UNITED STATES 
SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549


FORM 10-Q

(Mark One)

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

For the quarterly period ended: December 31, 2008

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

Commission File Number: 2-93231-NY

CHINA NUTRIFRUIT GROUP LIMITED

Nevada
      87-0395695(State or other jurisdiction of
      (I.R.S. Employer Identification No.)incorporation or organization)


China Nutrifruit Group Limited 
No. 2 Wenhua Street, Dongfeng New Village
Daqing, Heilongjiang Province, PRC 163311 
-------------------------------------------------------------------
(Address of principal executive offices, Zip Code)

(86) 459-460-9488 
-------------------------------------------------- 
(Registrants telephone number, including area code)

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

Indicate by check mark whether the registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of the Exchange Act
during the past 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes Q        
No

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

Large accelerated filer £       
Accelerated filer £       
Non-accelerated filer £       
Smaller reporting company Q

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

The number of shares outstanding of each of the issuers
classes of common equity, as of February 16, 2009 is as follows:

Class of Securities
      Shares OutstandingCommon Stock, $0.001 par value
      36,125,754




---

TABLE OF CONTENTS

|                                                                                             | Page
|-------------------------------------------------------------------------------------------- | ----
|PART I - FINANCIAL INFORMATION                                                               |     
|Item 1 Financial Statements                                                                  | ii  
|Item 2 Management's Discussion and Analysis of Financial Condition and Results of Operations | 26  
|Item 3 Quantitative and Qualitative Disclosure about Market Risk                             | 37  
|Item 4 Controls and Procedures                                                               | 37  
|                                                                                             |     
|PART II - OTHER INFORMATION                                                                  |     
|Item 1 Legal Proceedings                                                                     | 38  
|Item 1A Risk Factors                                                                         | 38  
|Item 2 Unregistered Sales of Equity Securities and Use of Proceeds                           | 38  
|Item 3 Defaults Upon Senior Securities                                                       | 38  
|Item 4 Submission of Matters to a Vote of Security Holders                                   | 38  
|Item 5 Other Information                                                                     | 38  
|Item 6 Exhibits                                                                              | 38  

i

---

PART I.

FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS.





CHINA NUTRIFRUIT GROUP LIMITED AND SUBSIDIARIES

CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

AS OF DECEMBER 31, 2008 AND

FOR THE NINE MONTHS ENDED DECEMBER 31, 2008





ii

---

CHINA NUTRIFRUIT GROUP LIMITED AND
SUBSIDIARIES(FORMERLY KNOWN AS FASHION TECH
INTERNATIONAL, INC.)

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

(Stated in US Dollars)

|                                         |   | December 31, |  |   | March 31,  | 
|---------------------------------------- | - | ------------ |  | - | ---------- | 
|                                         |   | 2008         |  |   | 2008       | 
|ASSETS                                   |   |              |  |   |            | 
|Current assets:                          |   |              |  |   |            | 
|Cash and cash equivalents                | $ | 8,396,925    |  | $ | 7,104,849  | 
|Trade receivables, net                   |   | 1,794,802    |  |   | 1,921,457  | 
|Inventory, net                           |   | 12,562,421   |  |   | 1,955,725  | 
|Prepayments                              |   | 499,546      |  |   | -          | 
|Other current assets                     |   | 4,376        |  |   | 114,865    | 
|Total current assets                     |   | 23,258,070   |  |   | 11,096,896 | 
|Property, plant and equipment, net       |   | 16,966,697   |  |   | 7,173,523  | 
|Land use rights, net                     |   | 190,095      |  |   | 318,120    | 
|TOTAL ASSETS                             | $ | 40,414,862   |  | $ | 18,588,539 | 
|                                         |   |              |  |   |            | 
|LIABILITIES AND STOCKHOLDERS EQUITY     |   |              |  |   |            | 
|Current liabilities:                     |   |              |  |   |            | 
|Short-term borrowings                    | $ | 7,294,797    |  | $ | 2,848,110  | 
|Other payables and accrued
      expense |   | 389,178      |  |   | 494,278    | 
|Consideration payable                    |   | -            |  |   | 5,353,755  | 
|Trade payables                           |   | 1,220,239    |  |   | 161,136    | 
|Income taxes payable                     |   | 1,050,475    |  |   | 607,680    | 
|Advances from customers                  |   | 1,737,133    |  |   | -          | 
|Amount due to a director                 |   | 516          |  |   | -          | 
|Amount due to a shareholder              |   | 7,374,420    |  |   | -          | 
|Amount due to an affiliate               |   | -            |  |   | 58,253     | 
|TOTAL LIABILITIES                        |   | 19,066,758   |  |   | 9,523,212  | 
|                                         |   |              |  |   |            | 
|Minority interests                       |   | -            |  |   | 4,039,286  | 

|                                                                         |   |            |  |   |            |  
|------------------------------------------------------------------------ | - | ---------- |  | - | ---------- | -
|Commitments and Contingencies                                            |   |            |  |   |            |  
|                                                                         |   |            |  |   |            |  
|Stockholders' equity                                                     |   |            |  |   |            |  
|Preferred stock                                                          |   |            |  |   |            |  
|Authorized: 5,000,000 shares, par value $0.001                           |   |            |  |   |            |  
|None issued and outstanding                                              |   | -          |  |   | -          |  
|Common stock                                                             |   |            |  |   |            |  
|Authorized: 120,000,000 shares, par value $0.001                         |   |            |  |   |            |  
|Issued and outstanding: 36,125,754 shares as at December
      31, 2008; |   |            |  |   |            |  
|(2,873,036 shares as at March 31, 2008)                                  |   | 36,126     |  |   | 2,873      |  
|Additional paid-in-capital                                               |   | 6,781,315  |  |   | (4,965     | )
|Statutory reserves - restricted                                          |   | 2,872,011  |  |   | 1,713,065  |  
|Accumulated other comprehensive income                                   |   | 410,125    |  |   | 812,312    |  
|Retained earnings                                                        |   | 11,248,527 |  |   | 2,502,756  |  
|TOTAL STOCKHOLDERS EQUITY                                               |   | 21,348,104 |  |   | 5,026,041  |  
|TOTAL LIABILITIES AND STOCKHOLDERS EQUITY                               | $ | 40,414,862 |  | $ | 18,588,539 |  

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

1

---

CHINA NUTRIFRUIT GROUP LIMITED AND
SUBSIDIARIES(FORMERLY KNOWN AS FASHION TECH
INTERNATIONAL, INC.)

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

(Stated in US Dollars)

|                                                          |   | Three months ended |   |   | Nine months ended |  
|--------------------------------------------------------- | - | ------------------ | - | - | ----------------- | -
|                                                          |   | December 31,       |   |   | December 31,      |  
|                                                          |   | 2008               |   |   | 2007              |  
|Net sales                                                 | $ | 13,873,857         |   | $ | 6,210,070         |  
|Cost of sales                                             |   | (7,836,719         | ) |   | (3,536,169        | )
|Gross profit                                              |   | 6,037,138          |   |   | 2,673,901         |  
|Selling, general and administrative expenses              |   | (1,610,004         | ) |   | (550,299          | )
|Operating earnings                                        |   | 4,427,134          |   |   | 2,123,602         |  
|Other income (expenses)                                   |   |                    |   |   |                   |  
|Interest expenses                                         |   | (128,455           | ) |   | (114,103          | )
|Other income                                              |   | 6,555              |   |   | 60                |  
|Total other income (expenses)                             |   | (121,900           | ) |   | (114,043          | )
|Earnings before minority interests and income
      taxes |   | 4,305,234          |   |   | 2,009,559         |  
|Provision for income taxes                                |   | (1,050,626         | ) |   | (293,824          | )
|Earnings before minority interests                        |   | 3,254,608          |   |   | 1,715,735         |  
|Minority interests                                        |   | -                  |   |   | (416,254          | )
|Net earnings                                              | $ | 3,254,608          |   | $ | 1,299,481         |  

|                                            |   |            |  |   |            |  |   |            |  |   |           | 
|------------------------------------------- | - | ---------- |  | - | ---------- |  | - | ---------- |  | - | --------- | 
|Earnings per share                          |   |            |  |   |            |  |   |            |  |   |           | 
|Basic                                       | $ | 0.0903     |  | $ | 0.0633     |  | $ | 0.5089     |  | $ | 0.1404    | 
|Diluted                                     | $ | 0.0902     |  | $ | 0.0633     |  | $ | 0.5088     |  | $ | 0.1404    | 
|                                            |   |            |  |   |            |  |   |            |  |   |           | 
|Weighted average number of common
    stock |   |            |  |   |            |  |   |            |  |   |           | 
|outstanding                                 |   |            |  |   |            |  |   |            |  |   |           | 
|Basic                                       |   | 36,061,476 |  |   | 20,531,621 |  |   | 19,463,339 |  |   | 9,258,462 | 
|Diluted                                     |   | 36,091,262 |  |   | 20,531,621 |  |   | 19,465,518 |  |   | 9,258,462 | 

2

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CHINA NUTRIFRUIT GROUP LIMITED AND
SUBSIDIARIES (FORMERLY KNOWN AS FASHION TECH
INTERNATIONAL, INC.)

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

(Stated in US Dollars)

|                                                                                     |   | Nine months ended |  
|------------------------------------------------------------------------------------ | - | ----------------- | -
|                                                                                     |   | December 31,      |  
|                                                                                     |   | 2008              |  
|Operating activities:                                                                |   |                   |  
|Net earnings                                                                         | $ | 9,904,717         |  
|Adjustments to reconcile net loss to net
      cash provided by operating activities |   |                   |  
|Minority interests                                                                   |   | 209,308           |  
|Depreciation and amortization                                                        |   | 654,849           |  
|Loss on disposal of
      property, plant and equipment                              |   | 289               |  
|Changes in operating assets and
      liabilities:                                   |   |                   |  
|Trade receivables, net                                                               |   | 172,808           |  
|Inventory                                                                            |   | (10,501,428       | )
|Prepayments                                                                          |   | (499,412          | )
|Other
      current assets                                                           |   | (64,981           | )
|Trade payables                                                                       |   | 1,049,463         |  
|Income
      taxes payable                                                           |   | 425,577           |  
|Advances from customers                                                              |   | 1,727,701         |  
|Consideration payables                                                               |   | (5,352,352        | )
|Amount due to a
      shareholder                                                    |   | 7,360,552         |  
|Amount
      due to a director                                                       |   | (59,076           | )
|Other payables and
      accrued expenses                                            |   | (116,020          | )
|Net cash provided by operating activities                                            |   | 4,911,995         |  
|                                                                                     |   |                   |  
|Investing activities:                                                                |   |                   |  
|Cash (outflow)/inflow from acquisition of subsidiaries                               |   | (1,451,038        | )
|Purchases of property and equipment                                                  |   | (13,102,841       | )
|Proceeds from disposal of property and equipment                                     |   | 3,918             |  
|Net cash (used in)/provided by investing
      activities                            |   | (14,549,961       | )
|                                                                                     |   |                   |  
|Financing activities:                                                                |   |                   |  
|Proceeds from borrowings                                                             |   | 4,353,113         |  
|Proceeds from issue of common stock                                                  |   | 8,578,706         |  
|Costs related to issuance of common stock                                            |   | (1,741,421        | )
|Net cash (used in)/provided by financing
      activities                            |   | 11,190,398        |  
|                                                                                     |   |                   |  
|Increase in cash and cash equivalents                                                |   | 1,552,432         |  
|                                                                                     |   |                   |  
|Effect of exchange rate on cash and cash
      equivalents                           |   | (260,356          | )
|                                                                                     |   |                   |  
|Cash and cash equivalents at beginning of
      the period                           |   | 7,104,849         |  
|                                                                                     |   |                   |  
|Cash and cash equivalents at end of the
      period                                 | $ | 8,396,925         |  
|                                                                                     |   |                   |  
|Supplemental disclosure of cash flows
      information:                             |   |                   |  
|Cash paid for:                                                                       |   |                   |  
|Interest                                                                             | $ | 318,050           |  
|Income tax                                                                           | $ | 2,818,381         |  

3

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CHINA NUTRIFRUIT GROUP LIMITED AND SUBSIDIARIES (FORMERLY KNOWN AS FASHION TECH INTERNATIONAL,
INC.)

CONDENSEDCONSOLIDATEDSTATEMENTSOFSHAREHOLDERSEQUITY(UNAUDITED)

(Statedin USDollars)

|                                                    |  | Common stockShares |  |   | Amount |  |  | Preferred stockShares |  |   | Amount |  |   | Additionalpaid-incapital |   |   | Statutoryreserves restricted |  |   | Retainedearnings |   |   | Accumulatedothercomprehensiveincome |   |   | Total      |  
|--------------------------------------------------- |  | ------------------ |  | - | ------ |  |  | --------------------- |  | - | ------ |  | - | ------------------------ | - | - | ----------------------------- |  | - | ---------------- | - | - | ----------------------------------- | - | - | ---------- | -
|                                                    |  |                    |  |   |        |  |  |                       |  |   |        |  |   |                          |   |   |                               |  |   |                  |   |   |                                     |   |   |            |  
|Balance at March 31, 2008                           |  | 2,873,036          |  | $ | 2,873  |  |  | -                     |  | $ | -      |  | $ | (4,965                   | ) | $ | 1,713,065                     |  | $ | 2,502,756        |   | $ | 812,312                             |   | $ | 5,026,041  |  
|Effect of reverse acquisition:                      |  |                    |  |   |        |  |  |                       |  |   |        |  |   |                          |   |   |                               |  |   |                  |   |   |                                     |   |   |            |  
|Recapitalization                                    |  | 30,166,878         |  |   | 30,167 |  |  | -                     |  |   | -      |  |   | (47,919                  | ) |   | -                             |  |   | -                |   |   | -                                   |   |   | (17,752    | )
|Share issued in privateplacement at $2.78 per share |  | 3,085,840          |  |   | 3,086  |  |  | -                     |  |   | -      |  |   | 8,575,620                |   |   | -                             |  |   | -                |   |   | -                                   |   |   | 8,578,706  |  
|Cost of raising capital                             |  | -                  |  |   | -      |  |  | -                     |  |   | -      |  |   | (1,741,421               | ) |   | -                             |  |   | -                |   |   | -                                   |   |   | (1,741,421 | )
|Transfer to reserve                                 |  | -                  |  |   | -      |  |  | -                     |  |   | -      |  |   | -                        |   |   | 1,158,946                     |  |   | (1,158,946       | ) |   | -                                   |   |   | -          |  
|Comprehensive income                                |  |                    |  |   |        |  |  |                       |  |   |        |  |   |                          |   |   |                               |  |   |                  |   |   |                                     |   |   |            |  
|Net earnings                                        |  | -                  |  |   | -      |  |  | -                     |  |   | -      |  |   | -                        |   |   | -                             |  |   | 9,904,717        |   |   | -                                   |   |   | 9,904,717  |  
|Translation
      adjustments                       |  | -                  |  |   | -      |  |  | -                     |  |   | -      |  |   | -                        |   |   | -                             |  |   | -                |   |   | (402,187                            | ) |   | (402,187   | )
|Balance at December 31,                             |  |                    |  |   |        |  |  |                       |  |   |        |  |   |                          |   |   |                               |  |   |                  |   |   |                                     |   |   |            |  
|2008                                                |  | 36,125,754         |  |   | 36,126 |  |  | -                     |  |   | -      |  |   | 6,781,315                |   |   | 2,872,011                     |  |   | 11,248,527       |   |   | 410,125                             |   |   | 21,348,104 |  

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

4

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China Nutrifruit Group Limited and Subsidiaries (Formerly
Known as Fashion Tech International, Inc.) Notes to Condensed Consolidated
Financial Statements For the three and nine months ended December 31, 2008
and 2007 (Unaudited) (Stated in U.S. Dollars)

NOTE 1. NATURE OF BUSINESS AND SUMMARY OF PRINCIPAL
ACCOUNTING POLICIES

Nature of Business

China Nutrifruit Group Limited, formerly known as Fashion Tech
International, Inc., (the Company) was originally incorporated in the state of
Utah on April 22, 1983 and changed its domicile from Utah to Nevada in April
1999. The Company was not engaged in any business activities and had no
meaningful operations, income producing assets or significant operating capital
since at least 1989 until it acquired Fezdale Investments Limited (Fezdale) on
August 14, 2008.

On August 14, 2008, the Company acquired all of the equity
interests of Fezdale, a British Virgin Islands corporation, through a share
exchange transaction (the Share Exchange Transaction), with the result that
the stockholders of Fezdale became the beneficial owners of approximately 86.59%
of the Companys common stock. As a result of such Share Exchange Transaction,
Fezdale became a wholly-owned subsidiary of the Company and the former
shareholders of Fezdale became the Companys controlling shareholders.
Accordingly, all references to shares of Fezdales ordinary shares have been
restated to reflect the equivalent numbers of the common stock of China
Nutrifruit Group Limited.

The share exchange resulted in Fezdales former shareholder
obtaining a majority voting interest in the Company. Accounting principles
generally accepted in the United States of America (US GAAP) require that a
company whose shareholders retain the majority interest in a combined business
be treated as the acquirer for accounting purposes. As a result, in the Share
Exchange Transaction, Fezdale is treated as the accounting acquirer and China
Nutrifruit Group Limited is treated as the acquired party for accounting
purpose. Accordingly, the Share Exchange Transaction has been accounted for a
recapitalization of the Company. The equity section of the accompanying
financial statements have been restated to reflect the recapitalization of the
Company due to the Share Exchange Transaction as of the first day of the first
period presented. The assets and liabilities acquired that, for accounting
purposes, were deemed to have been acquired by Fezdale were not significant.

Also, on August 14, 2008, our majority shareholder, Yiu Fai
Kung (Mr. Kung), entered into escrow agreements with the private placement
investors and HFG International, Limited (HFG). Mr. Kung will deliver a
certain number of shares of our common stock owned by him to the investors and
HFG pro-rata in accordance with their respective investment amount for no
additional consideration if:

(i)

Our after tax net income for our fiscal
year ending on March 31, 2009 is less than $13,919,707 and fiscal year ending on
March 31, 2010 is less than $18,495,315; and

After the Share Exchange Transaction and the Financing, the
total common stock issued and outstanding of the Company is 36,125,754.

The Company amended its articles of incorporation on August 14,
2008 and changed its name into China Nutrifruit Group Limited.

On October 10, 2008, the Company completed a private placement
financing with certain investors (the Financing). Pursuant to the terms of the
securities purchase agreement, the Company sold 3,085,840 shares of the
Companys common stock at the price of $2.78 per share and received a gross
proceed of $8,578,705.73.

5

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China Nutrifruit Group Limited and Subsidiaries (Formerly
Known as Fashion Tech International, Inc.) Notes to Condensed Consolidated
Financial Statements For the three and nine months ended December 31, 2008
and 2007 (Unaudited) (Stated in U.S. Dollars)

NOTE 1. NATURE OF BUSINESS AND SUMMARY OF PRINCIPAL
ACCOUNTING POLICIES (CONTD)

Fezdale Investments Limited

Fezdale is a private limited liability company incorporated in
British Virgin Island on August 22, 2007.

In November 2007, Solar Sun Holdings Limited (Solar Sun), a
subsidiary of Fezdale, entered in a share purchase agreement with six owners of
Daqing Longheda Food Company Limited (Longheda) under which the six owners of
Longheda agreed to transfer an aggregate of 75% equity interests in Longheda to
Solar Sun for a total consideration of RMB40,000,000. In May 2008, the six
founders of Longheda transferred the remaining 25% equity interests in Longheda
to Solar Sun. After the transfer, Longheda became the wholly owned subsidiary of
Solar Sun (note 3).

Solar Sun Holdings Limited

Solar Sun is a private limited liability company incorporated
in Hong Kong on September 12, 2007. Solar Sun is a holding company and has no
assets or operations other than its ownership of Longheda.

Daqing Longheda Food Company Limited

Longheda was incorporated in Heilongjiang province of Peoples
Republic of China in June 2004. Longheda manufactures and sells a variety of
food products processed from specialty premium fruits that grow in Northeast
China. Currently, Longheda processes 4 types of premium specialty fruits,
including golden berry, crab apple, blueberry and raspberry, and sells fresh
fruits. Longheda currently has four types of fruit based products, including
fruit concentrate, nectar, glazed fruits and fruit beverage. Longheda sells its
products through an extensive sales and distribution network covering 19
provinces and 41 cities. The fresh fruits are mainly sold to fruit supermarkets
and stores while the processed fruit products are mainly sold to manufacturers
for further processing into fruit juice and other fruit related products.

Basis of presentation

The interim condensed consolidated financial statements include
the accounts of China Nutrifruit Group Limited and its subsidiaries (the
Group). The interim condensed consolidated financial statements have been
prepared in accordance with the US GAAP. The interim condensed consolidated
financial statements of the Group include the accounts of China Nutrifruit Group
Limited, Fezdale Investments Limited, Solar Sun Holdings Limited and Daqing
Longheda Food Company Limited after the date of acquisition. All significant
intercompany transactions and balances have been eliminated.

The interim condensed consolidated financial statements are
unaudited and, in our opinion, include all adjustments, consisting of normal
recurring adjustments and accruals necessary for a fair representation of our
condensed consolidated balance sheets, operating results, and cash flows for the
periods presented. Operating results for the periods presented are not
necessarily indicatives of the annual results for the year ending March 31,
2009. Certain information and footnote disclosures normally included in
financial statements prepared in accordance with the US GAAP have been condensed
or omitted in accordance with the rules and regulations of the Securities and
Exchange Commission (the SEC). The interim condensed consolidated financial
statements should be read in conjunction with the audited consolidated financial
statements and accompany notes included in the Companys registration statement
on Form S-1 filed on October 14, 2008. The Company follows the same accounting
policies in the preparation of interim reports.

6

---

China Nutrifruit Group Limited and Subsidiaries (Formerly
Known as Fashion Tech International, Inc.) Notes to Condensed Consolidated
Financial Statements For the three and nine months ended December 31, 2008
and 2007 (Unaudited) (Stated in U.S. Dollars)

Use of estimates

The preparation of the interim condensed consolidated financial
statements in conformity with US GAAP requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities, the
disclosure of contingent liabilities at the date of the financial statements,
and the reported amounts of revenue and expenses during the reporting period.
Actual results could differ from these estimates.

Segment information

The Group identifies and classifies its operating segment based
on the nature of the products with similar economic characteristics. No segment
information is provided as the Group only has one business and geographical
segment. The Groups reportable segment is the manufacture and sell of food
products, which the operations are located in PRC and sales were predominately
made to customers located in the PRC.

Economic and political risks

The Groups operations are conducted in the PRC. According the
Groups business, financial position maybe influenced by the political, economic
and legal environment in the PRC, and by the general state of the PRC economy.

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

Earnings per share

Basic earnings per share is computed by dividing net operating
results for the reporting period attributable to common stockholders by the
weighted average number of common stocks outstanding during the period. Diluted
earnings per share is calculated by dividing net operating results for the
reporting period attributable to common stockholders by the weighted average
number of common stocks outstanding and the dilutive effect of common stock
equivalents.

Trade accounts receivable

In the normal course of business, the Group extends credit to
customers. Trade accounts receivable, less allowance for doubtful accounts,
reflect the net realizable value of receivables, and approximate fair value. On
a regular basis, the Group evaluates its trade accounts receivable and
establishes an allowance for doubtful accounts based on a combination of
specific customer circumstances, credit conditions, and payment history. A
receivable is considered past due if payments have not been received within the
agreed upon invoice terms. No allowance for doubtful accounts at December 31,
2008 was recorded. Trade accounts receivable is charged off against the
allowance after management determines the potential for recovery is remote.

7

---

China Nutrifruit Group Limited and Subsidiaries (Formerly
Known as Fashion Tech International, Inc.) Notes to Condensed Consolidated
Financial Statements For the three and nine months ended December 31, 2008
and 2007 (Unaudited) (Stated in U.S. Dollars)

Cash and cash equivalents

The Group considers all highly liquid investments with an
original maturity date of three months or less to be cash equivalents.

Inventories

The cost of finished products inventories includes raw
materials, direct labor and indirect production costs. Inventories are stated at
the lower of cost or market. The Group uses first-in, first-out methods to value
its inventories. During the idle production period, overhead costs include
depreciation are treated as current-period charges, which charge directly to
general and administrative expense instead of costs of inventories.

Fair value of financial instruments

The carrying amount of certain of the Groups financial
instruments, including cash and cash equivalents, trade accounts receivable,
accounts payable, other current assets, other payables and accrued expenses,
approximates fair value due to the relatively short maturity.

Property, plant and equipment, net

Property, plant and equipment are recorded at cost and are
depreciated on a straight-line basis over the estimated useful lives of the
assets. Maintenance and repairs are expensed as incurred. The principal
estimated useful lives generally are: buildings and leasehold improvements  20
years; machinery and equipment - 10 years. Depreciation of property, plant and
equipment was $660,769 for the nine months period ended December 31, 2008.
During the idle period of the plant, depreciation is treated as current-period
charges, which charge directly to general and administrative expense.

Goodwill

Goodwill represents the excess of the purchase price over the
fair value of the net tangible and identifiable intangible assets acquired in a
business combination. Goodwill is tested at least annually for impairment using
a two-step process. The first step is to identify a potential impairment, and
the second step measures the amount of the impairment loss, if any. Impairment
exists if the carrying amount of a reporting units goodwill exceeds its
estimated fair value.

Negative goodwill represents the excess fair value of the net
tangible and identifiable intangible assets acquired in a business combination
over the purchase price. The negative goodwill is allocated as a pro rata
reduction of the amounts assigned to the assets acquired excluding financial
assets, deferred taxes and other current assets. If negative goodwill exceeds
the amount of those assets, the remaining excess shall be recognized as an
extraordinary gain in the period which the business combination is completed.
(note 3)

Revenue recognition

The Group recognizes revenue from sales of products, where
persuasive evidence of an arrangement exists, delivery has occurred, the
sellers price is fixed or determinable and collectibility is reasonably
assured. This generally occurs when the customer receives the product or at the
time title passes to the customer. Customers generally do not have the right to
return product unless damaged or defective. Net sales are comprised of gross
sales reduced by customer returns, trade promotions and discounts.

8

---

China Nutrifruit Group Limited and Subsidiaries (Formerly
Known as Fashion Tech International, Inc.) Notes to Condensed Consolidated
Financial Statements For the three and nine months ended December 31, 2008
and 2007 (Unaudited) (Stated in U.S. Dollars)

Comprehensive income

Comprehensive income is comprised of net income and other
comprehensive income.

Shipping and handling costs

Shipping and handling costs are included in selling expenses.
The shipping and handling costs for the nine months ended December 31, 2008 was
$1,464,741.

Impairment of long-lived assets

Long-lived assets, except goodwill and indefinite-lived
intangible assets, are reviewed for impairment when circumstances indicate the
carrying value of an asset may not be recoverable. Recoverability of assets to
be held and used is measured by a comparison of the carrying amount of the
assets to future net cash flows estimated by the Group to be generated by such
assets. If such assets are considered to be impaired, the impairment to be
recognized is the amount by which the carrying amount of the assets exceeds the
fair value of the assets. Assets to be disposed of by sale are recorded as held
for sale at the lower of carrying value or estimated net realizable value.
During the period, no impairment on long-lived assets was recorded by the
Group.

All lands in the PRC are owned by the PRC government. The
government in the PRC, according to the relevant PRC law, may sell the right to
use the land for a specific period of time. Thus, all of the Groups land
located in the PRC is considered to be leasehold land and is stated at cost less
accumulated amortization and any recognized impairment loss. Amortization is
provided over the term of the land use right agreements on a straight-line
basis, which is 50 years and they will expire in 2055.

Advertising costs

Advertising costs are expensed as incurred. The total
advertising costs were $9,359 for the nine months ended December 31, 2008.

Other income recognition

Other income comprised of interest income and others.

Interest income is accrued on a time basis, by reference to the
principal outstanding and at the effective interest rate applicable, which is
the rate that exactly discounts the estimated future cash receipts through the
expected life of the loan to the loans net carrying amount.

Foreign currency translation

The accompanying financial statements are presented in United
States dollars. The functional currency of the Group is Renminbi, RMB. The
financial statements are translated into United States dollars from RMB at
year-end exchange rates as to assets and liabilities and average exchange rates
as to revenues and expenses. Capital accounts are translated at their historical
exchange rates when the capital transactions occurred.

9

---

China Nutrifruit Group Limited and Subsidiaries (Formerly
Known as Fashion Tech International, Inc.) Notes to Condensed Consolidated
Financial Statements For the three and nine months ended December 31, 2008
and 2007 (Unaudited) (Stated in U.S. Dollars)

Foreign currency translation (Continued)

|December 31, 2008                            |                     
|-------------------------------------------- | --------------------
|Balance sheet                                | RMB6.8542 to US$1.00
|Statement of income and comprehensive income | RMB6.8916 to US$1.00

|March 31, 2008                               |                     
|-------------------------------------------- | --------------------
|Balance sheet                                | RMB7.0222 to US$1.00
|Statement of income and comprehensive income | RMB7.4695 to US$1.00

The RMB is not freely convertible into foreign currency and all
foreign exchange transactions must take place through authorized institutions.
No representation is made that the RMB amounts could have been, or could be,
converted into US$ at the rates used in translation.

We have restricted cash, amounting to US$8,376,234 and
US$7,103,562 as of December 31, 2008 and March 31, 2008 respectively.

Statutory reserves

The laws and regulations of the PRC require that before an
enterprise distributes profits to its owners, it must first satisfy all tax
liabilities, provide for losses in previous years, and make allocations. The
statutory reserves include a surplus reserve fund and a common welfare fund.
These statutory reserves represent restricted retained earnings. The details of
surplus reserve fund and common welfare fund are as follows:

Surplus reserve fund

The Companys subsidiary in PRC is
required, as necessary, to transfer 10 percent of its net income, as determined
in accordance with the PRC accounting rules and regulations, to a statutory
surplus reserve fund until such reserve balance reaches 50 percent of that
subsidiarys paid-in capital.

The transfer to this reserve must be
made before distribution of any dividends to owners. The surplus reserve fund is
non-distributable other than during liquidation and can be used to fund previous
years' losses, if any, and may be utilized for business expansion or converted
into equity by raising equity from existing owners in proportion to their equity
holdings.

Common welfare fund

The Companys subsidiary in PRC is
required, as necessary, to transfer 5 percent to 10 percent of its net income,
as determined in accordance with the PRC accounting rules and regulations, to
the statutory common welfare fund. This fund can only be utilized on capital
items for the collective benefit of that subsidiarys employees, such as
construction of dormitories, cafeteria facilities, and other staff welfare
facilities. This fund is non-distributable other than upon liquidation. The
transfer to this fund must be made before distribution of any dividends to
owners.

10

---

China Nutrifruit Group Limited and Subsidiaries (Formerly
Known as Fashion Tech International, Inc.) Notes to Condensed Consolidated
Financial Statements For the three and nine months ended December 31, 2008
and 2007 (Unaudited) (Stated in U.S. Dollars)

Related party transactions

A related party is generally defined as (i) any person that
holds 10% or more of the Groups securities and their immediate families, (ii)
the Groups management, (iii) someone that directly or indirectly controls, is
controlled by or is under common control with the Group, or (iv) anyone who can
significantly influence the management or operating decisions of the Group. A
transaction is considered to be a related party transaction when there is a
transfer of resources or obligations between related parties.

Income taxes

The Group accounts for income taxes under the provision of
Statement of Financial Accounting Standards (SFAS) No. 109, Accounting for
Income Taxes (SFAS 109) and related interpretations and guidance including FIN
48, Accounting for Uncertainty in Income Taxes  an interpretation of FASB
Statement No. 109 (Fin 48), resulting in two components of income tax expense:
current and deferred. Current income tax expense approximates taxes to be paid
or refunded for the relevant periods. Deferred income tax expense results from
changes in deferred tax assets and liabilities between periods. Deferred income
tax assets and liabilities are computed for differences between the financial
statement carrying amounts and the tax bases of existing assets and liabilities
that will result in taxable or deductible amounts in the future, as well as from
net operating loss and tax credit carryforwards, and are measured at the enacted
tax laws and rates applicable in the years which the differences are expected to
be recovered or settled. A deferred tax asset is recognized if it is more likely
than not that a benefit will be realized. The Groups operations are primarily
located in PRC and subject to PRC profits tax.

NOTE 2. RECENT ACCOUNTING PRONOUNCEMENTS

In September 2006, the Financial Accounting Standards Board
(FASB) issued SFAS 157, Fair Value Measurements (SFAS 157), which provides
guidance about how to measure assets and liabilities that use fair value. SFAS
157 apply whenever another US GAAP standard requires (or permits) assets or
liabilities to be measured at fair value but does not expand the use of fair
value to any new circumstances. This standard also requires additional
disclosures in both annual and quarterly reports. SFAS 157 is effective for
financial statements issued for fiscal years beginning after November 15, 2007.
In February 2008, the FASB issued FASB Staff Position (FSP) 157-1, Application
of FASB Statement No. 157 to FASB Statement No. 13 and Other Accounting
Pronouncements That Address Fair Value Measurements for Purposes of Lease
Classification or Measurement under Statement 13 (FSP 157-1), which states
that SFAS 157 does not address fair value measurements for purposes of lease
classification or measurement. In February 2008, the FASB issued FSP 157-2,
Effective Date of FASB Statement No. 157 (FSP 157-2), which delays the
effective date for non-financial assets and non-financial liabilities to fiscal
years beginning after November 15, 2008, except for items that are measured at
fair value in the financial statements on a recurring basis (at least annually).
The Company adopted the provisions of SFAS 157 for its financial assets and
liabilities and those items for which it has measured on a recurring basis
effective January 1, 2008, and the adoption did not have a material impact on
its financial position and results of operations. As provided by FSP 157-2, the
Company has elected to defer the adoption of SFAS 157 for certain of its
non-financial assets and liabilities and is currently evaluating the impact of
adopting SFAS 157 on its non-financial assets and liabilities.

11

---

China Nutrifruit Group Limited and Subsidiaries (Formerly
Known as Fashion Tech International, Inc.) Notes to Condensed Consolidated
Financial Statements For the three and nine months ended December 31, 2008
and 2007 (Unaudited) (Stated in U.S. Dollars)

In February 2007, the FASB issued SFAS 159, The Fair Value
Option for Financial Assets and Financial Liabilities - Including an amendment
of FASB Statement No. 115 (SFAS 159), which is effective for the Company
beginning January 1, 2008. This standard permits entities to choose to measure
many financial instruments and certain other items at fair value and
consequently report unrealized gains and losses on such items in earnings. The
Company has elected not to adopt the fair value provisions of SFAS 159 and the
adoption of SFAS 159 did not have a significant impact of its financial
position, cash flows and results of operations.

In December 2007, the FASB issued SFAS 141 (revised 2007),
Business Combinations (SFAS 141(R)). SFAS 141(R) establishes principles and
requirements for how an acquirer recognizes and measures in its financial
statements the identifiable assets acquired, the liabilities assumed, any
noncontrolling interest in the acquiree and the goodwill acquired. SFAS 141(R)
also establishes disclosure requirements to enable the evaluation of the nature
and financial effects of the business combination. SFAS 141(R) will be effective
for financial statements issued for fiscal years beginning after December 15,
2008, and will be adopted by the Company beginning in the first quarter of 2009.
The Company does not expect there to be any significant impact of adopting SFAS
141(R) on its financial position, cash flows and results of operations.

In December 2007, the FASB issued SFAS 160, Noncontrolling
Interests in Consolidated Financial Statements - an amendment of Accounting
Research Bulletin No.51 (SFAS 160). SFAS 160 establishes accounting and
reporting standards for ownership interests in subsidiaries held by parties
other than the parent, the amount of consolidated net income attributable to the
parent and to the noncontrolling interest, changes in a parents ownership
interest, and the valuation of retained noncontrolling equity investments when a
subsidiary is deconsolidated. SFAS 160 also establishes disclosure requirements
that clearly identify and distinguish between the interests of the parent and
the interests of the noncontrolling owners. SFAS 160 will be effective for
financial statements issued for fiscal years beginning after December 15, 2008,
and will be adopted by the Company beginning in the first quarter of 2009. The
Company does not expect there to be any significant impact of adopting SFAS 160
on its financial position, cash flows and results of operations.

In March 2008, the FASB issued SFAS No. 161, Disclosures about
Derivative Instruments and Hedging Activities (SFAS 161). SFAS 161 is intended
to improve financial reporting about derivative instruments and hedging
activities by requiring enhanced disclosures to enable investors to better
understand their effects on an entitys financial position, financial
performance, and cash flows. SFAS 161 achieves these improvements by requiring
disclosure of the fair values of derivative instruments and their gains and
losses in a tabular format. It also provides more information about an entitys
liquidity by requiring disclosure of derivative features that are credit
risk-related. Finally, it requires cross-referencing within footnotes to enable
financial statement users to locate important information about derivative
instruments. SFAS 161 will be effective for financial statements issued for
fiscal years and interim periods beginning after November 15, 2008, will be
adopted by the Company beginning in the first quarter of 2009. The Company does
not expect there to be any significant impact of adopting SFAS 161 on its
financial position, cash flows and results of operations.

12

---

China Nutrifruit Group Limited and Subsidiaries (Formerly
Known as Fashion Tech International, Inc.) Notes to Condensed Consolidated
Financial Statements For the three and nine months ended December 31, 2008
and 2007 (Unaudited) (Stated in U.S. Dollars)

In May 2008, FASB issued Financial Accounting Standards No.
162, The Hierarchy of Generally Accepted Accounting Principles. This Statement
identifies the sources of accounting principles and the framework for selecting
the principles to be used in the preparation of financial statements of
nongovernmental entities that are presented in conformity with generally
accepted accounting principles (GAAP) in the United States (the GAAP hierarchy).
This Statement is effective 60 days following the SEC's approval of the Public
Company Accounting Oversight Board amendments to AU Section 411, The Meaning of
Present Fairly in Conformity With Generally Accepted Accounting Principles. The
Company does not expect there to be any significant impact of adopting SFAS 162
on its financial position, cash flows and results of operations.

In May 2008, FASB issued Financial Accounting Standards No.
163, Accounting for Financial Guarantee Insurance Contracts - an interpretation
of FASB Statement No. 60. Diversity exists in practice in accounting for
financial guarantee insurance contracts by insurance enterprises under FASB
Statement No. 60, Accounting and Reporting by Insurance Enterprises. That
diversity results in inconsistencies in the recognition and measurement of claim
liabilities because of differing views about when a loss has been incurred under
FASB Statement No. 5, Accounting for Contingencies. This Statement requires that
an insurance enterprise recognize a claim liability prior to an event of default
(insured event) when there is evidence that credit deterioration has occurred in
an insured financial obligation. This Statement also clarifies how Statement 60
applies to financial guarantee insurance contracts, including the recognition
and measurement to be used to account for premium revenue and claim liabilities.
Those clarifications will increase comparability in financial reporting of
financial guarantee insurance contracts by insurance enterprises. This Statement
requires expanded disclosures about financial guarantee insurance contracts. The
accounting and disclosure requirements of the Statement will improve the quality
of information provided to users of financial statements. This Statement is
effective for financial statements issued for fiscal years beginning after
December 15, 2008, and all interim periods within those fiscal years. The
Company does not expect there to be any significant impact of adopting SFAS 163
on its financial position, cash flows and results of operations.

Other recent accounting pronouncements issued by the FASB
(including its Emerging Issues Task Force (EITF)), the American Institute of
Certified Public Accountants (AICPA), and the SEC did not or are not believed
by management to have a material impact on the Company's present or future
financial statements.

13

---

China Nutrifruit Group Limited and Subsidiaries (Formerly
Known as Fashion Tech International, Inc.) Notes to Condensed Consolidated
Financial Statements For the three and nine months ended December 31, 2008
and 2007 (Unaudited) (Stated in U.S. Dollars)

NOTE 3  ACQUISITION OF A SUBSIDIARY

In November 2007, Solar Sun entered into a share purchase
agreement with six owners of Longheda to acquire the 75% interest in Longheda
with a total consideration of RMB40,000,000.

In May 2008, Solar Sun entered into another share purchase
agreement with six owners of Longheda to acquire the remaining 25% interests in
Longheda with a total consideration of RMB10,000,000. Since the beneficial
owners of the Company were third parties independent of Longheda and the Group
has obtained the controlling interests in Longheda, the acquisition was
accounted for using the purchase method of accounting. As of the acquisition
date, the Group recorded the fair values of Longheda assets acquired and
liabilities assumed. The allocation of the purchase price to assets acquired and
liabilities assumed as at the date of acquisition is as follows:

|                                    |  | $           |  
|----------------------------------- |  | ----------- | -
|                                    |  |             |  
|Cash and cash equivalents           |  | 5,666,951   |  
|Trade accounts receivable           |  | 2,389,049   |  
|Inventories                         |  | 1,126,973   |  
|Other current assets                |  | 2,477,178   |  
|Property, plant and equipment, net  |  | 11,107,547  |  
|Land use right, net                 |  | 502,735     |  
|Borrowings                          |  | (2,863,365  | )
|Accounts payable                    |  | (111,771    | )
|Other payables and accrued expenses |  | (478,984    | )
|Tax payable                         |  | (166,764    | )
|                                    |  |             |  
|Net assets acquired                 |  | 19,649,549  |  
|Minority interests                  |  | (13,452,363 | )
|Statutory reserves                  |  | (1,713,065  | )
|Negative goodwill                   |  | (3,052,439  | )
|                                    |  |             |  
|Total purchase price                |  | 1,431,682   |  

The allocation of the purchase price to assets acquired and
liabilities assumed as at the date of acquisition resulted in negative goodwill
of $3,052,439. In accordance with SFAS No. 141, Business Combinations, the
negative goodwill was allocated as a pro rata reduction of the amounts assigned
to the assets acquired excluding financial assets, deferred taxes and other
current assets. This resulted in the following allocation of negative goodwill:

|                                   |  | $         | 
|---------------------------------- |  | --------- | 
|Property, plant and equipment, net |  | 2,920,266 | 
|Land use right, net                |  | 132,173   | 
|Negative goodwill                  |  | 3,052,439 | 

14

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China Nutrifruit Group Limited and Subsidiaries (Formerly
Known as Fashion Tech International, Inc.) Notes to Condensed Consolidated
Financial Statements For the three and nine months ended December 31, 2008
and 2007 (Unaudited) (Stated in U.S. Dollars)

The following table represents the unaudited results of
operations of the Company as if the acquisition of Longheda had been consummated
as of April 1, 2008 and 2007 and the results are shown for the nine months ended
December 31, 2008 and 2007 includes certain pro forma adjustments, including
depreciation and amortization on the assets acquired, and other adjustments.

|                                                           |   | For the nine months ended | 
|---------------------------------------------------------- | - | ------------------------- | 
|                                                           |   | December 31,              | 
|                                                           |   | 2008                      | 
|Pro forma Information:                                     |   |                           | 
|Revenues                                                   | $ | 36,212,228                | 
|Net profit                                                 |   | 10,114,025                | 
|Net profit per share  basic                               | $ | 0.5197                    | 
|Net profit per share  diluted                             | $ | 0.5196                    | 
|Shares used for computing basic earnings per share         |   | 19,463,339                | 
|Shares used for computing diluted earnings
      per share |   | 19,465,603                | 

NOTE 4. EARNINGS PER SHARE

The computations of basic and diluted earnings per share for
the three months and nine months ended December 31 are as follows:

|                                              |   | Three months ended |  |   | Nine months ended | 
|--------------------------------------------- | - | ------------------ |  | - | ----------------- | 
|                                              |   | December 31,       |  |   | December 31,      | 
|                                              |   | 2008               |  |   | 2007              | 
|Numerator:                                    |   |                    |  |   |                   | 
|Net earnings available to common shareholders | $ | 3,254,608          |  | $ | 1,299,481         | 
|Denominator:                                  |   |                    |  |   |                   | 
|Weighted average common stock                 |   | 36,061,476         |  |   | 20,531,621        | 
|Dilutive potential common
      stock         |   | 36,091,262         |  |   | 20,531,621        | 
|                                              |   |                    |  |   |                   | 
|Basic net earnings per share                  | $ | 0.0903             |  | $ | 0.0633            | 
|                                              |   |                    |  |   |                   | 
|Diluted net earnings per share                | $ | 0.0902             |  | $ | 0.0633            | 

15

---

China Nutrifruit Group Limited and Subsidiaries (Formerly
Known as Fashion Tech International, Inc.) Notes to Condensed Consolidated
Financial Statements For the three and nine months ended December 31, 2008
and 2007 (Unaudited) (Stated in U.S. Dollars)

On June 19, 2008, the Company effected a reverse stock split
pursuant to which each ten outstanding shares of common stock, par value $0.001,
were automatically converted into one share of common stock, par value $0.001
(the Reverse Stock Split). All of the share number, share prices and per-share
amounts have been adjusted, on a retroactive basis, to reflect the effect of the
Reverse Stock Split.

NOTE 5. INVENTORY, NET

At December 31, 2008 and March 31, 2008 inventory is comprised
of the following:

|               |   | December 31, |  |   | March 31, | 
|-------------- | - | ------------ |  | - | --------- | 
|               |   | 2008         |  |   | 2008      | 
|               |   |              |  |   |           | 
|Finished goods | $ | 12,392,223   |  | $ | 1,888,650 | 
|Raw material   |   | 170,198      |  |   | 67,075    | 
|               | $ | 12,562,421   |  | $ | 1,955,725 | 

NOTE 6. PROPERTY, PLANT AND EQUIPMENT, NET

Property, plant and equipment, net, at December 31, 2008 and
March 31, 2008 are summarized as follows:

|                                         |   | December 31, |   |   | March 31,  |  
|---------------------------------------- | - | ------------ | - | - | ---------- | -
|                                         |   | 2008         |   |   | 2008       |  
|                                         |   |              |   |   |            |  
|Buildings                                | $ | 3,486,972    |   | $ | 1,846,936  |  
|Machinery                                |   | 15,216,545   |   |   | 7,254,044  |  
|Furniture, fixtures and office equipment |   | 13,643       |   |   | 28,016     |  
|Motor vehicles                           |   | 6,099        |   |   | 22,304     |  
|                                         |   |              |   |   |            |  
|Total                                    | $ | 18,723,259   |   | $ | 9,151,300  |  
|Less: accumulated depreciation           |   | (1,756,562   | ) |   | (1,977,777 | )
|                                         | $ | 16,966,697   |   | $ | 7,173,523  |  

At December 31, 2008 and March 31, 2008, certain of the Groups
plant and machinery with an aggregate net book value of approximately $5,817,601
and $2,559,000, respectively, were pledged to secure the bank borrowings.

16

---

China Nutrifruit Group Limited and Subsidiaries (Formerly
Known as Fashion Tech International, Inc.) Notes to Condensed Consolidated
Financial Statements For the three and nine months ended December 31, 2008
and 2007 (Unaudited) (Stated in U.S. Dollars)

NOTE 7. BORROWINGS

The Group's borrowings are summarized as follows:

|                |   | December 31, |  |   | March 31, | 
|--------------- | - | ------------ |  | - | --------- | 
|                |   | 2008         |  |   | 2008      | 
|                |   |              |  |   |           | 
|Bank borrowings | $ | 7,294,797    |  | $ | 2,848,110 | 

The interest rates are based on the banks best lending rate
plus a certain percentage and the credit lines are normally subject to periodic
review. The range of effective interest rates (which are also equal to
contracted interest rates) on the Groups borrowings for the nine months ended
December 31, 2008 was 8.53% per annum. Plant and machinery with an aggregate net
book value of approximately $5,817,601 as of December 31, 2008 were pledged to
secure such bank borrowings. The maturity dates of the outstanding bank
borrowings as of December 31, 2008 are February 10, 2009 and August 14, 2009.

NOTE 8. AMOUNT DUE TO AN AFFILIATE/ A DIRECTOR/ A
SHAREHOLDER

The amount due to an affiliate/a director/ a shareholder is
unsecured, interest free and has no fixed terms of repayment.

NOTE 9. OTHER PAYABLES AND ACCRUED EXPENSES

Other payables and accrued expenses by major categories are
summarized as follows:

|               |   | December 31, |  |   | March 31, | 
|-------------- | - | ------------ |  | - | --------- | 
|               |   | 2008         |  |   | 2008      | 
|               |   |              |  |   |           | 
|               |   |              |  |   |           | 
|Accruals       | $ | 246,374      |  | $ | 206,910   | 
|VAT payables   |   | 104,765      |  |   | 229,838   | 
|Other payables |   | 38,039       |  |   | 57,530    | 
|               | $ | 389,178      |  | $ | 494,278   | 

17

---

China Nutrifruit Group Limited and Subsidiaries (Formerly
Known as Fashion Tech International, Inc.) Notes to Condensed Consolidated
Financial Statements For the three and nine months ended December 31, 2008
and 2007 (Unaudited) (Stated in U.S. Dollars)

NOTE 10, PROVISION FOR INCOME TAXES

The provision for income tax is as follows:

|                    |   | For the nine months period
      ended December 31, | 
|------------------- | - | --------------------------------------------------- | 
|                    |   | 2008                                                | 
|                    |   |                                                     | 
|Current:            |   |                                                     | 
|PRC                 | $ | 3,248,958                                           | 
|Other jurisdictions |   | -                                                   | 
|Deferred:           |   |                                                     | 
|PRC                 |   | -                                                   | 
|Other jurisdictions |   | -                                                   | 
|                    |   | 3,248,958                                           | 

At December 31, 2008, the Group did not have material valuation
allowance that would result into any deferred tax assets.

The Groups operations are conducted in the PRC and are subject
to PRCs enterprise income tax. Pursuant to the PRC Income Tax Law prior to
January 1, 2008, enterprise income taxes were generally imposed at a statutory
rate of 33%, which comprised 30% national income tax and 3% local income tax.
However, the Group has been granted a preferential tax treatment by the State
Tax Bureau of the PRC as the Group was considered as a hi-tech enterprise in the
Heilongjiang province. According to the PRC Income Tax Law and various approval
documents issued by the Tax Bureau, the Groups profits for the period prior to
2008 were taxed at a rate of 15%.

On March 16, 2007, the Fifth Plenary Session of the Tenth
National Peoples Congress passed the Corporate Income Tax Law of the PRC which
will take effect on January 1, 2008. According to the new tax law, the
applicable corporate income tax rate for domestically-owned enterprises and
foreign-invested enterprises are subject to a uniform tax rate of 25%. While the
new tax law equalizes the tax rates for domestically-owned and foreign-invested
companies, preferential tax treatment would continue to be given to companies in
certain encouraged sectors and to enterprises classified as high and new
technology companies, whether domestically-owned or foreign-invested
enterprises. The new tax law also provides a five-year transition period
starting from its effective date for those enterprises which were established
before the promulgation date of the new tax law and which were entitled to a
preferential tax treatment. The tax rate of such enterprises will transition to
the uniform tax of 25% within a five-year transition period.

18

---

China Nutrifruit Group Limited and Subsidiaries (Formerly
Known as Fashion Tech International, Inc.) Notes to Condensed Consolidated
Financial Statements For the three and nine months ended December 31, 2008
and 2007 (Unaudited) (Stated in U.S. Dollars)

In July 2006, the FASB issued FIN 48, which clarifies the
accounting and disclosure for uncertainty in tax positions, as defined in SFAS
No. 109. FIN 48 prescribes a more-likely-than-not threshold for financial
statement recognition and measurement of a tax position taken or expected to be
taken in a tax return. This interpretation also provides guidance on
de-recognition of income tax assets and liabilities, classification of current
and deferred income tax assets and liabilities, accounting for interest and
penalties associated with tax positions, accounting for income taxes in interim
periods and income tax disclosures.

The Group adopted the provisions of FIN 48 effective August 22,
2007. Based on its FIN 48 analysis, the Group concluded that the adoption of FIN
48 did not have any impact on the Groups total liabilities or owners equity.
The Groups classifies interests and/or penalties related to income tax matters
in income tax expenses. As of March 31, 2008, the Group did not have interests
and penalties related to uncertain tax positions. The Group does not anticipate
any significant increases or decrease to its liabilities for unrecognized tax
benefits within the next twelve months.

The provision for income taxes appearing in the consolidated
statement of income represents the current tax expenses. A reconciliation
between the provision for income taxes computed by PRC enterprise income tax
rate to income before income taxes is as follows:

|                                                                                          | For the nine months period
      ended December 31,
|----------------------------------------------------------------------------------------- | ---------------------------------------------------
|                                                                                          | 2008                                               
|                                                                                          | %                                                  
|Statutory rate                                                                            | 25                                                 
|Tax effect of preferential tax treatment granted by the
      State Tax Bureau of the PRC | -                                                  
|                                                                                          | 25                                                 

NOTE 11. FAIR VALUE OF FINANCIAL INSTRUMENTS

The fair value of a financial instrument is the amount at which
the instrument could be exchanged in a current transaction between willing
parties. The carrying amounts of financial assets and liabilities, such as cash
and cash equivalents, trade receivables, trade payables, other payables and
accrued expenses, approximate their fair values because of the short maturity of
these instruments and market rates of interest.

NOTE 12. STOCKHOLDERS EQUITY

General

The Companys total authorized capital at December 31, 2008, is
125,000,000 shares of which 120,000,000 shares are common stock of par value
$0.001 and 5,000,000 shares are preferred stock of par value $0.001. At December
31, 2008, 36,125,754 shares of common stock and none of the shares of preferred
stock, respectively, were issued and outstanding.

19

---

China Nutrifruit Group Limited and Subsidiaries (Formerly
Known as Fashion Tech International, Inc.) Notes to Condensed Consolidated
Financial Statements For the three and nine months ended December 31, 2008
and 2007 (Unaudited) (Stated in U.S. Dollars)

NOTE 12. STOCKHOLDERS EQUITY

Common stock

On August 14, 2008, the Company effected an initial closing of
a private placement transaction and issued 1,692,960 shares of the Companys
common stock to certain investors at a price of $2.78 per share for aggregate
proceeds of $4,706,467.

On October 3, 2008, the Company effected a second closing of a
private placement transaction and issued 955,244 shares of the Companys common
stock to 21 investors at a price of $2.78 per share for aggregate proceeds of
$2,655,600.

On October 10, 2008, the Company effected a third and final
closing of a private placement transaction and issued 437,636 shares of the
Companys common stock to 9 investors at a price of $2.78 per share for
aggregate proceeds of $1,216,637.

Warrants

In connection with the private placement which closed on
October 10, 2008, WLT Brothers Capital, Inc., Wentworth Securities, Inc. and
Euro Pacific Capital, Inc., the Companys placement agents, received, as partial
compensation, warrants to purchase 66,171, 95,781 and 54,057 shares of the
Companys common stock, respectively. The warrants have a term of 3 years and
are immediately exercisable at $2.78 per share, subject to the usual adjustments
for certain corporate events.

NOTE 13. PRC CONTRIBUTION PLAN

Employees of the Group are entitled to retirement benefits
calculated with reference to their salaries basis upon retirement and their
length of service in accordance with a PRC government-managed retirement plan.
The PRC government is directly responsible for the payments of the benefits to
these retired employees. The Group is required to make contributions to the
government-managed retirement plan based on certain percentages of the
employees monthly salaries. The amounts contributed by the Group were
approximately $209,591 for the nine months period ended December 31, 2008.

NOTE 14. SIGNIFICANT CONCENTRATIONS AND RISK

(a) Credit Risk

Financial instruments that potentially subject the Group to
significant concentration of credit risk consist primarily of cash and cash
equivalents. As of December 31, 2008, substantially all of the Groups cash and
cash equivalents were held by major financial institutions located in the PRC,
which management believes are of high credit quality.

(b) Groups operations are in China

All of the Groups products are produced in China. The Groups
operations are subject to various political, economic, and other risks and
uncertainties inherent in China. Among other risks, the Groups operations are
subject to the risks of transfer of funds; domestic and international customs
and tariffs; changing taxation policies; foreign exchange restrictions; and
political conditions and governmental regulations.

20

---

China Nutrifruit Group Limited and Subsidiaries (Formerly
Known as Fashion Tech International, Inc.) Notes to Condensed Consolidated
Financial Statements For the three and nine months ended December 31, 2008
and 2007 (Unaudited) (Stated in U.S. Dollars)

NOTE 15. COMMITMENTS AND CONTINGENT LIABILITIES

Operating Lease Commitments

The Group leases certain office premises and buildings under
non-cancelable leases. Minimum future rental payments required under
non-cancellable operating leases in effect as of December 31, 2008 are as
follows:

|Not later than 1 year                        | $ | 8,889 | 
|-------------------------------------------- | - | ----- | 
|Later than 1 year and not later than 5 years |   | -     | 
|                                             | $ | 8,889 | 

Rent expenses for the three months and nine months ended
December 31, 2008 were $8,890 and $25,877, respectively.

NOTE 16. COMPREHENSIVE INCOME

The Companys comprehensive income is comprised of net
operating results and translation adjustments. Comprehensive income for the
three months and nine months ended December 31 are as follows:

|                                       |   | Three months ended
      December 31, |   |   | Nine months ended
      December 31, | 
|-------------------------------------- | - | ------------------------------------- | - | - | ------------------------------------ | 
|                                       |   | 2008                                  |   |   | 2007                                 | 
|                                       |   |                                       |   |   |                                      | 
|Comprehensive income :                 |   |                                       |   |   |                                      | 
|Net earnings                           | $ | 3,254,608                             |   | $ | 1,299,481                            | 
|Translation adjustments                |   | (34,698                               | ) |   | 234,471                              | 
|Total comprehensive loss, net of taxes | $ | 3,219,910                             |   | $ | 1,533,952                            | 

21

---

China Nutrifruit Group Limited and Subsidiaries (Formerly
Known as Fashion Tech International, Inc.) Notes to Condensed Consolidated
Financial Statements For the three and nine months ended December 31, 2008
and 2007 (Unaudited) (Stated in U.S. Dollars)

NOTE 17. RELATED PARTY TRANSACTION

On May 16, 2008, our Chairman Changjun Yu (Mr. Yu) entered
into a Trademark Transfer Agreement with the Company pursuant to which Mr. Yu
transferred his rights to the trademark 农珍之冠 to the Company for a nominal
consideration of RMB 1. In connection with the trademark transfer, Mr. Yu also
entered into a Trademark License Agreement with the Company pursuant to which
Mr. Yu granted the Company the exclusive rights to use such trademark before the
Trademark Office approves the transfer of such trademark.

On April 28, 2008, Longheda entered into a financial advisory
agreement (the Financial Advisory Agreement) with HFG International, Limited.
The Financial Advisory Agreement was amended on August 12, 2008. Under the
Financial Advisory Agreement, as amended, HFG International, Limited agreed to
provide Longheda with financial advisory and consulting services in facilitating
Longhedas going public transaction. In consideration for these services, HFG
International, Limited is entitled to $450,000 which will be paid within 45 days
after the closing of the going public transaction. HFG International, Limited is
an affiliate of Halter Financial Investments, L.P., which was an 87.5%
shareholder of the Company before the closing of the reverse acquisition of
Fezdale.

[End of condensed consolidated financial statements.]

22

---

CHINA NUTRIFRUIT GROUP LIMITED AND SUBSIDIARIES 
(FORMERLY KNOWN AS FASHION TECH INTERNATIONAL, INC.)

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS

The unaudited pro forma condensed consolidated statements of
operations for the three months and nine months ended December 31, 2007 reflects
the results of operations of the Company as if had the merger and the
acquisition of 100% equity interest of Longheda had occurred on April 1, 2007.
The pro forma condensed consolidated statements of operations were prepared as
if the transactions were consummated on April 1, 2007. These pro forma condensed
consolidated statements of operations should be read in conjunction with the
separate financial statements and related notes thereto of China Nutrifruit
Group Limited and have been prepared for comparative purposes only and do not
purport to be indicative of the results of operations which actually would have
resulted had the transaction occurred on the date indicated and are not
necessarily indicative of the results that may be expected in the future.

A pro forma balance sheet has not been provided since the
historical unaudited condensed consolidated balance sheet of China Nutrifruit
Group Limited and its subsidiaries as of December 31, 2008 provided in this
financial statement includes the effects of the recapitalization.

23

---

CHINA NUTRIFRUIT GROUP LIMITED AND SUBSIDIARIES
(FORMERLY KNOWN AS FASHION TECH INTERNATIONAL, INC.)

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

(Stated in US Dollars)

FOR THE THREE-MONTH PERIOD ENDED
DECEMBER 31, 2007

|                                             |   | ChinaNutrifruit
      Three- month ended |                   |   | FezdaleThree-
      month ended |              |   | Solar Sun |              | Longheda |            |   | Pro FormaAdjustments |                |   | Pro FormaCombined |           
|-------------------------------------------- | - | ---------------------------------------- | ----------------- | - | ------------------------------- | ------------ | - | --------- | ------------ | -------- | ---------- | - | -------------------- | -------------- | - | ----------------- | ----------
|Three-month ended                            |   |                                          | Three-month ended
|December                                     |   |                                          | **December**      |   |                                 | **December** |   |           | **December**
|31, 2007                                     |   |                                          | 31, 2007          |   |                                 | 31, 2007     |   |           | 31, 2007    
|                                             |   |                                          |                   |   |                                 |              |   |           |              |          |            |   |                      |                |   |                   |           
|Net sales                                    | $ | -                                        |                   | $ | -                               |              | $ | -         |              | $        | 13,384,677 |   |                      |                |   | $                 | 13,384,677
|Cost of sales                                |   | -                                        |                   |   | -                               |              |   | -         |              |          | (7,473,282 | ) |                      | (C) 174,238    |   |                   | (7,299,044
|                                             |   |                                          |                   |   |                                 |              |   |           |              |          |            |   |                      |                |   |                   |           
|Gross profit                                 |   | -                                        |                   |   | -                               |              |   | -         |              |          | 5,911,395  |   |                      |                |   |                   | 6,085,633 
|                                             |   |                                          |                   |   |                                 |              |   |           |              |          |            |   |                      |                |   |                   |           
|Selling, general and administrative expenses |   | (8,035                                   | )                 |   | (36,479                         | )            |   | (74       | )            |          | (1,110,312 | ) |                      |                |   |                   | (1,154,900
|                                             |   |                                          |                   |   |                                 |              |   |           |              |          |            |   |                      |                |   |                   |           
|Operating earnings                           |   | (8,035                                   | )                 |   | (36,479                         | )            |   | (74       | )            |          | 4,801,083  |   |                      |                |   |                   | 4,930,733 
|                                             |   |                                          |                   |   |                                 |              |   |           |              |          |            |   |                      |                |   |                   |           
|Other income (expenses)                      |   |                                          |                   |   |                                 |              |   |           |              |          |            |   |                      |                |   |                   |           
|Interest expenses                            |   | (23                                      | )                 |   | -                               |              |   | -         |              |          | (107,143   | ) |                      |                |   |                   | (107,166  
|Other income                                 |   | -                                        |                   |   | -                               |              |   | 60        |              |          | 5,454      |   |                      |                |   |                   | 5,514     
|Total other income (expenses)                |   | (23                                      | )                 |   | -                               |              |   | 60        |              |          | (101,689   | ) |                      |                |   |                   | (101,652  
|                                             |   |                                          |                   |   |                                 |              |   |           |              |          |            |   |                      |                |   |                   |           
|Earnings before income taxes                 |   | (8,058                                   | )                 |   | (36,479                         | )            |   | (14       | )            |          | 4,699,394  |   |                      |                |   |                   | 4,829,081 
|                                             |   |                                          |                   |   |                                 |              |   |           |              |          |            |   |                      |                |   |                   |           
|Provision for income taxes                   |   | -                                        |                   |   | -                               |              |   | -         |              |          | (691,052   | ) |                      |                |   |                   | (691,052  
|                                             |   |                                          |                   |   |                                 |              |   |           |              |          |            |   |                      |                |   |                   |           
|Net earnings                                 | $ | (8,058                                   | )                 | $ | (36,479                         | )            | $ | (14       | )            | $        | 4,008,342  |   |                      |                |   | $                 | 4,138,029 
|                                             |   |                                          |                   |   |                                 |              |   |           |              |          |            |   |                      |                |   |                   |           
|Earnings per share                           |   |                                          |                   |   |                                 |              |   |           |              |          |            |   |                      |                |   |                   |           
|Basic and diluted                            | $ | (0.0004                                  | )                 |   |                                 |              |   |           |              |          |            |   |                      |                |   | $                 | 0.1284    
|                                             |   |                                          |                   |   |                                 |              |   |           |              |          |            |   |                      |                |   |                   |           
|Weighted average number of common stock      |   |                                          |                   |   |                                 |              |   |           |              |          |            |   |                      |                |   |                   |           
|outstanding                                  |   |                                          |                   |   |                                 |              |   |           |              |          |            |   |                      |                |   |                   |           
|Basic and diluted                            |   | 20,531,621                               |                   |   |                                 |              |   |           |              |          |            |   |                      | (A)(18,478,458 | ) |                   | 32,220,041
|                                             |   |                                          |                   |   |                                 |              |   |           |              |          |            |   |                      | (B) 30,166,878 |   |                   |           

24

---

CHINA NUTRIFRUIT GROUP LIMITED AND SUBSIDIARIES

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

(Stated in US Dollars)

FOR THE NINE-MONTH PERIOD ENDED
DECEMBER 31, 2007

|                                             |   | ChinaNutrifruit |                 |   | Fezdale |              |   | Solar Sun |              | Longheda |             |   | Pro
    FormaAdjustments |                |   | Pro
    FormaCombined |             
|-------------------------------------------- | - | --------------- | --------------- | - | ------- | ------------ | - | --------- | ------------ | -------- | ----------- | - | ------------------------ | -------------- | - | --------------------- | ------------
|Nine-month
      ended                       |   |                 | Nine-monthended
|Nine-month                                   |   |                 | **Nine-month** 
|ended                                        |   |                 | ended          
|December                                     |   |                 | **December**    |   |         | **December** |   |           | **December**
|31, 2007                                     |   |                 | 31, 2007        |   |         | 31, 2007     |   |           | 31, 2007    
|                                             |   |                 |                 |   |         |              |   |           |              |          |             |   |                          |                |   |                       |             
|Net sales                                    | $ | -               |                 | $ | -       |              | $ | -         |              | $        | 27,155,984  |   |                          |                |   | $                     | 27,155,984  
|Cost of sales                                |   | -               |                 |   | -       |              |   | -         |              |          | (14,929,237 | ) |                          | (C) 514,198    |   |                       | (14,415,039)
|                                             |   |                 |                 |   |         |              |   |           |              |          |             |   |                          |                |   |                       |             
|Gross profit                                 |   | -               |                 |   | -       |              |   | -         |              |          | 12,226,747  |   |                          |                |   |                       | 12,740,945  
|                                             |   |                 |                 |   |         |              |   |           |              |          |             |   |                          |                |   |                       |             
|Selling, general and administrative expenses |   | (14,580         | )               |   | (33,039 | )            |   | (74       | )            |          | (2,328,032  | ) |                          |                |   |                       | (2,375,725  
|                                             |   |                 |                 |   |         |              |   |           |              |          |             |   |                          |                |   |                       |             
|Operating earnings                           |   | (14,580         | )               |   | (33,039 | )            |   | (74       | )            |          | 9,898,715   |   |                          |                |   |                       | 10,365,220  
|                                             |   |                 |                 |   |         |              |   |           |              |          |             |   |                          |                |   |                       |             
|Other income (expenses)                      |   |                 |                 |   |         |              |   |           |              |          |             |   |                          |                |   |                       |             
|Interest
    expenses                        |   | (132            | )               |   | -       |              |   | -         |              |          | (280,965    | ) |                          |                |   |                       | (281,097    
|Other income                                 |   | -               |                 |   | -       |              |   | 60        |              |          | 16,947      |   |                          |                |   |                       | 17,007      
|Total other income (expenses)                |   | (132            | )               |   | -       |              |   | 60        |              |          | (264,018    | ) |                          |                |   |                       | (264,090    
|                                             |   |                 |                 |   |         |              |   |           |              |          |             |   |                          |                |   |                       |             
|Earnings before income
    taxes             |   | (14,712         | )               |   | (33,039 | )            |   | (14       | )            |          | 9,634,697   |   |                          |                |   |                       | 10,101,130  
|                                             |   |                 |                 |   |         |              |   |           |              |          |             |   |                          |                |   |                       |             
|Provision for income taxes                   |   | -               |                 |   | -       |              |   | -         |              |          | (1,445,204  | ) |                          |                |   |                       | (1,445,204  
|                                             |   |                 |                 |   |         |              |   |           |              |          |             |   |                          |                |   |                       |             
|Net earnings                                 | $ | (14,712         | )               | $ | (33,039 | )            | $ | (14       | )            |          | 8,189,493   |   |                          |                |   | $                     | 8,655,926   
|                                             |   |                 |                 |   |         |              |   |           |              |          |             |   |                          |                |   |                       |             
|Earnings per share                           |   |                 |                 |   |         |              |   |           |              |          |             |   |                          |                |   |                       |             
|Basic and diluted                            | $ | (0.0016         | )               |   |         |              |   |           |              |          |             |   |                          |                |   | $                     | 0.2784      
|                                             |   |                 |                 |   |         |              |   |           |              |          |             |   |                          |                |   |                       |             
|Weighted average number of common stock      |   |                 |                 |   |         |              |   |           |              |          |             |   |                          |                |   |                       |             
|outstanding                                  |   |                 |                 |   |         |              |   |           |              |          |             |   |                          |                |   |                       |             
|Basic and diluted                            |   | 9,258,462       |                 |   |         |              |   |           |              |          |             |   |                          | (A) (8,332,615 | ) |                       | 31,092,725  
|                                             |   |                 |                 |   |         |              |   |           |              |          |             |   |                          | (B) 30,166,878 |   |                       |             

25

---

NOTES TO UNAUDITED PROFORMA CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS

NOTE 1  PRO FORMA ADJUSTMENTS

On August 14, 2008, China Nutrifruit Group Limited acquired
all of the equity interests of Fezdale Investments Limited ("Fezdale"), a
British Virgin Islands corporation, through a share exchange transaction (the
"Share Exchange Transaction"), with the result that the stockholders of Fezdale
became the beneficial owners of approximately 83.5% of the Companys common
stock. As a result of such Share Exchange Transaction, Fezdale became a
wholly-owned subsidiary of the Company and the former shareholders of Fezdale
became the Companys controlling shareholders. Accordingly, all references to
shares of Fezdales ordinary shares have been restated to reflect the equivalent
numbers of the common stock of China Nutrifruit Group Limited.

China Nutrifruit Group Limited completed the acquisition of
Fezdale, pursuant to the share exchange agreement, in August 2008. The
acquisition would be accounted for as a recapitalization effected by a share
exchange, wherein Fedzale is considered as the acquirer for accounting and
financial reporting purposes.

Pro forma adjustments on the attached financial statements include the
following:

(A) To record the 1 for 10 reverse stock split of China Nutrifruit Group
Limiteds common stock.

(B) To record the issuance of 30,166,878 shares of China Nutrifruit Group
Limiteds common stock in connection with the recapitalization.

(C) To record the adjustment of depreciation of property, plant and equipment
and amortization of land use rights due to the effect of negative goodwill
arising from the acquisition of Longheda.

26

---

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

Special Note Regarding Forward-Looking Statements

This Quarterly Report on Form 10-Q, including the following
Managements Discussion and Analysis of Financial Condition and Results of
Operations, contains forward-looking statements within the meaning of Section
27A of the Securities Act of 1933, as amended, and Section 21E of the Securities
Exchange Act of 1934, as amended (the Exchange Act"). Such statements include,
among others, those concerning our expected financial performance and strategic
and operational plans, as well as all assumptions, expectations, predictions,
intentions or beliefs about future events. You are cautioned that any such
forward-looking statements are not guarantees of future performance and that a
number of risks and uncertainties could cause actual results of the Company to
differ materially from those anticipated, expressed or implied in the
forward-looking statements. The words believe, expect, anticipate,
project, targets, optimistic, intend, aim, will or similar
expressions are intended to identify forward-looking statements. All statements
other than statements of historical fact are statements that could be deemed
forward-looking statements. Risks and uncertainties that could cause actual
results to differ materially from those anticipated include risks related to new
and existing products; any projections of sales, earnings, revenue, margins or
other financial items; any statements of the plans, strategies and objectives of
management for future operations; any statements regarding future economic
conditions or performance; uncertainties related to conducting business in
China; any statements of belief or intention; any of the factors mentioned in
the Risk Factors section of our Current Report on Form 8-K filed on August 14,
2008, and other risks and uncertainties mentioned in this Form 10-Q or our other
reports filed with the Securities and Exchange Commission. The Company assumes
no obligation and does not intend to update any forward-looking statements,
except as required by law.

Certain Terms

Except as otherwise indicated by the context, references in
this report to:

- We, the Company, us, our company, our, and China Nutrifruit
  refer to the combined business of China Nutrifruit Group Limited and its
  consolidated subsidiaries;
- Fezdale refers to Fezdale Investments Limited, a British Virgin Islands
  corporation which is our direct, wholly-owned subsidiary;
- Solar Sun refers to Solar Sun Holdings Limited, a Hong Kong corporation
  which is our indirect, wholly-owned subsidiary;
- Longheda refers to Daqing Longheda Food Company Limited, a Chinese
  corporation, our indirect, wholly-owned subsidiary;
- China, Chinese and PRC, refer to the Peoples Republic of China;
- Renminbi and RMB refer to the legal currency of China; and
- U.S. dollars, dollars and $ refer to the legal currency of the
  United States.

Overview

We are a holding company and conduct virtually all our
operations through our indirect, wholly owned subsidiary Longheda, which is a
leading producer of premium specialty fruit based products in China. Until our acquisition of Fezdale on August 14, 2008, our operations
were very limited and our business strategy and ownership changed several times
over the previous years.

27

---

On August 14, 2008, we completed a reverse acquisition of
Fezdale through a share exchange transaction whereby we issued 30,166,878 shares
of our common stock to the stockholders of Fezdale, in exchange for all of the
issued and outstanding capital stock of Fezdale. Fezdale thereby became our
wholly owned subsidiary and the former stockholders of Fezdale became our
controlling stockholders.

In connection with the reverse acquisition of Fezdale, on
October 10, 2008, we completed a private placement of our common shares to
certain investors for approximately $8.58 million in gross proceeds, resulting in
approximately $6.84 million in net proceeds after payment of approximately $1.74
million in offering expenses.

As a result of our reverse acquisition of Fezdale, we now
engage in developing, processing, marketing and distributing a variety of food
products processed primarily from premium specialty fruits grown in Northeast
China, including golden berries, crab apples, blueberries and raspberries. Our
primary product offerings include fruit concentrate, nectar, glazed fruits, and
beverage as well as fresh fruits. Our processed fruit products are mainly sold
to food producers for further processing into fruit juice and other fruit based
foods, and our fresh fruits are mainly sold to supermarkets and stores. We
currently operate manufacturing facilities located in Daqing and Mu Dan Jiang,
Heilongjiang Province, China where an abundant supply of a variety of premium
specialty fruits is available. Our four fruit processing lines have an aggregate
production capacity of 15,960 tons and our beverage production line has
production capacity of 10,800 tons. We sell our products through an extensive
nationwide sales and distribution network, which included 68 distributors as of
December 31, 2008, covering 19 provinces and 41 cities in China.

Generally Accepted Accounting Principles in the United States
(US GAAP) require that a company whose stockholders retain a majority interest
in a combined business be treated as the acquirer for accounting purposes. As a
result, in the share exchange transaction, Fezdale was treated as the accounting
acquirer and China Nutrifruit Group Limited was treated as the acquired party
for accounting purpose. Accordingly, the share exchange transaction has been
accounted for a recapitalization of the Company and our financial statements in
this Quarterly Report on Form 10-Q, particularly the equity section of our
financial statements, are presented to reflect the recapitalization resulting
from the share exchange transaction.

Third Fiscal Quarter Financial Highlights

Like many other sectors of the economy and most of our
competitors, our financial performance in the third quarter of fiscal 2009 was
negatively affected by the current global economic contraction. Because our
revenue is generated in RMB and our financial results are reported in U.S.
dollar, we reported an increase in our revenue in this fiscal quarter, but the
increase only resulted from the increased value in RMB against U.S. dollar.
However, if our financial performance and operating results do not include the
favorable exchange rate adjustment, our net sales revenue decreased slightly as
compared to the same period last year. While we managed to sell slightly more
products in this fiscal quarter as compared to the same period last year, we
experienced a softening demand for our higher margin nectar and glazed fruit
products and a decline in per unit sales price of our apple and crab apple fruit
concentrate products in this quarter. We expect the demand for nectar and glazed
fruit products to recover in the next a few quarters. In the meantime, we will
continue to focus on reducing costs, increasing sales and improving our
operational efficiency.

The following are some of our financial results for the third
fiscal quarter of 2009 in comparison to our pro forma financial results for the
third fiscal quarter of 2008:

- Net Sales: Net sales increased $0.5 million, or 3.7%,
to $13.9 million for the third fiscal quarter of 2009 from $13.4 million for the
same period last year, primarily as a result of exchange rate fluctuations.
- Gross Margin: Gross margin was 43.5% for the third
fiscal quarter of 2009, as compared to 45.5% for the same period last year.
- Net Income:Net income decreased $0.8 million, or 21.4%, to $3.3
  million for the third fiscal quarter of 2009, from $4.1 million for the same
  period last year.
- Fully diluted earnings per share:Fully diluted earnings per share
  were $0.09 for the third fiscal quarter of 2009, as compared to $0.13 for the
  same period last year. The decrease in fully diluted net income per share was
  mainly due to the fact that more shares of our common stock were outstanding
  in this quarter as a result of the shares issued in connection with the
  private placement transaction and share exchange transaction discussed above.

28

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Taxation

United States

China Nutrifruit Group Limited is subject to United States
income tax at a tax rate of 34%. No provision for income taxes in the United
States has been made as China Nutrifruit had no income taxable in the United
States during the three months ended December 31, 2008.

PRC

A company registered in China used to be subject to national
and local income taxes within China at the applicable tax rate on the taxable
income as reported in its PRC statutory financial statements in accordance with
relevant income tax laws. Under the Provisional Regulation of the Peoples
Republic of China on Enterprise Income Tax effective as from January 1, 1994,
income tax was generally payable by enterprises at a rate of 33% of their
taxable income.

In 2007, China passed the new Enterprise Income Tax Law (the
New EIT Law) and its implementing rules, both of which became effective on
January 1, 2008. The New EIT Law significantly curtails tax incentives granted
to foreign-invested enterprises under the previous law. The New EIT Law,
however, (i) reduces the statutory rate of enterprise income tax from 33% to
25%, (ii) permits companies to continue to enjoy their existing tax incentives,
adjusted by certain transitional phase-out rules, and (iii) introduces new tax
incentives, subject to various qualification criteria. Longheda was subject to a
tax rate of 15% in 2007 and is subject to a tax rate of 25% since 2008. We
expect that the tax rate of 25% currently applicable to Longheda will remain
unchange in 2009.

Substantially all of our income may be derived from dividends
received from our PRC operating subsidiaries described above. The New EIT Law
and its implementing rules generally, for PRC enterprise income tax purposes,
provide that a 10% withholding tax applies to China-sourced income derived by
non-resident enterprises whose jurisdiction of incorporation has signed a tax
treaty with China. Since China and US have signed a tax treaty to avoid double
taxation, we expect that such 10% withholding tax will apply to dividends paid
to us by our PRC subsidiaries but this treatment will depend on our status as a
non-resident enterprise.

Results of Operations

We discuss below our results of operations based on the
unaudited consolidated financial statements of the Company for the three-month
and nine-month periods ended December 31, 2008 and 2007. Solar Sun acquired 75%
of the ownership of Longheda on November 12, 2007 and the remaining 25% on May
21, 2008. For the period from April 1, 2008 to May 21, 2008, we reflect 75% of
the results of Longheda in our condensed consolidated financial statements. For
the period from May 21, 2008 to December 31, 2008, we reflect 100% of the
results of Longheda in our condensed consolidated financial statements. We
believe a presentation of the Companys results of operations for the three and
nine months ended December 31, 2007 on a pro forma basis provide the most
meaningful guidance to investors in assessing performance between periods.

29

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Comparison of Three Months Ended December 31, 2008 and
December 31, 2007

The results of operations below consolidated the financial
results of our primary operating subsidiary, Longheda, into our condensed
consolidated financial statements from October 1, 2008 to December 31, 2008. For
comparison purposes, we have provided our results of operations in actual
reported amounts for the three months ended December 31, 2008 and our results of
operations on a pro forma basis for the three month ended December 31, 2007 to
provide comparable presentation during such periods. We believe that presenting
our financial statements and operating results as if we had consolidated
Longheda provides investors with a consistent and meaningful measurement of
operating results which are comparable with subsequent periods. We employ this
financial reporting methodology internally when analyzing performance between
periods, developing internal projections and measuring management performance.

(All amounts, other than percentages and per share number, in
thousands of U.S. dollars)

|                           |   | For the three months ended |  |                               |   | For the three months ended |   |             
|-------------------------- | - | -------------------------- |  | ----------------------------- | - | -------------------------- | - | ------------
|(Unaudited)                |   | December 31, 2008          |  |                               |   | December 31, 2007          |   |             
|                           |   | (As reported)              |  |                               |   | (Pro forma)                |   |             
|                           |   | In Thousands               |  | As a Percentage of  Net Sales |   |                            |   | In Thousands
|Net Sales                  | $ | 13,874                     |  | 100.0                         | % |                            | $ | 13,385      
|Costs of Sales             |   | 7,837                      |  | 56.5                          | % |                            |   | 7,299       
|Gross profit               |   | 6,037                      |  | 43.5                          | % |                            |   | 6,086       
|Selling, general and       |   |                            |  |                               |   |                            |   |             
|administrative expenses    |   | 1,610                      |  | 11.6                          | % |                            |   | 1,155       
|Operating income           |   | 4,427                      |  | 31.9                          | % |                            |   | 4,931       
|Other income               |   | 7                          |  | 0.0                           | % |                            |   | 6           
|Interest expenses          |   | 128                        |  | 0.9                           | % |                            |   | 107         
|Income before minority     |   |                            |  |                               |   |                            |   |             
|interests and income taxes |   | 4,305                      |  | 31.0                          | % |                            |   | 4,829       
|Income taxes               |   | 1,051                      |  | 7.6                           | % |                            |   | 691         
|Net income                 |   | 3,255                      |  | 23.5                          | % |                            |   | 4,138       
|Earnings per share (basic  |   |                            |  |                               |   |                            |   |             
|and diluted)               |   | 0.09                       |  |                               |   |                            |   | 0.13        

The functional currency of the Company is RMB, however, our
financial information is expressed in USD. The results of operations reported in
the table above is based on the exchange rate of RMB7.44 to $1 for the three
months ended December 31, 2007 and the rate of RMB6.85 to $1 for the three
months ended December 31, 2008.

Net Sales. Our net sales consist of revenue
derived from the sale of our fruit and fruit based products. Net sales modestly
increased $0.5 million, or 3.7% to $13.9 million for the three months ended
December 31, 2008 from $13.4 million for the three months ended December 31,
2007. The increase resulted solely from the increased value of RMB, the currency
in which we generate revenue, as compare to the U.S. dollar, which is the
currency in which we report our financial results. In this quarter, our total
sales volume increased slightly. However, as a result of the general economic
slow-down and uncertainty, some of our customers reduced their purchase order
for our nectar products and glazed fruit products which caused revenue from our
higher margin nectar products and glazed fruit products to decrease
approximately 32.5% and 18.9% in this quarter, respectively. In addition, the
per unit sale price of our apple and crab apple fruit concentrate fell
significantly as compared to the same period last year as a result of the
significant price decline of apple in the third fiscal quarter. The per unit
sale prices of our other products remain stable in this quarter.

30

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Cost of Sales. Our cost of sales is primarily
comprised of the costs of our raw materials, labor, overhead and sales tax. Our
cost of sales increased $0.5 million, or 7.4%, to $7.8 million for the three
months ended December 31, 2008 from $7.3 million for the three months ended
December 31, 2007. This increase was primarily due to the increased value of
RMB. As a percentage of net sales, the cost of sales was 56.5% for the three
months ended December 31, 2008 as compared to 54.5% for the three months ended
December 31, 2007.

Gross Profit. Our gross profit is equal to our
net revenues less our cost of sales. Our gross profit decreased by $48,495 to
$6.0 million for the three months ended December 31, 2008 from $6.1 million for
the three months ended December 31, 2007. Gross profit as a percentage of net
sales was 43.5% for the three months ended December 31, 2008 as compared to
45.5% for the same period last year. The decrease of gross margin was mainly due
to the decreased sales of our higher margin nectar and glazed fruit products.

Selling and General and Administrative Expenses.
Our selling and general and administrative expenses increased $0.4 million, or
39.3%, to $1.6 million for the three months ended December 31, 2008 from $1.2
million for the three months ended December 31, 2007.

Our selling expenses include sales commissions, the cost of
advertising and promotional materials, salaries and fringe benefits of sales
personnel and other sales related costs. The selling expenses increased $220,382
or 30.4%, to $945,802 for the three months ended December 31, 2008 from $725,420
for the three months ended December 31, 2007. The increase was primarily
attributed to the increase in transportation costs resulting primary from higher
charge by transportation companies in this quarter. In addition, due to our
expanded sales efforts, we were able to penetrate into some new market located
at further distance from our facilities which also increased our transportation
cost in this quarter.

Our general and administrative expenses include the costs
associated with staff and support personnel who manage our business activities
and professional fees paid to third parties. Our general and administrative
expenses increased $234,722 or 54.7%, to $664,202 for the three months ended
December 31, 2008 from $429,480 for the three months ended December 31, 2007. As
a percentage of net sales, general and administrative expenses for the three
months ended December 31, 2008 increased by 1.6% to 4.8%, as compared to 3.2%
for the three months ended December 31, 2007. This percentage increase was
primarily attributable to the increased cost of insurance benefits for certain
of our employees as mandated by the PRC government in 2008 and the additional
professional and staff costs incurred after the reverse acquisition transaction
on August 14, 2008.

Interest Expenses. Our interest expenses
increased $21,289 to $128,455 for the three months ended December 31, 2008 from
$107,166 for the three months ended December 31, 2007. The increase in interest
expenses was primarily attributable to a $0.8 million increase in the
outstanding balances of our bank loans.

Income before Minority Interests and Income
Taxes. Income before minority interests and income taxes decreased $0.5
million, or 10.9%, to $4.3 million for the three months ended December 31, 2008
from $4.8 million for the three months ended December 31, 2007. Income before
minority interests and income taxes as a percentage of net sales decreased from
36.1% for the three months ended December 31, 2007 to 31.0% for the three months
ended December 31, 2008. The percentage decrease was primarily attributed to the
decreased sales of our nectar and glazed fruit products and the additional
professional and staff costs incurred after the reverse acquisition transaction
on August 14, 2008.

Net Income. Our net income decreased $0.8 million
or 21.4%, to $3.3 million for the three months ended December 31, 2008 from $4.1
million for the three months ended December 31, 2007, mainly as a result of
general economic crisis which led to decreased sales of our nectar and glazed
fruit products and a reduction in the per unit sales price of our apple and crab
apple fruit concentrate products. In additional, we have incurred additional
administrative expenses after the reverse acquisition transaction on August 14,
2008.

31

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Comparison of Nine months Ended December 31, 2008 and
December 31, 2007

We have consolidated 75% of the results of Longheda into our
condensed consolidated financial statements from April 1, 2008 to May 21, 2008
and 100% of the results Longheda into our condensed consolidated financial
statements from May 21, 2008 to December 31, 2008. For comparison purposes, we
have provided our results of operations in actual reported amounts for the nine
months ended December 31, 2008 and on a pro forma basis for the nine months
ended December 31, 2007 to provide comparable presentation to our reported
results during such periods. We believe that providing this financial
information as if we had consolidated Longheda may assist investors in assessing
historical performance between periods.

(All amounts, other than percentages and earnings per share, in
thousands of U.S. dollars)

|                                                  |   | For the nine months ended |  |                    |   |  | For the nine months ended |  
|------------------------------------------------- | - | ------------------------- |  | ------------------ | - |  | ------------------------- | -
|(Unaudited)                                       |   | December 31, 2008         |  |                    |   |  | December 31, 2007         |  
|                                                  |   | (As reported)             |  |                    |   |  | (Pro forma)               |  
|                                                  |   | In Thousands              |  | As a Percentage of |   |  |                           |  
|                                                  |   |                           |  | Net Sales          |   |  |                           |  
|Net Sales                                         | $ | 36,212                    |  | 100.0              | % |  |                           | $
|Costs of Sales                                    |   | 19,021                    |  | 52.5               | % |  |                           |  
|Gross profit                                      |   | 17,191                    |  | 47.5               | % |  |                           |  
|Selling, general and administrative expenses      |   | 3,541                     |  | 9.8                | % |  |                           |  
|Operating income                                  |   | 13,650                    |  | 37.7               | % |  |                           |  
|Other income                                      |   | 26                        |  | 0.1                | % |  |                           |  
|Interest expenses                                 |   | 318                       |  | 0.9                | % |  |                           |  
|Income before minority interests and income taxes |   | 13,358                    |  | 36.9               | % |  |                           |  
|Income taxes                                      |   | 3,244                     |  | 9.0                | % |  |                           |  
|Minority interest                                 |   | 209                       |  | 0.6                | % |  |                           |  
|Net income                                        |   | 9,905                     |  | 27.3               | % |  |                           |  
|Earnings per share (basic                         |   | 0.51                      |  |                    |   |  |                           |  
|and diluted)                                      |   |                           |  |                    |   |  |                           |  

The results of operations reported in the table above is based
on the exchange rate of RMB7.57 to $1 for the nine months ended December 31,
2007 and the rate of RMB6.89 to $1 for the three months ended December 31, 2008.

Net Sales.Our net sales increased $9.0 million,
or 33.3% to $36.2 million for the nine months ended December 31, 2008 from $27.2
million for the nine months ended December 31, 2007. The increase was primarily
due to the increase of sales of our fruit processed products and expansion of
our customer base in the first six months of fiscal 2009 and our increased brand
recognition. We were able to satisfy the growth in demand by commencing
operation of our Mu Dan Jiang factory production line and realized an increase
in revenue from net sales due partly to that expansion of production capacity.

Cost of Sales. Our cost of sales increased $4.6
million, or 32.0%, to $19.0 million for the nine months ended December 31, 2008
from $14.4 million for the nine months ended December 31, 2007. This increase
was primarily due to the increase of sales volume. As a percentage of net sales,
the cost of sales decreased to 52.5% for the nine months ended December 31, 2008
from 53.1% for the nine months ended December 31, 2007.

Gross Profit and Gross Margin. Our gross profit
increased $4.5 million to $17.2 million for the nine months ended December 31,
2008 from $12.7 million for the nine months ended December 31, 2007. Gross
profit as a percentage of net sales was 47.5% and 46.9% for the nine months
ended December 31, 2008 and 2007, respectively. The increase in the gross margin was
primarily driven by the increased sales of higher margin nectar, glazed fruits
and fruit concentrate products for the nine months ended December 31, 2008 as
compare to the sales for the nine months ended December 31, 2007.

32

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Selling and General and Administrative Expenses.
Our selling and general and administrative expenses increased $1.2 million, or
49.0%, to $3.5 million for the nine months ended December 31, 2008 from $2.4
million for the nine months ended December 31, 2007.

Our selling expenses increased $0.5 million or 33.7%, to $2.0
million for the nine months ended December 31, 2008 from $1.5 million for the
nine months ended December 31, 2007. We believe the increase of our selling
expenses is generally in line with the increase of our net sales.

Our general and administrative expenses increased $652,363, or
76.4%, to $1.5 million for the nine months ended December 31, 2008 from $853,440
for the nine months ended December 31, 2007. As a percentage of net sales,
general and administrative expenses for the nine months ended December 31, 2008
increased by 1.1% to 4.2%, as compared to 3.1% for the nine months ended
December 31, 2007. This percentage increase was primarily attributable to the
increased cost of insurance benefits for certain of our employees as mandated by
the PRC government in 2008 and the additional professional and staff costs
incurred after the reverse acquisition transaction on August 14, 2008.

Interest Expenses. Our interest expenses
increased $36,953 to $318,050 for the nine months ended December 31, 2008 from
$281,097 for the nine months ended December 31, 2007. The increase in interest
expenses was primarily attributable to the increase in the outstanding balances
of our bank loans.

Income before Minority Interest and Income Taxes.
Income before minority interests and income taxes increased $3.3 million, or
32.2%, to $13.4 million for the nine months ended December 31, 2008 from $10.1
million for the nine months ended December 31, 2007. Income before minority
interests and income taxes as a percentage of net sales decreased slightly from
37.2% for the nine months ended December 31, 2007 to 36.9% for the nine months
ended December 31, 2008. Such percentage decrease was primarily due to the
increase in additional professional and staff costs incurred after the reverse
acquisition transaction on August 14, 2008.

Minority Interests. Our financial
statements reflect an adjustment to our consolidated group net income equal to
$209,308 for the nine months ended December 31, 2008, reflecting the fact that
we had only 75% ownership in Longheda from April 1, 2008 to May 20, 2008.

Net Income. Although we incurred a minority
interest of $209,308 before the acquisition of the remain 25% ownership in
Longheda on May 21, 2008, our net income increased $1.2 million or 14.4%, to
$9.9 million for the nine months ended December 31, 2008 from $8.7 million for
the nine months ended December 31, 2007. The main reasons for the growth of our
net income were due to increased market demand for our products and expansion of
our customer base in the first six months of fiscal year 2009, and increased
brand recognition.

Liquidity and Capital Resources

As of December 31, 2008, we had cash and cash equivalents of
$8.4 million. The following table sets forth a summary of our cash flows for the
periods indicated:

33

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|Statement of Cash Flow (All amounts
      in thousands of U.S. dollars)
|-----------------------------------------------------------------------
|(Unaudited)                                                            
|                                                                       
|                                                                       
|Net cash provided by operating activities                              
|Net cash (used in)/provided by investing activities                    
|Net cash provided by financing activities                              
|Effect of exchange rate on cash and cash equivalents                   
|Cash and cash equivalents at beginning of
      the period             
|Cash and cash equivalents at end of period                             

Cash Flows from Operating Activities.

Net cash provided by operating activities was $4.9 million for
nine months ended December 31, 2008, an increase of $3.3 million from $1.6
million provided by operating activities for nine months ended December 31,
2007. The increase in net cash provided by operating activities was primarily
attributable to a $9.9 million increase in net income and a $7.4 million advance
from our major shareholder Yiu Fai Kung made for the purpose of acquiring
Longheda. Our inventory for finished products increased $10.5 million in the
first nine months of fiscal year 2009 because our new fruit concentrate
production line with a processing capacity of 6,000 tons became operational in
August 2008 and we stocked up more finished products for sale for the coming
months until the next harvest season.

Cash Flows from Investing Activities.

Our cash used in investing activities for nine months ended
December 31, 2008 primarily related to our acquisition of the 25% of minority
interest in Longheda for $1.5 million and the purchase of property, plant and
equipment for the new concentrated fruit juice production line in Mu Dan Jiang
for $13 million. We had no investing activities for the nine months ended
December 31, 2007.

Cash Flows from Financing Activities.

Net cash provided by financing activities was $11.2 million in
the nine months ended December 31, 2008. The net cash provided by financing
activities for the nine months ended December 31, 2008 was mainly attributable
to proceeds from bank loans of $4.4 million and $6.8 million from the private
placement of our common stock completed on October 10, 2008.

As of December 31, 2008, the amount, maturity date and term of
each of our bank loans are as follows:

|(All amounts in millions of U.S. dollars)
|-----------------------------------------
|Banks                                    
|                                         
|Daqing City Commercial Bank              
|Daqing City Commercial Bank              
|Total                                    

34

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As of December 31, 2008, certain of our plant and machinery
with an aggregate net book value of approximately $5,817,601 were pledged to
secure the bank loans.

On October 10, 2008, we completed a private placement of our
common shares to certain investors for approximately $8.58 million in gross
proceeds, resulting in approximately $6.84 million in net proceeds after payment
of approximately $1.74 million in offering expenses.

We did not repay any bank loan in the three months ended
December 31, 2008. Subsequently, we repaid the $2.9 million loan due on February 10, 2009 and
have approximately $4.4 million in outstanding bank loans that will mature in
the next 12 months. We believe that we maintain good relationships with the
banks we deal with. We believe that our cash on hand, cash flow from operations,
together with the net proceeds from the private offering referenced above and
anticipated additional cash resources will meet our expected capital expenditure
and working capital for the next 12 months. In addition, we may, in the future,
require additional cash resources due to changed business conditions,
implementation of our strategy to expand our production capacity or other
investments or acquisitions we may decide to pursue. If our own financial
resources are insufficient to satisfy our capital requirements, we may seek to
sell additional equity or debt securities or obtain additional credit
facilities. The sale of additional equity securities could result in dilution to
our stockholders. The incurrence of indebtedness would result in increased debt
service obligations and could require us to agree to operating and financial
covenants that would restrict our operations. Financing may not be available in
amounts or on terms acceptable to us, if at all. Any failure by us to raise
additional funds on terms favorable to us, or at all, could limit our ability to
expand our business operations and could harm our overall business prospects.

Critical Accounting Policies

Critical accounting policies are those we believe are most
important to portraying our financial conditions and results of operations and
also require the greatest amount of subjective or complex judgments by
management. Judgments and uncertainties regarding the application of these
policies may result in materially different amounts being reported under various
conditions or using different assumptions. There have been no material changes
to the critical accounting policies previously disclosed in our Quarterly Report
on Form 10-Q for the fiscal quarter ended September 30, 2008.

Recently issued accounting pronouncements:

In September 2006, the Financial Accounting Standards Board
(FASB) issued SFAS 157, Fair Value Measurements (SFAS 157), which
provides guidance about how to measure assets and liabilities that use fair
value. SFAS 157 apply whenever another US GAAP standard requires (or permits)
assets or liabilities to be measured at fair value but does not expand the use
of fair value to any new circumstances. This standard also requires additional
disclosures in both annual and quarterly reports. SFAS 157 is effective for
financial statements issued for fiscal years beginning after November 15, 2007.
In February 2008, the FASB issued FASB Staff Position (FSP) 157-1,
Application of FASB Statement No. 157 to FASB Statement No. 13 and Other
Accounting Pronouncements That Address Fair Value Measurements for Purposes of
Lease Classification or Measurement under Statement 13 (FSP 157-1), which
states that SFAS 157 does not address fair value measurements for purposes of
lease classification or measurement. In February 2008, the FASB issued FSP
157-2, Effective Date of FASB Statement No. 157 (FSP 157-2), which
delays the effective date for non-financial assets and non-financial liabilities
to fiscal years beginning after November 15, 2008, except for items that are
measured at fair value in the financial statements on a recurring basis (at
least annually). The Company adopted the provisions of SFAS 157 for its
financial assets and liabilities and those items for which it has measured on a
recurring basis effective January 1, 2008, and the adoption did not have a
material impact on its financial position and results of operations. As provided
by FSP 157-2, the Company has elected to defer the adoption of SFAS 157 for
certain of its non-financial assets and liabilities and is currently evaluating
the impact of adopting SFAS 157 on its non-financial assets and liabilities.

In February 2007, the FASB issued SFAS 159, The Fair Value
Option for Financial Assets and Financial Liabilities - Including an amendment of FASB Statement No.
115 (SFAS 159), which is effective for the Company beginning January 1,
2008. This standard permits entities to choose to measure many financial
instruments and certain other items at fair value and consequently report
unrealized gains and losses on such items in earnings. The Company has elected
not to adopt the fair value provisions of SFAS 159 and the adoption of SFAS 159
did not have a significant impact of its financial position, cash flows and
results of operations.

35

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In December 2007, the FASB issued SFAS 141 (revised 2007),
Business Combinations (SFAS 141(R)). SFAS 141(R) establishes principles
and requirements for how an acquirer recognizes and measures in its financial
statements the identifiable assets acquired, the liabilities assumed, any
noncontrolling interest in the acquiree and the goodwill acquired. SFAS 141(R)
also establishes disclosure requirements to enable the evaluation of the nature
and financial effects of the business combination. SFAS 141(R) will be effective
for financial statements issued for fiscal years beginning after December 15,
2008, and will be adopted by the Company beginning in the first quarter of 2009.
The Company does not expect there to be any significant impact of adopting SFAS
141(R) on its financial position, cash flows and results of operations.

In December 2007, the FASB issued SFAS 160, Noncontrolling
Interests in Consolidated Financial Statements - an amendment of Accounting
Research Bulletin No.51 (SFAS 160). SFAS 160 establishes accounting and
reporting standards for ownership interests in subsidiaries held by parties
other than the parent, the amount of consolidated net income attributable to the
parent and to the noncontrolling interest, changes in a parents ownership
interest, and the valuation of retained noncontrolling equity investments when a
subsidiary is deconsolidated. SFAS 160 also establishes disclosure requirements
that clearly identify and distinguish between the interests of the parent and
the interests of the noncontrolling owners. SFAS 160 will be effective for
financial statements issued for fiscal years beginning after December 15, 2008,
and will be adopted by the Company beginning in the first quarter of 2009. The
Company does not expect there to be any significant impact of adopting SFAS 160
on its financial position, cash flows and results of operations.

In March 2008, the FASB issued SFAS No. 161, Disclosures
about Derivative Instruments and Hedging Activities (SFAS 161). SFAS 161
is intended to improve financial reporting about derivative instruments and
hedging activities by requiring enhanced disclosures to enable investors to
better understand their effects on an entitys financial position, financial
performance, and cash flows. SFAS 161 achieves these improvements by requiring
disclosure of the fair values of derivative instruments and their gains and
losses in a tabular format. It also provides more information about an entitys
liquidity by requiring disclosure of derivative features that are credit
risk-related. Finally, it requires cross-referencing within footnotes to enable
financial statement users to locate important information about derivative
instruments. SFAS 161 will be effective for financial statements issued for
fiscal years and interim periods beginning after November 15, 2008, will be
adopted by the Company beginning in the first quarter of 2009. The Company does
not expect there to be any significant impact of adopting SFAS 161 on its
financial position, cash flows and results of operations.

In May 2008, FASB issued Financial Accounting Standards No.
162, The Hierarchy of Generally Accepted Accounting Principles. This
Statement identifies the sources of accounting principles and the framework for
selecting the principles to be used in the preparation of financial statements
of nongovernmental entities that are presented in conformity with generally
accepted accounting principles (GAAP) in the United States (the GAAP hierarchy).
This Statement is effective 60 days following the SEC's approval of the Public
Company Accounting Oversight Board amendments to AU Section 411, The Meaning of
Present Fairly in Conformity With Generally Accepted Accounting Principles. The
Company does not expect there to be any significant impact of adopting SFAS 162
on its financial position, cash flows and results of operations.

In May 2008, FASB issued Financial Accounting Standards No.
163, Accounting for Financial Guarantee Insurance Contracts - an
interpretation of FASB Statement No. 60. Diversity exists in practice in
accounting for financial guarantee insurance contracts by insurance enterprises
under FASB Statement No. 60, Accounting and Reporting by Insurance Enterprises.
That diversity results in inconsistencies in the recognition and measurement of
claim liabilities because of differing views about when a loss has been incurred
under FASB Statement No. 5, Accounting for Contingencies.

36

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This Statement requires that an insurance enterprise recognize a
claim liability prior to an event of default (insured event) when there is
evidence that credit deterioration has occurred in an insured financial
obligation. This Statement also clarifies how Statement 60 applies to financial
guarantee insurance contracts, including the recognition and measurement to be
used to account for premium revenue and claim liabilities. Those clarifications
will increase comparability in financial reporting of financial guarantee
insurance contracts by insurance enterprises. This Statement requires expanded
disclosures about financial guarantee insurance contracts. The accounting and
disclosure requirements of the Statement will improve the quality of information
provided to users of financial statements. This Statement is effective for
financial statements issued for fiscal years beginning after December 15, 2008,
and all interim periods within those fiscal years. The Company does not expect
there to be any significant impact of adopting SFAS 163 on its financial
position, cash flows and results of operations.

Other recent accounting pronouncements issued by the FASB
(including its Emerging Issues Task Force (EITF)), the American Institute of
Certified Public Accountants (AICPA), and the SEC did not or are not believed
by management to have a material impact on the Company's present or future
financial statements.

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements.

Seasonality

As is typical in the fruit processing industry, we experience
seasonality in our business. Except for the beverage production line which
operates on a year round basis, our fruit processing lines mainly operate from
mid-July to mid-November of each year because our the source fruits used in our
operations are typically harvested during that period and must be immediately
processed. In fiscal year ended March 31, 2008, net sales during the second and
third fiscal quarters accounted for approximately 69.3% of our total sales
revenue. As a result of seasonality, our personnel, working capital
requirements, cash flow and inventories vary substantially throughout the year.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET
RISK

Not applicable.

ITEMS 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures. We
maintain a system of disclosure controls and procedures. The term disclosure
controls and procedures, as defined by regulations of the SEC, means controls
and other procedures that are designed to ensure that information required to be
disclosed in the reports that we file or submit to the SEC under the Exchange
Act, is recorded, processed, summarized and reported, within the time periods
specified in the SECs rules and forms. Disclosure controls and procedures
include, without limitation, controls and procedures designed to ensure that
information required to be disclosed by us in the reports that we file or submit
to the SEC under the Exchange Act is accumulated and communicated to the our
management, including our principal executive officer and our principal
financial officer, or persons performing similar functions, as appropriate to
allow timely decisions to be made regarding required disclosure. Each of Jinglin
Shi, Chief Executive Officer, and Colman Cheng, our Chief Financial Officer,
have evaluated the design and operating effectiveness of our disclosure controls
and procedures as of December 31, 2008. Based upon their evaluation, these
executive officers have concluded that our disclosure controls and procedures
are effective as of December 31, 2008.

Changes in Internal Control over Financial Reporting.
There has been no change to our internal control over financial reporting during
the quarter ended December 31, 2008 that has materially affected, or is
reasonably likely to materially affect, our internal control over financial
reporting. Management decided to exclude recently acquired Fezdale and its
subsidiaries from its evaluation of controls and procedures above because it was
not possible to conduct an assessment of the acquired companies controls and
procedures in the period between the consummation date and the date of
managements assessment.

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PART II

OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

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

ITEM 1A. RISK FACTORS

Not Applicable.

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

Not Applicable

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

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

None.

ITEM 5. OTHER INFORMATION

None.

ITEM 6. EXHIBITS

|Exhibit Number | Description                                                                                                                                                                 
|-------------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|               |                                                                                                                                                                             
|31.1           | Certification of Principal
      Executive Officer filed pursuant to Section 302 of the Sarbanes-Oxley Act
      of 2002.                                                   
|31.2           | Certification of Principal Financial Officer
      filed pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.                                                         
|32.1           | Certification of Principal
      Executive Officer furnished pursuant to 18 U.S.C. Section 1350, as adopted
      pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|32.2           | Certification of Principal Financial Officer
      furnished pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
      Section 906 of the Sarbanes-Oxley Act of 2002.

38

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SIGNATURES

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

DATED: February 17, 2009

CHINA NUTRIFRUIT GROUP
LIMITED

By: /s/ Colman Cheng Colman Cheng
Chief Financial Officer (On behalf of the Registrant and as Principal
Financial Officer)



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|EXHIBIT INDEX 
|--------------
|Exhibit Number
|              
|31.1          
|31.2          
|32.1          
|32.2          

40

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