UNITED STATES 
SECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549

FORM 10-Q

(Mark One)

xQUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended: September 30, 2009

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

Commission File Number:001-34440

CHINA NUTRIFRUIT GROUP LIMITED(Exact name of small business issuer as specified in its charter)

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

5th Floor, Chuangye Building, Chuangye Plaza 
Industrial Zone 3, Daqing Hi-Tech Industrial Development Zone 
Daqing, Heilongjiang China 163316(Address of principal executive offices, Zip Code)

(86) 459-8972870(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.

YesxNo
o

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

Yes o            No
o

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 o                                             | Accelerated Filer o        
|--------------------------------------------------------------------- | ---------------------------
|                                                                      |                            
|Non-Accelerated Filer o
(Do not check if a smaller reporting company) | Smaller reporting company x

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

YesoNo
x

The number of shares outstanding of each of the issuers classes of common equity, as of
November 13, 2009 is as follows:

|Class of Securities            | Shares Outstanding
|------------------------------ | ------------------
|Common Stock, $0.001 par value | 36,125,754        
|                               |                   

---

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

i

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PART I.

FINANCIAL INFORMATION



ITEM 1. FINANCIAL STATEMENTS.

CHINA NUTRIFRUIT GROUP LIMITED AND SUBSIDIARIES
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS OF SEPTEMBER 30, 2009 AND
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2009



iii

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|CHINA NUTRIFRUIT GROUP LIMITED AND
      SUBSIDIARIES                                                                                                                     |   |               |  |   |            | 
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | - | ------------- |  | - | ---------- | 
|                                                                                                                                                                          |   |               |  |   |            | 
|CONDENSED CONSOLIDATED BALANCE SHEETS
      (UNAUDITED)                                                                                                                   |   |               |  |  
|(Stated in US Dollars)                                                                                                                                                    |   |               |  |   |            | 
|                                                                                                                                                                          |   |               |  |   |            | 
|                                                                                                                                                                          |   |               |  |   |            | 
|                                                                                                                                                                          |   | September 30, |  |   | March 31,  | 
|                                                                                                                                                                          |   | 2009          |  |   | 2009       | 
|ASSETS                                                                                                                                                                    |   |               |  |   |            | 
|Current assets:                                                                                                                                                           |   |               |  |   |            | 
|Cash and cash equivalents                                                                                                                                                 | $ | 4,590,725     |  | $ | 4,768,542  | 
|Proceeds from private placement held in escrow
      account                                                                                                              |   | 10,874,169    |  |   | -          | 
|Trade receivables, net of
      allowance                                                                                                                                 |   | 12,827,089    |  |   | 11,423,996 | 
|Inventories, net                                                                                                                                                          |   | 12,149,512    |  |   | 3,692,892  | 
|Other current assets                                                                                                                                                      |   | 245,046       |  |   | 481,679    | 
|Total current assets                                                                                                                                                      |   | 40,686,541    |  |   | 20,367,109 | 
|Property and equipment, net                                                                                                                                               |   | 15,894,325    |  |   | 16,614,930 | 
|Deferred tax assets                                                                                                                                                       |   | 1,297,189     |  |   | 1,406,814  | 
|Land use rights, net                                                                                                                                                      |   | 186,882       |  |   | 189,303    | 
|TOTAL ASSETS                                                                                                                                                              | $ | 58,064,937    |  | $ | 38,578,156 | 
|                                                                                                                                                                          |   |               |  |   |            | 
|LIABILITIES AND SHAREHOLDERS EQUITY                                                                                                                                      |   |               |  |   |            | 
|Current liabilities:                                                                                                                                                      |   |               |  |   |            | 
|Other payables and accrued expenses                                                                                                                                       | $ | 1,751,250     |  | $ | 2,675,983  | 
|Trade payables                                                                                                                                                            |   | 1,165,599     |  |   | 260,322    | 
|Income taxes payable                                                                                                                                                      |   | 2,135,700     |  |   | 1,416,835  | 
|Total current liabilities                                                                                                                                                 |   | 5,052,549     |  |   | 4,353,140  | 
|Non-current liabilities:                                                                                                                                                  |   |               |  |   |            | 
|Amounts due to shareholders                                                                                                                                               |   | -             |  |   | 7,407,748  | 
|TOTAL LIABILITIES                                                                                                                                                         |   | 5,052,549     |  |   | 11,760,888 | 
|                                                                                                                                                                          |   |               |  |   |            | 
|Noncontrolling interests                                                                                                                                                  |   | -             |  |   | -          | 
|                                                                                                                                                                          |   |               |  |   |            | 
|Commitments and Contingencies                                                                                                                                             |   |               |  |   |            | 
|Shareholders' equity                                                                                                                                                      |   |               |  |   |            | 
|Preferred stock                                                                                                                                                           |   |               |  |   |            | 
|Authorized: 5,000,000 shares, par value
      $0.001 Issued and outstanding: 359,502 shares as at September 30, 2009;
      (nil as at March 31, 2009)                    |   | 360           |  |   | -          | 
|Common stock                                                                                                                                                              |   |               |  |   |            | 
|Authorized: 120,000,000 shares, par value
      $0.001 Issued and outstanding: 36,125,754 shares as at September 30, 2009;
      (36,125,754 shares as at March 31, 2009) |   | 36,126        |  |   | 36,126     | 
|Additional paid-in-capital                                                                                                                                                |   | 35,035,775    |  |   | 16,746,971 | 
|Statutory reserves - restricted                                                                                                                                           |   | 2,873,880     |  |   | 2,873,880  | 
|Accumulated other comprehensive income                                                                                                                                    |   | 445,483       |  |   | 425,675    | 
|Retained earnings                                                                                                                                                         |   | 14,620,764    |  |   | 6,734,616  | 
|TOTAL SHAREHOLDERS EQUITY                                                                                                                                                |   | 53,012,388    |  |   | 26,817,268 | 
|TOTAL LIABILITIES AND SHAREHOLDERS
      EQUITY                                                                                                                          | $ | 58,064,937    |  | $ | 38,578,156 | 

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

1

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|CHINA NUTRIFRUIT GROUP LIMITED
      AND SUBSIDIARIES           |   |                    |   |   |                        |   |   |             |   |  
|--------------------------------------------------------------- | - | ------------------ | - | - | ---------------------- | - | - | ----------- | - | -
|                                                                |   |                    |   |   |                        |   |  
|CONDENSED CONSOLIDATED STATEMENTS
      OF INCOME (UNAUDITED)   |   |                    |   |   |                        |   |  
|(Stated in US Dollars)                                          |   |                    |   |   |                        |   |   |             |   |  
|                                                                |   |                    |   |   |                        |   |   |             |   |  
|                                                                |   |                    |   |   |                        |  
|                                                                |   | Three months ended |   |   | Six
      months ended |  
|                                                                |   | September 30,      |   |   | September 30,          |  
|                                                                |   | 2009               |   |   | 2008                   |   |   | 2009        |   |  
|Net sales                                                       | $ | 19,324,868         |   | $ | 16,495,353             |   | $ | 28,683,933  |   | $
|Cost of sales                                                   |   | (9,641,849         | ) |   | (8,697,099             | ) |   | (15,053,882 | ) |  
|Gross profit                                                    |   | 9,683,019          |   |   | 7,798,254              |   |   | 13,630,051  |   |  
|Selling expenses                                                |   | (677,760           | ) |   | (656,299               | ) |   | (1,498,140  | ) |  
|General and administrative
      expenses                       |   | (501,365           | ) |   | (304,702               | ) |   | (1,515,070  | ) |  
|Operating earnings                                              |   | 8,503,894          |   |   | 6,837,253              |   |   | 10,616,841  |   |  
|Other income (expenses)                                         |   |                    |   |   |                        |   |   |             |   |  
|Interest expense                                                |   | -                  |   |   | (128,089               | ) |   | -           |   |  
|Other income                                                    |   | 31,623             |   |   | 6,009                  |   |   | 39,367      |   |  
|Total other income (expenses)                                   |   | 31,623             |   |   | (122,080               | ) |   | 39,367      |   |  
|Earnings before
      noncontrolling interests and income taxes |   | 8,535,517          |   |   | 6,715,173              |   |   | 10,656,208  |   |  
|Provision for income taxes                                      |   | (2,184,779         | ) |   | (1,703,066             | ) |   | (2,770,060  | ) |  
|Earnings before
      noncontrolling interests                  |   | 6,350,738          |   |   | 5,012,107              |   |   | 7,886,148   |   |  
|Noncontrolling interests                                        |   | -                  |   |   | -                      |   |   | -           |   |  
|**Net
      earnings**                                          |   | 6,350,738          |   |   | 5,012,107              |   |   | 7,886,148   |   |  
|Other comprehensive income                                      |   |                    |   |   |                        |   |   |             |   |  
|Foreign currency translation                                    |   | 17,500             |   |   | (681,907               | ) |   | 19,808      |   |  
|Comprehensive income                                            | $ | 6,368,238          |   | $ | 4,330,200              |   | $ | 7,905,956   |   | $
|                                                                |   |                    |   |   |                        |   |   |             |   |  
|Earnings per share                                              |   |                    |   |   |                        |   |   |             |   |  
|Basic                                                           | $ | 0.1758             |   | $ | 0.2599                 |   | $ | 0.2183      |   | $
|                                                                |   |                    |   |   |                        |   |   |             |   |  
|Diluted                                                         | $ | 0.1753             |   | $ | 0.2599                 |   | $ | 0.2179      |   | $
|                                                                |   |                    |   |   |                        |   |   |             |   |  
|Weighted average number of common stock
      outstanding       |   |                    |   |   |                        |   |   |             |   |  
|Basic                                                           |   | 36,125,754         |   |   | 19,287,708             |   |   | 36,125,754  |   |  
|                                                                |   |                    |   |   |                        |   |   |             |   |  
|Diluted                                                         |   | 36,226,175         |   |   | 19,287,708             |   |   | 36,187,189  |   |  

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

2

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CHINA NUTRIFRUIT GROUP LIMITED AND
SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)(Stated in US Dollars)

|                                                                                                                |   |                  |  
|--------------------------------------------------------------------------------------------------------------- | - | ---------------- | -
|                                                                                                                |   | Six months ended |  
|                                                                                                                |   | September 30,    |  
|                                                                                                                |   | 2009             |  
|Operating activities:                                                                                           |   |                  |  
|Net earnings                                                                                                    | $ | 7,886,148        |  
|Adjustments to reconcile net earnings to
      net cash used in operating activities                            |   |                  |  
|Noncontrolling interests                                                                                        |   | -                |  
|Depreciation and amortization                                                                                   |   | 748,912          |  
|Benefit for deferred
      income taxes                                                                         |   | 109,625          |  
|Loss on
      disposal of property and equipment                                                                |   | -                |  
|Changes in operating assets and liabilities:                                                                    |   |                  |  
|Trade
      receivables                                                                                         |   | (1,389,136       | )
|Inventories                                                                                                     |   | (8,448,704       | )
|Prepayments                                                                                                     |   | -                |  
|Other current assets                                                                                            |   | 236,678          |  
|Trade
      payables                                                                                            |   | 904,587          |  
|Income taxes payable                                                                                            |   | 716,902          |  
|Advances
      from customers                                                                                   |   | -                |  
|Consideration payables                                                                                          |   | -                |  
|Amount
      due to a director                                                                                  |   | -                |  
|Amount due to an
      affiliate                                                                                |   | -                |  
|Other
      payables and accrued expenses                                                                       |   | (927,211         | )
|Net cash used in operating activities                                                                           |   | (162,199         | )
|                                                                                                                |   |                  |  
|Investing activities:                                                                                           |   |                  |  
|Cash outflow from acquisition of
      subsidiaries                                                             |   | -                |  
|Purchases of property and equipment                                                                             |   | -                |  
|Proceeds from disposal of property and
      equipment                                                          |   | -                |  
|Net cash used in investing activities                                                                           |   | -                |  
|                                                                                                                |   |                  |  
|Financing activities:                                                                                           |   |                  |  
|Proceeds from borrowings                                                                                        |   | -                |  
|Repayment of borrowings                                                                                         |   | -                |  
|Amounts due to shareholders                                                                                     |   | -                |  
|Proceeds from issue of common stock                                                                             |   | -                |  
|Proceeds from private placement                                                                                 |   | 11,860,000       |  
|Cost of raising capital                                                                                         |   | (985,831         | )
|Net cash provided by financing activities                                                                       |   | 10,874,169       |  
|                                                                                                                |   |                  |  
|Increase/(decrease) in cash and cash
      equivalents                                                          |   | 10,711,970       |  
|                                                                                                                |   |                  |  
|Effect of exchange rate on cash and cash
      equivalents                                                      |   | (15,618          | )
|                                                                                                                |   |                  |  
|Cash and cash equivalents at beginning of
      the period                                                      |   | 4,768,542        |  
|                                                                                                                |   |                  |  
|Cash and cash equivalents and proceeds from
      private placement held in escrow account at end of the period | $ | 15,464,894       |  
|Analysis of balances:                                                                                           |   |                  |  
|Proceeds from private placement held in escrow account                                                          | $ | 10,874,169       |  
|Cash and cash equivalents                                                                                       |   | 4,590,725        |  
|                                                                                                                | $ | 15,464,894       |  
|                                                                                                                |   |                  |  
|Supplemental disclosure of cash flows information:                                                              |   |                  |  
|Cash paid for:                                                                                                  |   |                  |  
|Interest                                                                                                        | $ | -                |  
|Income taxes                                                                                                    | $ | 1,943,534        |  
|                                                                                                                |   |                  |  
|Supplemental disclosure of non-cash
      information:                                                          |   |                  |  
|Issuance of
      warrants                                                                                      | $ | 327,000          |  

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

3

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CHINA NUTRIFRUIT GROUP LIMITED
AND SUBSIDIARIES 
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS EQUITY (UNAUDITED) 
(Stated in US Dollars)


|                                                   |  |                 |  |   |              |  |  |            |  |   |        |  |   |            |   |   |               |  |   |            |  |   |            | 
|-------------------------------------------------- |  | --------------- |  | - | ------------ |  |  | ---------- |  | - | ------ |  | - | ---------- | - | - | ------------- |  | - | ---------- |  | - | ---------- | 
|                                                   |  | Preferred stock |  |   | Common stock |  |  |            |  |   |        |  |   |            |   |   |               |  |   |            |  |   |            | 
|                                                   |  |                 |  |   |              |  |  |            |  |   |        |  |   |            |   |   | Accumulated   |  |   |            |  |   |            | 
|                                                   |  |                 |  |   |              |  |  |            |  |   |        |  |   | Additional |   |   | other         |  |   | Statutory  |  |   |            | 
|                                                   |  |                 |  |   |              |  |  |            |  |   |        |  |   | paid-in    |   |   | comprehensive |  |   | reserves  |  |   | Retained   | 
|                                                   |  | Shares          |  |   | Amount       |  |  | Shares     |  |   | Amount |  |   | capital    |   |   | income        |  |   | restricted |  |   | earnings   | 
|Balance at March 31, 2009                          |  | -               |  | $ | -            |  |  | 36,125,754 |  | $ | 36,126 |  | $ | 16,746,971 |   | $ | 425,675       |  | $ | 2,873,880  |  | $ | 6,734,616  | 
|Capital contribution                               |  | -               |  |   | -            |  |  | -          |  |   | -      |  |   | 7,414,995  |   |   | -             |  |   | -          |  |   | -          | 
|Preferred stocks issued in
      private placement |  | 359,052         |  |   | 360          |  |  | -          |  |   | -      |  |   | 10,670,036 |   |   | -             |  |   | -          |  |   | -          | 
|Warrants issued in private placement               |  | -               |  |   | -            |  |  | -          |  |   | -      |  |   | 1,189,604  |   |   | -             |  |   | -          |  |   | -          | 
|Cost of raising capital                            |  | -               |  |   | -            |  |  | -          |  |   | -      |  |   | (985,831   | ) |   | -             |  |   | -          |  |   | -          | 
|Comprehensive income                               |  |                 |  |   |              |  |  |            |  |   |        |  |   |            |   |   |               |  |   |            |  |   |            | 
|Net earnings                                       |  | -               |  |   | -            |  |  | -          |  |   | -      |  |   | -          |   |   | -             |  |   | -          |  |   | 7,886,148  | 
|Translation adjustments                            |  | -               |  |   | -            |  |  | -          |  |   | -      |  |   | -          |   |   | 19,808        |  |   | -          |  |   | -          | 
|Balance at September 30, 2009                      |  | 359,052         |  | $ | 360          |  |  | 36,125,754 |  | $ | 36,126 |  | $ | 35,035,775 |   | $ | 445,483       |  | $ | 2,873,880  |  | $ | 14,620,764 | 

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

4

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China Nutrifruit Group Limited and Subsidiaries 
Notes to Condensed Consolidated Financial Statements 
For the three and six months ended September 30, 2009 and 2008 
(Unaudited) 
(Stated in U.S. Dollars)

NOTE 1.

NATURE OF BUSINESS AND SUMMARY OF PRINCIPAL ACCOUNTING POLICIES

Nature of Business

China Nutrifruit Group Limited (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 shareholders 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
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------

The return to Mr. Kung of any of the make good shares placed in escrow by him is considered to be a separate compensatory arrangement because Mr. Kung is a director of the Companys subsidiary Fezdale. Accordingly, if any of the required
earnings targets are met and shares are returned to Mr. Kung, the Company will recognize a non-cash compensation cost at that time equal to the then fair value of the shares returned (up to a total of 5,599,598 shares). For the year ended March 31,
2009, the earnings target for 2009 of net income of $13,955,178 (before any charges related to the release of any shares from escrow) was met. Accordingly, the Company has recorded a non-cash charge to compensation cost of $9,519,316.6 in
the fourth quarter of 2009 related to the release from escrow to Mr. Kung of 2,799,799 shares.

5

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China Nutrifruit Group Limited and Subsidiaries 
Notes to Condensed Consolidated Financial Statements 
For the three and six months ended September 30, 2009 and 2008 
(Unaudited) 
(Stated in U.S. Dollars)

NOTE 1.

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

On September 30, 2009, the Company entered into a securities purchase agreement (the "Private Placement Transaction") with certain accredited investors and effected the initial closing of the purchase and sale of 359,052 units (the "Unit") at a
purchase price of $33.00 per Unit. Each Unit consists of one share of the Companys newly-designated Series A Convertible Preferred Stock, par value $0.001 per share ("Series A Preferred Stock") and one warrant (the "Warrant") to
purchase the Companys common stock, par value $.001 per share. The Series A Preferred Stock is convertible into ten shares of the Companys Common Stock (subject to customary adjustments) and the Company is obligated to register the
underlying shares of Common Stock within a pre-defined period. In connection with the initial closing of the offering, the Company raised approximately $11.86 million.

The Warrants are immediately exercisable at a per share price of $3.30 (subject to customary adjustments) and have a term of four years

Fezdale Investments Limited

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

In October 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.

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 4 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 43 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.

6

---

China Nutrifruit Group Limited and Subsidiaries 
Notes to Condensed Consolidated Financial Statements 
For the three and six months ended September 30, 2009 and 2008 
(Unaudited) 
(Stated in U.S. Dollars)

NOTE 1.

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

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, 2010. 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).

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 the 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.

7

---

China Nutrifruit Group Limited and Subsidiaries 
Notes to Condensed Consolidated Financial Statements 
For the three and six months ended September 30, 2009 and 2008 
(Unaudited) 
(Stated in U.S. Dollars)

NOTE 1.

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

Earnings per share

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

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.

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 September 30, 2009 was recorded. Trade accounts receivable is charged off against the allowance after management determines the potential for recovery is
remote.

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 receivable, trade payable, other current assets, other payables and accrued expenses, approximates fair value due to the relatively
short maturity.

Property and equipment, net

Property 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
 20 years; leasehold improvements  10 years; machinery - 10 years, furniture, fixture and office equipment  5 years; motor vehicles  5 years. Depreciation of property, plant and equipment were $746,246 and $403,280
for the six months period ended September 30, 2009 and 2008 respectively.

8

---

China Nutrifruit Group Limited and Subsidiaries 
Notes to Condensed Consolidated Financial Statements 
For the three and six months ended September 30, 2009 and 2008 
(Unaudited) 
(Stated in U.S. Dollars)

NOTE 1.

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

Negative goodwill

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 rate 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.

Comprehensive income

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

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.

Shipping and handling costs

Shipping and handling costs are included in selling expenses. The shipping and handling costs for the six months ended September 30, 2009 and 2008 were $1,217,408 and $697,159 respectively.

Impairment of long-lived assets

Long-lived assets, except 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 land in the PRC is 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.

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.

9

---

China Nutrifruit Group Limited and Subsidiaries Notes to
Condensed Consolidated Financial Statements For the three and six
months ended September 30, 2009 and 2008 (Unaudited) (Stated in U.S.
Dollars)

NOTE 1.

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

Advertising costs

Advertising costs are expensed as incurred. The total
advertising costs were $10,877 and $9,299 for the six months ended September 30,
2009 and 2008 respectively.

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.

|September 30, 2009                           |                     
|-------------------------------------------- | --------------------
|Balance sheet                                | RMB6.8376 to US$1.00
|Statement of income and comprehensive income | RMB6.8405 to US$1.00
|                                             |                     
|March 31, 2009                               |                     
|Balance sheet                                | RMB6.8456 to US$1.00
|Statement of income and comprehensive income | RMB6.8805 to US$1.00

As at September 30, 2009, RMB31,184,095 equivalents to
US$4,560,679 (March 31, 2009: RMB32,611,383 equivalents to US$4,763,846) is not
freely convertible into foreign currency and all foreign exchange transactions
must take place through authorized institutions. No representation is made that
the RMB amounts could have been, or could be, converted into US$ at the rates
used in translation.

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.

10

---

China Nutrifruit Group Limited and Subsidiaries 
Notes to Condensed Consolidated Financial Statements 
For the three and six months ended September 30, 2009 and 2008 
(Unaudited) 
(Stated in U.S. Dollars)

NOTE 1.

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

Statutory reserves (Continued)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.

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 Accounting Standards Codification 740 (ASC 740) (formerly Statement of Financial Accounting Standards (SFAS) No. 109, Accounting for Income Taxes and related
interpretations and guidance including FIN 48, Accounting for Uncertainty in Income Taxes  an interpretation of FASB Statement No. 109), 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.

11

---

China Nutrifruit Group Limited and Subsidiaries 
Notes to Condensed Consolidated Financial Statements 
For the three and six months ended September 30, 2009 and 2008 
(Unaudited) 
(Stated in U.S. Dollars)

NOTE 2.

RECENT ACCOUNTING PRONOUNCEMENTS

In June 2009, the Financial Accounting Standards Board (the FASB) issued the FASB Accounting Standards Codification (the Codification) as the source of authoritative accounting principles recognized by the FASB to be applied
by nongovernmental entities in the preparation of financial statements in conformity with Generally Accepted Accounting Principles (GAAP). Rules and interpretative releases of the Securities and Exchange Commission are also sources of
authoritative GAAP for SEC registrants. As a result of the Codification, all changes to GAAP originating from the FASB will now be issued in Accounting Standards Updates. These changes and the Codification do not change GAAP. The Company adopted the
changes resulting from the Codification, effective September 30, 2009. Other than the manner in which new accounting guidance is referenced, the adoption of these changes had no impact on the Companys results of operations, financial position
or notes to the condensed consolidated financial statements.

In August 2009, the FASB issued Accounting Standards Update 2009-05, Fair Value Measurements and Disclosures (Topic 820)Measuring Liabilities at Fair Value (ASU 2009-05). ASU 2009-05 provides clarification in measuring the fair
value of a liability. ASU 2009-05 is effective beginning October 1, 2009. The Company currently does not expect ASU 2009-05 to have a significant impact on its financial statements.

In September 2009, the FASB issued Accounting Standards Update (ASU) No. 2009-12, Investments in Certain Entities That Calculate Net Asset Value per Share (or its Equivalent) (ASU 2009-12) which amends FASB
ASC Topic Fair Value Measurements and Disclosures. ASU 2009-12 provides additional guidance on estimating the fair value of certain alternative investments, such as hedge funds, private equity investments and venture capital funds. The
updated guidance allows the fair value of such investments to be determined using the net asset value (NAV) as a practical expedient, unless it is probable the investment will be sold at a value other than the NAV. In addition, the
guidance requires disclosures by major category of investment regarding the attributes of the investments within the scope of the guidance, regardless of whether the fair value of the investment is measured using the NAV or other fair value
technique. ASU 2009-12 shall be effective for interim and annual periods ending after December 15, 2009. Early application is permitted in financial statements for earlier interim and annual periods that have not been issued. If an entity elects to
early adopt the measurement amendments in this update, the entity is permitted to defer the adoption of the disclosure provisions until periods ending after December 15, 2009. The Company is currently evaluating the potential impacts of adoption of
ASU 2009-12 on its financial statements.

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.

12

---

China Nutrifruit Group Limited and Subsidiaries 
Notes to Condensed Consolidated Financial Statements 
For the three and six months ended September 30, 2009 and 2008 
(Unaudited) 
(Stated in U.S. Dollars)

NOTE 3.

EARNINGS PER
SHARE

The computations of basic and diluted earnings per share for
the three months and six months ended September 30 are as follows:

|                                                                         |   | Three months ended |  |   | Six months ended | 
|------------------------------------------------------------------------ | - | ------------------ |  | - | ---------------- | 
|                                                                         |   | September 30,      |  |   | September 30,    | 
|                                                                         |   | 2009               |  |   | 2008             | 
|Numerator:                                                               |   |                    |  |   |                  | 
|Net earnings available to common
      shareholders                      | $ | 6,350,738          |  | $ | 5,012,107        | 
|                                                                         |   |                    |  |   |                  | 
|Denominator:                                                             |   |                    |  |   |                  | 
|Weighted average common
      stock outstanding                          |   | 36,125,754         |  |   | 19,287,708       | 
|Effect of dilutive warrant                                               |   | 61,345             |  |   | -                | 
|Effect of dilutive preferred
      stock                                 |   | 39,076             |  |   | -                | 
|Weighted average common stock  and
      dilutive potential common stock |   | 36,226,175         |  |   | 19,287,708       | 
|                                                                         |   |                    |  |   |                  | 
|Basic net earnings per share                                             | $ | 0.1758             |  | $ | 0.2599           | 
|                                                                         |   |                    |  |   |                  | 
|Diluted net earnings per share                                           | $ | 0.1753             |  | $ | 0.2599           | 

NOTE 4.

INVENTORY,
NET

At September 30, 2009 and March 31, 2009 inventory is comprised
of the following:

|               |   | September 30, |  |   | March 31, | 
|-------------- | - | ------------- |  | - | --------- | 
|               |   | 2009          |  |   | 2009      | 
|               |   |               |  |   |           | 
|Finished goods | $ | 11,727,610    |  | $ | 3,578,680 | 
|Raw material   |   | 421,902       |  |   | 114,212   | 
|               | $ | 12,149,512    |  | $ | 3,692,892 | 

13

---

China Nutrifruit Group Limited and Subsidiaries 
Notes to Condensed Consolidated Financial Statements 
For the three and six months ended September 30, 2009 and 2008 
(Unaudited) 
(Stated in U.S. Dollars)

NOTE 5.

PROPERTY AND
EQUIPMENT, NET

Property and equipment, net, at September 30, 2009 and March
31, 2009 are summarized as follows:

|                                         |   | September 30, |   |   | March 31,  |  
|---------------------------------------- | - | ------------- | - | - | ---------- | -
|                                         |   | 2009          |   |   | 2009       |  
|                                         |   |               |   |   |            |  
|Buildings                                | $ | 5,045,945     |   | $ | 5,038,316  |  
|Leasehold improvement                    |   | 1,339,250     |   |   | 1,337,685  |  
|Machinery                                |   | 12,384,525    |   |   | 12,361,774 |  
|Furniture, fixtures and office equipment |   | 13,734        |   |   | 13,690     |  
|Motor vehicles                           |   | 6,186         |   |   | 6,144      |  
|                                         |   |               |   |   |            |  
|Total                                    | $ | 18,789,640    |   | $ | 18,757,609 |  
|Less: accumulated depreciation           |   | (2,895,315    | ) |   | (2,142,679 | )
|                                         | $ | 15,894,325    |   | $ | 16,614,930 |  

NOTE 6.

PROCEEDS FROM
PRIVATE PLACEMENT HELD IN ESCROW ACCOUNT

The balance represents the net proceeds raised in the first
closing of the Private Placement Transaction (Note 1), which held in the escrow
account.

In addition, the Company agreed that 7% of the aggregate
investment amount, amounting to approximately $830,200, will be deposited in
escrow account and be distributed to the Investors for the payment of dividend
on September 1, 2010, subject to terms in the closing escrow agreement.

NOTE 7.

OTHER
PAYABLES AND ACCRUED EXPENSES

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

|                         |   | September 30, |  |   | March 31, | 
|------------------------ | - | ------------- |  | - | --------- | 
|                         |   | 2009          |  |   | 2009      | 
|Accruals                 | $ | 392,800       |  | $ | 586,782   | 
|Value added tax payables |   | 950,317       |  |   | 1,034,195 | 
|Other payables           |   | 408,133       |  |   | 1,055,006 | 
|                         | $ | 1,751,250     |  | $ | 2,675,983 | 

The other payables mainly comprised the amount payable to the
suppliers of property and equipment, amounting to $237,730 and $960,544 as of
September 30, 2009 and March 31, 2009 respectively.

14

---

China Nutrifruit Group Limited and Subsidiaries Notes to Condensed Consolidated Financial Statements For the three and six months ended September 30, 2009
      and 2008 (Unaudited) (Stated in U.S. Dollars)

NOTE 8.

PROVISION FOR INCOME TAXES

|                                            |   |                           |  |   |           |  
|------------------------------------------- | - | ------------------------- |  | - | --------- | -
|The provision for income tax is as follows: |   |                           |  |   |           |  
|                                            |   |                           |  |   |           |  
|                                            |   | For the six months period | 
|                                            |   | ended September 30,       | 
|                                            |   | 2009                      |  |   | 2008      |  
|Current:                                    |   |                           |  |   |           |  
|PRC                                         | $ | 2,660,436                 |  | $ | 2,184,955 |  
|Other jurisdictions                         |   | -                         |  |   | -         |  
|Deferred:                                   |   |                           |  |   |           |  
|PRC                                         |   | 109,624                   |  |   | (666,978  | )
|Other jurisdictions                         |   | -                         |  |   | -         |  
|                                            | $ | 2,770,060                 |  | $ | 1,517,977 |  

Deferred tax assets

The source of significant temporary difference that gives rise
to the deferred tax asset is as follows:

|                                                                                         |   | September 30, |  |   | March 31, | 
|---------------------------------------------------------------------------------------- | - | ------------- |  | - | --------- | 
|                                                                                         |   | 2009          |  |   | 2009      | 
|Deferred tax assets:                                                                     |   |               |  |   |           | 
|Difference between book and tax basis of land
      use right and property and equipment | $ | 1,297,189     |  | $ | 1,406,814 | 
|Less: valuation allowance                                                                |   | -             |  |   | -         | 
|Net deferred tax assets                                                                  | $ | 1,297,189     |  | $ | 1,406,814 | 

In assessing the realizability of deferred tax assets,
management considers whether it is more likely than not that all of the assets
will not be realized. The ultimate realization of deferred tax assets is
dependent upon the generation of future taxable income in each tax jurisdiction
during the periods in which temporary differences in those jurisdictions become
deductible. Management considers the projected future taxable income and tax
planning strategies in making this assessment.

With regard to the US deferred tax assets, the Company believes
that it is more likely than not that results of future operations will generate
sufficient taxable income to realize the deferred tax assets, and therefore no
valuation allowance has been provided for these assets.

15

---

China Nutrifruit Group Limited and Subsidiaries 
Notes to Condensed Consolidated Financial Statements 
For the three and six months ended September 30, 2009 and 2008 
(Unaudited) 
(Stated in U.S. Dollars)

NOTE 8.

PROVISION FOR INCOME TAXES
(CONT'D)

Income taxes

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.

In July 2006, the FASB clarifies the accounting and disclosure for uncertainty in tax positions, as defined in ASC 740. ASC 740 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 ASC 740 effective August 22, 2007. Based on its ASC 740 analysis, the Group concluded that the adoption of ASC 740 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 September 30, 2009, 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.

16

---

China Nutrifruit Group Limited and Subsidiaries 
Notes to Condensed Consolidated Financial Statements 
For the three and six months ended September 30, 2009 and 2008 
(Unaudited) 
(Stated in U.S. Dollars)

NOTE 8.

PROVISION FOR INCOME TAXES
(CONT'D)

The provision for income taxes appearing in the consolidated
statement of income represents the current tax expenses. A reconciliation of the
provision for income tax calculated using the statutory federal income tax rate
and state and local income tax rate to the Companys provision for income taxes
for the six months ended September 30 is as follows:

|                                                          |   | For the six months period
      ended |  
|--------------------------------------------------------- | - | ------------------------------------- | -
|                                                          |   | September 30,                         |  
|                                                          |   | 2009                                  |  
|Provision for income taxes at statutory
      rate of 35% | $ | 3,729,672                             |  
|Chinese tax rate difference                               |   | (1,040,160                            | )
|Non-deductible expenses and non-assessable
      profits  |   | (43,771                               | )
|Tax losses not yet recognized                             |   | 124,319                               |  
|Income taxes                                              | $ | 2,770,060                             |  

NOTE 9.

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 10.

SHAREHOLDERS
EQUITY

General

The Companys total authorized capital at September 30, 2009,
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
September 30, 2009, 36,125,754 shares of common stock and 359,502 shares of
non-redeemable preferred stock, respectively, were issued and outstanding.

The Companys total authorized capital at March 31, 2009, 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 March
31, 2009, 36,125,754 shares of common stock and nil shares of non-redeemable
preferred stock, respectively, were issued and outstanding.

17

---

China Nutrifruit Group Limited and Subsidiaries 
Notes to Condensed Consolidated Financial Statements 
For the three and six months ended September 30, 2009 and 2008 
(Unaudited) 
(Stated in U.S. Dollars)

SHAREHOLDERS EQUITY (CONTD)

Additional paid-in capital

On September 28, 2009, Mr. Kung has agreed to capitalize his loan, amounting to HK$40,109,986, equivalents to US$5,190,244, by issuing 7 fully paid shares of par value US$1.00 in Fezdale to the Company.

On September 28, 2009, Mr. Kwan Ho Ng has agreed to capitalize his loan, amounting to HK$17,189,994, equivalents to US$2,224,751, by issuing 3 fully paid shares of par value US$1.00 in Fezdale to the Company.

Non-redeemable preferred stock

In connection with the first closing of Private Placement Transaction which closed on September 30, 2009, certain investors received 359,052 shares of Series A Preferred Stock. A summary of terms of Series A Preferred Stock as follows:

Ranking

With respect to rights upon liquidation, winding-up or dissolution, the Series A Preferred Stock ranks senior to the Companys Common Stock and any other classes or series of stock of the Company not designated as ranking senior to or pari
passu with the Series A Preferred Stock.

Voting

The holders of the Series A Preferred Stock will vote on an "as converted" basis, together with the Common Stock, as a single class, in connection with any proposal submitted to the Companys stockholders, except as required by Nevada law.

Conversion

Shares of the Series A Preferred Stock are optionally convertible into fully paid and non-assessable shares of Common Stock at a conversion rate calculated by dividing (A) $33.00 per share (the "Liquidation Preference Amount") by (B) the
conversion price, which is initially $3.30 per share, subject to adjustment as provided in the Certificate of Designation. Initially, each share of Series A Preferred Stock is convertible into 10 shares of Common Stock.

18

---

China Nutrifruit Group Limited and Subsidiaries 
Notes to Condensed Consolidated Financial Statements 
For the three and six months ended September 30, 2009 and 2008 
(Unaudited) 
(Stated in U.S. Dollars)

SHAREHOLDERS EQUITY (CONTD)

Non-redeemable preferred stock (Continued)Mandatory Conversion

The Company has the right to convert outstanding Series A Preferred Stock into shares of Common Stock upon (i) the closing of a sale by the Company of shares of the Common Stock in a registered public offering in which the Company sells shares of
its stock in exchange for at least $10 million in gross proceeds and the holders of the Series A Convertible Preferred Stock are able to offer and sell at least 50% of the Common Stock that would be received upon such mandatory conversion
("Qualified Sale") or (ii) when the average of the daily closing price of the Common Stock for at least 30 consecutive trading days is not less than $4.25 and the daily trading volume during each of those 30 trading days exceeds 75,000 shares (a
"Market Forced Conversion," and collectively with a Qualified Sale, a "Forced Conversion"). The conversion rate to be applied in effecting a Forced Conversion is calculated by dividing the Liquidation Preference Amount per share by $2.75 (in the
event of a Qualified Sale) or $3.30 (in the event of a Market Forced Conversion), as the case may be, subject to adjustment as provided in the Certificate of Designation. In addition, in connection with a Qualified Sale Forced Conversion, the
Company will pay to the holder for each share of Series A Preferred Stock so converted a per share amount equal to seven percent (7%) of the original issue price plus all accrued and unpaid dividends

Dividends

Each share of Series A Preferred Stock will be entitled to receive cumulative dividends at the annual rate of 7% on the Liquidation Preference Amount thereof. Such dividends will be payable annually on September 1 beginning with the first such date
after September 30, 2009 and any optional conversion date in cash.

Liquidation

In the event of the liquidation, dissolution or winding up of the affairs of the Company, whether voluntary or involuntary, the holders of the Series A Preferred Stock then outstanding will be entitled to receive, out of the assets of the
Company available for distribution to its stockholders, an amount equal to $33.00 per share plus accrued but unpaid dividends, before any payment shall be made or any assets distributed to the holders of the Common Stock or any other class or
series of stock issued by the Company not designated as ranking senior to or pari passu with the Series A Preferred Stock in respect of the right to participate in distributions or payments upon a liquidation event.

Redemption

At any time on or after less than 10% of the originally issued shares of Series A Preferred Stock shall remain outstanding and subject to the satisfaction of certain conditions, the Company has the option to redeem all shares of Series A Preferred
Stock then outstanding at a price equal to one hundred and one percent (101%) of the Liquidation Preference Amount, plus any accrued and unpaid dividends. A holder of then outstanding Series A Preferred Stock may also, upon the satisfaction of the
foregoing conditions and at the option of such holder, request the Company to redeem all or any of its shares of Series A Preferred Stock at the same price.

19

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China Nutrifruit Group Limited and Subsidiaries 
Notes to Condensed Consolidated Financial Statements 
For the three and six months ended September 30, 2009 and 2008 
(Unaudited) 
(Stated in U.S. Dollars)

NOTE 10.

SHAREHOLDERS
EQUITY (CONTD)

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.

The Company valued the warrants by Trinomial option pricing
model with the amount of $331,357 which recorded as cost of raising capital
against additional paid-in capital. The Company estimated the fair value of each
warrant award on the date of grant using the Trinomial option pricing model and
the assumption noted in the following table. Expected volatility is based on the
historical and implied volatility of a peer group of publicly traded entities.
The expected term of options gave consideration to historical exercises,
post-vesting cancellations and the options contractual term. The risk-free rate
for the expected term of the option is based on the U.S. Treasury Constant
Maturity at the time of grant. The assumptions used to value options granted
were as follows:

|Risk free interest rate | 3.479 %
|----------------------- | -------
|Expected volatility     | 59.92 %
|Expected dividend rate  | - %    
|Expected life (years)   | 3      

In connection with the first closing of Private Placement
Transaction which closed on September 30, 2009, certain investors received
359,502 warrants to purchase 898,777 shares of the Companys common stock. The
warrants have a term of 4 years and are immediately exercisable at $3.30 per
share, subject to customary adjustments.

The Company valued the warrants by Trinomial Option Pricing
Model with the amount of $1,361,000 which recorded as additional paid-in
capital. The Company estimated the fair value of each warrant award on the date
of grant using the Trinomial Option Pricing Model and the assumption noted in
the following table. Expected volatility is based on the historical and implied
volatility of a peer group of publicly traded entities. The expected term of
options gave consideration to historical exercises, post-vesting cancellations
and the options contractual term. The risk-free rate for the expected term of
the option is based on the U.S. Government Bond at the time of grant. The
assumptions used to value options granted were as follows:

20

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China Nutrifruit Group Limited and Subsidiaries 
Notes to Condensed Consolidated Financial Statements 
For the three and six months ended September 30, 2009 and 2008 
(Unaudited) 
(Stated in U.S. Dollars)



SHAREHOLDERS
EQUITY (CONTD)

Warrants (Continued)

|Risk free interest rate | 2,264 %
|----------------------- | -------
|Expected volatility     | 56.03 %
|Expected dividend rate  | - %    
|Expected life (years)   | 4      

In connection with the first closing of Private Placement
Transaction which closed on September 30, 2009, WLT Brothers Capital, Inc. and
Euro Pacific Capital, Inc., the Companys placement agents, received, as partial
compensation, 86,281 warrants to purchase 215,703 shares of the Companys common
stock, respectively. The warrants have a term of 4 years and are immediately
exercisable at $3.30 per share, subject to customary adjustments.

The Company valued the warrants by Trinomial Option Pricing
Model with the amount of $327,000 which recorded as cost of raising capital
against additional paid-in capital. The Company estimated the fair value of each
warrant award on the date of grant using the Trinomial Option Pricing Model l
and the assumption noted in the following table. Expected volatility is based on
the historical and implied volatility of a peer group of publicly traded
entities. The expected term of options gave consideration to historical
exercises, post-vesting cancellations and the options contractual term. The
risk-free rate for the expected term of the option is based on the U.S.
Government Bond at the time of grant. The assumptions used to value options
granted were as follows:

|Risk free interest rate | 2,264 %
|----------------------- | -------
|Expected volatility     | 56.03 %
|Expected dividend rate  | - %    
|Expected life (years)   | 4      

21

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China Nutrifruit Group Limited and Subsidiaries 
Notes to Condensed Consolidated Financial Statements 
For the three and six months ended September 30, 2009 and 2008 
(Unaudited) 
(Stated in U.S. Dollars)



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 $161,489 and $135,684 for the six months ended September 30, 2009 and 2008 respectively.

NOTE 12.

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 September 30, 2009, 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.

22

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China Nutrifruit Group Limited and Subsidiaries 
Notes to Condensed Consolidated Financial Statements 
For the three and six months ended September 30, 2009 and 2008 
(Unaudited) 
(Stated in U.S. Dollars)

NOTE 13.

SUBSEQUENT
EVENTS

On October 8, 2009, the Company effected the second and final
closing of the Private Placement Transaction and issued 43,916 Units at a
purchase price of $33.00 per Unit for gross proceeds of $1,449,000.

NOTE 14.

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 September 30, 2009 are as
follows:

|Not later than 1 year                                                                                                                                    | $ | 6,990 | 
|-------------------------------------------------------------------------------------------------------------------------------------------------------- | - | ----- | 
|Later than 1 year and not later than 5 years                                                                                                             |   | -     | 
|                                                                                                                                                         | $ | 6,990 | 
|                                                                                                                                                         |   |       | 
|Rent expenses for the
      three months and six months ended September 30, 2009 and 2008 were
      $4,386,  $14,754, $8,872 and $16,926, respectively. |  

NOTE 15.

COMPREHENSIVE
INCOME

The Companys comprehensive income is comprised of net
operating results and translation adjustments. Comprehensive income for the
three months and six months ended September 30 are as follows:

|                                         |   | Three months ended |  |   | Six months ended |  
|---------------------------------------- | - | ------------------ |  | - | ---------------- | -
|                                         |   | September 30,      |  |   | September 30,    |  
|                                         |   | 2009               |  |   | 2008             |  
|                                         |   |                    |  |   |                  |  
|Comprehensive income :                   |   |                    |  |   |                  |  
|Net earnings                             | $ | 6,350,738          |  | $ | 5,012,107        |  
|Translation adjustments                  |   | 17,500             |  |   | (681,907         | )
|Total comprehensive income, net of taxes | $ | 6,368,238          |  | $ | 4,330,200        |  

End of condensed consolidated financial
statements.

23

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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 Annual Report on Form 10-K for the year ended March 31, 2009, 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 all our operations through our indirect, wholly owned subsidiary Longheda, which is a leading producer of premium specialty fruit based products in China. We develop, process, market and distribute a variety of
food products processed primarily from premium specialty fruits grown in Northeast China, including golden berries, crab apple, blueberries and raspberries. Our products  include fruit concentrate, nectar, glazed fruits, and fruit beverages as well
as fresh fruits. We sell our products through an extensive nationwide sales and distribution network covering 19 provinces and 42 cities throughout China. As of September 30, 2009, our sales and distribution network was comprised of 70 distributors.
Our processed fruit products are mainly sold to food and beverage producers for further processing into fruit juice and other fruit related products. Our fresh fruits are mainly sold to supermarkets. Our manufacturing facility is located in Daqing
City and Mu Dan Jiang City, Heilongjiang Province, China where abundant supply of various premium specialty fruits is readily available. We have four fruit processing lines with an aggregate capacity of 15,960 tons and one beverage production lines
with a 10,800 ton capacity.

Recent Developments

During the second quarter, we undertook an equity capital financing transaction in which we issued and sold 403,418 units, consisting of one share of our newly-designated Series A Convertible Preferred Stock, par value $0.001 per share and
one
warrant to purchase 2.5 shares of common stock.  The purchase price of each unit was $33.00.  We effected the initial closing of the purchase and sale of 359,502 units on September 30, 2009 and received approximately $11.86 million in gross
proceeds from that initial closing.  The second closing was completed on October 8, 2009 when we sold 43,916 units for gross proceeds of approximately $1.45 million.

24

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Each share of Series A Preferred Stock is convertible into ten shares of our common stock (subject to customary adjustments) and has other rights, economic and otherwise, which are senior to shares of our common stock.  The warrants sold in the
offering are immediately exercisable at a per share price of $3.30 (subject to customary adjustments) and have a term of four years.  We are obligated to register the underlying shares of common stock issued and sold in the offering within a
pre-defined period.

For a more complete summary of the terms of the offering, the rights, preference and privileges of the Series A Preferred Stock, the terms of the warrants and for complete copies of the related transaction documents, please see our current reports
on Form 8-K filed on October 1, 2009 and October 9, 2009.

Second Fiscal Quarter Highlights

We experienced strong demand for our products and significant growth in our revenues this quarter. The processed fruit product market in China continued to expand in this quarter, due in part to the economic stimulus program initiated by the Chinese
government which stimulated consumer demand and spending in China. We also benefited from the increase in urban population and per capita disposable income in China which helped to drive market demand for natural beverage products like ours. We
started production in respect of the new growing season on July 18, 2009. As we expect the demand for our fruit products will continue to grow, we plan to use a portion of the $13.31 million in gross proceeds received in our private placement
financing transaction to further increase our production capacity, among other things. We believe that the financing proceeds, combined with our operating cash flows, will provide sufficient working capital and allow us to take advantage of the
growth in market demand in the future.

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

- Net Sales:Net sales increased $2.8 million, or 17.2%, to $19.3 million for the second fiscal quarter of 2009 from $16.5 million for the same period last year, primarily as a result of increased sales volume.
- Gross Margin:Gross margin was 50.1% for the second fiscal quarter of 2009, as compared to 47.3% for the same period last year.
- Net Income:Net income increased $1.3 million, or 26.7%, to $6.4 million for the second fiscal quarter of 2009, from $5.0 million for the same period last year.
- Fully diluted earnings per share:Fully diluted earnings per share were $0.1753 for the second fiscal quarter of 2009, as compared to $0.2599 for the same period last year. The decrease in fully diluted net income per share was mainly
because more shares of our common stock were outstanding in this quarter as a result of the shares issued in connection with the private placement transactions and share exchange transaction in August last year.

Taxation

United States

China Nutrifruit Group Limited is subject to United States income tax at a tax rate of 35%. 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
September 30, 2009.

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.

25

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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 has been subject
to a tax rate of 25% since 2008. We expect that the tax rate of 25% currently
applicable to Longheda will remain unchanged in 2009.

Substantially all of our income may be derived from dividends
received from our PRC operating subsidiary Longheda. 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 the U.S. 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 subsidiary but this treatment will depend on our status as
a non-resident enterprise.

Results of Operations

Comparison of Three Months Ended September 30, 2009 and
September 30, 2008

The following table sets forth key components of our results of
operations for the periods indicated, in dollars and as a percentage of sales
revenue.

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

|                                                              |   | For the three months |  |  | For the three months | 
|------------------------------------------------------------- | - | -------------------- |  |  | -------------------- | 
|                                                              |   | ended                |  |  | ended                | 
|(Unaudited)                                                   |   | September 30, 2009   |  |  | September 30, 2008   | 
|                                                              |   |                      |  |  | As a                 | 
|                                                              |   | In                   |  |  | Percentage           | 
|                                                              |   | Thousands            |  |  | of Net Sales         | 
|Net Sales                                                     | $ | 19,325               |  |  | 100.0 %              | 
|Costs of Sales                                                |   | 9,642                |  |  | 49.9 %               | 
|Gross profit                                                  |   | 9,683                |  |  | 50.1 %               | 
|Selling expenses                                              |   | 678                  |  |  | 3.5 %                | 
|General and administrative expenses                           |   | 501                  |  |  | 2.6 %                | 
|Interest expenses                                             |   | -                    |  |  | - %                  | 
|Income before noncontrolling interests and
      income taxes |   | 8,536                |  |  | 44.2 %               | 
|Provision for Income taxes                                    |   | 2,185                |  |  | 11.3 %               | 
|Noncontrolling interests                                      |   | -                    |  |  | - %                  | 
|Net income                                                    |   | 6,351                |  |  | 32.9 %               | 
|Earnings per share:                                           |   |                      |  |  |                      | 
|Basic                                                         | $ | 0.1758               |  |  |                      | 
|Diluted                                                       | $ | 0.1753               |  |  |                      | 

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 RMB 6.8411 to $1 for the three
months ended September 30, 2009 and the rate of RMB 6.8673 to $1 for the three
months ended September 30, 2008.

Net Sales. Net sales consist of revenue derived
from the sale of our fruit and fruit based products. Net sales increased $2.8
million, or 17.2% to $19.3 million for the three months ended September 30, 2009
from $16.5 million for the three months ended September 30, 2008. The increase
was mainly attributable to the increased sales volume of our products. Market
demand for our products was strong in this quarter, due, in part, to the Chinese
governments economic stimulus program which stimulated domestic demand and consumer spending. We also
benefit from the continuing growth in a health conscious urban population and
per capita disposable income in China which helped to drive demand for natural
healthy beverages and fruit products like ours. Sales of concentrate pulp
products grew from approximately $0.7 million during the three months ended
September 30, 2008 to $1.7 million during the three months ended September 30,
2009. Furthermore, we launched the new blueberry glazed fruit this quarter which
were well received by our customers and contributed $1.6 million, or 8.4% of net
sales.

26

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The following table sets forth percentage of net sales generated
by each product for the three months ended September 30, 2009 and 2008:

|(All amounts, other than percentages, in
      thousands of U.S. dollars)
|-------------------------------------------------------------------------
|                                                                         
|                                                                         
|Products                                                                 
|                                                                         
|                                                                         
|Fresh fruit                                                              
|Glazed fruit                                                             
|Nectar                                                                   
|Concentrate juice                                                        
|Concentrate pulp                                                         
|Beverage                                                                 
|Total                                                                    

Cost of Sales. Cost of sales is primarily
comprised of the costs of our raw materials, labor, overhead and sales tax. Cost
of sales increased $1.2 million, or 13.6%, to $9.6 million for the three months
ended September 30, 2009 from $8.7 million for the three months ended September
30, 2008. This increase was primarily due to, and consistent with, the increase
in sales volume.

Gross Profit. Gross profit is equal to net sales
less cost of sales. Gross profit increased by $1.9 million to $9.7 million for
the three months ended September 30, 2009 from $7.8 million for the three months
ended September 30, 2008. Gross profit as a percentage of net sales was 50.1%
for the three months ended September 30, 2009 as compared to 47.3% for the same
period last year. The increase in gross margin was mainly because we sold a
higher percentage of glazed fruit and nectar products in the three months period
ended September 30, 2009. Glazed fruit and nectar products have a relatively
higher profit margin as compared to our fruit concentrate and concentrate pulp
products. In addition, we were able to increase the gross margin for fruit
concentrate products during the most recent quarter. The gross margin for fruit
concentrate, glazed fruit, nectar and concentrate pulp products for the three
months period ended September 30, 2009 were 45.6%, 63.0%, 67.8% and 33.2%, as
compared to 38.4%, 63.4%, 69.0% and 38.0% for the same period last year,
respectively. The increase in gross margin for fruit concentrate products was
mainly attributed to the increase in the average sales price of raspberry
concentrate products which increased approximately 109% in this quarter as
compared to the same period last year. Gross margin for concentrate pulp
products decreased in the three months ended September 30, 2009, mainly because
sales price for apple concentrate pulp in the international market decreased
significantly in this quarter as compared to the same period last year due to
general economic slowdown and uncertainty. However, price of apple in
international market was stable, even increased moderately.

27

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Selling and General and Administrative Expenses.
Selling and general and administrative expenses increased $0.2 million, or
22.7%, to $1.2 million for the three months ended September 30, 2009 from $1.0
million for the three months ended September 30, 2008.

Selling expenses include sales commissions, the cost of
advertising and promotional materials, salaries and fringe benefits of sales
personnel and other sales related costs. Selling expenses increased $21,461 or
3.3%, to $677,760 for the three months ended September 30, 2009 from $656,299
for the three months ended September 30, 2008. As a percentage of net sales, it
decreased 0.5% from 4.0% for three months ended September 30, 2008 to 3.5% for
the three months ended September 30, 2009. Due to well established relationship
with our existing customers, we received repeat orders with higher volume from
our existing clients, which led to lower sales related travel expenses in this
quarter. We plan to continue to spend more efforts on identifying new
distributors in regions where we have no or limited sales to further expand our
customer base and market share.

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 $196,662 or 64.5%, to $501,365 for the three months ended
September 30, 2009 from $304,072 for the three months ended September 30, 2008.
As a percentage of net sales, general and administrative expenses for the three
months ended September 30, 2009 increased by 0.3% to 6.1%, as compared to 5.8%
for the three months ended September 30, 2008. This percentage increase was
primarily attributable to the increase of the professional fees and other
expenses incurred due to our U.S. public company status.

Interest Expenses. We did not have any interest
expenses for the three months ended September 30, 2009 because we repaid all
outstanding bank loans on March 26, 2009.

Income before Noncontrolling Interests and Income
Taxes. Income before noncontrolling interests and income taxes increased
$1.8 million, or 27.1%, to $8.5 million for the three months ended September 30,
2009 from $6.7 million for the three months ended September 30, 2008. Income
before noncontrolling interests and income taxes as a percentage of net sales
increased from 40.7% for the three months ended September 30, 2008 to 44.2% for
the three months ended September 30, 2009. The percentage increase was primarily
attributable to the increased gross margin. In addition, we incurred no interest
expense in this quarter because we repaid in full all of our bank loans on March
26, 2009.

Provision for Income Taxes. The provision for
income taxes increased $0.5 million, or 28.3%, to $2.2 million for the three
months ended September 30, 2009 from $1.7 million for the three months ended
September 30, 2008. The increase in the provision for income taxes is mainly
attributed to the increase in net income before income taxes.

Net Income. Net income increased $1.3 million or
26.7%, to $6.4 million for the three months ended September 30, 2009 from $5.0
million for the three months ended September 30, 2008, mainly as a result of the
increase in sales revenue and gross margin as discuss above.

Comparison of Six Months Ended September 30, 2009 and
September 30, 2008

The following table sets forth key components of our results of
operations for the periods indicated, in dollars and as a percentage of sales
revenue.

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

|                                                              |   | For the six
      months |  |  | For the six
      months | 
|------------------------------------------------------------- | - | ------------------------ |  |  | ------------------------ | 
|                                                              |   | ended                    |  |  | ended                    | 
|(Unaudited)                                                   |   | September 30, 2009       |  |  | September 30, 2008       | 
|                                                              |   |                          |  |  | As a                     | 
|                                                              |   | In                       |  |  | **Percentage**           | 
|                                                              |   | Thousands                |  |  | of Net Sales             | 
|Net Sales                                                     | $ | 28,684                   |  |  | 100.0 %                  | 
|Costs of Sales                                                |   | 15,054                   |  |  | 52.5 %                   | 
|Gross profit                                                  |   | 13,630                   |  |  | 47.5
    %               | 
|Selling expenses                                              |   | 1,498                    |  |  | 5.2 %                    | 
|General and administrative
      expenses                     |   | 1,515                    |  |  | 5.3
    %                | 
|Interest expenses                                             |   | -                        |  |  | %                        | 
|Income before noncontrolling
      interests and income taxes |   | 10,656                   |  |  | 37.1 %                   | 
|Provision for Income taxes                                    |   | 2,770                    |  |  | 9.7 %                    | 
|Noncontrolling interests                                      |   | -                        |  |  | - %                      | 
|Net income                                                    |   | 7,886                    |  |  | 27.5 %                   | 
|Earnings per share:                                           |   |                          |  |  |                          | 
|Basic                                                         | $ | 0.2183                   |  |  |                          | 
|Diluted                                                       | $ | 0.2180                   |  |  |                          | 

28

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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 RMB 6.8405 to $1 for the six
months ended September 30, 2009 and the rate of RMB 6.9365 to $1 for the six
months ended September 30, 2008.

Net Sales. Net sales increased $6.4 million, or
28.8% to $28.7 million for the six months ended September 30, 2009 from $22.3
million for the six months ended September 30, 2008. The increase was mainly
attributable to the increased sales volume of our products. Market demand for
our products was strong in the six months ended September 30, 2009, due, in
part, to the Chinese governments economic stimulus program which stimulated
domestic consumer spending and demand for our products. We also benefit from the
continuing growth in a health conscious urban population and per capita
disposable income in China which helped to drive demand for natural healthy
beverages and fruit products like ours. Sales of concentrate pulp products grew
significantly from $0.7 million during the six months ended September 30, 2008
to $4.5 million during the six months ended September 30, 2009. In order to meet
the anticipated market demand for concentrate pulp products, the Company plans
to add a concentrate pulp production line to increase our production capacity.

The following table sets forth percentage of net sales generated
by each product for the six months ended September 30, 2009 and 2008:

|(All amounts, other than percentages, in
      thousands of U.S. dollars)
|-------------------------------------------------------------------------
|                                                                         
|                                                                         
|                                                                         
|                                                                         
|                                                                         
|Products                                                                 
|Fresh fruit                                                              
|Glazed fruit                                                             
|Nectar                                                                   
|Concentrate juice                                                        
|Concentrate pulp                                                         
|Beverage                                                                 
|Total                                                                    

Cost of Sales. Cost of sales increased $3.8
million, or 33.6%, to $15.1 million for the six months ended September 30, 2009
from $11.3 million for the six months ended September 30, 2008. This increase
was primarily due to, and consistent with, the increase in our sales volume. In
the six months period ended September 30, 2009, we also sold a higher percentage
of pulp concentrate products which generally have a higher per unit cost as
compared to glazed fruit and nectar products.

29

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Gross Profit.  Gross profit increased by $2.6 million to $13.6 million for the six months ended September 30, 2009 from $11.0 million for the six months ended September 30, 2008. Gross profit as a percentage of net sales
was 47.5% for the six months ended September 30, 2009 as compared to 49.4% for the same period last year.  The modest decrease in gross margin was mainly because in the six months period ended September 30, 2009, we sold a higher percentage of pulp
concentrate products which had a relatively lower margin as compared to glazed fruit and nectar products. The gross margin for fruit concentrate, glazed fruit, nectar and pulp concentrate products for the six months period ended September 30, 2009
were 42.7%, 63.7%, 67.8% and 36.1%, as compared to 40.2%, 65.2%, 70.3% and 39.3% for the same period last year, respectively. The increase in gross margin for fruit concentrate products was mainly attributable to the increase in average sales price
of raspberry concentrate which increased approximately 87% as compared to the six months period ended September 30, 2008. Gross margin for pulp concentrate products decreased in the three months ended September 30, 2009, mainly because sales price
for apple concentrate pulp in the international market decreased significantly in this quarter as compared to the same period last year due to general economic slowdown and uncertainty. However, price of apple in international market was stable,
even increased moderately.

Selling and General and Administrative Expenses.  Selling and general and administrative expenses increased $1.1 million, or 57.4%, to $3.0 million for the six months ended September 30, 2009 from $1.9 million for the six
months ended September 30, 2008.

Selling expenses increased $0.4 million or 37.7%, to $1.5 million for the six months ended September 30, 2009 from $1.1 million for same period last year. As a percentage of net sales, it increased 0.3% from 4.9% for six months ended
September 30, 2008 to 5.2% for the six months ended September 30, 2009.  We believe the increase in selling expenses were generally in line with the increase in sales volume.

General and administrative expenses increased $0.7 million or 83.5%, to $1.5 million for the six months ended September 30, 2009 from $0.8 million for the six months ended September 30, 2008. As a percentage of net sales, general and
administrative expenses for the six months ended September 30, 2009 increased by 1.6% to 5.3%, as compared to 3.7% for same period last year. This percentage increase was primarily attributable to higher  professional fees and other expenses
incurred by the company due to its U.S. public company status.

Interest Expenses. We did not have any interest expenses for the six months ended September 30, 2009 because we repaid all outstanding bank loans on March 26, 2009.

Income before Noncontrolling Interests and Income Taxes. Income before noncontrolling interests and income taxes increased $1.7 million, or 19.5%, to $10.7 million for the six months ended September 30, 2009 from $9.0
million for the six months ended September 30, 2008. Income before noncontrolling interests and income taxes as a percentage of net sales decreased from 40.0% for the six months ended September 30, 2008 to 37.1% for the six months ended September
30, 2009. The percentage decrease was primarily attributed to the decrease in gross margin and increase in general and administrative expenses as discuss above.

Provision for Income Taxes.  Our provision for income taxes was $2.8 million and $1.5 million during the six months ended September 30, 2009 and 2008, respectively.  The increase was mainly due to increase in net income before
income tax.  As a percentage of net sales, it increased from 6.8% for the six months ended September 2008 to 9.7% for the six months ended September 30, 2009. The increase was mainly due to the deferred tax of $0.7 million arising from the
temporary difference recognized from the 25% of equity interest of Longheda acquired by Solar Sun in May 2008.

Net Income. Our net income increased $0.7 million or 9.7%, to $7.9 million for the six months ended September 30, 2009 from $7.1 million for the six months ended September 30, 2008, mainly as a result of the increase in
sales revenue as discuss above..

30

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Liquidity and Capital Resources

As of September 30, 2009, we had cash and cash equivalents of $4.6 million. The following table sets forth a summary of our cash flows for the periods indicated:

|Statement of Cash Flow
      (All amounts in thousands of U.S. dollars)
|-----------------------------------------------------------------------
|(Unaudited)                                                            
|                                                                       
|                                                                       
|Net cash (used in) operating activities                                
|Net cash provided by/(used in) 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 used in operating activities was $162,199 for the six
months ended September 30, 2009, a decrease of $2.5 million from $2.7 million
for the six months ended September 30, 2008. Net cash used in operating
activities for the six months ended September 30, 2009 was attributable to $8.4
million used to increase our inventory during our production season and a $1.4
million increase in trade receivables due to increase in sales.

Cash Flows from Investing Activities.

We had no investing activities for the six months ended
September 30, 2009. Our cash used in investing activities for six months ended
September 30, 2008 primarily related to our acquisition of the 25% of minority
interest in Longheda for $1.4 million and the purchase of property, plant and
equipment for the new concentrated fruit juice production line in Mu Dan Jiang
for $13 million.

Cash Flows from Financing Activities.

For the six months ended September 30, 2008, the $7.9 million
cash provided by financing activities was mainly attributable to the receipt of
$3.6 million in net proceeds from the issuance of stock in a private placement
and a $7.3 million draw down of new bank loans

On September 30, 2009, we effected the initial closing of a
private placement transaction and issued 359,502 units at a purchase price of
$33.00 per unit for gross proceeds of $11,860,000. Each unit consists of one
share of the Companys newly-designated Series A Convertible Preferred Stock,
par value $0.001 per share, and one warrant to purchase 2.5 shares of the
Companys common stock. The warrants are immediately exercisable at a per share
price of $3.30 (subject to customary adjustments) and have a term of four years.
The total net proceeds from the initial closing were approximately $10.9
million.

As of September 30, 2009, we did not have any outstanding bank
loans. We believe that our currently available working capital, after receiving
the aggregate proceeds of our capital raising activities referred to above,
should be adequate to sustain our operations at our current levels through at
least the next twelve months. We may 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 Annual Report on Form 10-K for the fiscal yearended March 31, 2009.

31

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Recently Issued Accounting Pronouncements

In June 2009, the Financial Accounting Standards Board (the FASB) issued the FASB Accounting Standards Codification (the Codification) as the source of authoritative accounting principles recognized by the FASB to be applied
by nongovernmental entities in the preparation of financial statements in conformity with Generally Accepted Accounting Principles (GAAP). Rules and interpretative releases of the Securities and Exchange Commission are also sources of
authoritative GAAP for SEC registrants. As a result of the Codification, all changes to GAAP originating from the FASB will now be issued in Accounting Standards Updates. These changes and the Codification do not change GAAP. The Company adopted the
changes resulting from the Codification, effective September 30, 2009. Other than the manner in which new accounting guidance is referenced, the adoption of these changes had no impact on the Companys results of operations, financial position
or notes to the condensed consolidated financial statements.

In August 2009, the FASB issued Accounting Standards Update 2009-05, Fair Value Measurements and Disclosures (Topic 820)Measuring Liabilities at Fair Value (ASU 2009-05). ASU 2009-05 provides clarification in measuring the fair
value of a liability. ASU 2009-05 is effective beginning October 1, 2009. The Company currently does not expect ASU 2009-05 to have a significant impact on its financial statements.

In September 2009, the FASB issued Accounting Standards Update (ASU) No. 2009-12, Investments in Certain Entities That Calculate Net Asset Value per Share (or its Equivalent) (ASU 2009-12) which amends FASB
ASC Topic Fair Value Measurements and Disclosures. ASU 2009-12 provides additional guidance on estimating the fair value of certain alternative investments, such as hedge funds, private equity investments and venture capital funds. The
updated guidance allows the fair value of such investments to be determined using the net asset value (NAV) as a practical expedient, unless it is probable the investment will be sold at a value other than the NAV. In addition, the
guidance requires disclosures by major category of investment regarding the attributes of the investments within the scope of the guidance, regardless of whether the fair value of the investment is measured using the NAV or other fair value
technique. ASU 2009-12 shall be effective for interim and annual periods ending after December 15, 2009. Early application is permitted in financial statements for earlier interim and annual periods that have not been issued. If an entity elects to
early adopt the measurement amendments in this update, the entity is permitted to defer the adoption of the disclosure provisions until periods ending after December 15, 2009. The Company is currently evaluating the potential impacts of adoption of
ASU 2009-12 on its financial statements.

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

The harvest season for our source fruits are generally from mid July to mid November every year. As fruits collected cannot be stored at room temperature for a long time, they must be processed as soon as they are harvested. Our fruit processing
production is generally from mid July to mid November every year. Our fruit beverage production lasts throughout the year since the raw materials we use are not subject to seasonal effect.

Due to the nature of our business, we will generally experience higher sales in the second and third fiscal quarters mainly due to distributors (i) efforts to obtain adequate supply of our fruit processing products before the supply diminishes
after production ceases in November; and (ii) anticipation of higher demand for fruit processed products as a result of festive seasons at the end of the year and beginning of the following year such as Christmas and the Chinese spring festival.

32

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ITEM 3.         QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

Not applicable.

ITEM 4.         CONTROLS AND PROCEDURESDisclosure Controls and Procedures

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

As required by Rule 13a-15 under the Exchange Act, our management, including our Chief Executive Officer, Mr. Jinglin Shi, and Chief Financial Officer, Mr. Colman Cheng, evaluated the effectiveness of the design and operation of our disclosure
controls and procedures as of September 30, 2009. Based on our assessment, Mr. Shi and Mr. Cheng determined that, as of September 30, 2009, and as of the date that the evaluation of the effectiveness of our disclosure controls and procedures was
completed, our disclosure controls and procedures were effective to satisfy the objectives for which they are intended.

Changes in Internal Controls over Financial Reporting.

During the quarter ended September 30, 2009, there were no changes in our internal control over financial reporting identified in connection with the evaluation performed during the period covered by this report that has materially affected, or is
reasonably likely to materially affect, our internal control over financial reporting.

33

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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

There is no unregistered sales of equity securities during the
period covered by this quarterly report that has not been disclosed in the
Companys Current Report on Form 8-K.

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.

34

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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: November 16, 2009

CHINA NUTRIFRUIT GROUP LIMITED

By: /s/ Colman
Cheng Colman Cheng Chief Financial Officer (Principal
Financial Officer and Accounting Officer)

35

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EXHIBIT INDEX

|**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.

36

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