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

FORM 10-Q

(Mark One)

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

For the quarterly period ended: September 30, 2010

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

For the transition period from ____________ to _____________

Commission File No. 001-34449

AMERICAN LORAIN CORPORATION(Exact name of registrant as specified in its charter)

|Nevada                          | 87-0430320         
|------------------------------- | -------------------
|(State or other jurisdiction of | (I.R.S. Employer   
|incorporation or organization)  | Identification No.)

Beihuan Road  
Junan County Shandong, China 276600(Address, including zip code, of principal executive offices)

(86) 539-7318818(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.

Yes [X]            
No [    ]

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

Yes [    ]                 No [   
]

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

Large accelerated filer [    ]        
Accelerated filer [    ]        
Non-accelerated filer [    ]            
Smaller reporting company [X]

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

Yes [    ]                
No [X]

The numbers of shares outstanding of the issuer’s class of common stock as of September 30, 2010 was 34,419,709.

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Table of Contents

|           |                                                                                             | Page
|---------- | ------------------------------------------------------------------------------------------- | ----
|           | Part I - Financial
      Information                                                        |     
|Item 1     | Financial Statements and Accountants Report                                                | 2   
|Item 2     | Managements Discussion
      and Analysis of Financial Condition and Results of Operations | 31  
|Item 3     | Quantitative and Qualitative Disclosures about Market Risk                                  | 40  
|Item 4     | Controls and Procedures                                                                     | 40  
|           |                                                                                             |     
|           | Part II - Other
      Information                                                           |     
|Item 1     | Legal Proceedings                                                                           | 41  
|Item 1A    | Risk Factors                                                                                | 41  
|Item 2     | Unregistered Sales of Equity Securities and Use of Proceeds                                 | 41  
|Item 3     | Defaults Upon Senior
      Securities                                                       | 41  
|Item 4     | Removed and Reserved                                                                        | 41  
|Item 5     | Other Information                                                                           | 41  
|Item 6     | Exhibits                                                                                    | 41  
|Signatures |                                                                                             | 42  

1

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PART I 
FINANCIAL INFORMATION

ITEM 1.     FINANCIAL STATEMENTS AND ACCOUNTANT’S REPORT

|CONTENTS                                                      |  | PAGES   | 
|------------------------------------------------------------- |  | ------- | 
|REPORT OF INDEPENDENT REGISTERED PUBLIC
      ACCOUNTING FIRM |  | 3       | 
|CONSOLIDATED BALANCE SHEETS                                   |  | 4  5   | 
|CONSOLIDATED STATEMENTS OF INCOME                             |  | 6       | 
|CONSOLIDATED STATEMENTS OF CASH FLOWS                         |  | 7  8   | 
|CONSOLIDATED STATEMENTS OF
      STOCKHOLDERS EQUITY         |  | 9       | 
|NOTES TO FINANCIAL STATEMENTS                                 |  | 10  30 | 

2

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REPORT OF REGISTERED INDEPENDENT PUBLIC ACCOUNTING FIRM

To:     The Board of Directors and Stockholders of American Lorain Corporation

We have reviewed the accompanying interim consolidated balance sheets of American Lorain Corporation (the “Company”) as of September 30, 2010 and December 31, 2009, and the related statements of income, stockholders’ equity, and
cash flows for the three-month and nine-month periods ended September 30, 2010 and 2009. These interim consolidated financial statements are the responsibility of the Company's management.

We conducted our review in accordance with the standards of the Public Company Accounting Oversight Board (United States). A review of interim financial information consists principally of applying analytical procedures and making inquiries of
persons responsible for financial and accounting matters.  It is substantially less in scope than an audit conducted in accordance with the standards of the Public Company Accounting Oversight Board, the objective of which is the expression of an
opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.

Based on our review, we are not aware of any material modifications that should be made to the accompanying interim consolidated financial statements for them to be in conformity with U.S. generally accepted accounting principles.

|San Mateo, California | Samuel H. Wong & Co., LLP   
|--------------------- | ----------------------------
|October 29, 2010      | Certified Public Accountants

3

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AMERICAN LORAIN CORPORATION 
CONSOLIDATED BALANCE SHEETS 
AT SEPTEMBER 30, 2010 AND DECEMBER 31, 2009 
(Stated in US
Dollars)

|                                             |  |      |  |   | At September 30, |  |   | At December 31, | 
|-------------------------------------------- |  | ---- |  | - | ---------------- |  | - | --------------- | 
|ASSETS                                       |  | Note |  |   | 2010             |  |   | 2009            | 
|Current assets                               |  |      |  |   |                  |  |   |                 | 
|Cash and
      cash equivalents              |  |      |  | $ | 11,885,550       |  | $ | 12,111,532      | 
|Restricted cash                              |  | 3    |  |   | 845,233          |  |   | 1,299,889       | 
|Short-term
      investment                  |  |      |  |   | 9,336,710        |  |   | 7,320,248       | 
|Trade accounts receivable                    |  | 4    |  |   | 25,927,949       |  |   | 23,025,772      | 
|Other
      receivables                      |  | 5    |  |   | 3,729,677        |  |   | 4,398,805       | 
|Inventory                                    |  | 6    |  |   | 35,766,659       |  |   | 26,400,117      | 
|Advance
      to suppliers                   |  |      |  |   | 26,216,051       |  |   | 20,980,858      | 
|Prepaid expenses and
      taxes             |  |      |  |   | 470,914          |  |   | 905,266         | 
|Deferred tax
      asset                     |  |      |  |   | 200,879          |  |   | 199,867         | 
|Total current assets                         |  |      |  | $ | 114,379,622      |  | $ | 96,642,354      | 
|                                             |  |      |  |   |                  |  |   |                 | 
|Property, plant and equipment,
      net     |  | 7    |  |   | 54,867,192       |  |   | 41,280,407      | 
|Land use rights,
      net                   |  | 8    |  |   | 4,848,427        |  |   | 3,871,547       | 
|Deposit                                      |  |      |  |   | 16,469           |  |   | 16,088          | 
|TOTAL ASSETS                                 |  |      |  | $ | 174,111,710      |  | $ | 141,810,396     | 
|                                             |  |      |  |   |                  |  |   |                 | 
|LIABILITIES AND STOCKHOLDERS
      EQUITY   |  |      |  |   |                  |  |   |                 | 
|Current liabilities                          |  |      |  |   |                  |  |   |                 | 
|Short-term bank loans                        |  | 9    |  | $ | 46,810,749       |  | $ | 35,488,212      | 
|Long-term debt  current
      portion       |  | 13   |  |   | 230,794          |  |   | -               | 
|Notes
      payable                          |  | 10   |  |   | 716,621          |  |   | -               | 
|Accounts Payable                             |  |      |  |   | 2,630,930        |  |   | 2,614,515       | 
|Taxes
      payable                          |  | 11   |  |   | 1,831,117        |  |   | 2,235,341       | 
|Accrued liabilities and
      other payables |  | 12   |  |   | 2,058,517        |  |   | 6,422,492       | 
|Deferred
      tax liabilities               |  |      |  |   | 2,947            |  |   | -               | 
|Customers deposits                           |  |      |  |   | 1,456,230        |  |   | 13,842          | 
|Total current liabilities                    |  |      |  | $ | 55,737,905       |  | $ | 46,774,402      | 
|                                             |  |      |  |   |                  |  |   |                 | 
|Long term liabilities                        |  |      |  |   |                  |  |   |                 | 
|Long term bank loans                         |  | 13   |  |   | 13,063           |  |   | 294,873         | 
|                                             |  |      |  |   |                  |  |   |                 | 
|TOTAL LIABILITIES                            |  |      |  | $ | 55,750,968       |  | $ | 47,069,275      | 

See Accompanying Notes to the Financial Statements and
Accountants Report

4

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AMERICAN LORAIN CORPORATION 
CONSOLIDATED BALANCE SHEETS 
AT SEPTEMBER 30, 2010 AND DECEMBER 31, 2009 
(Stated in US
Dollars)

|                                                                                                                                                                                                |  |       |  |   | At September 30, |  |   | At December 31, | 
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ----- |  | - | ---------------- |  | - | --------------- | 
|                                                                                                                                                                                                |  | Note  |  |   | 2010             |  |   | 2009            | 
|STOCKHOLDERS EQUITY                                                                                                                                                                            |  |       |  |   |                  |  |   |                 | 
|Preferred Stock, $.001 par value, 5,000,000
      shares authorized; 0 shares issued and outstanding at September 30, 2010
      and December 31, 2009                                          |  |       |  |   | -                |  |   | -               | 
|Common stock, $0.001 par value, 200,000,000 shares
      authorized; 34,419,709 and 30,240,202 shares issued and outstanding as of
      September 30, 2010 and December 31, 2009, respectively |  | 14    |  |   | 34,420           |  |   | 30,240          | 
|Additional paid-in capital                                                                                                                                                                      |  | 14    |  |   | 52,155,306       |  |   | 35,268,603      | 
|Statutory reserves                                                                                                                                                                              |  | 2 (s) |  |   | 9,926,320        |  |   | 8,895,477       | 
|Retained earnings                                                                                                                                                                               |  |       |  |   | 41,887,949       |  |   | 38,455,349      | 
|Accumulated other comprehensive income                                                                                                                                                          |  |       |  |   | 6,681,151        |  |   | 6,068,569       | 
|Non-controlling interests                                                                                                                                                                       |  | 15    |  |   | 7,675,596        |  |   | 6,022,883       | 
|                                                                                                                                                                                                |  |       |  |   |                  |  |   |                 | 
|TOTAL STOCKHOLDERS EQUITY                                                                                                                                                                      |  |       |  | $ | 118,360,742      |  | $ | 94,741,121      | 
|                                                                                                                                                                                                |  |       |  |   |                  |  |   |                 | 
|TOTAL LIABILITIES AND
      STOCKHOLDERS EQUITY                                                                                                                                                |  |       |  | $ | 174,111,710      |  | $ | 141,810,396     | 

See Accompanying Notes to the Financial Statements and
Accountants Report

5

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AMERICAN LORAIN CORPORATION

CONSOLIDATED STATEMENTS OF INCOME 
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2010 AND
2009 
(Stated in US Dollars)

|                                          |  |                |  |   | **Three
      months ended September 30,** |   |   | Nine months
      ended September **30,** |  
|----------------------------------------- |  | -------------- |  | - | ------------------------------------------ | - | - | ----------------------------------------- | -
|                                          |  | Note           |  |   | 2010                                       |   |   | 2009                                      |  
|                                          |  |                |  |   |                                            |   |   |                                           |  
|Net revenues                              |  | 2
      (u),16 |  | $ | 48,073,224                                 |   | $ | 38,674,651                                |  
|Cost of revenues                          |  |                |  |   | (37,293,496                                | ) |   | (29,566,601                               | )
|Gross profit                              |  |                |  | $ | 10,779,728                                 |   | $ | 9,108,050                                 |  
|                                          |  |                |  |   |                                            |   |   |                                           |  
|Operating expenses                        |  |                |  |   |                                            |   |   |                                           |  
|Selling and marketing expenses            |  |                |  |   | (2,072,152                                 | ) |   | (1,165,107                                | )
|General and
      administrative expenses |  |                |  |   | (1,643,967                                 | ) |   | (906,847                                  | )
|                                          |  |                |  |   |                                            |   |   |                                           |  
|Operating income                          |  |                |  | $ | 7,063,609                                  |   | $ | 7,036,096                                 |  
|                                          |  |                |  |   |                                            |   |   |                                           |  
|Government subsidy
      income           |  |                |  |   | 321,537                                    |   |   | 43,864                                    |  
|Interest and other income                 |  | 1 (b)          |  |   | 628,008                                    |   |   | 24,196                                    |  
|Other expenses                            |  |                |  |   | (16,269                                    | ) |   | (52,694                                   | )
|Interest expense                          |  |                |  |   | (1,127,993                                 | ) |   | (857,089                                  | )
|                                          |  |                |  |   |                                            |   |   |                                           |  
|Earnings before tax                       |  |                |  | $ | 6,868,892                                  |   | $ | 6,194,373                                 |  
|                                          |  |                |  |   |                                            |   |   |                                           |  
|Income tax                                |  | 2 (r),17       |  |   | (1,476,363                                 | ) |   | (1,396,694                                | )
|                                          |  |                |  |   |                                            |   |   |                                           |  
|Net income                                |  |                |  | $ | 5,392,529                                  |   | $ | 4,797,679                                 |  
|                                          |  |                |  |   |                                            |   |   |                                           |  
|Net income attributable to:               |  |                |  |   |                                            |   |   |                                           |  
|-Common stockholders                      |  |                |  | $ | 5,084,475                                  |   | $ | 4,497,364                                 |  
|-Non-controlling interest                 |  |                |  |   | 308,054                                    |   |   | 300,315                                   |  
|                                          |  |                |  | $ | 5,392,529                                  |   | $ | 4,797,679                                 |  
|                                          |  |                |  |   |                                            |   |   |                                           |  
|                                          |  |                |  |   |                                            |   |   |                                           |  
|Earnings per share                        |  | 2 (v)          |  |   |                                            |   |   |                                           |  
|- Basic                                   |  |                |  | $ | 0.16                                       |   | $ | 0.18                                      |  
|- Diluted                                 |  |                |  | $ | 0.16                                       |   | $ | 0.18                                      |  
|                                          |  |                |  |   |                                            |   |   |                                           |  
|Weighted average shares outstanding       |  |                |  |   |                                            |   |   |                                           |  
|- Basic                                   |  |                |  |   | 31,083,710                                 |   |   | 25,177,640                                |  
|- Diluted                                 |  |                |  |   | 31,679,871                                 |   |   | 25,200,136                                |  

See Accompanying Notes to the Financial Statements and
Accountants Report

6

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AMERICAN LORAIN CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOW 
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2010 AND
2009 
(Stated in US Dollars)

|                                                                                             |   | Three months ended |   |   | Nine months ended |  
|-------------------------------------------------------------------------------------------- | - | ------------------ | - | - | ----------------- | -
|                                                                                             |   | September 30,      |   |   | September 30,     |  
|                                                                                             |   | 2010               |   |   | 2009              |  
|Cash flows from operating activities                                                         |   |                    |   |   |                   |  
|Net income                                                                                   | $ | 5,392,529          |   | $ | 4,797,679         |  
|Stock and share based
      compensation                                                     |   | 195,868            |   |   | 80,484            |  
|Depreciation                                                                                 |   | 554,385            |   |   | 276,694           |  
|Amortization                                                                                 |   | 40,053             |   |   | 22,217            |  
|Gain on
      acquisition of Shandong Greenpia                                               |   | (479,332           | ) |   | -                 |  
|Change in assets and liabilities net of effects from
      acquisition of Shandong Greenpia: |   |                    |   |   |                   |  
|(Increase)/decrease in accounts & other receivables                                          |   | (12,081,954        | ) |   | 1,776,531         |  
|(Increase)/decrease in
      inventories                                                     |   | (979,407           | ) |   | (8,751,246        | )
|Decrease/(increase) in prepayment                                                            |   | (5,152,378         | ) |   | -                 |  
|Increase/(decrease) in accounts
      and other payables                                     |   | (2,425,974         | ) |   | (961,609          | )
|Net cash (used
      in)/provided by operating activities                                    |   | (14,936,210        | ) |   | (2,759,250        | )
|                                                                                             |   |                    |   |   |                   |  
|Cash flows from investing activities                                                         |   |                    |   |   |                   |  
|Shandong Greenpia acquisition net of
      cash acquired                                     |   | (1,929,773         | ) |   | -                 |  
|Sales (investment) in
      short term investment fund                                       |   | (183,966           | ) |   | 58,384            |  
|(Increase)/decrease in restricted cash                                                       |   | (103,792           | ) |   | (14,642           | )
|Payment of land use
      rights                                                             |   | (72,466            | ) |   | (4,590            | )
|Payments for purchase of equipment
      & plant                                             |   | (1,295,379         | ) |   | (881,610          | )
|Decrease (increase) in
      deposit                                                         |   | -                  |   |   | -                 |  
|Net cash used in investing
      activities                                                  |   | (3,585,376         | ) |   | (842,458          | )
|                                                                                             |   |                    |   |   |                   |  
|Cash flows from financing activities                                                         |   |                    |   |   |                   |  
|Proceeds from bank
      borrowings                                                          |   | 41,717,825         |   |   | 2,465,431         |  
|Repayment of bank loans                                                                      |   | (32,736,075        | ) |   | -                 |  
|Proceeds from issuance
      of notes                                                        |   | 716,621            |   |   | -                 |  
|Repayment of notes                                                                           |   | -                  |   |   | (1,614,364        | )
|Issuance of common
      stock                                                               |   | 8,693,478          |   |   | -                 |  
|Net cash provided by/(used in)
      financing activities                                    | $ | 18,391,849         |   | $ | 851,067           |  
|                                                                                             |   |                    |   |   |                   |  
|Net Increase/(decrease) of Cash and Cash Equivalents                                         |   | (129,737           | ) |   | (2,750,641        | )
|                                                                                             |   |                    |   |   |                   |  
|Effect of foreign currency translation on cash and cash
      equivalents                    |   | 1,676,496          |   |   | 80,722            |  
|                                                                                             |   |                    |   |   |                   |  
|Cash and cash equivalentsbeginning of year                                                  |   | 10,338,791         |   |   | 6,831,721         |  
|                                                                                             |   |                    |   |   |                   |  
|Cash and cash equivalentsend of year                                                        | $ | 11,885,550         |   | $ | 4,161,802         |  

See Accompanying Notes to the Financial Statements and
Accountants Report

7

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AMERICAN LORAIN CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOW 
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2010 AND
2009 
(Stated in US Dollars)

|Supplementary cash flow information:                   |   |           |  |   |           |  |   |           |  |   |           | 
|------------------------------------------------------ | - | --------- |  | - | --------- |  | - | --------- |  | - | --------- | 
|Interest received                                      |   | 5,096     |  |   | 3,892     |  |   | 11,898    |  |   | 70,502    | 
|Interest paid                                          |   | 991,634   |  |   | 857,089   |  |   | 2,930,588 |  |   | 2,205,740 | 
|Income taxes paid                                      | $ | 856,944   |  | $ | 1,396,694 |  | $ | 3,346,075 |  | $ | 2,580,172 | 
|Stock issued in acquisition of Shandong
      Greenpia |   | 2,100,000 |  |   | -         |  |   | 2,100,000 |  |   | -         | 

See Accompanying Notes to the Financial Statements and
Accountants Report

8

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AMERICANLORAINCORPORATIONSTATEMENTOFSTOCKHOLDERSEQUITYFOR THEYEARSENDEDSEPTEMBER30, 2010 ANDDECEMBER31, 2009 
(STATEDIN USDOLLARS)

|                                                   |  |            |  |   |            |  |   |                |   |   |               |  |   |              |   |   | **Accumulated**   |   |   |                 |  |   |             |  
|-------------------------------------------------- |  | ---------- |  | - | ---------- |  | - | -------------- | - | - | ------------- |  | - | ------------ | - | - | ----------------- | - | - | --------------- |  | - | ----------- | -
|                                                   |  | **Number** |  |   |            |  |   | **Additional** |   |   |               |  |   |              |   |   | **Other**         |   |   | **Non-**        |  |   |             |  
|                                                   |  | **Of**     |  |   | **Common** |  |   | **Paid-in**    |   |   | **Statutory** |  |   | **Retained** |   |   | **Comprehensive** |   |   | **Controlling** |  |   |             |  
|                                                   |  | Shares     |  |   | Stock      |  |   | Capital        |   |   | Reserves      |  |   | Earnings     |   |   | Income            |   |   | Interests       |  |   | Total       |  
|Balance, January 1, 2009                           |  | 25,172,640 |  | $ | 25,172     |  | $ | 24,187,019     |   | $ | 5,438,723     |  | $ | 27,503,991   |   | $ | 5,178,616         |   | $ | 5,122,021       |  | $ | 67,455,542  |  
|Issuance of share based compensation               |  | 56,393     |  |   | 57         |  |   | 166,341        |   |   | -             |  |   | -            |   |   | -                 |   |   | -               |  |   | 166,398     |  
|Issuance of common stock for cash                  |  | 5,011,169  |  |   | 5,011      |  |   | 12,002,150     |   |   | -             |  |   | -            |   |   | -                 |   |   | -               |  |   | 12,007,161  |  
|Issuance cost of common stock                      |  |            |  |   |            |  |   | (1,086,907     | ) |   | -             |  |   | -            |   |   | -                 |   |   | -               |  |   | (1,086,907  | )
|Net income                                         |  | -          |  |   | -          |  |   | -              |   |   | -             |  |   | 15,308,974   |   |   | -                 |   |   | -               |  |   | 15, 308,974 |  
|Appropriations to statutory reserves               |  | -          |  |   | -          |  |   | -              |   |   | 3,456,754     |  |   | (3,456,754   | ) |   | -                 |   |   | -               |  |   | -           |  
|Allocation to non-controlling
      interests      |  | -          |  |   | -          |  |   | -              |   |   | -             |  |   | (900,862     | ) |   | -                 |   |   | 900,862         |  |   | -           |  
|Foreign currency translation adjustment            |  | -          |  |   | -          |  |   | -              |   |   | -             |  |   | -            |   |   | 889,953           |   |   | -               |  |   | 889,953     |  
|Balance, December 31, 2009                         |  | 30,240,202 |  | $ | 30,240     |  | $ | 35,268,603     |   | $ | 8,895,477     |  | $ | 38,455,349   |   | $ | 6,068,569         |   | $ | 6,022,883       |  | $ | 94,741,121  |  
|                                                   |  |            |  |   |            |  |   |                |   |   |               |  |   |              |   |   |                   |   |   |                 |  |   |             |  
|Balance, January 1, 2010                           |  | 30,240,202 |  | $ | 30,240     |  | $ | 35,268,603     |   | $ | 8,895,477     |  | $ | 38,455,349   |   | $ | 6,068,569         |   | $ | 6,022,883       |  | $ | 94,741,121  |  
|Issuance of share based compensation               |  | 7,000      |  |   | 7          |  |   | 670,530        |   |   | -             |  |   | -            |   |   | -                 |   |   | -               |  |   | 670,537     |  
|Issuance of common stock for cash                  |  | 3,440,800  |  |   | 3,441      |  |   | 9,634,240      |   |   | -             |  |   | -            |   |   | -                 |   |   | -               |  |   | 9,637,681   |  
|Issuance cost of common stock                      |  | -          |  |   | -          |  |   | (678,510       | ) |   | -             |  |   | -            |   |   | -                 |   |   | -               |  |   | (678,510    | )
|Appropriations to additional paid in
      capital |  | -          |  |   | -          |  |   | 5,161,176      |   |   | -             |  |   | (5,161,176   | ) |   | -                 |   |   | -               |  |   | -           |  
|Acquisition of a new company                       |  | 731,707    |  |   | 732        |  |   | 2,099,267      |   |   | -             |  |   | -            |   |   | -                 |   |   | -               |  |   | 2,099,999   |  
|Net income                                         |  | -          |  |   | -          |  |   | -              |   |   | -             |  |   | 10,282,887   |   |   | -                 |   |   | -               |  |   | 10,282,887  |  
|Appropriations to statutory reserves               |  | -          |  |   | -          |  |   | -              |   |   | 1,030,843     |  |   | (1,030,843   | ) |   | -                 |   |   | -               |  |   | -           |  
|Allocation to non-controlling
      interests      |  | -          |  |   | -          |  |   | -              |   |   | -             |  |   | (658,268     | ) |   | -                 |   |   | 658,268         |  |   | -           |  
|Unrealized gain (loss) on investment               |  | -          |  |   | -          |  |   | -              |   |   | -             |  |   | -            |   |   | (568,702          | ) |   | -               |  |   | (568,702    | )
|Foreign currency translation
      adjustment      |  | -          |  |   | -          |  |   | -              |   |   | -             |  |   | -            |   |   | 2,175,729         |   |   | -               |  |   | 2,175,729   |  
|Balance, September 30, 2010                        |  | 34,419,709 |  | $ | 34,420     |  | $ | 52,155,306     |   | $ | 9,926,320     |  | $ | 41,887,949   |   | $ | 7,675,596         |   | $ | 6,681,151       |  | $ | 118,360,742 |  

See Accompanying Notes to the Financial Statements and
Accountants Report

9

---

AMERICAN LORAIN CORPORATION 
NOTES TO FINANCIAL STATEMENTS - JUNE 30, 2010 AND DECEMBER 31, 2009 
(STATED IN US DOLLARS)

|1. | ORGANIZATION, BASIS OF PRESENTATION, AND PRINCIPAL ACTIVITIES
|-- | -------------------------------------------------------------
|   |                                                              
|   | (a)                                                          
|   |                                                              
|   |                                                              
|   |                                                              
|   | (b)                                                          
|   |                                                              
|   |                                                              
|   |                                                              
|   |                                                              
|   |                                                              
|   |                                                              
|   |                                                              
|   |                                                              
|   |                                                              
|   | (c)                                                          
|   |                                                              
|   |                                                              
|   |                                                              
|   |                                                              
|   |                                                              
|   |                                                              

10

---

AMERICAN LORAIN CORPORATION 
NOTES TO FINANCIAL STATEMENTS - SEPTEMBER 30, 2010 AND
DECEMBER 31, 2009 
(STATED IN US DOLLARS)

|   | (d)                                          | Business Activities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|-- | -------------------------------------------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                              |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   |                                              | The Company develops, manufactures, and sells convenience
      foods (includes ready-to-cook (or RTC) foods; ready-to-eat (or RTE) foods
      and meals ready-to-eat (or MRE); chestnut products; and frozen foods, in
      hundreds of varieties. The Company operates through indirect Chinese
      subsidiaries. The products are sold in 26 provinces and administrative
      regions in China and 42 foreign countries. Food products are categorized
      into three types: (1) chestnut products, (2) convenience food, and (3)
      frozen food.
|   |                                              |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|2. | SUMMARY OF SIGNIFICANT ACCOUNTING
  POLICIES
|   |                                              |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   | (a)                                          | Method of Accounting                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   |                                              |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   |                                              | The Company maintains its general ledger and journals
      with the accrual method accounting for financial reporting purposes. The
      financial statements and notes are representations of management.
      Accounting policies adopted by the Company conform to generally accepted
      accounting principles in the United States of America and have been
      consistently applied in the presentation of financial statements, which
      are compiled on the accrual basis of accounting.                                                     
|   |                                              |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   |                                              | The Company regrouped certain accounts in its
      presentation of changes in assets and liabilities in the statement of cash
      flows for the year ended December 31, 2009 in order to be consistent with
      the presentation provided for the year ended December 31, 2009. There was
      no impact in earnings for the regrouping.                                                                                                                                                                                                                 
|   |                                              |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   | (b)                                          | Principles of consolidation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   |                                              |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   |                                              | The consolidated financial statements which include the
      Company and its subsidiaries are compiled in accordance with generally
      accepted accounting principles in the United States of America. All
      significant inter-company accounts and transactions have been eliminated.
      The consolidated financial statements include 100% of assets, liabilities,
      and net income or loss of those wholly-owned subsidiaries; ownership
      interests of minority investors are recorded as minority
  interests.                         
|   |                                              |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   |                                              | As of September 30, 2010, the detailed identities of the
      consolidating subsidiaries are as follows:                                                                                                                                                                                                                                                                                                                                                                                                                                                      

| |  | Name of Company                     |  | Place of       |  |  | Attributable    |  |   | Registered | 
| |  | ----------------------------------- |  | -------------- |  |  | --------------- |  | - | ---------- | 
| |  |                                     |  | incorporation  |  |  | equity interest |  |   | capital    | 
| |  |                                     |  |                |  |  | %               |  |   |            | 
| |  | Shandong Lorain Co., Ltd            |  | PRC            |  |  | 80.2            |  | $ | 15,058,002 | 
| |  | Luotian Lorain Co., Ltd             |  | PRC            |  |  | 100             |  |   | 3,781,490  | 
| |  | Junan Hongrun Foodstuff Co., Ltd    |  | PRC            |  |  | 100             |  |   | 42,204,078 | 
| |  | Beijing Lorain Co., Ltd             |  | PRC            |  |  | 100             |  |   | 1,492,961  | 
| |  | Shandong Greenpia Foodstuff Co.,Ltd |  | PRC            |  |  | 100             |  |   | 1,850,000  | 
| |  | Dongguan Lorain Co,,Ltd             |  | PRC            |  |  | 100             |  |   | 142,296    | 
| |  | International Lorain Holding Inc.   |  | Cayman Islands |  |  | 100             |  | $ | 45,474,970 | 

| | (c) | Use of estimates                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| |     | The preparation of the financial statements in conformity
      with generally accepted accounting principles in the United States of
      America requires management to make estimates and assumptions that affect
      the reported amounts of assets and liabilities and disclosure of
      contingent assets and liabilities at the date of the financial statements
      and the reported amounts of revenues and expenses during the reporting
      periods. Management made these estimates using the best information
      available at the time the estimates are made; however actual results could
      differ materially from those estimates.

11

---

AMERICAN LORAIN CORPORATION 
NOTES TO FINANCIAL STATEMENTS - SEPTEMBER 30, 2010 AND
DECEMBER 31, 2009 
(STATED IN US DOLLARS)

| | (d) | Economic and political risks                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| |     | The Companys operations are conducted in the PRC.
      Accordingly, the Companys business, financial condition and results of
      operations may be influenced by the political, economic and legal
      environment in the PRC, and by the general state of the PRC
  economy.                                                                                                                                                                                                                                                                                                                                                                                               
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| |     | The Companys operations in the PRC are subject to
      special considerations and significant risks not typically associated with
      companies in North America and Western Europe. These include risks
      associated with, among others, the political, economic and legal
      environment and foreign currency exchange. The Companys results may be
      adversely affected by changes in the political and social conditions in
      the PRC, and by changes in governmental policies with respect to laws and
      regulations, anti-inflationary measures, currency conversion, remittances
      abroad, and rates and methods of taxation, among other things.
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | (e) | Lease prepayments                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| |     | Lease prepayments represent the cost of land use rights
      in the PRC. Land use rights are carried at cost and amortized on a
      straight-line basis over the period of rights of 50 years.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | (f) | Property, plant and equipment                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| |     | Plant and equipment are carried at cost less accumulated
      depreciation. Depreciation is provided over their estimated useful lives,
      using the straight-line method. Estimated useful lives of the plant and
      equipment are as follows:                                                                                                                                                                                                                                                                                                                                                                                                                              

| | Buildings               |  | 40 years | 
| | ----------------------- |  | -------- | 
| | Landscaping and trees   |  | 30 years | 
| | Machinery and equipment |  | 10 years | 
| | Motor vehicles          |  | 10 years | 
| | Office equipment        |  | 5 years  | 

| |     | The cost and related accumulated depreciation of assets
      sold or otherwise retired are eliminated from the accounts and any gain or
      loss is included in the statement of income. The cost of maintenance and
      repairs is charged to income as incurred, whereas significant renewals and
      betterments are capitalized.                                                                                                                                                                                                   
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | (g) | Accounting for the Impairment of Long-Lived
      Assets                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| |     | The long-lived assets held and used by the Company are
      reviewed for impairment whenever events or changes in circumstances
      indicate that the carrying amount of assets may not be recoverable. It is
      reasonably possible that these assets could become impaired as a result of
      technology or other industry changes. Determination of recoverability of
      assets to be held and used is by comparing the carrying amount of an asset
      to future net undiscounted cash flows to be generated by the
  assets.
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| |     | If such assets are considered to be impaired, the
      impairment to be recognized is measured by the amount by which the
      carrying amount of the assets exceeds the fair value of the assets. Assets
      to be disposed of are reported at the lower of the carrying amount or fair
      value less costs to sell. During the reporting years, there was no
      impairment loss.                                                                                                                                                  
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | (h) | Construction in progress                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| |     | Construction in progress represents direct costs of
      construction or acquisition and design fees incurred. Capitalization of
      these costs ceases and the construction in progress is transferred to
      plant and equipment when substantially all the activities necessary to prepare the assets for their intended use are completed. No depreciation is provided until it is completed and ready for intended use.                                                                                                             

12

---

AMERICAN LORAIN CORPORATION 
NOTES TO FINANCIAL STATEMENTS - SEPTEMBER 30, 2010 AND DECEMBER 31, 2009 
(STATED IN US DOLLARS)

| | (i) | Investment securities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |     | The Company classifies its equity securities into trading or available-for-sale. Trading securities are bought and held principally for the purpose of selling them in the near term. All securities not included in trading
securities are classified as available-for-sale.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |     | Trading and available-for-sale securities are recorded at fair value. Unrealized holding gains and losses on trading securities are included in the net income. Unrealized holding gains and losses, net of the related tax effect, on
available for sale securities are excluded from net income and are reported as a separate component of other comprehensive income until realized. Realized gains and losses from the sale of available-for-sale securities are determined on a
specific-identification basis.                                                                                                                                                                                                                                                                                                                                 
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |     | A decline in the market value of any available-for-sale security below cost that is deemed to be other-than- temporary results in a reduction in carrying amount to fair value. The impairment is charged as an expense to the
statement of income and comprehensive income and a new cost basis for the security is established. To determine whether impairment is other-than-temporary, the Company considers whether it has the ability and intent to hold the investment until a
market price recovery and considers whether evidence indicating the cost of the investment is recoverable outweighs evidence to the contrary. Evidence considered in this assessment includes the reasons for the impairment, the severity and duration
of the impairment, changes in value subsequent to year end, and forecasted performance of the investee.
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |     | Premiums and discounts are amortized or accreted over the life of the related available-for-sale security as an adjustment to yield using the effective-interest method. Dividend and interest income are recognized when earned.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | (j) | Inventories                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |     | Inventories consisting of finished goods and raw materials are stated at the lower of cost or market value. Finished goods are comprised of direct materials, direct labor and an appropriate proportion of overhead.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | (k) | Trade receivables                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |     | Trade receivables are recognized and carried at the original invoice amount less allowance for any uncollectible amounts. An estimate for doubtful accounts is made when collection of the full amount is no longer probable. Bad
debts are written off as incurred.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | (l) | Advances to suppliers                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |     | Advances to supplier represents good faith deposits and prepayments issued to suppliers for the purpose of committing the supplier to provide product promptly upon the Company’s issuance of purchase order for raw materials,
supplies, equipment, and building materials. Upon receipt of the goods dictated in the Company issued purchase order, these good faith deposits will be reclassified to the appropriate account such as inventory, construction in progress, or plant and
equipment.                                                                                                                                                                                                                                                                                                                                                 
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | (m) | Customer deposits                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |     | The Company accounts for good faith deposits received from customers in advance of delivery of their order that are to be fulfilled future periods as short term liabilities. When the Company has fulfilled all the criteria
necessary to recognize revenue the Company will reclassify these amounts to sales. In the event that the Company cannot fulfill such criteria these deposits would be refunded to customers.                                                                                                                                                                                                                                                                                                                                                                                                                           

13

---

AMERICAN LORAIN CORPORATION 
NOTES TO FINANCIAL STATEMENTS - SEPTEMBER 30, 2010 AND DECEMBER 31, 2009 
(STATED IN US DOLLARS)

| | (n) | Cash and cash equivalents                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| |     | The Company considers all highly liquid investments purchased with original maturities of three months or less to be cash equivalents.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | (o) | Advertising                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| |     | All advertising costs are expensed as incurred.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | (p) | Shipping and handling                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| |     | All shipping and handling are expensed as incurred.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | (q) | Research and development                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| |     | All research and development costs are expensed as incurred.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | (r) | Retirement benefits                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| |     | Retirement benefits in the form of contributions under defined contribution retirement plans to the relevant authorities are charged to the consolidated statement of income as incurred.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | (s) | Income taxes                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| |     | The Company accounts for income tax using an asset and liability approach and allows for recognition of deferred tax benefits in future years. Under the asset and liability approach, deferred taxes are provided for the net tax
effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. A valuation allowance is provided for deferred tax assets if it is more likely
than not these items will either expire before the Company is able to realize their benefits, or that future realization is uncertain.                                                                                                                                                                                                                                                                                                                                                                                                                                        
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| |     | The Company has implemented Statement of Financial Accounting Standards (SFAS) No. 109, Accounting for Income Taxes. Income tax liabilities computed according to the United States and People’s Republic of China (PRC) tax
laws are provided for the tax effects of transactions reported in the financial statements and consists of taxes currently due plus deferred taxes related primarily to differences between the basis of fixed assets and intangible assets for financial
and tax reporting. The deferred tax assets and liabilities represent the future tax return consequences of those differences, which will be either taxable or deductible when the assets and liabilities are recovered or settled. Deferred taxes also
are recognized for operating losses that are available to offset future income taxes. A valuation allowance is created to evaluate deferred tax assets if it is more likely than not that these items will either expire before the Company is able to
realize that tax benefit, or that future realization is uncertain.
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| |     | Effective January 1, 2008, PRC government implemented a new 25% tax rate across the board for all enterprises regardless of whether domestic or foreign enterprise without any tax holiday which is defined as "two-year exemption
followed by three-year half exemption" hitherto enjoyed by tax payers. As a result of the new tax law of a standard 15% tax rate, tax holidays terminated as of December 31, 2007. However, PRC government has established a set of transition rules to
allow enterprises already started tax holidays before January 1, 2008, to continue enjoying the tax holidays until being fully utilized.                                                                                                                                                                                                                                                                                                                                                                                                                                    
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| |     | The Company is subject to United States Tax according to Internal Revenue Code Sections 951 and 957. Corporate income tax is imposed on progressive rates in the range of: -                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           

14

---

AMERICAN LORAIN CORPORATION 
NOTES TO FINANCIAL STATEMENTS - SEPTEMBER 30, 2010 AND
DECEMBER 31, 2009 
(STATED IN US DOLLARS)

Taxable Income

| | Rate |  | Over       |  |  | But Not Over |  |  | Of Amount Over | 
| | ---- |  | ---------- |  |  | ------------ |  |  | -------------- | 
| | 15%  |  | 0          |  |  | 50,000       |  |  | 0              | 
| | 25%  |  | 50,000     |  |  | 75,000       |  |  | 50,000         | 
| | 34%  |  | 75,000     |  |  | 100,000      |  |  | 75,000         | 
| | 39%  |  | 100,000    |  |  | 335,000      |  |  | 100,000        | 
| | 34%  |  | 335,000    |  |  | 10,000,000   |  |  | 335,000        | 
| | 35%  |  | 10,000,000 |  |  | 15,000,000   |  |  | 10,000,000     | 
| | 38%  |  | 15,000,000 |  |  | 18,333,333   |  |  | 15,000,000     | 
| | 35%  |  | 18,333,333 |  |  | -            |  |  | -              | 

| | (t) | Statutory reserves                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| |     | Statutory reserves refer to amounts appropriated from net
      income to a reserve account which is earmarked for the recovery of losses
      and future expansion. PRC laws prescribe that an enterprise operating at a
      profit, must appropriate, on an annual basis, an amount equal to 10% of
      its profit. Such an appropriation is necessary until the reserve reaches a
      maximum that is equal to 50% of the enterprises PRC registered
      capital.        
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| | (u) | Foreign currency translation                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| |     | The accompanying financial statements are presented in
      United States dollars. The functional currency of the Company is the
      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.

| |                                                  |  | 6/30/2010 |  |  | 12/31/2009 |  |  | 9/31/2009 | 
| | ------------------------------------------------ |  | --------- |  |  | ---------- |  |  | --------- | 
| | Year/quarter end RMB : US$ exchange
      rate   |  | 6.6981    |  |  | 6.8372     |  |  | 6.8376    | 
| | Average yearly/quarterly RMB : US$ exchange rate |  | 6.8164    |  |  | 6.8408     |  |  | 6.8425    | 

| |     | The RMB is not freely convertible into foreign currency
      and all foreign exchange transactions must take place through authorized
      institutions. No representation is made that the RMB amounts could have
      been, or could be, converted into US Dollar at the rates used in
      translation.                                                                                                                                                                                                                                                                                                                                 
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | (v) | Revenue recognition                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |     | The Company's revenue recognition policies are in
      compliance with Staff accounting bulletin (SAB) 104. Sales revenue is
      recognized at the date of shipment to customers when a formal arrangement
      exists, the price is fixed or determinable, the delivery is completed, no
      other significant obligations of the Company exist and collectibility is
      reasonably assured. Payments received before all of the relevant criteria
      for revenue recognition are satisfied are recorded as unearned
    revenue.                                                                                                 
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |     | The Company's revenue consists of the invoiced value of
      goods, net of a value-added tax (VAT). The Company allows its customers to
      return products if there is there is a product quality problem; however,
      the Company has not experience a material amount of returns to date, and
      as such does not provide any allowance for sales returns.                                                                                                                                                                                                                                                                         
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |     | The Company has expanded its sales model from relying
      solely on direct sales to a multiple sales channels where it is expected
      that third party distributors will play a larger role. Accordingly, the
      Company has incentivized these distributors with a 1.00% sales incentive.
      In connection, with this expansion of its sales channels, and
      consideration of accounting guidance provided in FASB ASC605-50
      (EITF 01-9), the Company will recognize these sales incentives as
      reduction in gross sales revenue resulting. The Company reports net sales
      revenue on its statements of income.

15

---

AMERICAN LORAIN CORPORATION 
NOTES TO FINANCIAL STATEMENTS - SEPTEMBER 30, 2010 AND DECEMBER 31, 2009 
(STATED IN US DOLLARS)

| | (w) | Earnings per share                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| |     | Basic earnings per share is computed by dividing net income by the weighted average number of ordinary shares outstanding during the period. Diluted earnings per share is computed by dividing net income by the sum of the weighted
average number of ordinary shares outstanding and dilutive potential ordinary shares during the years. During the period ended September 30, 2010 and the year ended December 31, 2009, no dilutive potential ordinary shares were issued.                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| |     | The Company computes earnings per share (“EPS”) in accordance with Statement of Financial Accounting Standards No. 128, “Earnings per share” (“SFAS No. 128”), and SEC Staff Accounting Bulletin
No. 98 (“SAB 98”). SFAS No. 128 requires companies with complex capital structures to present basic and diluted EPS. Basic EPS is measured as the income or loss available to common shareholders divided by the weighted average common
shares outstanding for the period. Diluted EPS is similar to basic EPS but presents the dilutive effect on a per share basis of potential common shares (e.g., convertible securities, options, and warrants) as if they had been converted at the
beginning of the periods presented, or issuance date, if later. Potential common shares that have an anti-dilutive effect (i.e., those that increase income per share or decrease loss per share) are excluded from the calculation of diluted EPS.
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | (x) | Financial Instruments                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| |     | The Company’s financial instruments are cash and cash equivalents, accounts receivable, other receivable, advances to suppliers, advances to employees, bank loans and notes, accounts payable, other payable, dividend payable,
accrued liabilities, and long-term liabilities. The recorded values of cash and cash equivalents, accounts receivable, other receivable, advances to suppliers, advances to employees, bank loans and notes, accounts payable, other payable, dividend
payable and accrued liabilities approximate their fair values based on their short-term nature. The recorded values of long-term liabilities approximate their fair values, as interest approximates market rates.                                                                                                                                                                                                                                      
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | (y) | Commitments and contingencies                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| |     | Liabilities for loss contingencies arising from claims, assessments, litigation, fines and penalties and other sources are recorded when it is probable that a liability has been incurred and the amount of the assessment can be
reasonably estimated.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | (z) | Comprehensive income                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| |     | Comprehensive income is defined to include all changes in equity except those resulting from investments by owners and distributions to owners. Among other disclosures, all items that are required to be recognized under current
accounting standards as components of comprehensive income are required to be reported in a financial statement that is presented with the same prominence as other financial statements. The Company’s other comprehensive income is currently
comprised of foreign currency translation adjustments and unrealized gains or losses on investments.                                                                                                                                                                                                                                                                                                                                                        

| | (aa) | Recent accounting pronouncements                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | ---- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| |      | In June 2009, FASB issued FASB Statement No. 166, Accounting for Transfers for Financial Assets (FASB ASC 860 Transfers and Servicing) and FASB Statement No. 167 (FASB ASC 810 Consolidation), a revision to FASB Interpretation No.
46 (Revised December 2003), Consolidation of Variable Interest Entities (FASB ASC 810 Consolidation).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| |      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| |      | Statement 166 is a revision to FASB Statement No. 140, Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities (FASB ASC 860 Transfers and Servicing), and will require more information about
transfers of financial assets, including securitization transactions, and where entities have continuing exposure to the risks related to transferred financial assets. It eliminates the concept of a “qualifying special-purpose entity, changes the requirements for
      derecognizing financial assets, and requires additional disclosures.
      Statement No. 166 (FASB ASC 860 Transfers and Servicing) must be applied
      as of the beginning of each reporting entitys first annual reporting
      period that begins after November 15, 2009, for interim periods within
      that first annual reporting period and for interim and annual reporting
      periods thereafter. Earlier application is prohibited. This Statement must
      be applied to transfers occurring on or after the effective date. The
      Company is still evaluating the impact of the above
  pronouncement.

16

---

AMERICAN LORAIN CORPORATION 
NOTES TO FINANCIAL STATEMENTS - SEPTEMBER 30, 2010 AND
DECEMBER 31, 2009 
(STATED IN US DOLLARS)

| |  | Statement 167 is a revision to FASB Interpretation No. 46
      (Revised December 2003), Consolidation of Variable Interest Entities (FASB
      ASC 810 Consolidation), and changes how a reporting entity determines when
      an entity that is insufficiently capitalized or is not controlled through
      voting (or similar rights) should be consolidated. The determination of
      whether a reporting entity is required to consolidate another entity is
      based on, among other things, the other entitys purpose and design and
      the reporting entitys ability to direct the activities of the other
      entity that most significantly impact the other entitys economic
      performance. Statement No. 167 (FASB ASC 810 Consolidation) shall be
      effective as of the beginning of each reporting entitys first annual
      reporting period that begins after November 15, 2009, for interim periods
      within that first annual reporting period, and for interim and annual
      reporting periods thereafter. Earlier application is prohibited. The
      Company is still evaluating the impact of the above
  pronouncement.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| |  | On June 30, 2009, FASB issued FASB Statement No. 168,
      Accounting Standards Codification ( FASB ASC 105 Generally Accepted
      Accounting Principles) a replacement of FASB Statement No. 162 the
      Hierarchy of Generally Accepted Accounting Principles. On the effective
      date of this standard, FASB Accounting Standards Codification (ASC)
      became the source of authoritative U.S. accounting and reporting standards
      for nongovernmental entities, in addition to guidance issued by the
      Securities and Exchange Commission (SEC). This statement is effective for
      financial statements issued for interim and annual periods ending after
      September 15, 2009. If an accounting change results from the application
      of this guidance, an entity should disclose the nature and reason for the
      change in accounting principle in their financial statements. This new
      standard flattens the GAAP hierarchy to two levels: one that is
      authoritative (in FASB ASC) and one that is non-authoritative (not in FASB
      ASC). Exceptions include all rules and interpretive releases of the SEC
      under the authority of federal securities laws, which are sources of
      authoritative GAAP for SEC registrants, and certain grandfathered guidance
      having an effective date before March 15, 1992. Statement No. 168 is the
      final standard that will be issued by FASB in that form. There will no
      longer be, for example, accounting standards in the form of statements,
      staff positions, Emerging Issues Task Force (EITF) abstracts, or AICPA
      Accounting Statements of Position. The Company has adopted the new
      accounting standard. There was no material impact on the financial
      statements presented herein.
| |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     

|3. | RESTRICTED CASH                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   | Restricted Cash represents interest bearing deposits
      placed with banks to secure banking facilities in the form of loans and
      notes payable. The restriction of funds is based on time. The funds that
      collateralize loans are held for 60 days in savings account that pay
      interest at the prescribed national daily savings account rate. For funds
      that underline notes payable, the cash is deposited in six month time
      deposits that pay interest at the national time deposit rate.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|4. | TRADE ACCOUNTS
RECEIVABLE                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   

| |                                            |   | 9/30/2010  |   |   | 12/31/2009 |  
| | ------------------------------------------ | - | ---------- | - | - | ---------- | -
| | Trade accounts receivable                  | $ | 26,245,604 |   | $ | 23,293,362 |  
| | Less:Allowance for doubtful
      accounts |   | (317,655   | ) |   | (267,590   | )
| |                                            | $ | 25,927,949 |   | $ | 23,025,772 |  

17

---

AMERICAN LORAIN CORPORATION 
NOTES TO FINANCIAL STATEMENTS - SEPTEMBER 30, 2010 AND
DECEMBER 31, 2009 
(STATED IN US DOLLARS)

| | Allowance for bad debt: |   | 9/30/2010 |   |   | 12/31/2009 |  
| | ----------------------- | - | --------- | - | - | ---------- | -
| | Beginning balance       | $ | (267,590  | ) | $ | (127,967   | )
| | Additions to allowance  |   | (50,065   | ) |   | (139,623   | )
| | Bad debt written-off    |   | -         |   |   | -          |  
| | Ending balance          | $ | (317,655  | ) | $ | (267,590   | )

|   | The Company offers credit terms of between 30 to 60 days
      to most of their domestic customers, including supermarkets and
      wholesalers, around 90 days to most of their international customers, and
      between 0 to 15 days for most of the third-party distributors the Company
      works with.
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                 
|5. | OTHER RECEIVABLE                                                                                                                                                                                                                                                                                                
|   |                                                                                                                                                                                                                                                                                                                 
|   | Other receivables consisted of the following as of
      September 30, 2010 and December 31, 2009:                                                                                                                                                                                                              

| |                                                          |   | 9/30/2010 |  |   | 12/31/2009 | 
| | -------------------------------------------------------- | - | --------- |  | - | ---------- | 
| | Advances to employees
      for job/travel disbursements |   | 514,706   |  |   | 627,006    | 
| | Amount due by a non-related enterprise                   |   | 962,729   |  |   | 1,999,671  | 
| | Other non-related
      receivables                      |   | 2,252,242 |  |   | 1,772,128  | 
| |                                                          | $ | 3,729,677 |  | $ | 4,398,805  | 

Advances to employees for job/travel disbursements consisted of
advances to employees for transportation, meals, client entertainment,
commissions, and procurement of certain raw materials. The advances issued to
employees may be carried for extended periods of time because employees may
spend several months out in the field working to procure new sales contracts or
fulfill existing contracts. Advances to employees for purchase of materials in
other receivables are adjusted to advances to suppliers as of September 30,
2010. The Company reclassified certain amounts carried as Other Receivable:
Advances to employees for purchase of materials at December 31, 2009 to
Advances to Suppliers to improve comparability between periods. This
reclassification had not impact on the Companys statements of income in prior
periods.

Related party travel advances consisted of the following as of
September 30, 2010 and December 31, 2009:

| |                                        |   | 9/30/2010 |  |   | 12/31/2009 | 
| | -------------------------------------- | - | --------- |  | - | ---------- | 
| | Chen Si, Chairman &
      CEO          | $ | 217,086   |  | $ | 541,245    | 
| | Lu Yundong, General Manager            |   | 57,560    |  |   | 32,358     | 
| | Liu Gang, Former Board
      Secretary |   | -         |  |   | 29,513     | 
| |                                        | $ | 274,646   |  | $ | 603,116    | 

Related party travel advances represents cash issued to senior
management and officers for travel, lodging, and meals and entertainment to be
incurred on business trips in the normal course of business. In accordance with
the Company controls over cash, officers and senior managers, as similar to all
employees, must sign receipts when cash is issued to them and must return with
receipts from vendors in order for the finance department to account for the
expenses.

18

---

AMERICAN LORAIN CORPORATION 
NOTES TO FINANCIAL STATEMENTS - SEPTEMBER 30, 2010 AND
DECEMBER 31, 2009 
(STATED IN US DOLLARS)

|6. | INVENTORY                                                                                   
|-- | --------------------------------------------------------------------------------------------
|   |                                                                                             
|   | Inventories consisted of the following as of September
      30, 2010 and December 31, 2009:

| |                |   | 9/30/2010  |  |   | 12/31/2009 | 
| | -------------- | - | ---------- |  | - | ---------- | 
| | Raw materials  | $ | 14,837,593 |  | $ | 12,014,402 | 
| | Finished goods |   | 20,929,066 |  |   | 14,385,715 | 
| |                | $ | 35,766,659 |  | $ | 26,400,117 | 

|7. | PROPERTY, PLANT AND EQUIPMENT                                                                                  
|-- | ---------------------------------------------------------------------------------------------------------------
|   |                                                                                                                
|   | Property, plant, and equipment consisted of the following
      as of September 30, 2010 and December 31,
2009:

| |                               |   | 9/30/2010  |   |   | 12/31/2009 |  
| | ----------------------------- | - | ---------- | - | - | ---------- | -
| | At Cost:                      |   |            |   |   |            |  
| | Buildings                     | $ | 47,898,905 |   | $ | 29,181,372 |  
| | Landscaping and trees         |   | 2,816,239  |   |   | 2,758,944  |  
| | Machinery and
      equipment |   | 9,150,159  |   |   | 7,783,775  |  
| | Office equipment              |   | 498,354    |   |   | 466,411    |  
| | Motor vehicles                |   | 414,608    |   |   | 357,902    |  
| |                               | $ | 60,778,265 |   | $ | 40,548,404 |  
| | Less:Accumulated depreciation |   |            |   |   |            |  
| | Buildings                     |   | (2,456,818 | ) |   | (1,811,423 | )
| | Landscaping and
      trees   |   | (23,469    | ) |   |            |  
| | Machinery and equipment       |   | (3,777,988 | ) |   | (3,226,015 | )
| | Office equipment              |   | (295,390   | ) |   | (264,039   | )
| | Motor vehicles                |   | (220,524   | ) |   | (230,341   | )
| |                               |   | (6,774,189 | ) |   | (5,531,818 | )
| |                               |   |            |   |   |            |  
| | Construction in Progress      |   | 863,116    |   |   | 6,263,821  |  
| |                               | $ | 54,867,192 |   | $ | 41,280,407 |  

Construction in progress is mainly comprised of capital
expenditures for construction of the Companys new corporate campus, including
offices, factories, and staff dormitories. Capital commitments for the
construction are immaterial for the two years above.

Landscaping and trees represent the Companys vertical
investment in the development of its own chestnut supply that is expected to
increase the Companys ability to meet demands for its products and help reduce
potential volatility in its cost for raw materials over time. The Company began
depreciating these as of July 1, 2010 because the assets have begun producing
harvests that will become material to the Companys operations.

19

---

AMERICAN LORAIN CORPORATION 
NOTES TO FINANCIAL STATEMENTS - SEPTEMBER 30, 2010 AND
DECEMBER 31, 2009 
(STATED IN US DOLLARS)

|8. | LAND USE RIGHTS, NET                                                                            
|-- | ------------------------------------------------------------------------------------------------
|   |                                                                                                 
|   | Land use rights consisted of the following as of
      September 30, 2010 and December 31,
2009:

| |                                     |   | 9/30/2010 |   |   | 12/31/2009 |  
| | ----------------------------------- | - | --------- | - | - | ---------- | -
| | Land use rights, at cost            |   | 5,445,417 |   | $ | 4,359,423  |  
| | Less:Accumulated
      amortization |   | (596,990  | ) |   | (487,876   | )
| |                                     | $ | 4,848,427 |   | $ | 3,871,547  |  

Land use rights represent the Companys purchase of usage
rights for a parcel of land for a specified duration of time. The PRC government
owns the land on which the Companys corporate campus is being constructed.

|9. | SHORT-TERM BANK LOANS
|-- | ---------------------

Short-term bank loans consisted of the following as of
September 30, 2010 and December 31, 2009:

| |                                                          |  | Remark |  |   | 9/30/2010 |  |   | 12/31/2009 | 
| | -------------------------------------------------------- |  | ------ |  | - | --------- |  | - | ---------- | 
| | Loans from Junan County Construction Bank,               |  |        |  |   |           |  |   |            | 
| |  Interest rate at 5.346% per annum
      due1/18/2010   |  |        |  | $ | -         |  | $ | 212,075    | 
| |  Interest rate at 5.346% per annum due 1/24/2010        |  |        |  |   | -         |  |   | 144,796    | 
| |  Interest rate at 5.346% per annum
      due 1/28/2010  |  |        |  |   | -         |  |   | 153,572    | 
| |  Interest rate at 5.346% per annum due 3/8/2010         |  |        |  |   | -         |  |   | 153,571    | 
| |  Interest rate at 5.346% per annum
      due 3/25/2010  |  |        |  |   | -         |  |   | 153,572    | 
| |  Interest rate at 5.346% per annum due 1/22/2010        |  |        |  |   | -         |  |   | 394,899    | 
| |  Interest rate at 5.346% per annum
      due 1/10/2010  |  |        |  |   | -         |  |   | 394,898    | 
| |  Interest rate at 5.346% per annum due 1/12/2010        |  |        |  |   | -         |  |   | 475,340    | 
| |  Interest rate at 5.841% per annum
      due 12/27/2010 |  | A      |  |   | 731,551   |  |   | 716,667    | 
| |  Interest rate at 5.346% per annum due 9/1/2010         |  |        |  |   | -         |  |   | 1,170,073  | 
| |  Interest rate at 5.346% per annum
      due 1/7/2010   |  |        |  |   | -         |  |   | 1,462,587  | 
| |  Interest rate at 5.841% per annum due 12/9/2010        |  |        |  |   | 1,492,961 |  |   | -          | 
| |  Interest rate at 5.841% per annum
      due 9/9/2011   |  |        |  |   | 1,194,369 |  |   | -          | 
| |  Interest rate at 5.346% per annum due 12/15/2010       |  |        |  |   | 194,085   |  |   | -          | 
| |  Interest rate at 5.346% per annum
      due 12/15/2010 |  |        |  |   | 67,183    |  |   | -          | 
| |  Interest rate at 5.841% per annum due 1/14/2011        |  |        |  |   | 477,747   |  |   | -          | 
| |  Interest rate at 5.841% per annum
      due 3/4/2011   |  |        |  |   | 388,170   |  |   | -          | 
| |                                                          |  |        |  |   |           |  |   |            | 
| | Loan from Junan County
      Agriculture Bank,           |  |        |  |   |           |  |   |            | 

20

---

AMERICAN LORAIN CORPORATION 
NOTES TO FINANCIAL STATEMENTS - SEPTEMBER 30, 2010 AND
DECEMBER 31, 2009 
(STATED IN US DOLLARS)

| |  Interest rate at 7.965% per annum
      due 8/23/2010          |  |   |  |  | -         |  |  | 1,608,846 | 
| | ---------------------------------------------------------------- |  | - |  |  | --------- |  |  | --------- | 
| |  Interest rate at 7.965% per annum due 9/22/2010                |  |   |  |  | -         |  |  | 1,447,961 | 
| |  Interest rate at 6.804% per annum
      due 3/3/2010           |  |   |  |  | -         |  |  | 1,462,587 | 
| |  Interest rate at 7.965% per annum due 11/22/2010               |  |   |  |  | 656,903   |  |  | 643,538   | 
| |  Interest rate at 6.804% per annum
      due 3/11/2010          |  |   |  |  | -         |  |  | 2,193,881 | 
| |  Interest rate at 6.804% per annum due 3/08/2010                |  |   |  |  | -         |  |  | 1,755,104 | 
| |  Interest rate at 7.965% per annum
      due 3/17/2010          |  |   |  |  | -         |  |  | 3,363,950 | 
| |  Interest rate at 6.903% per annum due 3/30/2011                |  |   |  |  | 94,057    |  |  | -         | 
| |  Interest rate at 6.804% per annum
      due 12/9/2010          |  |   |  |  | 1,940,849 |  |  | -         | 
| |  Interest rate at 6.804% per annum due 12/13/2010               |  |   |  |  | 2,239,441 |  |  | -         | 
| |  Interest rate at 6.804% per annum
      due 11/17/2010         |  |   |  |  | 1,791,553 |  |  | -         | 
| |  Interest rate at 7.434% per annum due 8/23/2011                |  | B |  |  | 1,492,961 |  |  | -         | 
| |  Interest rate at 7.434% per annum
      due 9/18/2011          |  |   |  |  | 1,478,031 |  |  | -         | 
| |                                                                  |  |   |  |  |           |  |  |           | 
| | Loan from Junan County Industrial
      and Commercial Banks,    |  |   |  |  |           |  |  |           | 
| |  Interest rate at 5.346% per annum due1/8/2010                  |  |   |  |  | -         |  |  | 438,776   | 
| |  Interest rate at 5.346% per annum
      due1/14/2010           |  |   |  |  | -         |  |  | 541,157   | 
| |  Interest rate at 5.346% per annum due1/25/2010                 |  |   |  |  | -         |  |  | 614,287   | 
| |  Interest rate at 3.240% per annum
      due 3/15/2010          |  |   |  |  | -         |  |  | 463,640   | 
| |  Interest rate at 5.346% per annum due 10/10/2010               |  |   |  |  | 1,343,665 |  |  | -         | 
| |  Interest rate at 5.346% per annum
      due 10/26/2010         |  |   |  |  | 1,269,017 |  |  | -         | 
| |  Interest rate at 5.346% per annum due 11/8/2010                |  |   |  |  | 627,043   |  |  | -         | 
| |  Interest rate at 3.510% per annum
      due 11/26/2010         |  |   |  |  | 1,224,228 |  |  | -         | 
| |  Interest rate at 4.860% per annum due 10/12/2010               |  | C |  |  | 880,847   |  |  | -         | 
| |  Interest rate at 4.860% per annum
      due 12/10/2010         |  | D |  |  | 1,030,143 |  |  | -         | 
| |                                                                  |  |   |  |  |           |  |  |           | 
| |                                                                  |  |   |  |  |           |  |  |           | 
| | Loan from Junan County Agricultural Financial
      Institution, |  |   |  |  |           |  |  |           | 
| |  Interest rate at 10.939% per annum
      due 1/22/2010         |  |   |  |  | -         |  |  | 1,170,070 | 
| |  Interest rate at 7.222% per annum due 3/1/2011                 |  | E |  |  | 1,045,072 |  |  | -         | 
| |  Interest rate at 10.939% per annum
      due 2/07/2011         |  |   |  |  | 1,119,726 |  |  | -         | 

21

---

AMERICAN LORAIN CORPORATION 
NOTES TO FINANCIAL STATEMENTS - SEPTEMBER 30, 2010 AND
DECEMBER 31, 2009 
(STATED IN US DOLLARS)

| | Loan from Linyi Commercial Bank,                                          |  |   |  |  |           |  |  |           | 
| | ------------------------------------------------------------------------- |  | - |  |  | --------- |  |  | --------- | 
| |  Interest rate at 9.293% per annum
      due 1/19/2010                   |  |   |  |  | -         |  |  | 658,164   | 
| |  Interest rate at 8.496% per annum due 12/21/2010                        |  |   |  |  | 701,692   |  |  | 687,416   | 
| |  Interest rate at 11.340% per annum
      due 12/16/2010                 |  | F |  |  | 1,492,961 |  |  | 1,462,587 | 
| |                                                                           |  | F |  |  |           |  |  |           | 
| |  Interest rate at 11.340% per annum
      due 12/14/2010                 |  |   |  |  | 1,492,961 |  |  | 1,462,587 | 
| |  Interest rate at 11.510% per annum due 1/21/2011                        |  |   |  |  | 671,832   |  |  | -         | 
| |                                                                           |  |   |  |  |           |  |  |           | 
| | China Minsheng Banking Corporation, Linyi
      Branch,                   |  |   |  |  |           |  |  |           | 
| |  Interest rates at 6.372% per annum
      due 6/09/2011                  |  | G |  |  | 2,985,921 |  |  | -         | 
| |                                                                           |  |   |  |  |           |  |  |           | 
| | Loan from Beijing Miyun County Shilipu
      Rural Financial Institution, |  |   |  |  |           |  |  |           | 
| |  Interest rates at 7.434% per annum due 1/20/2010                        |  |   |  |  | -         |  |  | 1,462,587 | 
| |  Interest rates at 6.903% per annum
      on demand                      |  |   |  |  | 2,836,625 |  |  | 2,778,915 | 
| |                                                                           |  |   |  |  |           |  |  |           | 
| | Loan from China Merchants Bank,
      Beijing,                            |  |   |  |  |           |  |  |           | 
| |  Interest rate at 5.310% per annum on demand                             |  |   |  |  | -         |  |  | 731,294   | 
| |                                                                           |  |   |  |  |           |  |  |           | 
| | Loan from China Agricultural Bank, Luotian
      Branch                   |  |   |  |  |           |  |  |           | 
| |  Interest rate at 6.372% per annum
      due 8/25/2010                   |  |   |  |  | -         |  |  | 1,901,363 | 
| |  Interest rate at 6.372% per annum due 3/20/2011                         |  |   |  |  | 74,648    |  |  | -         | 
| |  Interest rate at 6.372% per annum
      due 6/20/2011                   |  |   |  |  | 149,296   |  |  | -         | 
| |  Interest rate at 6.372% per annum due 9/12/2011                         |  |   |  |  | 895,776   |  |  | -         | 
| |                                                                           |  |   |  |  |           |  |  |           | 
| | Bank of Beijing,                                                          |  |   |  |  |           |  |  |           | 
| |  Interest rate at 6.903% per annum
      due 7/29/2010                   |  |   |  |  | -         |  |  | 292,517   | 
| |                                                                           |  |   |  |  |           |  |  |           | 
| | East West Bank (Formerly United
      Commercial Bank), China Branch,     |  |   |  |  |           |  |  |           | 

22

---

AMERICAN LORAIN CORPORATION 
NOTES TO FINANCIAL STATEMENTS - SEPTEMBER 30, 2010 AND
DECEMBER 31, 2009 
(STATED IN US DOLLARS)

| |  Interest rate at 5.494% per annum
      due 1/14/2011  |  | H |  |   | 969,723    |  |   | 1,050,137  | 
| | -------------------------------------------------------- |  | - |  | - | ---------- |  | - | ---------- | 
| |                                                          |  |   |  |   |            |  |   |            | 
| | HSBC Miyun Branch,                                       |  |   |  |   |            |  |   |            | 
| |  Interest rate at 6.804% per annum due 4/08/2010        |  |   |  |   | -          |  |   | 292,517    | 
| |  Interest rate at 7.430% per annum
      due 10/08/2010 |  | I |  |   | 298,592    |  |   | -          | 
| |  Interest rate at 5.840% per annum due 6/09/2011        |  | I |  |   | 298,592    |  |   | -          | 
| |  Interest rate at 6.372% per annum
      due 6/29/2011  |  |   |  |   | 970,424    |  |   |            | 
| |                                                          |  |   |  |   |            |  |   |            | 
| |                                                          |  |   |  |   |            |  |   |            | 
| | Shenzhen Development Bank,                               |  |   |  |   |            |  |   |            | 
| |  Interest rate at 5.576% per annum
      due 12/29/2010 |  |   |  |   | 1,492,961  |  |   | 1,462,587  | 
| |  Interest rate at 5.310% per annum due 2/12/2011        |  |   |  |   | 477,747    |  |   | -          | 
| |  Interest rate at 5.310% per annum
      due 9/14/2011  |  |   |  |   | 746,480    |  |   | -          | 
| |                                                          |  |   |  |   |            |  |   |            | 
| | Golly Wing Holding Ltd,                                  |  |   |  |   |            |  |   |            | 
| |  Interest rate at 12.000% per annum due 11/15/2010      |  |   |  |   | 1,503,074  |  |   | -          | 
| |                                                          |  |   |  |   |            |  |   |            | 
| | China Development Bank,                                  |  |   |  |   |            |  |   |            | 
| |  Interest rate at 5.841% per annum
      due 6/27/2011  |  |   |  |   | 2,985,921  |  |   | -          | 
| |                                                          |  |   |  |   |            |  |   |            | 
| | Shanghai Pudong Development
      Bank,                  |  |   |  |   |            |  |   |            | 
| |  Interest rate at 5.832% per annum due 3/21/2011        |  |   |  |   | 2,985,921  |  |   | -          | 
| |                                                          |  |   |  |   |            |  |   |            | 
| | Luotian Agricultural Development Bank,                   |  |   |  |   |            |  |   |            | 
| |  Interest rate at 0.670% per month
      due 12/11/2010 |  |   |  |   | -          |  |   | 109,694    | 
| |                                                          |  |   |  |   |            |  |   |            | 
| |                                                          |  |   |  | $ | 46,810,749 |  | $ | 35,488,212 | 

The short-term loans, which are denominated in the functional
currency Renminbi (RMB), were primarily obtained for general working capital.

Remark:

23

---

AMERICAN LORAIN CORPORATION 
NOTES TO FINANCIAL STATEMENTS - SEPTEMBER 30, 2010 AND
DECEMBER 31, 2009 
(STATED IN US DOLLARS)

A: A parcel of 19,840 square meters land use right was used as
collateral for this loan. 
B: A parcel of 12,726 square meters land use right and an 8,162
square meters building was used as collateral for this loan.
C: Account receivable of $191,248 was use as collateral for
this loan. D: Account receivable of $239,441 was used as collateral for this
loan. 
E: A parcel of Land and building worthy $1,045,072 was used as
collateral for this loan. 
F: Machinery of $857,737 was used as collateral for
these two loans. 
G: A land of 18,734 square meter was used as collateral for
this loan. 
H: A parcel of 19,507 square meters land use right, owned by
Sishui Xinlu, was used as collateral for this loan. 
I: Machinery and equipment
was used as collateral for this loan.

|10. | NOTES PAYABLE                                                                                 
|--- | ----------------------------------------------------------------------------------------------
|    |                                                                                               
|    | Notes payable consisted of the following as of September
      30, 2010 and December 31, 2009:

| |                                            |   | 9/30/2010 |  |   | 12/31/2009 | 
| | ------------------------------------------ | - | --------- |  | - | ---------- | 
| | Loans from Junan County Construction Bank, |   |           |  |   |            | 
| |  due at 1/26/2011                         | $ | 373,240   |  | $ | -          | 
| |  due at 12/26/210                         |   | 343,381   |  |   | -          | 
| |                                            | $ | 716,621   |  | $ | -          | 

|    | Certain notes payable, as indicated above, do not have a
      stated rate of interest. These notes are payable on demand to the
      Companys creditors.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                            
|11. | TAXES PAYABLE                                                                                                                                              
|    |                                                                                                                                                            
|    | Taxes payable consisted of the following as of September
      30, 2010 and December 31, 2009:                                                             

| |                                  |   | 9/30/2010 |  |   | 12/31/2009 | 
| | -------------------------------- | - | --------- |  | - | ---------- | 
| | Value added tax payable          | $ | 261,364   |  | $ | 328,608    | 
| | Corporate income tax payable     |   | 1,527,766 |  |   | 1,842,751  | 
| | Employee payroll tax withholding |   | 2,644     |  |   | 3,449      | 
| | Property tax payable             |   | 3,941     |  |   | 12,279     | 
| | Stamp tax payable                |   | -         |  |   | 359        | 
| | Sales tax payable                |   | -         |  |   | -          | 
| | Land use tax payable             |   | 28,629    |  |   | 41,260     | 
| | Import tariffs                   |   | 6,773     |  |   | 6,635      | 
| |                                  | $ | 1,831,117 |  | $ | 2,235,341  | 

|12. | ACCRUED EXPENSES AND OTHER PAYABLE                                                                                  
|--- | --------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                     
|    | Accrued expenses and other payables consisted of the
      following as of September 30, 2010 and December 31,
2009:

| |                            |   | 9/30/2010 |  |   | 12/31/2009 | 
| | -------------------------- | - | --------- |  | - | ---------- | 
| | Accrued salaries and wages | $ | 157,877   |  | $ | 500,390    | 
| | Accrued utility expenses   |   | 116,318   |  |   | 263,492    | 
| | Accrued interest expenses  |   | -         |  |   | 9,264      | 

| | Accrued transportation expenses |   | 179,985   |  |   | 344,841   | 
| | ------------------------------- | - | --------- |  | - | --------- | 
| | Other accruals                  |   | 327,119   |  |   | 184,860   | 
| | Business and other taxes        |   | 319,932   |  |   | 2,344,746 | 
| | Purchase disbursement payable   |   | 882,710   |  |   | 2,750,547 | 
| | Accrued staff welfare           |   | 74,576    |  |   | 24,352    | 
| |                                 | $ | 2,058,517 |  | $ | 6,422,492 | 

24

---

AMERICAN LORAIN CORPORATION 
NOTES TO FINANCIAL STATEMENTS - SEPTEMBER 30, 2010 AND
DECEMBER 31, 2009 
(STATED IN US DOLLARS)

|13. | LONG-TERM DEBT                                                                                                 
|--- | ---------------------------------------------------------------------------------------------------------------
|    |                                                                                                                
|    | Long-term debt current portion consisted of the following
      as of September 30, 2010 and December 31,
2009:

| |                                                                                 |   | 9/30/2010 |  |   | 12/31/2009 | 
| | ------------------------------------------------------------------------------- | - | --------- |  | - | ---------- | 
| | Loans from Luotian Agricultural Development
      Bank                          |   |           |  |   |            | 
| |  Interest rate at 0.670% per annum
      due 12/11/2010                        | $ | 111,972   |  | $ | -          | 
| |  Interest rate at 2.100% per annum due 12/11/2010                              |   | 13,063    |  |   | -          | 
| |                                                                                 |   |           |  |   |            | 
| | Loans from East West Bank (Formerly United
      Commercial Bank), China Branch |   |           |  |   |            | 
| |  Interest rate at 5.494% per annum
      due 1/14/2010                         |   | 105,759   |  |   | -          | 
| |                                                                                 |   |           |  |   |            | 
| |                                                                                 | $ | 230,794   |  | $ | -          | 

Long-term debt non-current portion consisted of the following
as of September 30, 2010 and December 31, 2009:

| |                                                                                 |   | 9/30/2010 |  |   | 12/31/2009 | 
| | ------------------------------------------------------------------------------- | - | --------- |  | - | ---------- | 
| | Loans from Luotian Agricultural Development
      Bank                          |   |           |  |   |            | 
| |  Interest rate at 2.100% per
      annum due 12/11/2011                        | $ | 13,063    |  | $ | 25,595     | 
| |                                                                                 |   |           |  |   |            | 
| | Loans from East West Bank (Formerly
      United Commercial Bank), China Branch |   |           |  |   |            | 
| |  Interest rate at 5.494% per annum due
      1/14/2010                         |   | -         |  |   | 269,278    | 
| |                                                                                 | $ | 13,063    |  | $ | 294,873    | 

|14. | CAPITALIZATION                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|    | Dating back to May 3, 2007, the Company underwent a
      reverse-merger and a concurrent financing transaction that resulted in
      24,923,178 shares of outstanding common stock that remained unchanged
      until through December 31, 2007. During the course of 2008, several
      holders of warrants issued in connection with the financing transaction
      exercised their rights to purchase shares at the prescribed exercise
      price. The holders of the warrants exercised the right to purchase a total
      of 360,207; however, because the holders did not pay in cash for the
      warrants, 110,752 of those shares were cancelled as consideration in lieu
      of the warrant holders paying in cash. Ultimately, 249,455 of new shares
      were issued to those who exercised their warrant. The Company also made an
      adjustment to it outstanding share count for rounding errors as result of
      the split and reverse splits made at the time of the reverse merger. The
      number of shares in the adjustment was an addition of seven shares. The
      Company believes the adjustment of seven shares is immaterial to both
      prior and current earnings per share calculation. As detailed in the table
      below, the total number of outstanding shares at December 31, 2008 was
      25,172,640.

25

---

AMERICAN LORAIN CORPORATION 
NOTES TO FINANCIAL STATEMENTS - SEPTEMBER 30, 2010 AND
DECEMBER 31, 2009 
(STATED IN US DOLLARS)

During the year of 2009, the Company issued 56,393 shares of
stock to its employees and vendors and 5,011,169 shares to investors. The
Company issued 1,334,573 stock options to employees on July 28, 2009. 1,753,909
shares of Series A warrants and 501,115 shares of Series B warrants were issued
to investors on October 28, 2009.

On February 10, 2010, the Company issued 2,000 shares to
service provider as compensation for services rendered.

On September 10, 2010, the Company issued to a group of
accredited investors, in a private placement, 3,440,800 shares at price of 2.80
per share, for gross proceeds of approximately $9.6 million. After the deduction
of issuance costs, the Company received $8,955,730 in net proceeds. Among other
requirement, the transaction also called for the Company to reset the exercise
price of previously issued warrants, enter into a make good agreement, escrow
agreement, and registration rights agreement. The company does not believe these
additional agreements had any impact on it earnings during the nine months ended
September 30, 2010.

On September 23, 2010, the Company issued 5,000 shares of
common stock to its employees as incentive compensation.

On September 23, 2010, the Company issued 731,707 shares of
restricted common stock to the former owner of Shandong Greenpia, Mr. Ji
Zhenwei. See Note 1. ORGANIZATION, BASIS OF PRESENTATION, AND PRINCIPAL
ACTIVITIES for further details

During the year of 2010, the Company transferred 5,161,176 from
retained earnings to additional paid up capital and 1,030,843 from retained
earnings to statutory reserve during the year of 2010. This transfer is to be
used for future company development, recovery of losses, and the expansion of
operations.

| |                                                         |  | Par value authorized |  |  | Issuance date |  |  | Shares outstanding | 
| | ------------------------------------------------------- |  | -------------------- |  |  | ------------- |  |  | ------------------ | 
| | Common stock at 1/1/2009                                |  | 200,000,000          |  |  |               |  |  | 25,172,640         | 
| | New shares issued to employees and vendors during 2009  |  |                      |  |  | Various dates |  |  | 56,393             | 
| | New shares issued to PIPE investors                     |  |                      |  |  | 10/28/2009    |  |  | 5,011,169          | 
| | New shares issued to service provider during 2010       |  |                      |  |  | 2/10/2010     |  |  | 2,000              | 
| | New shares issued to accredited investors               |  |                      |  |  | 9/10/2010     |  |  | 3,440,800          | 
| | New shares
      issued to employee                     |  |                      |  |  | 9/23/2010     |  |  | 5,000              | 
| | New shares issued as acquisition cost                   |  |                      |  |  | 9/24/2010     |  |  | 731,707            | 
| | Common
      stock at 9/30/2010                         |  |                      |  |  |               |  |  | 34,419,709         | 
| |                                                         |  |                      |  |  |               |  |  |                    | 
| |                                                         |  | Number of warrants   |  |  |               |  |  |                    | 
| | Warrants and options                                    |  | or options           |  |  | Issuance date |  |  | Expiration date    | 
| | Issued to PIPE investors  first round financing        |  | 1,037,858            |  |  | 5/3/2007      |  |  | 5/2/2010           | 
| | Issued to placement agent  first round
      financing |  | 489,330              |  |  | 5/3/2007      |  |  | 5/2/2010           | 
| | Employee
      stock options                            |  | 1,334,573            |  |  | 7/28/2009     |  |  | 7/27/2014          | 
| | PIPE investors second round financing -
      Series A  |  | 1,753,909            |  |  | 10/28/2009    |  |  | 4/28/2015          | 
| | PIPE investors second round financing - Series B        |  | 501,115              |  |  | 10/28/2009    |  |  | 10/28/2012         | 
| | Total
      warrants                                    |  | 5,116,785            |  |  |               |  |  |                    | 

26

---

AMERICAN LORAIN CORPORATION 
NOTES TO FINANCIAL STATEMENTS - SEPTEMBER 30, 2010 AND
DECEMBER 31, 2009 
(STATED IN US DOLLARS)

|15. | NON-CONTROLLING INTERESTS                                                                                                                                                                                      
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                
|    | The non-controlling interest represents the 19.8% equity
      of Shandong Green Foodstuff Co., Ltd. held by the Shandong Economic
      Development Investment Corporation, which is a state-owned
  interest.
|    |                                                                                                                                                                                                                
|16. | SALES BY PRODUCT TYPE                                                                                                                                                                                          
|    |                                                                                                                                                                                                                
|    | Sales by categories of product consisted of the following
      as of September 30, 2010 and 2009:                                                                                                             

| | Category         |   | 2010        |  |   | 2009       | 
| | ---------------- | - | ----------- |  | - | ---------- | 
| | Chestnut         | $ | 49,062,130  |  | $ | 44,852,695 | 
| | Convenience food |   | 35,911,359  |  |   | 18,099,093 | 
| | FCB food         |   | 16,878,265  |  |   | 20,858,242 | 
| | Others           |   | -           |  |   | 31,082     | 
| | Total            | $ | 101,851,754 |  | $ | 83,841,112 | 

Revenue by geography consisted of the following as of September
30, 2010 and 2009:

| | Country                  |   | 2010        |  |   | 2009       | 
| | ------------------------ | - | ----------- |  | - | ---------- | 
| | Australia                |   | 174,840     |  |   | -          | 
| | Belgium                  | $ | 1,618,314   |  | $ | 1,203,354  | 
| | China                    |   | 80,882,742  |  |   | 68,980,929 | 
| | France                   |   | 418,819     |  |   | 723,383    | 
| | Germany                  |   | 779,334     |  |   | 395,209    | 
| | Holland                  |   | 118,318     |  |   | 142,385    | 
| | Hong Kong                |   | 73,192      |  |   | 342,428    | 
| | Indonesia                |   | 134,577     |  |   | -          | 
| | Israel                   |   | 13,219      |  |   | -          | 
| | Japan                    |   | 7,134,484   |  |   | 4,245,059  | 
| | Malaysia                 |   | 1,345,771   |  |   | 422,013    | 
| | Philippines              |   | 175,691     |  |   | -          | 
| | Poland                   |   | 17,052      |  |   | -          | 
| | Saudi Arabia             |   | -           |  |   | 993,350    | 
| | Singapore                |   | 464,069     |  |   | 725,402    | 
| | South Korea              |   | 5,384,258   |  |   | 4,206,399  | 
| | Spain                    |   | 375,779     |  |   | 154,655    | 
| | Taiwan                   |   | 322,089     |  |   | 399,103    | 
| | United Kingdom           |   | 1,734,090   |  |   | 289,426    | 
| | United States of America |   | 685,116     |  |   | 541,028    | 
| | Kuwait                   |   | -           |  |   | 76,989     | 
| | Total                    | $ | 101,851,754 |  | $ | 83,841,112 | 

27

---

AMERICAN LORAIN CORPORATION 
NOTES TO FINANCIAL STATEMENTS - SEPTEMBER 30, 2010 AND
DECEMBER 31, 2009 
(STATED IN US DOLLARS)

|17. | INCOME TAXES
|--- | ------------

The following tables provide the reconciliation of the
differences between the statutory and effective tax expenses for the nine months
ended September 30, 2010 and 2009.

| |                                     |   | 2010       |   |   | 2009       |  
| | ----------------------------------- | - | ---------- | - | - | ---------- | -
| | Income attributed to PRC            | $ | 14,237,959 |   | $ | 11,439,993 |  
| | Loss attributed to US*              |   | (949,113   | ) |   | (200,243   | )
| | Income before tax                   |   | 13,288,846 |   |   | 11,239,750 |  
| |                                     |   |            |   |   |            |  
| | PRC Statutory Tax at 25%
      Rate |   | 3,559,490  |   |   | 2,809,938  |  
| | Effect of tax exemption granted     |   | (553,531   | ) |   | (229,766   | )
| | Income tax                          | $ | 3,005,959  |   | $ | 2,580,172  |  

Per Share Effect of Tax Exemption

| |                                                 |   | 2010       |  |   | 2009       | 
| | ----------------------------------------------- | - | ---------- |  | - | ---------- | 
| | Effect of tax exemption
      granted           | $ | 553,531    |  | $ | 229,766    | 
| | Weighted-Average Shares Outstanding
      Basic |   | 30,525,487 |  |   | 25,177,640 | 
| | Per share effect                                | $ | 0.02       |  | $ | 0.01       | 

The difference between the U.S. federal statutory income tax
rate and the Companys effective tax rate was as follows for the nine months
ended September 30, 2010 and 2009:

| |                                              |   | 2010   |  |   | 2009    | 
| | -------------------------------------------- | - | ------ |  | - | ------- | 
| | U.S. federal statutory
      income tax rate | $ | 35%    |  | $ | 35.00%  | 
| | Lower rates in PRC, net                      |   | -10%   |  |   | -10.00% | 
| | Tax holiday for foreign
      investments    |   | 2.38%  |  |   | -2.04%  | 
| | The Companys effective tax rate             | $ | 22.62% |  | $ | 22.96%  | 

Effective January 1, 2008, PRC government implements a new 25%
tax rate across the board for all enterprises regardless of whether domestic or
foreign enterprise without any tax holiday which is defined as two-year
exemption followed by three-year half exemption hitherto enjoyed by tax payers.
As a result of the new tax law of a standard 15% tax rate, tax holidays
terminated as of December 31, 2007. However, PRC government has established a
set of transition rules to allow enterprises already started tax holidays before
January 1, 2008, to continue enjoying the tax holidays until being fully
utilized.

*The Company has accrued a deferred tax asset as a result of
its net operating loss in 2009 because the Company has plans to setup operations
in the United States. The company anticipates that the operations within the
United States will generate income in the future so that it will be able to take
full advantage of the accrued asset. Accordingly the Company has not provided a
valuation allowances for the accrued tax asset.

The Companys has detailed the tax rates for its subsidiaries
for 2010 and 2009 in the following table.

| | Income Tax Rate      |  | 2010 |  |  | 2009 | 
| | -------------------- |  | ---- |  |  | ---- | 
| | International Lorain |  | 0%   |  |  | 0%   | 
| | Junan Hongran        |  | 25%  |  |  | 25%  | 
| | Luotian Lorain       |  | 15%  |  |  | 15%  | 
| | Beijing Lorain       |  | 15%  |  |  | 15%  | 
| | Shangdong Lorain     |  | 25%  |  |  | 25%  | 

| | Shandong Greenpia |  | 25% |  |  | 0%  | 
| | ----------------- |  | --- |  |  | --- | 
| | Dongguan Lorain   |  | 25% |  |  | 25% | 

28

---

AMERICAN LORAIN CORPORATION 
NOTES TO FINANCIAL STATEMENTS - SEPTEMBER 30, 2010 AND
DECEMBER 31, 2009 
(STATED IN US DOLLARS)

|18. | SHARE BASED COMPENSATION                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|    | On July 27, 2009, the Companys Board of Directors
      adopted the American Lorain Corporation 2009 Incentive Stock Plan (the
      Plan). The Plan provides that the maximum number of shares of the
      Companys common stock that may be issued under the Plan is 2,500,000
      shares. The Companys employees, directors, and service providers are
      eligible to participate in the Plan.                                                                                                                                                                                                                                                                                                          
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|    | For the year ended December 31, 2009, the Company
      recorded a total of $166,346 of shared based compensation expense. The
      Company issued warrants that upon exercise would result in the issuance of
      1,334,573 common shares. These stock options vest over three years, where
      33.33% vest annually. The expense related to the stock options was
      $107,375. The Company also recorded expense of $58,971 for the issuance of
      56,393 common shares to participants, respectively. The common shares
      vested immediately. Given the materiality and nature of share based
      compensation, the entire expense has been recorded as general and
      administrative expenses.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|    | During the period ended September 30, 2010, the Company
      recorded a total of $650,817 stock option and its related general and
      administrative expenses.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|    | The range of the exercise prices of the stock options
      granted since inception of the plan are shown in the following
    table:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 

| | Price Range     | Number of Shares
| | --------------- | ----------------
| | $0 - $4.99      | 1,334,573 shares
| | $5.00 - $9.99   | 0 shares        
| | $10.00 - $14.99 | 0 shares        

No tax benefit has yet to be accrued or realized. For the
period ended September 30, 2010 the Company has yet to repatriate its earnings,
accordingly it has not recognized any deferred tax assets or liability in
regards to benefits derived from the issuance of stock options.

The Company used the Black-Scholes Model to value the warrants
granted. The following shows the weighted average fair value of the grants and
the assumptions that were employed in the model:

| | Weighted-average fair value of
      grants: | $ | 1.5955 | 
| | -------------------------------------------- | - | ------ | 
| | Risk-free interest rate:                     |   | 1.27%  | 
| | Expected volatility:                         |   | 5.11%  | 
| | Expected life in months:                     |   | 45.00  | 

|19. | LEASE COMMITMENTS                                                                                                                                                                                                                     
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                       
|    | The Company has entered into an operating lease agreement
      leasing a factory building located in Dongguan, China. The lease was
      signed by Shandong Lorain on behalf of Dongguan Lorain and expires on
      August 9, 2018.

29

---

AMERICAN LORAIN CORPORATION 
NOTES TO FINANCIAL STATEMENTS - SEPTEMBER 30, 2010 AND
DECEMBER 31, 2009 
(STATED IN US DOLLARS)

The minimum future lease payments for this property at
September 30, 2010 are shown in the following table:

From
    
    To
    
    
    Lease payment10/1/2010
    
    12/31/2010
    
    $
    21,0651/1/2011
    
    12/31/2011
    
    
    84,2591/1/2012
    
    12/31/2012
    
    
    84,2591/1/2013
    
    12/31/2013
    
    
    87,5361/1/2014
    
    12/31/2014
    
    
    92,6851/1/2015
    
    12/31/2015
    
    
    92,6851/1/2016
    
    12/31/2016
    
    
    92,6851/1/2017
    
    12/31/2017
    
    
    92,6851/1/2018
    
    8/9/2018
    
    
    56,641$
    704,500


The outstanding lease commitment as of September 30, 2010 is
$704,500.

The minimum future lease payments for this property at December
31, 2009 are shown in the following table:

From
    
    To
    
    
    Lease payment1/1/2010
    
    12/31/2010
    
    $
    84,2451/1/2011
    
    12/31/2011
    
    
    84,2451/1/2012
    
    12/31/2012
    
    
    84,2451/1/2013
    
    12/31/2013
    
    
    87,5211/1/2014
    
    12/31/2014
    
    
    92,6701/1/2015
    
    12/31/2015
    
    
    92,6701/1/2016
    
    12/31/2016
    
    
    92,6701/1/2017
    
    12/31/2017
    
    
    92,6701/1/2018
    
    8/9/2018
    
    
    56,631$
    767,567


The outstanding lease commitment as of December 31, 2009 is
$767,567.

30

---

ITEM 2.     Management’s Discussion and Analysis of Financial Condition and Results of Operations

Caution Regarding Forward-Looking Statements

This quarterly report on Form 10-Q contains forward-looking statements. These statements involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements to be materially different from
any future results, performances or achievements expressed or implied by the forward-looking statements. These risks and uncertainties include, but are not limited to the factors described in the section captioned “Risk Factors” in our
Annual Report on Form 10-K for the year ended December 31, 2009 filed with the Securities and Exchange Commission.

In some cases, you can identify forward-looking statements by terms such as “anticipates,” “believes,” “could,” “estimates,” “expects,” “intends,” “may,”
“plans,” “potential,” “predicts,” “projects,” “should,” “would” and similar expressions intended to identify forward-looking statements. Forward-looking statements reflect our
current views with respect to future events and are based on assumptions and are subject to risks and uncertainties. Given these uncertainties, you should not place undue reliance on these forward-looking statements.

Also, forward-looking statements represent our estimates and assumptions only as of the date of this report. You should read this report completely and with the understanding that our actual future results may be materially different from what we
expect.

Except as required by law, we assume no obligation to update any forward-looking statements publicly, or to update the reasons actual results could differ materially from those anticipated in any forward-looking statements, even if new information
becomes available in the future.

Overview

We are an integrated food manufacturing company with headquarters in Shandong Province, China. We develop, manufacture and sell the following types of food products:

- chestnut products,
- convenience foods (including ready-to-cook foods, ready-to-eat foods, and meals ready-to-eat); and
- frozen foods.

We conduct our production activities in China. Our products are sold in 26 provinces and administrative regions in China and 42 foreign countries. We believe that we are the largest processed chestnut foods manufacturer in China. We have developed
brand recognition for our chestnut products in China, Japan and South Korea over the past 10 to 15 years. We produced over 50 high value-added processed chestnut products in the third quarter of 2010. We derive most of our revenues from sales in
China, Japan and South Korea. Our primary strategy for 2010 has been to expand our brand recognition in the Chinese market for our convenience foods products. During the nine months ended September 30, 2010 and 2009, sales of our convenience food
products accounted for 35.3% and 21.6%of our revenue, respectively. Our strategy is intended to offset the seasonal nature of our chestnut business. In addition, these products are better received in many international markets than chestnut. We are also working
to expand our brand recognition in China for our Chestnut products and frozen products. During the nine months ended September 30, 2010 and 2009, sales to Chinese customers accounted for 79.4% and 82.3% of our overall revenues, respectively. In
addition, we are seeking distribution partners and local vendors to expand our marketing efforts in Asia, North America, Europe and the Middle East. We currently have immaterial sales and marketing activity in the United States, although our
long-term plan is to significantly expand our activities there.

Sales in the nine months ended September 30, 2010 benefited from exports to South Korea and Japan and indicated that American Lorain’s key export markets in northeast Asia improved after a soft year in 2009. In the fourth quarter, American
Lorain continue to see higher demand for its traditional chestnut product line along with additional sales revenues being generated by frozen chestnut summer promotions in Beijing and Chongqing. On May 3, 2010, American Lorain detailed a summer
promotion of frozen chestnuts for sales at Lorain®-branded counters which is expected to contribute additional revenues in 2010. The summer promotion has been well received by retailers in China as well as in other Asian markets. American Lorain
plans to increase the number of its branded chestnut counters at retail points to around 1,500 from the current approximately 1,190 by the end of 2010 in these markets to support sales of its chestnut products.

Frozen foods sold primarily to select export markets in Europe and wholesale customers like Yums! Foods in China contributed approximately 16.6% in revenues for the nine months ended September 30, 2010, compared to 24.9% in the nine months ended
September 30, 2009. Among the three business segments American Lorain operates, frozen foods have the lowest average gross margin of 16%-18%. Chestnut products and convenience food products have an average gross margin of 25%-28% and 22%-24%
respectively. American Lorain has been focusing more resources on the development and sales of higher margin chestnut and convenience food products. Although we plan to continue servicing our frozen food customers for the foreseeable future in order
to retain customer relationships we expect that revenue contribution from the frozen foods category as a percentage of total revenue will decline in future. Currently, American Lorain uses mostly outsourced, third party manufacturing facilities for
its frozen foods and maintains limited production exposure and contractual obligations in this segment.

31

---

Production Factors that Affect our Financial and Operational Condition

Our business depends on obtaining a reliable supply of various agricultural products, including chestnuts, vegetables, fruits, red meat, fish, eggs, rice, flour and packaging products. During the nine months ended September 30, 2010, the cost of our
raw materials increased from $44.9 million to $56.2 million, as compared to the nine months ended September 30, 2009, for an increase of approximately
25.1% . During the third quarter of 2010, the cost of our raw materials increased from
$22.0 million to $27.1 million, as compared to the third quarter of 2009, for an increase of approximately
23.1% . We may have to increase the number of our suppliers of raw materials and expand our own agricultural operations in the future
to meet growing production demands. Despite our efforts to control our supply of raw materials and maintain good relationships with our suppliers, we could lose one or more of our suppliers at any time. The loss of several suppliers may be difficult
to replace and could increase our reliance on higher cost or lower quality suppliers, which could negatively affect our profitability. In addition, if we have to increase the number of our suppliers of raw materials in the future to meet growing
production demands, we may not be able to locate new suppliers who could provide us with sufficient materials to meet our needs. Any interruptions to, or decline in, the amount or quality of our raw materials supply could materially disrupt our
production and adversely affect our business and financial condition and financial prospects.

We spent approximately $10 million in the second quarter to complete the new frozen storage, new bean production lines as well as the new multi-purpose convenience food production lines in our Shandong and Dongguan facilities. We fund the
investment from cash generated from operations as well as bank borrowings. We expect that the new facilities will provide the additional capacity we need to meet the growing convenience food business. We will, however, continue to implement our
strategy on production line and storage space lease when external capacity and frozen storage space is needed to support the growing business from time to time. We currently do not anticipate any difficulty in leasing external production lines and
storage spaces. However, we cannot guarantee such availability for the future.

On June 28, 2010, we signed a Letter of Intent to acquire 100% ownership of Shandong Greenpia Foodstuff Co., Ltd., (“Shandong Greenpia) a manufacturer of retail-packaged, Korean-style kimchi cold dishes. The acquisition included cash and stock offer of $2.1 million
in cash and 731,707 shares of American Lorain common stock, respectively. With the acquisition we will add a total of two kimchi-style cold dish production lines with annual capacity of 3,500 metric tons. On September 23, 2010, the Company, through
its subsidiaries Junan Hongrun and International Lorain, completed its acquisition of all the outstanding registered capital of Shandong Greenpia by paying $2,100,000 cash to Taebong Inc, who
owned 50% owner of Shandong Greenpia, and issuing 731,707 shares of the Company’s restricted common stock, valued at $2.87 per share, to Mr. Ji Zhenwei, owner of Shandong Green Safety Import Export Co., Ltd, who owned 50% of Shandong
Greenpia. Accordingly, beginning September 23, 2010, the Company has accounted for Shandong Greenpia
as an indirectly held wholly owned subsidiary. The kimchi cold dishes sold by
Shandong Greenpia are categorized as convenience foods products.

Seasonality

Chestnut season in China lasts from September to January. We purchase and produce raw chestnuts during these months and store them in our refrigerated storage facilities throughout the year. Once we obtain a purchase order during the rest of the
year, we remove the chestnuts from storage, process them and ship them within one day of production. Since most chestnuts are produced and sold in the fourth quarter, the Company generally performs best in the fourth quarter.

Uncertainties that Affect our Financial Condition

We spend a significant amount of cash on our operations, principally to procure raw materials for our products. Many of our suppliers, including chestnut, vegetable and fruit farmers, and suppliers of packaging materials, require us to prepay for
their supplies in cash or pay on the same day that such supplies are delivered to us. However, some of the suppliers with whom we have a long-standing business relationship allow us to pay on credit.  We fund the majority of our working capital requirements out of cash flow generated from
operations as well as bank loans. If we fail to generate sufficient sales, or if our suppliers stop offering us credit terms, we may not have sufficient liquidity to fund our operating costs and our business could be adversely affected.

We also fund approximately 79.8% of our working capital requirements from the proceeds of short-term loans from Chinese banks. We expect to continue to fund our working capital requirements with such loans in the future. Such loans are generally
secured by our fixed assets, receivables and/or guarantees by third parties. Our loan balance from short-term bank loans as of September 30, 2010 was approximately $46.8 million. The term of almost all such loans is one year or less.
Historically, our lenders have permitted us to roll over such loans on an annual basis. However, we may not have sufficient funds available to pay all of our borrowings upon maturity, and our lenders may not permit us to roll over the loans in the
future. Failure to roll over our short-term borrowings at maturity or to service our debt could result in the imposition of penalties, including increases in rates of interest, legal actions against us by our creditors, or even insolvency.

32

---

We anticipate that our existing capital resources and cash flows from operations and current and expected short-term bank loans will be adequate to satisfy our liquidity requirements for the next 12 months. However, if available liquidity is not
sufficient to meet our operating and loan obligations as they come due, our plans
include obtaining alternative financing arrangements or further reducing
expenditures as necessary to meet our cash requirements. However, there is no
assurance that, if required, we will be able to raise additional capital or
reduce discretionary spending to provide the required liquidity. Currently, the
capital markets for small capitalization companies are extremely difficult and
banking institutions have become stringent in their lending requirements.
Accordingly, we cannot be sure of the availability or terms of any third party
financing. However, we successfully consummated a private placement financing of
approximately $9.6 million through the sale of 3,440,800 shares of common stock
to several accredited investors on September 9, 2010, the proceeds of which are
being used to support chestnut procurement nationwide as we enter the chestnut
season.

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

In 2009, we shortened credit terms for many of our
international and domestic distributors from between 30 and 180 days to between
30 and 60 days for domestic distributors, and around 90 days for international
distributors. Our large customers may fail to meet these shortened credit terms,
in which case we may not have sufficient cash flow to fund our operating costs
and our business could be adversely affected.

In 2009, we introduced to the market several new products,
including the series of bean products, cold-dish products and lunch-box
products. Such additions to our product family increased the number of
suppliers, many of whom were new to us. Most of these new suppliers require
prepayment, in part or in full amount, before delivery of the supplies. Our cash
flow suffered from these increased advances to suppliers. Our suppliers may not
waive or reduce their prepayment requirements, in which case if we fail to find
alternative suppliers, we may not have sufficient cash flow to fund our
operations and our business could be adversely affected.

Results of Operations

Three Months Ended September 30, 2010 Compared to Three
Months Ended September 30, 2009

The following table summarizes the results of our operations
during the three-month periods ended September 30, 2010 and September 30, 2009,
respectively, and provides information regarding the dollar and percentage
increase or (decrease) from the three-month period ended September 30, 2009
compared to the three-month period ended September 30, 2010.

(All amounts, other than percentages, stated in U.S. dollar)

|                                    |  | Three months ended |   |  |                |   |  |                |  
|----------------------------------- |  | ------------------ | - |  | -------------- | - |  | -------------- | -
|                                    |  | September 30,      |   |  | Dollar($)      |   |  | Percentage (%) |  
|                                    |  | 2010               |   |  | 2009           |   |  | Increase       |  
|                                    |  | (In US Dollar)     |   |  | (In US Dollar) |   |  | (Decrease)     |  
|Net revenues                        |  | 48,073,224         |   |  | 38,674,651     |   |  | 9,398,573      |  
|Cost of revenues                    |  | (37,293,496        | ) |  | (29,566,601    | ) |  | (7,726,895     | )
|Gross profit                        |  | 10,779,728         |   |  | 9,108,050      |   |  | 1,671,678      |  
|Operating expenses                  |  |                    |   |  |                |   |  |                |  
|Selling and marketing expenses      |  | (2,072,152         | ) |  | (1,165,107     | ) |  | (907,045       | )
|General and administrative expenses |  | (1,643,967         | ) |  | (906,847       | ) |  | (737,120       | )
|                                    |  |                    |   |  |                |   |  |                |  
|Operating income                    |  | 7,063,609          |   |  | 7,036,096      |   |  | 27,513         |  
|                                    |  |                    |   |  |                |   |  |                |  
|Government subsidy income           |  | 321,537            |   |  | 43,864         |   |  | 277,673        |  
|Interest and other income           |  | 628,008            |   |  | 24,196         |   |  | 603,812        |  
|Other expenses                      |  | (16,269            | ) |  | (52,694        | ) |  | 36,425         |  
|Interest expense                    |  | (1,127,993         | ) |  | (857,089       | ) |  | (270,904       | )
|                                    |  |                    |   |  |                |   |  |                |  
|Earnings before tax                 |  | 6,868,892          |   |  | 6,194,373      |   |  | 674,519        |  
|                                    |  |                    |   |  |                |   |  |                |  
|Income tax                          |  | (1,476,363         | ) |  | (1,396,694     | ) |  | (79,669        | )

|                                 |  |           |   |  |           |   |  |         |   |  |       | 
|-------------------------------- |  | --------- | - |  | --------- | - |  | ------- | - |  | ----- | 
|Income before minority interests |  | 5,392,529 |   |  | 4,797,679 |   |  | 594,850 |   |  | 12.4% | 
|                                 |  |           |   |  |           |   |  |         |   |  |       | 
|Net income attributable to:      |  |           |   |  |           |   |  |         |   |  |       | 
|                                 |  |           |   |  |           |   |  |         |   |  |       | 
|Minority interests               |  | (308,054  | ) |  | (300,315  | ) |  | (7,739  | ) |  | 2.6%  | 
|Common stock holders             |  | 5,084,475 |   |  | 4,497,364 |   |  | 587,111 |   |  | 13.1% | 

33

---

Revenue

Net Revenues. Our net revenue for the three months ended
September 30, 2010 amounted to $48.1 million, which represents an increase of
approximately $9.4 million, or 24.3%, from the three-month period ended on
September 30, 2009, in which our net revenue was $38.7 million. The increased
revenues were attributable to increased revenues from sales of our chestnut and
convenience food products as a result of 16.0% and 72.5% (or $2.9 million and
$7.8 million) increase in sales respectively of such products; due to our
effective marketing efforts and well established domestic and international
distribution network. Frozen foods sold primarily to select export markets in
Europe and wholesale customers like Yums! Foods in China contributed
approximately 17.2% in revenues for the quarter compared to 24.8% in the third
quarter of 2009.

Cost of Revenues. During the three months ended
September 30, 2010, we experienced an increase in cost of revenue, which
consists of raw materials, direct labor and manufacturing overhead expenses, of
$7.7 million, in comparison to the three months ended September 30, 2009, from
approximately $29.6 million to $37.3 million, reflecting an increase of
approximately 26.1% . Approximately 64.5%, or $5.1 million, of this increase was
attributable to an increase in raw material costs, which increased from $22.0
million during the three months ended September 30, 2009 to $27.1 million, or
approximately 23.1%, during the three months ended September 30, 2010 due to
higher production volume as our business expands, as well as higher prices for
chestnut and other agricultural products caused by general inflation.

The factors that contributed to the remaining 35.5% increase in
cost of revenues were: an increase in wage expense for factory workers, an
increase in direct manufacturing expenses such as depreciation expenses for capital equipment and an increase in the
cost of consumables used in conjunction with capital equipment.

Gross Profit. Our gross profit increased $1.7 million,
or 18.4%, to $10.8 million for the three months ended September 30, 2010 from
$9.1 million for the same period in 2009 as a result of higher revenues, offset
by higher costs of revenues, for the reasons indicated immediately above. Our
gross margins decreased from 23.6% to 22.4% for the period ended September 30,
2010, as compared to the period ended September 30, 2009 as the percentage
revenue contribution for convenience food products, which has a slightly lower
gross margin as compared to chestnut products, continues to increase. Gross
profit margins by product segment for the three months ended September 30, 2010
were: 25-28% for chestnuts, 22-24% for convenience foods and 16-18% for frozen
foods.

Operating Expenses

Selling and Marketing Expenses. Our selling and
marketing expenses increased approximately $0.9 million, or 77.9%, to $2.1
million in the third quarter of 2010 from $1.2 million in the third quarter of
2009. The following table reflects the main factors that contributed to this
increase as well as the dollar amount that each factor contributed to this
increase. The increases listed in the table below were partially offset by
decreases in dollar amount of other selling and marketing expenses, including
business tax, supermarket fees, warehousing, leasing, etc.

|(in U.S. dollars)  |  | Increase in Costs in the Three
      Months Ended | 
|------------------ |  | ------------------------------------------------- | 
|                   |  | September 30, 2010 over the Three
      Months    | 
|                   |  | Ended September 30, 2009                          | 
|                   |  |                                                   | 
|Transportation     |  | -571,214                                          | 
|Port Fees          |  | -165,761                                          | 
|Sea Transportation |  | -110,044                                          | 
|Wages (Sales)      |  | 72,072                                            | 

34

---

Selling and marketing expenses saw a large increase as we
enhanced our efforts to expand our distribution channels in China as well as
internationally, and to build the brand recognition for our chestnut and
convenience food products.

General and Administrative Expenses. We experienced an
increase in general and administrative expense of approximately $0.7 million
from approximately $0.9 million to approximately $1.6 million for the three
months ended September 30, 2010, compared to the same period in 2009. The
following table reflects the main factors that contributed to this increase as
well as the dollar amount that each factor contributed to this increase:

|(In U.S Dollars)                 |  | Increase in Costs in the                                                                                   | 
|-------------------------------- |  | ---------------------------------------------------------------------------------------------------------- | 
|                                 |  | Three Months Ended September 30, 2010
    over the Three Months Ended September 30,
 (in U.D Dollars) 2009 | 
|Stock Option Expense             |  | 195,867                                                                                                    | 
|Filing Expenses                  |  | 154,466                                                                                                    | 
|Wages (Administrative)           |  | 64,524                                                                                                     | 
|Amortization of Intangible Asset |  | 40,024                                                                                                     | 

The increases listed in the table above were partially offset
by decreases in dollar amount of other factors, including entertainment fee,
waste water treatment expense, and appraisal expense, etc.

Interest Expenses. We experienced an increase in
interest expenses of approximately $0.3 million from approximately $0.9
million to $1.1 million for the three months ended September 30, 2010, compared
to the same period in 2009. The increase was mainly due to the increase in
outstanding balance of our bank loans, which was $46.8 million at the end of
September 30, 2010, compared to $34.6 million at the end of September 30, 2009.

Income Before Taxation and Minority Interest

Income before taxation and minority interest increased
$0.7 million, or 10.9%, to $6.9 million for the three months ended September 30,
2010 from $6.2 million for the same period of 2009. The increase was mainly
attributable to the increase of our sales revenue as described above in the
three months ended September 30, 2010 as compared to the three months ended
September 30, 2009.

Net Income

Net income increased $0.6 million, or 13.1%, to $5.1 million for
the three months ended September 30, 2010 from $4.5 million for the same period
of 2009. The increase was attributable to increased sales revenue and was
partially offset by increased cost of goods sold, operating expenses, interest
expense and higher income tax in the three months ended September 30, 2010 as
compared to the three months ended September 30, 2009.

Nine Months Ended September 30, 2010 Compared to Nine Months
Ended September 30, 2009

The following table summarizes the results of our operations
during the nine-month periods ended September 30, 2010 and September 30, 2009,
respectively and provides information regarding the dollar and percentage
increase or (decrease) from the nine-month period ended September 30, 2009
compared to the nine-month period ended September 30, 2010.

|                                    |  | Nine months ended |   |  |                |   |  |                |  
|----------------------------------- |  | ----------------- | - |  | -------------- | - |  | -------------- | -
|                                    |  | September 30,     |   |  | Dollar($)      |   |  | Percentage (%) |  
|                                    |  | 2010              |   |  | 2009           |   |  | Increase       |  
|                                    |  | (In US Dollar)    |   |  | (In US Dollar) |   |  | (Decrease)     |  
|Net revenues                        |  | 101,851,754       |   |  | 83,841,112     |   |  | 18,010,642     |  
|Cost of revenues                    |  | (78,629,267       | ) |  | (64,279,971    | ) |  | (14,349,296    | )
|Gross profit                        |  | 23,222,487        |   |  | 19,561,141     |   |  | 3,661,346      |  
|Operating expenses                  |  |                   |   |  |                |   |  |                |  
|Selling and marketing expenses      |  | (4,639,500        | ) |  | (3,556,271     | ) |  | (1,083,229     | )
|General and administrative expenses |  | (3,592,629        | ) |  | (2,798,044     | ) |  | (794,585       | )
|                                    |  |                   |   |  |                |   |  |                |  
|Operating income                    |  | 14,990,358        |   |  | 13,206,826     |   |  | 1,783,532      |  
|                                    |  |                   |   |  |                |   |  |                |  
|Government subsidy income           |  | 698,961           |   |  | 240,118        |   |  | 458,843        |  
|Interest and other income           |  | 759,579           |   |  | 232,844        |   |  | 526,735        |  
|Other expenses                      |  | (88,506           | ) |  | (234,298       | ) |  | 145,792        |  
|Interest expense                    |  | (3,071,546        | ) |  | (2,205,740     | ) |  | (865,806       | )

|                                 |  |            |   |  |            |   |  |           |   |  |       | 
|-------------------------------- |  | ---------- | - |  | ---------- | - |  | --------- | - |  | ----- | 
|Earnings before tax              |  | 13,288,846 |   |  | 11,239,750 |   |  | 2,049,096 |   |  | 18.2% | 
|Income tax                       |  | (3,005,959 | ) |  | (2,580,172 | ) |  | (425,787  | ) |  | 16.5% | 
|Income before minority interests |  | 10,282,887 |   |  | 8,659,578  |   |  | 1,623,309 |   |  | 18.7% | 
|                                 |  |            |   |  |            |   |  |           |   |  |       | 
|Net income attributable to:      |  |            |   |  |            |   |  |           |   |  |       | 
|Minority interests               |  | (658,268   | ) |  | (550,509   | ) |  | (107,759  | ) |  | 19.6% | 
|Common stock holders             |  | 9,624,619  |   |  | 8,109,069  |   |  | 1,515,550 |   |  | 18.7% | 

35

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Revenue

Net Revenues. Our net revenue for the nine months ended
September 30, 2010 amounted to $101.9 million, which is approximately $18.0
million, or 21.5%, more than that of the same period ended on September 30,
2009, during which period we had revenue of $83.8 million. During the nine
months ended September 30, 2010, revenues from sales of chestnut products
increased by $4.2 million, or 9.4%, and revenues from sales of convenience food
products increased by $17.8 million, or 98.4%, and sales of frozen, canned and
bulk food products decreased $4.0 million, or 19.1%, compared to the same period
in 2009. The increased revenues were attributable to increased revenues from
sales of our chestnut and convenience food products as a result of 9.4% and
98.4% (or $4.2 million and $17.8 million) increase in sales respectively of such
products; due to our effective marketing efforts and well established domestic
and international distribution network. Frozen foods sold primarily to select
export markets in Europe and wholesale customers like Yums! Foods in China
contributed approximately 16.6% in revenues for the nine months ended September
30, 2010, as compared to 24.9% in the third quarter of 2009.

Cost of Revenues. Our cost of revenues, which consists
of raw materials, direct labor and manufacturing overhead expenses, was $78.6
million for the nine month period ended September 30, 2010, an increase of $14.3
million or 22.3%, as compared to $64.3 million for the nine month period ended
September 30, 2009. The cost of revenues  increased because the sales in the
nine months ended September 30, 2010 increased as compared to the same period
ended September 30, 2009. Approximately 78.5%, or $11.3 million, of this increase
was attributable to an increase in raw material costs, which increased from
$44.9 million during the nine months ended September 30, 2009 to $56.2 million, or
approximately 25.1%, during the nine months ended September 30, 2010.

The factors that contributed to the remaining 21.5% increase in
cost of revenues were: an increase in wage expense for factory workers, an
increase in direct manufacturing expenses such as depreciation expenses for capital equipment and an increase in the
cost of consumables used in conjunction with capital equipment.

Gross Profit. Our gross profit increased $3.6 million,
or 18.7%, to $23.2 million for the nine months ended September 30, 2010 from
$19.6 million for the same period in 2009. This increase was attributable to
increased sales revenue.

Operating Expenses

Selling and Marketing Expenses. Selling and marketing
expenses increased $1.1 million, or 30.5%, to $4.6 million for the nine months
ended September 30, 2010 from $3.6 million for the same period in 2009. This
increase mainly resulted from increased efforts to market our products in our
domestic market.

General and Administrative Expenses. General and
administrative expenses increased $ 0.8 million, or 28.4% to $3.6 million for the
nine months ended September 30, 2010 from $2.8 million for the same period of
2009. The increase of general and administrative expenses was primarily
attributable to increased salary and benefits costs for our employees relative
to our expanded business, the increased compensation for managerial personnel
and expenses related to the Company's employee stock option plan.

Interest Expenses. We experienced an increase in
interest expenses of approximately $0.9 million from approximately $2.2 million to
$3.1 million for the nine months ended September 30, 2010, compared to the same
period in 2009. The increase was mainly due to the increase in outstanding
balance of our bank loans, which was $46.8 million at the end of September 30,
2010, compared to $34.6 million at the end of September 30, 2009.

Income Before Taxation and Minority Interest

Income before taxation and minority interest increased $2.0
million or 18.2% to $13.3 million for the nine months ended September 30, 2010
from $11.2 million for the same period of 2009. The increase was primarily a
result of the higher revenue during the nine month period ended on September 30,
2010 as compared to 2009.

36

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Net Income

Net income increased $1.5 million, or 18.7% to $9.6 million for
the nine months ended September 30, 2010 from $8.1 million for the same period
of 2009. The increase was primarily a result of increased revenue, offset by
higher interest expense, cost of revenues, selling and marketing and general
administrative expenses.

Liquidity and Capital Resources

As of September 30, 2010, we had cash and cash equivalents
(including restricted cash) of $12.7 million. Our cash and cash equivalents
decreased by approximately $0.7 million from December 31, 2009, due to cash spent on
our inventories and prepayments to suppliers. The following table provides
detailed information about our net cash flow for all financial statements
periods presented in this report.

USD 000

|                                                          |  | Nine Months Ended |  
|--------------------------------------------------------- |  | ----------------- | -
|                                                          |  | September 30,     |  
|                                                          |  | 2010              |  
|Net cash provided by (used in)
      operating activities |  | (9,431            | )
|Net cash
      provided by (used in) investing activities |  | (13,084           | )
|Net cash provided by (used in)
      financing activities |  | 20,682            |  
|Net cash flow (outflow)                                   |  | (1,833            | )

Operating Activities

Net cash used in operating activities was $9.4 million for the
nine months ended September 30, 2010 and net cash used in operating activities
for the nine months ended September 30, 2009 was approximately $15.7 million.
The increase of approximately $6.3 million in net cash flows provided by
operating activities in the nine months ended September 30, 2010 was primarily a
result of less decrease in payables of approximately $18.0 million and less
increase in inventory of $2.1 million, partially offset additional increase in
receivables of approximately $11.4 million and additional increase in
prepayments of $4.4 million as compared to the same period in 2009.

Investing Activities

Our main uses of cash for investment activities are payments
for the acquisition of property, plants and equipment.

Net cash used in investing activities for the nine months
period ended September 30, 2010 was $13.1 million, which is an increase of $14.3
million from net cash provided by investing activities of $1.2 million for the
same period of 2009. The increase was primarily due to increase in payment for
purchase of equipment and plant in 2010.

Financing Activities

Net cash provided by financing activities for the nine months
period ended September 30, 2010 was $20.7 million, which is a increase of $5.9
million from $14.8 million net cash provided by financing activities during the
same period in 2009. The increase of the net cash provided by financing
activities was primarily a result of increased short term bank borrowing in
2010, offset by repayment of bank loans.

We also successfully consummated a private placement financing of
approximately $9.6 million through the sale of 3,440,800 shares of common stock
to several accredited investors on September 9, 2010, the proceeds of which are
being used to support chestnut procurement nationwide as we enter the chestnut
season.

Loan Facilities

As of September 30, 2010, the amounts and maturity dates for
our short-term bank loans are as set forth in the Notes to the Financial
Statements. The total amounts outstanding were $46.8 million as of September 30,
2010, compared with $35.5 million as of December 31, 2009. We believe that our
currently available working capital, after receiving the aggregate proceeds of
the credit facilities referred to above, should be adequate to sustain our
operations at our current levels through at least the next twelve months.

On May 31, 2010, Junan Hongrun Foodstuff Co. Ltd. (the
Subsidiary), a wholly-owned subsidiary of American Lorain Corporation, entered
into a Loan Agreement (the Agreement) with DEG-Deutsche Investitions-Und
Entwicklungsgesellschaft MBH (the Lender).

Pursuant to the Agreement, the Subsidiary may borrow from the
Lender, in the Lenders sole discretion, up to $15,000,000 by means of a
long-term loan. The Subsidiary intends to use the borrowed funds, if any, in
order to expand its production facilities in Hongrun, China. The loan is secured
by the Subsidiarys assets as well as the Companys common stocks owned by Mr.
Chen, our CEO and Chairman of Board. Mr. Chen pledged approximately 5,313,574 shares of common
stock as partial collateral to this loan. The Company expects to borrow
$15,000,000 from the Lender in the fourth quarter of 2010, subject to the
Lenders consent on the effectiveness of the collateral.

37

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Obligations under Material Contracts

We do not have any material contractual obligations as of September 30, 2010.

Critical Accounting Policies

The preparation of financial statements in conformity with United States generally accepted accounting principles requires our management to make assumptions, estimates and judgments that affect the amounts reported in our financial statements,
including the notes thereto, and related disclosures of commitments and contingencies, if any. We consider our critical accounting policies to be those that require significant judgments and estimates in the preparation of financial statements,
including the following:

Method of Accounting -- We maintain our general ledger and journals with the accrual method accounting for financial reporting purposes. Accounting policies adopted by us conform to generally accepted accounting principles in the United
States and have been consistently applied in the presentation of our financial statements, which are compiled on the accrual basis of accounting.

Use of estimates -- The preparation of the financial statements in conformity with generally accepted accounting principles in the United States requires management to make estimates and assumptions that affect the reported amounts of assets
and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Management makes these estimates using the best information
available at the time the estimates are made; however, actual results could differ materially from those estimates.

Principles of consolidation -- Our consolidated financial statements, which include information about our company and our subsidiaries, are compiled in accordance with generally accepted accounting principles in the United States. All
significant inter-company accounts and transactions have been eliminated. Our consolidated financial statements include 100% of assets, liabilities, and net income or loss of our wholly-owned subsidiaries. Ownership interests of minority investors
are recorded as minority interests.

38

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As of September 30, 2010, the details pertaining to our
subsidiaries were as follows:

|                                     |  | Place of       |  |  | Attributable
    equity |  |   | Registered | 
|------------------------------------ |  | -------------- |  |  | ----------------------- |  | - | ---------- | 
|Name
      of Company                |  | incorporation  |  |  | interest %              |  |   | capital    | 
|Shandong Lorain Co., Ltd             |  | PRC            |  |  | 80.2                    |  | $ | 15,058,002 | 
|Luotian
      Lorain Co., Ltd        |  | PRC            |  |  | 100                     |  | $ | 3,781,490  | 
|Junan Hongrun Foodstuff Co., Ltd     |  | PRC            |  |  | 100                     |  | $ | 42,204,078 | 
|Beijing
      Lorain Co., Ltd        |  | PRC            |  |  | 100                     |  | $ | 1,492,961  | 
|Shandong Greenpia Foodstuff Co., Ltd |  | PRC            |  |  | 100                     |  | $ | 1,850,000  | 
|Dongguan Lorain Co,,Ltd              |  | PRC            |  |  | 100                     |  | $ | 142,296    | 
|International Lorain Holding Inc.    |  | Cayman Islands |  |  | 100                     |  | $ | 45,474,970 | 

Accounting for the Impairment of Long-Lived Assets --
The long-lived assets held and used by us are reviewed for impairment whenever
events or changes in circumstances indicate that the carrying amount of assets
may not be recoverable. It is reasonably possible that these assets could become
impaired as a result of technology or other industry changes. Determination of
recoverability of assets to be held and used is by comparing the carrying amount
of an asset to future net undiscounted cash flows to be generated by the assets.

If such assets are considered to be impaired, the impairment to
be recognized is measured by the amount by which the carrying amount of the
assets exceeds the fair value of the assets. Assets to be disposed of are
reported at the lower of the carrying amount or fair value less costs to sell.
During the reporting period, there was no impairment loss.

Revenue recognition -- Our revenue recognition policies
are in compliance with Staff Accounting Bulletin (SAB) 104. Sales revenue is
recognized at the date of shipment to customers when a formal arrangement
exists, the price is fixed or determinable, the delivery is completed, no other
significant obligations of ours exist and collectability is reasonably assured.
Payments received before all of the relevant criteria for revenue recognition
are satisfied are recorded as unearned revenue.

Our revenue consists of invoiced value of goods, net of a
value-added tax. No product return or sales discount allowance is made as
products delivered and accepted by customers are normally not returnable and
sales discount is normally not granted after products are delivered.

Recent Accounting Pronouncements

In June 2009, FASB issued FASB Statement No. 166, Accounting
for Transfers for Financial Assets (FASB ASC 860 Transfers and Servicing) and
FASB Statement No. 167 (FASB ASC 810 Consolidation), a revision to FASB
Interpretation No. 46 (Revised December 2003), Consolidation of Variable
Interest Entities (FASB ASC 810 Consolidation).

Statement 166 is a revision to FASB Statement No. 140,
Accounting for Transfers and Servicing of Financial Assets and Extinguishments
of Liabilities (FASB ASC 860 Transfers and Servicing), and will require more
information about transfers of financial assets, including securitization
transactions, and where entities have continuing exposure to the risks related
to transferred financial assets. It eliminates the concept of a qualifying
special-purpose entity, changes the requirements for derecognizing financial
assets, and requires additional disclosures. Statement No. 166 (FASB ASC 860
Transfers and Servicing) must be applied as of the beginning of each reporting
entitys first annual reporting period that begins after November 15, 2009, for
interim periods within that first annual reporting period and for interim and
annual reporting periods thereafter. Earlier application is prohibited. This
Statement must be applied to transfers occurring on or after the effective date.
The Company is still evaluating the impact of the above pronouncement.

Statement 167 is a revision to FASB Interpretation No. 46
(Revised December 2003), Consolidation of Variable Interest Entities (FASB ASC
810 Consolidation), and changes how a reporting entity determines when an entity
that is insufficiently capitalized or is not controlled through voting (or
similar rights) should be consolidated. The determination of whether a reporting
entity is required to consolidate another entity is based on, among other
things, the other entitys purpose and design and the reporting entitys ability
to direct the activities of the other entity that most significantly impact the
other entitys economic performance. Statement No. 167 (FASB ASC 810
Consolidation) shall be effective as of the beginning of each reporting entitys
first annual reporting period that begins after November 15, 2009, for interim
periods within that first annual reporting period, and for interim and annual
reporting periods thereafter. Earlier application is prohibited. The Company is
still evaluating the impact of the above pronouncement.

On June 30, 2009, FASB issued FASB Statement No. 168,
Accounting Standards Codification ( FASB ASC 105 Generally Accepted Accounting
Principles) a replacement of FASB Statement No. 162 the Hierarchy of Generally
Accepted Accounting Principles. On the effective date of this standard, FASB
Accounting Standards Codification (ASC) became the source of authoritative U.S.
accounting and reporting standards for nongovernmental entities, in addition to
guidance issued by the Securities and Exchange Commission (SEC). This statement
is effective for financial statements issued for interim and annual periods
ending after September 15, 2009. If an accounting change results from the
application of this guidance, an entity should disclose the nature and reason
for the change in accounting principle in their financial statements. This new
standard flattens the GAAP hierarchy to two levels: one that is authoritative
(in FASB ASC) and one that is non-authoritative (not in FASB ASC). Exceptions
include all rules and interpretive releases of the SEC under the authority of
federal securities laws, which are sources of authoritative GAAP for SEC
registrants, and certain grandfathered guidance having an effective date before March 15, 1992. Statement No. 168 is the final standard that will be issued by FASB in that form. There will no longer be, for example, accounting standards in the form
of statements, staff positions, Emerging Issues Task Force (EITF) abstracts, or AICPA Accounting Statements of Position. The Company has adopted the new accounting standard. There was no material impact on the financial statements presented herein.

39

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Off-Balance Sheet Arrangements

We do not have any off-balance arrangements.

ITEM 3.     QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not required.

ITEM 4.     CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

We maintain disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act) that are designed to ensure that information required to be disclosed in Exchange Act reports is recorded, processed, summarized and reported within
the time periods specified in the 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 and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures as of September 30, 2010. Based on that
evaluation, our Chief Executive Officer and Chief Financial Officer concluded that as of September 30, 2010, our disclosure controls and procedures were effective.

Changes in Internal Controls over Financial Reporting

During the fiscal quarter ended September 30, 2010, there were no changes in our internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

40

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PART II. 
OTHER INFORMATION

ITEM 1.     LEGAL PROCEEDINGS

From time to time, we have disputes that arise in the ordinary
course of business. Currently, there are no material legal proceedings to which
we are a party, or to which any of our property is subject.

ITEM 1A.  RISK FACTORS

Not applicable.

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

Please refer to Item 2 in Part 1 above under the heading Production Factors that Affect our Financial and Operational Condition for a description of the
issuance of unregistered share in connection with the Companys acquisition of
Shandong Greenpia Foodstuff Co.

ITEM 3.     DEFAULTS UPON SENIOR SECURITIES

None

ITEM 4.     REMOVED AND RESERVED

Not applicable

ITEM 5.     OTHER INFORMATION

None

ITEM 6.     EXHIBITS

|Exhibit No. |  | 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 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 pursuant to 18 U.S.C. Section 1350, as adopted pursuant
      to Section 906 of the Sarbanes-Oxley Act of
  2002.

41

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SIGNATURES

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

Date: November 15, 2010

AMERICAN LORAIN CORPORATION

/s/ Si Chen 
Si Chen 
 Chief Executive Officer

/s/ Lin Fu 
Lin Fu 
Interim Chief Financial Officer

42

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