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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: March 31, 2011

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

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 May 16, 2011 was 34,419,709.

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TABLE OF CONTENTS

|                                                                                                   | PAGE
|-------------------------------------------------------------------------------------------------- | ----
|PART I - FINANCIAL
      INFORMATION                                                               |     
|ITEM 1
      FINANCIAL STATEMENTS                                                                  | 1   
|ITEM 2 MANAGEMENTS DISCUSSION AND ANALYSIS
      OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS | 28  
|ITEM 3
      QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK                            | 34  
|ITEM 4 CONTROLS AND PROCEDURES                                                                     | 35  
|                                                                                                   |     
|PART II - OTHER INFORMATION                                                                        |     
|ITEM 1
      LEGAL PROCEEDINGS                                                                     | 36  
|ITEM 1A RISK FACTORS                                                                               | 36  
|ITEM 2
      UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS                           | 36  
|ITEM 3 DEFAULTS UPON SENIOR
      SECURITIES                                                       | 36  
|ITEM 4
      REMOVED AND RESERVED                                                                  | 36  
|ITEM 5 OTHER INFORMATION                                                                           | 36  
|ITEM 6
      EXHIBITS                                                                              | 36  
|SIGNATURES                                                                                         | 37  

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PART I FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS



AMERICAN LORAIN CORPORATION

UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2011 AND DECEMBER 31, 2010

(Stated in US Dollars)



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AMERICAN LORAIN CORPORATION

|CONTENTS                                                      | PAGES 
|------------------------------------------------------------- | ------
|REPORT OF INDEPENDENT REGISTERED PUBLIC
      ACCOUNTING FIRM | 1     
|CONSOLIDATED BALANCE SHEETS                                   | 2  3 
|CONSOLIDATED STATEMENTS OF INCOME                             | 4     
|CONSOLIDATED STATEMENTS OF CASH FLOWS                         | 5     
|CONSOLIDATED STATEMENTS OF
      STOCKHOLDERS EQUITY         | 6  7 
|NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                    | 8  27

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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 March 31, 2011 and December 31, 2010, and the related statements of income, stockholders’ equity, and cash
flows for the three months ended March 31, 2011 and 2010.  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.

|                      | /s/
Samuel H. Wong & Co., LLP
|--------------------- | -----------------------------
|San Mateo, California | Samuel H. Wong & Co., LLP    
|May 5, 2011           | Certified Public Accountants 

1

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AMERICAN LORAIN CORPORATION 
CONSOLIDATED BALANCE SHEETS 
AT MARCH 31, 2011 AND DECEMBER 31, 2010 
(Stated in US
Dollars)

|                                             |  |       |   |                   |  |   | (Audited)            | 
|-------------------------------------------- |  | ----- | - | ----------------- |  | - | -------------------- | 
|ASSETS                                       |  | Note  |   | At March 31, 2011 |  |   | At December 31, 2010 | 
|Current assets                               |  |       |   |                   |  |   |                      | 
|Cash and cash equivalents                    |  | 2 (d) | $ | 18,603,272        |  | $ | 12,730,626           | 
|Restricted cash                              |  | 3     |   | 4,858,780         |  |   | 2,308,898            | 
|Short-term investment                        |  |       |   | 7,794,153         |  |   | 9,447,585            | 
|Trade
      accounts receivable              |  | 4     |   | 21,835,538        |  |   | 33,226,612           | 
|Other receivables                            |  | 5     |   | 1,976,234         |  |   | 1,492,850            | 
|Inventories                                  |  | 6     |   | 38,730,930        |  |   | 29,807,198           | 
|Advance to suppliers                         |  |       |   | 7,467,094         |  |   | 7,744,976            | 
|Prepaid
      expenses and taxes             |  |       |   | 949,956           |  |   | 434,061              | 
|Deferred tax asset                           |  |       |   | 104,689           |  |   | 103,713              | 
|Security
      deposits and other Assets     |  |       |   | 628,998           |  |   | 693,858              | 
|Total current assets                         |  |       | $ | 102,949,644       |  | $ | 97,990,377           | 
|                                             |  |       |   |                   |  |   |                      | 
|Non-current assets                           |  |       |   |                   |  |   |                      | 
|Property, plant
      and equipment, net     |  | 7     |   | 72,782,827        |  |   | 72,095,007           | 
|Land use rights, net                         |  | 8     |   | 4,884,453         |  |   | 4,877,438            | 
|Deposit                                      |  |       |   | 15,878            |  |   | 20,297               | 
|TOTAL ASSETS                                 |  |       | $ | 180,632,802       |  | $ | 174,983,119          | 
|                                             |  |       |   |                   |  |   |                      | 
|LIABILITIES AND STOCKHOLDERS EQUITY         |  |       |   |                   |  |   |                      | 
|Current liabilities                          |  |       |   |                   |  |   |                      | 
|Short-term bank loans                        |  | 9     | $ | 16,139,139        |  | $ | 25,164,469           | 
|Long-term
      debt  current portion       |  | 13    |   | 220,998           |  |   | 218,935              | 
|Notes payable                                |  | 10    |   | 6,106,777         |  |   | 4,249,977            | 
|Accounts
      payable                       |  |       |   | 5,468,206         |  |   | 6,284,532            | 
|Taxes payables                               |  | 11    |   | 1,248,383         |  |   | 3,266,502            | 
|Accrued
      liabilities and other payables |  | 12    |   | 1,780,060         |  |   | 1,335,947            | 
|Customers deposits                           |  |       |   | 1,180,590         |  |   | 89,370               | 
|Total current liabilities                    |  |       | $ | 32,144,153        |  | $ | 40,609,732           | 
|                                             |  |       |   |                   |  |   |                      | 
|Long-term liabilities                        |  |       |   |                   |  |   |                      | 
|Long-term debt                               |  | 13    |   | 15,126,807        |  |   | 5,030,930            | 
|                                             |  |       |   |                   |  |   |                      | 
|TOTAL LIABILITIES                            |  |       | $ | 47,270,960        |  | $ | 45,640,662           | 

See Accompanying Notes to the Financial Statements and
Accountants Report 
2

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AMERICAN LORAIN CORPORATION 
CONSOLIDATED BALANCE SHEETS 
AT MARCH 31, 2011 AND DECEMBER 31, 2010 
(Stated in US
Dollars)

|                                                                                                                                                                                            |  | Note  |   | At March 31,
    2011 |  |   | (Audited) At December 31,
    2010 | 
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ----- | - | --------------------- |  | - | ---------------------------------- | 
|STOCKHOLDERS EQUITY                                                                                                                                                                        |  |       |   |                       |  |   |                                    | 
|Preferred Stock, $.001 par value, 5,000,000
      shares authorized; 0 shares issued and outstanding at March 31, 2011 and
      December 31, 2010, respectively                            |  |       |   | -                     |  |   | -                                  | 
|Common stock, $0.001 par value, 200,000,000 shares
      authorized; 34,419,709 and 34,419,709 shares issued and outstanding as of
      March 31, 2011 and December 31, 2010, respectively |  | 14    |   | 34,420                |  |   | 34,420                             | 
|Additional paid-in capital                                                                                                                                                                  |  | 14    |   | 52,545,183            |  |   | 52,371,481                         | 
|Statutory reserves                                                                                                                                                                          |  | 2 (r) |   | 12,060,229            |  |   | 11,340,739                         | 
|Retained earnings                                                                                                                                                                           |  |       |   | 50,395,173            |  |   | 48,688,375                         | 
|Accumulated other comprehensive income                                                                                                                                                      |  |       |   | 10,753,537            |  |   | 9,475,745                          | 
|Non-controlling interests                                                                                                                                                                   |  | 15    |   | 7,573,300             |  |   | 7,431,697                          | 
|                                                                                                                                                                                            |  |       |   |                       |  |   |                                    | 
|TOTAL STOCKHOLDERS EQUITY                                                                                                                                                                  |  |       | $ | 133,361,842           |  | $ | 129,342,457                        | 
|                                                                                                                                                                                            |  |       |   |                       |  |   |                                    | 
|TOTAL LIABILITIES AND
      STOCKHOLDERS EQUITY                                                                                                                                            |  |       | $ | 180,632,802           |  | $ | 174,983,119                        | 

See Accompanying Notes to the Financial Statements and
Accountants Report 
3

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AMERICAN LORAIN CORPORATION

CONSOLIDATED STATEMENTS OF INCOME 
FOR THE THREE MONTHS ENDED MARCH 31, 2011 AND 2010 
(Stated in US
Dollars)

|                                    |  | Note      |   | March 31, 2011 |   |   | March 31, 2010 |  
|----------------------------------- |  | --------- | - | -------------- | - | - | -------------- | -
|                                    |  |           |   |                |   |   |                |  
|Net revenues                        |  | 2 (t),16  | $ | 30,449,805     |   | $ | 24,560,216     |  
|Cost of revenues                    |  |           |   | (23,674,895    | ) |   | (18,836,126    | )
|Gross profit                        |  |           | $ | 6,774,910      |   | $ | 5,724,090      |  
|                                    |  |           |   |                |   |   |                |  
|Operating expenses                  |  |           |   |                |   |   |                |  
|Selling and marketing expenses      |  |           |   | (1,362,686     | ) |   | (1,372,352     | )
|General and administrative expenses |  |           |   | (1,475,947     | ) |   | (1,016,452     | )
|                                    |  |           |   | (2,838,633     | ) |   | (2,388,804     | )
|                                    |  |           |   |                |   |   |                |  
|Operating income                    |  |           | $ | 3,936,277      |   | $ | 3,335,286      |  
|                                    |  |           |   |                |   |   |                |  
|Government subsidy income           |  |           |   | 293,093        |   |   | 181,421        |  
|Interest income                     |  |           |   | 2,475          |   |   | 2,804          |  
|Other income                        |  |           |   | 44,609         |   |   | 119,277        |  
|Other expenses                      |  |           |   | (159,572       | ) |   | (27,523        | )
|Interest expense                    |  |           |   | (653,123       | ) |   | (920,424       | )
|                                    |  |           |   | (472,518       | ) |   | (644,445       | )
|                                    |  |           |   |                |   |   |                |  
|Earnings before tax                 |  |           | $ | 3,463,759      |   | $ | 2,690,841      |  
|                                    |  |           |   |                |   |   |                |  
|Income tax                          |  | 2 (q),17  |   | (895,868       | ) |   | (671,992       | )
|                                    |  |           |   |                |   |   |                |  
|Net income                          |  |           | $ | 2,567,891      |   | $ | 2,018,849      |  
|Net income attributable to:         |  |           |   |                |   |   |                |  
|                                    |  |           |   |                |   |   |                |  
|-Common stockholders                |  |           | $ | 2,426,288      |   | $ | 1,860,531      |  
|-Non-controlling interest           |  |           |   | 141,603        |   |   | 158,318        |  
|                                    |  |           | $ | 2,567,891      |   | $ | 2,018,849      |  
|                                    |  |           |   |                |   |   |                |  
|                                    |  |           |   |                |   |   |                |  
|Earnings per share                  |  | 2 (u), 18 |   |                |   |   |                |  
|- Basic                             |  |           | $ | 0.07           |   | $ | 0.07           |  
|- Diluted                           |  |           | $ | 0.07           |   | $ | 0.07           |  
|                                    |  |           |   |                |   |   |                |  
|Weighted average shares outstanding |  |           |   |                |   |   |                |  
|- Basic                             |  |           |   | 34,419,709     |   |   | 26,075,413     |  
|- Diluted                           |  |           |   | 35,155,958     |   |   | 26,730,651     |  

See Accompanying Notes to the Financial Statements and
Accountants Report 
4

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AMERICAN LORAIN CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS 
FOR THE THREE MONTHS ENDED MARCH 31, 2011 AND 2010 
(Stated in US
Dollars)

|                                                                          |   | March 31, 2011 |   |   | March 31, 2010 |  
|------------------------------------------------------------------------- | - | -------------- | - | - | -------------- | -
|Cash flows from operating activities                                      |   |                |   |   |                |  
|Net income                                                                | $ | 2,567,891      |   | $ | 2,018,849      |  
|Stock and share
      based compensation                                  |   | 173,702        |   |   | 249,006        |  
|Depreciation of fixed assets                                              |   | 483,601        |   |   | 365,569        |  
|Amortization of
      intangible assets                                   |   | 44,886         |   |   | 35,720         |  
|Write down of short-term
      investments                                |   | 44,909         |   |   | -              |  
|(Increase)/decrease in accounts & other receivables                       |   | 11,998,911     |   |   | 4,089,021      |  
|(Increase)/decrease in
      inventories                                  |   | (8,923,732     | ) |   | (9,473,698     | )
|Decrease/(increase) in advance to suppliers and prepayment                |   | (238,013       | ) |   | (238,115       | )
|Decrease/(increase) in
      deferred tax asset                           |   | (977           | ) |   | -              |  
|Increase/(decrease) in accounts, tax and other payables                   |   | (2,390,331     | ) |   | (301,956       | )
|Net cash (used
      in)/provided by operating activities                 |   | 3,760,847      |   |   | (3,255,604     | )
|                                                                          |   |                |   |   |                |  
|Cash flows from investing activities                                      |   |                |   |   |                |  
|Purchase of
      plant and equipment                                     |   | (791,155       | ) |   | (427,535       | )
|Payment of construction in progress                                       |   | (380,266       | ) |   | -              |  
|Proceeds[DS1]
      from short-term investments                           |   | 1,698,341      |   |   | 22,227         |  
|(Increase)/decrease in
      restricted cash                              |   | (2,549,882     | ) |   | 181,835        |  
|Payments for the
      purchase of land use rights                        |   | (51,902        | ) |   | (14,887        | )
|Payments for security deposits                                            |   | 69,279         |   |   | -              |  
|Net cash used in
      investing activities                               |   | (2,005,585     | ) |   | (238,360       | )
|Cash flows from financing activities                                      |   |                |   |   |                |  
|Repayment of notes                                                        |   | (1,196,589     | ) |   | -              |  
|Proceeds from issuance of notes                                           |   | 3,053,390      |   |   | -              |  
|Proceeds from bank
      borrowings                                       |   | 11,449,469     |   |   | 17,853,746     |  
|Repayment of bank borrowings                                              |   | (10,376,859    | ) |   | (17,961,100    | )
|Net cash provided
      by/(used in) financing activities                 | $ | 2,929,411      |   | $ | (107,354       | )
|                                                                          |   |                |   |   |                |  
|Net Increase/(decrease) of Cash and
      Cash Equivalents                |   | 4,684,673      |   |   | (3,601,318     | )
|                                                                          |   |                |   |   |                |  
|Effect of foreign currency translation on cash and
      cash equivalents |   | 1,187,973      |   |   | 19,450         |  
|                                                                          |   |                |   |   |                |  
|Cash and cash equivalentsbeginning
      of year                         |   | 12,730,626     |   |   | 12,111,532     |  
|Cash and cash equivalentsend of year                                     | $ | 18,603,272     |   | $ | 8,529,664      |  
|                                                                          |   |                |   |   |                |  
|Supplementary cash flow information:                                      |   |                |   |   |                |  
|Interest received                                                         | $ | 2,475          |   | $ | 2,804          |  
|Interest paid                                                             | $ | 653,123        |   | $ | 909,715        |  
|Income taxes paid                                                         | $ | 2,028,968      |   | $ | 1,839,950      |  

See Accompanying Notes to the Financial Statements and
Accountants Report 
5

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AMERICANLORAINCORPORATIONCONSOLIDATEDSTATEMENTSOFSTOCKHOLDERSEQUITYFOR THE THREE-MONTHPERIODAND YEARENDEDMARCH31, 2011
ANDDECEMBER31, 2010 
(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, 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      |  |   | 890,203    |   |   | -          |  |   | -          |   |   | -             |   |   | -           |  |   | 890,210     |  
|Issuance of common stock for cash                  |  | 3,440,800  |  |   | 3,441  |  |   | 9,630,800  |   |   | -          |  |   | -          |   |   | -             |   |   | -           |  |   | 9,634,241   |  
|Issuance cost of common stock                      |  | -          |  |   | -      |  |   | (678,567   | ) |   | -          |  |   | -          |   |   | -             |   |   | -           |  |   | (678,567    | )
|Appropriations to additional paid in
      capital |  | -          |  |   | -      |  |   | 5,161,175  |   |   | -          |  |   | (5,161,175 | ) |   | -             |   |   | -           |  |   | -           |  
|Acquisition of Shandong Greenpia                   |  | 731,707    |  |   | 732    |  |   | 2,099,267  |   |   | -          |  |   | -          |   |   | -             |   |   | -           |  |   | 2,099,999   |  
|Net income                                         |  | -          |  |   | -      |  |   | -          |   |   | -          |  |   | 19,248,277 |   |   | -             |   |   | -           |  |   | 19,248,277  |  
|Appropriations to statutory reserves               |  | -          |  |   | -      |  |   | -          |   |   | 2,445,262  |  |   | (2,445,262 | ) |   | -             |   |   | -           |  |   | -           |  
|Allocation to non-controlling interests            |  | -          |  |   | -      |  |   | -          |   |   | -          |  |   | (1,408,814 | ) |   | -             |   |   | 1,408,814   |  |   | -           |  
|Unrealized gain (loss) on investment               |  | -          |  |   | -      |  |   | -          |   |   | -          |  |   | -          |   |   | (587,117      | ) |   | -           |  |   | (587,117    | )
|Foreign currency translation adjustment            |  | -          |  |   | -      |  |   | -          |   |   | -          |  |   | -          |   |   | 3,994,293     |   |   | -           |  |   | 3,994,293   |  
|Balance, December 31, 2010                         |  | 34,419,709 |  | $ | 34,420 |  | $ | 52,371,481 |   | $ | 11,340,739 |  | $ | 48,688,375 |   | $ | 9,475,745     |   | $ | 7,431,697   |  | $ | 129,342,457 |  
|                                                   |  |            |  |   |        |  |   |            |   |   |            |  |   |            |   |   |               |   |   |             |  |   |             |  
|Balance, January 1, 2011                           |  | 34,419,709 |  | $ | 34,420 |  | $ | 52,371,481 |   | $ | 11,340,739 |  | $ | 48,688,375 |   | $ | 9,475,745     |   | $ | 7,431,697   |  | $ | 129,342,457 |  
|Issuance of share based compensation               |  | -          |  |   | -      |  |   | 173,702    |   |   | -          |  |   | -          |   |   | -             |   |   | -           |  |   | 173,702     |  
|                                                   |  |            |  |   |        |  |   |            |   |   |            |  |   |            |   |   |               |   |   |             |  |   |             |  
|Net income                                         |  | -          |  |   | -      |  |   | -          |   |   | -          |  |   | 2,567,891  |   |   | -             |   |   | -           |  |   | 2,567,891   |  
|Appropriations to statutory reserves               |  | -          |  |   | -      |  |   | -          |   |   | 719,490    |  |   | (719,490   | ) |   | -             |   |   | -           |  |   | -           |  
|Allocation to non-controlling interests            |  | -          |  |   | -      |  |   | -          |   |   | -          |  |   | (141,603   | ) |   | -             |   |   | 141,603     |  |   | -           |  
|Unrealized gain (loss) on investment               |  | -          |  |   | -      |  |   | -          |   |   | -          |  |   | -          |   |   | 44,909        |   |   | -           |  |   | 44,909      |  
|Foreign currency translation adjustment            |  | -          |  |   | -      |  |   | -          |   |   | -          |  |   | -          |   |   | 1,232,883     |   |   | -           |  |   | 1,232,883   |  
|Balance, March 31, 2011                            |  | 34,419,709 |  | $ | 34,420 |  | $ | 52,545,183 |   | $ | 12,060,229 |  | $ | 50,395,173 |   | $ | 10,753,537    |   | $ | 7,573,300   |  | $ | 133,361,842 |  

See Accompanying Notes to the Financial Statements and
Accountants Report 
6

---

AMERICANLORAINCORPORATIONCONSOLIDATEDSTATEMENTSOFSTOCKHOLDERSEQUITYFOR THE THREE-MONTHPERIODAND YEARENDEDMARCH31, 2011
ANDDECEMBER31, 2010 
(STATEDIN USDOLLARS)

|                                              |   | March 31, 2011 |  |   | December 31, 2010 | 
|--------------------------------------------- | - | -------------- |  | - | ----------------- | 
|                                              |   |                |  |   |                   | 
|Comprehensive Income                          |   |                |  |   |                   | 
|Net
      Income                              | $ | 2,567,891      |  | $ | 19,248,277        | 
|Other Comprehensive Income                    |   |                |  |   |                   | 
|Foreign
      Currency Translation Adjustment |   | 1,232,883      |  |   | 3,994,293         | 
|Total Comprehensive Income                    | $ | 3,800,774      |  | $ | 23,242,570        | 

See Accompanying Notes to the Financial Statements and
Accountants Report 
7

---

AMERICAN LORAIN CORPORATION 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
MARCH 31, 2011 AND DECEMBER 31, 2010 
(Stated in US Dollars)

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

8

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AMERICAN LORAIN CORPORATION 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
MARCH 31, 2011
AND DECEMBER 31, 2010 
(Stated in US Dollars)

|   | (d)                                          | Business Activities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|-- | -------------------------------------------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                              |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   |                                              | The Company develops, manufactures, and sells convenience
      foods (including 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 three months ended March 31, 2011 in order to be consistent
      with the presentation provided for the year ended December 31, 2010. 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 March 31, 2011, the detailed identities of the
      consolidating subsidiaries are as follows:                                                                                                                                                                                                                                                                                                                                                                                                                                                           

| |                                     |  | Place of       |  |  | Attributable equity |  |   | Registered | 
| | ----------------------------------- |  | -------------- |  |  | ------------------- |  | - | ---------- | 
| | Name of Company                     |  | incorporation  |  |  | interest %          |  |   | capital    | 
| | Shandong Lorain Co., Ltd            |  | PRC            |  |  | 80.20               |  | $ | 15,398,238 | 
| | Luotian Lorain Co., Ltd             |  | PRC            |  |  | 100                 |  |   | 3,866,933  | 
| | Junan Hongrun Foodstuff Co., Ltd    |  | PRC            |  |  | 100                 |  |   | 45,678,692 | 
| | Beijing Lorain Co., Ltd             |  | PRC            |  |  | 100                 |  |   | 1,526,694  | 
| | Shandong Greenpia Foodstuff Co.,Ltd |  | PRC            |  |  | 100                 |  |   | 2,345,002  | 
| | Dongguan Lorain Co,,Ltd             |  | PRC            |  |  | 100                 |  |   | 152,669    | 
| | International Lorain Holding Inc.   |  | Cayman Islands |  |  | 100                 |  |   | 47,508,817 | 

| | (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 makes these estimates using the best information
      available at the time the estimates are made; however actual results could
      differ materially from those estimates.
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | (d) | Cash and cash equivalents                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| |     | The Company considers all highly liquid investments
      purchased with original maturities of three months or less to be cash
      equivalents.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 

9

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AMERICAN LORAIN CORPORATION 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
MARCH 31, 2011 AND DECEMBER 31, 2010  
(Stated in US Dollars)

| | (e) | Investment securities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |     | The Company classifies securities it holds for investment purposes 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.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | (f) | Trade accounts receivables                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |     | Trade accounts 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.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | (g) | 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.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | (h) | Customer deposits and advances to suppliers                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |     | Customer deposits were received from customers in connection with orders of products to be delivered in future periods.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |     | Advances to suppliers are good faith deposits paid to suppliers for the purpose of committing suppliers to provide product promptly upon delivery of the Company’s purchase order for raw materials, supplies, equipment,
building materials etc. Pursuant to the Company’s arrangements with its suppliers, this deposit is generally 20% of the total amount contracted for. This type of transaction is classified as a prepayment category under the account name
“Advance to Suppliers” until such time as the Company’s purchase order is delivered, at which point this account is reduced by reclassification of the applicable amount to the appropriate asset account such as inventory or fixed
assets or construction in progress.                                                                                                       
| | (i) | Property, plant and equipment, net                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |     | Property, plant and equipment, net 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 property, plant and
equipment are as follows:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        

10

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AMERICAN LORAIN CORPORATION 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
MARCH 31, 2011
AND DECEMBER 31, 2010 
(Stated in US Dollars)

| | Buildings                   | 40 years
| | --------------------------- | --------
| | Landscaping, plant and tree | 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.                                                                                                                                                                                                                                                                                                            
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | (j) | Construction in progress                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| |     | Construction in progress represents direct and indirect
      construction or acquisition costs. 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 the asset is completed and ready for
      intended use.                                                                                                                                                                                                                                                           
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | (k) | Land Use Rights                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| |     | Land use rights are carried at cost and amortized on a
      straight-line basis over a specified period.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | (l) | Accounting for the Impairment of Long-Lived
      Assets                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| |     | The long-lived assets held 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. An impairment is present if carrying amount of
      an asset is less than its undiscounted cash flows to be
  generated.                                                                                                                                                                                         
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| |     | If an asset is considered impaired, a loss is recognized
      based on the amount by which the carrying amount exceeds the fair market
      value of the asset. Assets to be disposed of are reported at the lower of
      the carrying amount or fair value less costs to sell. The Company believes
      no impairment has occurred to its assets during 2010 and through March 31,
      2011.                                                                                                                                                                                                                                                  
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | (m) | Advertising                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| |     | All advertising costs are expensed as incurred.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | (n) | Shipping and handling                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| |     | All shipping and handling are expensed as
  incurred.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | (o) | Research and development                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| |     | All research and development costs are expensed as
      incurred.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | (p) | 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.                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | (q) | 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.

11

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AMERICAN LORAIN CORPORATION 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
MARCH 31, 2011
AND DECEMBER 31, 2010 
(Stated in US Dollars)

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: -

| | Taxable Income | 
| | -------------- | 
| | Rate           | 
| | 15%            | 
| | 25%            | 
| | 34%            | 
| | 39%            | 
| | 34%            | 
| | 35%            | 
| | 38%            | 
| | 35%            | 

| | (r) | Statutory reserves                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| |     | Statutory reserves are referring to the amount
      appropriated from the net income in accordance with laws or regulations,
      which can be used to recover losses and increase capital, as approved, and
      are to be used to expand production or operations. The Company transferred
      $2,445,262 from retained earnings to statutory reserves during 2010. 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.
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | (s) | 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.                                                                                                                                                                                             

12

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AMERICAN LORAIN CORPORATION 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
MARCH 31, 2011
AND DECEMBER 31, 2010 
(Stated in US Dollars)

| |                                        |  | 3/31/2011 |  |  | 12/31/2010 |  |  | 3/31/2010 | 
| | -------------------------------------- |  | --------- |  |  | ---------- |  |  | --------- | 
| | Year end RMB : US$ exchange rate       |  | 6.5501    |  |  | 6.6118     |  |  | 6.8361    | 
| | Average yearly RMB : US$ exchange rate |  | 6.5713    |  |  | 6.7788     |  |  | 6.8360    | 

| |     | 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 Dollars at the rates used in
      translation.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | (t) | 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 invoiced value of
      goods, net of a value-added tax (VAT). The Company allows its customers to
      return products if they are defective. However, this rarely happens and
      amounts returned have been de minimis.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| |     | The Company gradually switched its sales model from
      direct sales to third party distributor model and issues 1% sales
      incentive to distributors. The Company modified it accounting policy for
      the recognition of revenue accordingly. Given the circumstances of how the
      Company conducts its incentive program, the Company books the payments
      settled in cash as a contra account to Gross Revenue, and includes the
      amount in its reported net revenue. The Company has considered the
      guidance in FASB ASC605-50 (EITF 01-9) and will account for
      its sales incentive program accordingly.                                                                                                                                                                                                                                                                                                                                                                             
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | (u) | Earnings per share                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| |     | Basic earnings per share are computed by dividing net
      income by the weighted average number of shares of common stock
      outstanding during the period. Diluted earnings per share are computed by
      dividing net income by the sum of the weighted average number of ordinary
      shares outstanding and potential dilutive securities during the year.
      During the years ended December 31, 2010, 81,155 warrants were issued to
      certain service providers. During the year ended December 31, 2009,
      1,334,573 stock options were granted to employees pursuant to the
      Companys equity incentive plan and; 2,255,024 warrants were issued to
      investors in connection with a PIPE financing. These warrants and options
      could be potentially dilutive if the market price of the Companys common
      stock exceeds the exercise price for these securities.                                                                                                            
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| |     | 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.
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | (v) | 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.                                                                                                                                                                                                                                                                          

13

---

AMERICAN LORAIN CORPORATION 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
MARCH 31, 2011 AND DECEMBER 31, 2010  
(Stated in US Dollars)

| | (w) | 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.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | (x) | 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 current component of other comprehensive
income includes the foreign currency translation adjustment and unrealized gain or loss.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | (y) | Recent accounting pronouncements                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| |     | In April 2010, the FASB issued an Accounting Standard Update (“ASU”) No.2010-13,”Compensation-Stock Compensation” (Topic 718): Effect of Denominating the Exercise Price of a Share-Based Payment Award in the
Currency of the Market in Which the Underlying Equity Security Trades,” which address the classification of a share-based payment award with an exercise price denominated in the currency of a market in which the underlying equity security
trades. Topic 718 is amended to clarify that a share-based payment award with an exercise price denominated in the currency of a market in which a substantial portion of the entity’s equity securities trades shall not be considered to contain
a market, performance, or service condition. Therefore, such an award is not to be classified as a liability if it otherwise qualifies as equity classification. The amendments in this update should be applied by recording a cumulative-effect
adjustment to the opening balance of retained earnings. The cumulative-effect adjustment should be calculated for all awards outstanding as of the beginning of the fiscal year in which the amendments are initially applied, as if the amendments had
been applied consistently since the inception of the award. ASU 2010-13 is effective for interim and annual periods beginning on or after December 15, 2010 and is not expected to have a material impact on the Company’s consolidated financial
position or results of the operations.                                                                                                                                                                                                                                                                                                                                                                                                                              
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| |     | In January 2011, the FASB issued an Accounting Standard Update (“ASU”) No, 2011-01, “Receivables Topic 310): Disclosures about the Credit Quality of Financing Receivables and the Allowance for
Credit Losses, to
be concurrent with the effective date of the guidance for determining what constitutes a troubled debt restructuring, as presented in proposed Accounting Standards Update, Receivables (Topic 310): Clarifications to Accounting for Troubled Debt
Restructurings by Creditors. The amendments in this Update apply to all public-entity creditors that modify financing receivables within the scope of the disclosure requirements about troubled debt restructurings in Update 2010-20. Under the
existing effective date in Update 2010-20, public- entity creditors would have provided disclosures about troubled debt restructurings for periods beginning on or after December 15, 2010. The amendments in this Update temporarily defer that
effective date, enabling public-entity creditors to provide those disclosures after the Board clarifies the guidance for determining what constitutes a troubled debt restructuring. The deferral in this Update will result in more consistent
disclosures about troubled debt restructurings. This amendment does not defer the effective date of the other disclosure requirements in Update 2010-20. In the proposed Update for determining what constitutes a troubled debt restructuring, the Board
proposed that the clarifications would be effective for interim and annual periods ending after June 15, 2011. For the new disclosures about troubled debt restructurings in Update 2010-20, those clarifications would be applied retrospectively to the
beginning of the fiscal year in which the proposal is adopted. The Company does not expect to have a material impact on the Company’s consolidated financial position or results of the operations.

14

---

AMERICAN LORAIN CORPORATION 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
MARCH 31, 2011
AND DECEMBER 31, 2010 
(Stated in US Dollars)

|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                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   

| |                                            |   | 3/31/2011  |   |   | 12/31/2010 |  
| | ------------------------------------------ | - | ---------- | - | - | ---------- | -
| | Trade accounts receivable                  | $ | 22,174,604 |   | $ | 33,562,514 |  
| | Less:Allowance for doubtful
      accounts |   | (339,066   | ) |   | (335,902   | )
| |                                            | $ | 21,835,538 |   | $ | 33,226,612 |  
| |                                            |   |            |   |   |            |  
| |                                            |   |            |   |   |            |  
| | Allowance for bad debt:                    |   | 3/31/2011  |   |   | 12/31/2010 |  
| | Beginning balance                          | $ | (335,902   | ) | $ | (267,590   | )
| | Additions to allowance                     |   | (3,164     | ) |   | (68,312    | )
| | Bad debt written-off                       |   | -          |   |   | -          |  
| | Ending balance                             | $ | (339,066   | ) | $ | (335,902   | )

|   | 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 RECEIVABLES                                                                                                                                                                                                                                                                                               
|   |                                                                                                                                                                                                                                                                                                                 
|   | Other receivables consisted of the following as of March
      31, 2011 and December 31, 2010:                                                                                                                                                                                                                  

| |                                                       |   | 3/31/2011 |  |   | 12/31/2010 | 
| | ----------------------------------------------------- | - | --------- |  | - | ---------- | 
| | Advances to employees for purchase
      of materials | $ | -         |  | $ | -          | 
| | Advances to employees for job/travel disbursements    |   | 1,205,368 |  |   | 764,725    | 
| | Amount due by a non-related
      enterprise          |   | 164,142   |  |   | 215,685    | 
| | Other non-related receivables                         |   | 606,724   |  |   | 512,440    | 
| |                                                       | $ | 1,976,234 |  | $ | 1,492,850  | 

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.

Specifically, the company uses every available employee to
arrange purchases with desirable chestnut or other raw material growers.
However, because many of these growers are in rural farming areas of China where
traditional banking and credit arrangements are difficult to implement, the
Company must utilize cash purchases and also must contract for its future needs
by placing a good faith deposit in cash with the growers. However none of these
advances to employees for delivery to the growers on behalf of the Company are
personal loans to the employees. Advances to employees for purchase of
materials in other receivables are adjusted to advances to suppliers as of March
31, 2011.

15

---

AMERICAN LORAIN CORPORATION 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
MARCH 31, 2011
AND DECEMBER 31, 2010 
(Stated in US Dollars)

Related party receivable consisted of the following as of March
31, 2011 and December 31, 2010:

| |            |   | 3/31/2011 |  |   | 12/31/2010 | 
| | ---------- | - | --------- |  | - | ---------- | 
| | Chen Si    | $ | 128,999   |  | $ | 123,467    | 
| | Lu Yundong |   | 32,869    |  |   | -          | 
| | Liu Gang   |   | -         |  |   | -          | 
| |            | $ | 161,868   |  | $ | 123,467    | 

|   | Related party receivable represented advances issued by
      management for job or travel disbursement in the normal course of
      business. The receivable had no impact on earnings. As with other
      employees, officers sign notes when cash is issued to them as job or
      travel disbursement.
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                              
|6. | INVENTORIES                                                                                                                                                                                                                                                                                                  
|   |                                                                                                                                                                                                                                                                                                              
|   | Inventories consisted of the following as of March 31,
      2011 and December 31, 2010:                                                                                                                                                                                                                     

| |                |   | 3/31/2011  |  |   | 12/31/2010 | 
| | -------------- | - | ---------- |  | - | ---------- | 
| | Raw materials  | $ | 15,171,059 |  | $ | 18,128,883 | 
| | Finished goods |   | 23,559,871 |  |   | 11,678,315 | 
| |                | $ | 38,730,930 |  | $ | 29,807,198 | 

|7. | PROPERTY, PLANT AND EQUIPMENT                                                                              
|-- | -----------------------------------------------------------------------------------------------------------
|   |                                                                                                            
|   | Property, plant, and equipment consisted of the following
      as of March 31, 2011 and December 31, 2010:

| |                                   |   | 3/31/2011  |   |   | 12/31/2010 |  
| | --------------------------------- | - | ---------- | - | - | ---------- | -
| | At Cost:                          |   |            |   |   |            |  
| | Buildings                         | $ | 49,150,123 |   | $ | 48,612,643 |  
| | Landscaping, plant and tree       |   | 2,879,872  |   |   | 2,852,998  |  
| | Machinery and
      equipment     |   | 9,835,538  |   |   | 9,544,910  |  
| | Office equipment                  |   | 528,464    |   |   | 501,977    |  
| | Motor vehicles                    |   | 451,579    |   |   | 420,020    |  
| |                                   | $ | 62,845,576 |   | $ | 61,932,548 |  
| | Less:Accumulated depreciation     |   |            |   |   |            |  
| | Buildings                         |   | (3,028,493 | ) |   | (2,729,161 | )
| | Landscaping,
      plant and tree |   | (71,997    | ) |   | (23,775    | )
| | Machinery and equipment           |   | (4,226,129 | ) |   | (3,998,121 | )
| | Office equipment                  |   | (330,691   | ) |   | (312,872   | )
| | Motor vehicles                    |   | (237,925   | ) |   | (225,832   | )
| |                                   |   | (7,895,235 | ) |   | (7,289,761 | )
| |                                   |   |            |   |   |            |  
| | Construction in Progress          |   | 17,832,486 |   |   | 17,452,220 |  
| |                                   | $ | 72,782,827 |   | $ | 72,095,007 |  

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

16

---

AMERICAN LORAIN CORPORATION 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
MARCH 31, 2011
AND DECEMBER 31, 2010 
(Stated in US Dollars)

Landscaping, plants, and trees accounts for the orchards that
the Company has developed for agricultural operations. These orchards as well as
the young trees which were purchased as nursery stock are capitalized into fixed
assets. The depreciation is then calculated on a 30-year straight-line method
when production in commercial quantities begins. The orchards have begun
production in small quantities and the Company has accounted for depreciation
commencing July 1, 2010.

|8. | LAND USE RIGHTS                                                                             
|-- | --------------------------------------------------------------------------------------------
|   |                                                                                             
|   | Land use rights consisted of the following as of March
      31, 2011 and December 31, 2010:

| |                               |   | 3/31/2011 |   |   | 12/31/2010 |  
| | ----------------------------- | - | --------- | - | - | ---------- | -
| | Land use rights, at cost      | $ | 5,561,827 |   | $ | 5,509,925  |  
| | Less:Accumulated amortization |   | (677,374  | ) |   | (632,487   | )
| |                               | $ | 4,884,453 |   | $ | 4,877,438  |  

|   | All lands are owned by the government in China. Land use
      rights represent the Companys purchase of usage rights for a parcel of
      land for a specified duration of time, typically 50 years. The land use
      rights are then amortized over the period of usage. Amortization expense
      for the years ended March 31, 2011 and December 31, 2010 were $ 44,886 and
      $144,611, respectively.
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                   
|9. | SHORT-TERM BANK LOANS                                                                                                                                                                                                                                                                                                                                                                                             
|   |                                                                                                                                                                                                                                                                                                                                                                                                                   
|   | Short-term bank loans consisted of the following as of
      March 31, 2011 and December 31, 2010:                                                                                                                                                                                                                                                                                                                

| |                                                               |  | Remark |  |   | 3/31/2011 |  |   | 12/31/2010 | 
| | ------------------------------------------------------------- |  | ------ |  | - | --------- |  | - | ---------- | 
| | Loans from Junan County Construction Bank,                    |  |        |  |   |           |  |   |            | 
| | 
      Interest rate at 5.610% per annum due 1/6/2011        |  |        |  | $ | -         |  | $ | 128,558    | 
| |  Interest rate at 5.841%
      per annum due 1/14/2011       |  |        |  |   | -         |  |   | 483,983    | 
| | 
      Interest rate at 5.610% per annum due 1/28/2011       |  |        |  |   | -         |  |   | 3,223      | 
| |  Interest rate at 5.841%
      per annum due 3/4/2011        |  |        |  |   | -         |  |   | 393,236    | 
| | 
      Interest rate at 5.841% per annum due 9/9/2011        |  |        |  |   | -         |  |   | 1,209,958  | 
| |                                                               |  |        |  |   |           |  |   |            | 
| | Loan from Junan County
      Agriculture Bank,                |  |        |  |   |           |  |   |            | 
| |  Interest rate at 6.903%
      per annum due 3/30/2011       |  |        |  |   | -         |  |   | 95,284     | 
| | 
      Interest rate at 7.434% per annum due 8/23/2011       |  | A      |  |   | 1,526,694 |  |   | 1,512,447  | 
| |                                                               |  |        |  |   |           |  |   |            | 
| | Loan from Junan County
      Industrial and Commercial Banks, |  |        |  |   |           |  |   |            | 
| |  Interest rate at 5.100%
      per annum due 1/18/2011       |  |        |  |   |           |  |   | 756,224    | 
| | 
      Interest rate at 5.100% per annum due 1/20/2011       |  |        |  |   |           |  |   | 756,224    | 
| |  Interest rate at 5.100%
      per annum due 1/26/2011       |  |        |  |   |           |  |   | 1,134,336  | 
| | 
      Interest rate at 5.100% per annum due 2/8/2011        |  |        |  |   |           |  |   | 635,228    | 
| |  Interest rate at 5.100%
      per annum due 2/22/2011       |  |        |  |   |           |  |   | 1,240,207  | 
| | 
      Interest rate at 4.860% per annum due 3/15/2011       |  |        |  |   |           |  |   | 1,134,336  | 

17

---

AMERICAN LORAIN CORPORATION 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
MARCH 31, 2011
AND DECEMBER 31, 2010 
(Stated in US Dollars)

| |  Interest rate at 5.600% per annum due 5/20/2011                     |  | B |  |  | 427,474   |  |  | -         | 
| | --------------------------------------------------------------------- |  | - |  |  | --------- |  |  | --------- | 
| |                                                                       |  |   |  |  |           |  |  |           | 
| | Loan from Linyi Commercial
      Bank,                                |  |   |  |  |           |  |  |           | 
| |  Interest rate at
      11.510% per annum due 1/21/2011              |  |   |  |  | -         |  |  | 680,601   | 
| | 
      Interest rate at 11.676% per annum due 12/15/2011             |  | C |  |  | 687,012   |  |  | 680,601   | 
| |  Interest rate at
      12.201% per annum due 1/10/2012              |  | C |  |  | 687,012   |  |  | -         | 
| |                                                                       |  |   |  |  |           |  |  |           | 
| | Loan from China Agricultural Bank, Luotian
      Branch               |  |   |  |  |           |  |  |           | 
| |  Interest rate at 6.372% per annum
      due 8/25/2010               |  |   |  |  |           |  |  | -         | 
| |  Interest rate at 6.372% per annum due 9/12/2011                     |  |   |  |  | 1,068,686 |  |  | 1,134,336 | 
| |                                                                       |  |   |  |  |           |  |  |           | 
| | Bank of Beijing,                                                      |  |   |  |  |           |  |  |           | 
| |  Interest rate at 6.672% per annum
      due 10/28/2011              |  |   |  |  | 305,339   |  |  | 302,489   | 
| |                                                                       |  |   |  |  |           |  |  |           | 
| | East West Bank (Formerly United
      Commercial Bank), China Branch, |  |   |  |  |           |  |  |           | 
| |  Interest rate at 5.494% per annum
      due 11/14/2011              |  | D |  |  | 820,671   |  |  | 897,052   | 
| |                                                                       |  |   |  |  |           |  |  |           | 
| | HSBC Miyun Branch,                                                    |  |   |  |  |           |  |  |           | 
| |  Interest rate at 5.840% per annum due 6/09/2011                     |  | E |  |  | 305,339   |  |  | 302,489   | 
| |  Interest rate at 6.372% per annum
      due 6/29/2011               |  |   |  |  | 816,781   |  |  | 983,091   | 
| |  Interest rate at 6.804% per annum due 4/8/2011                      |  | E |  |  | 305,339   |  |  | 302,489   | 
| |                                                                       |  |   |  |  |           |  |  |           | 
| | Shenzhen Development Bank,                                            |  |   |  |  |           |  |  |           | 
| |  Interest rate at 5.310% per annum
      due 9/14/2011               |  |   |  |  | 763,347   |  |  | 756,224   | 
| |                                                                       |  |   |  |  |           |  |  |           | 
| | China Development Bank,                                               |  |   |  |  |           |  |  |           | 
| |  Interest rate at 5.841% per annum due 6/27/2011                     |  | F |  |  | 3,053,390 |  |  | 3,024,895 | 
| |                                                                       |  |   |  |  |           |  |  |           | 
| | Luotian Agricultural Development Bank,                                |  |   |  |  |           |  |  |           | 
| | 
      Interest rate at 0.670% per month due 12/11/2010              |  |   |  |  | 28,626    |  |  | 113,433   | 
| |                                                                       |  |   |  |  |           |  |  |           | 
| | Luotian Sanliqiao Credit
      Union,                                 |  |   |  |  |           |  |  |           | 
| |  Interest rate at 6.300% per annum due 11/5/2011                     |  |   |  |  | 763,347   |  |  | 756,224   | 
| |                                                                       |  |   |  |  |           |  |  |           | 
| | Beijing Rural Commercial Bank, Shilibao
      Branch,                 |  |   |  |  |           |  |  |           | 
| |  Interest rate at 7.434% per annum
      due 8/10/2011               |  |   |  |  | 2,595,380 |  |  | 2,571,161 | 
| |                                                                       |  |   |  |  |           |  |  |           | 
| | China Agricultural Bank, Shandong
      Branch                        |  |   |  |  |           |  |  |           | 

18

---

AMERICAN LORAIN CORPORATION 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
MARCH 31, 2011
AND DECEMBER 31, 2010 
(Stated in US Dollars)

| |  Interest rate at
      7.2280% per annum due 12/27/2011 |   | 1,526,694  |  |   | 1,512,447  | 
| | --------------------------------------------------------- | - | ---------- |  | - | ---------- | 
| | Shandong Junan Rural Credit
      Union                   |   |            |  |   |            | 
| | Interest rate at
      9.1155% per annum due 2/07/2011   |   | -          |  |   | 1,209,958  | 
| | Beijing International Trust Co.,
      Ltd., (BITIC)    |   |            |  |   |            | 
| |  Interest rate at 6.600%
      per annum due 12/14/2011  |   | 458,008    |  |   | 453,734    | 
| |                                                           | $ | 16,139,139 |  | $ | 25,164,469 | 

|    | The short-term loans, which are denominated in the
      functional currency Renminbi (RMB), were primarily obtained for general
      working capital.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                        
|    | Remark:                                                                                                                                                
|    |                                                                                                                                                        
|    | A: A parcel of 12,726 square meters land use right and an
      8,162 square meters building was used as collateral for this
  loan.                   
|    |                                                                                                                                                        
|    | B: Accounts Receivable in the amount of $1,650,000 was
      used as collateral for this loan                                                          
|    |                                                                                                                                                        
|    | C: Machinery of $857,737 was used as collateral for these
      two loans.                                                                             
|    |                                                                                                                                                        
|    | D: A parcel of 19,507 square meters land use right, owned
      by Sishui Xinlu, was used as collateral for this loan.                                 
|    |                                                                                                                                                        
|    | E: Machinery and equipment was used as collateral for this loan.                                                                                       
|    |                                                                                                                                                        
|    | F: A land of 25,463 square meters was used as
      collateral                                                                                         
|    |                                                                                                                                                        
|10. | NOTES PAYABLE                                                                                                                                          
|    |                                                                                                                                                        
|    | Notes payable consisted of the following as of March 31,
      2011 and December 31, 2010:                                                             

| |                                 |   | 3/31/2011 |  |   | 12/31/2010 | 
| | ------------------------------- | - | --------- |  | - | ---------- | 
| | Junan County Construction Bank, |   |           |  |   |            | 
| |  due at 1/26/2011              | $ | -         |  | $ | 378,112    | 
| |  due at 1/30/2011              |   | -         |  |   | 846,971    | 
| |                                 |   |           |  |   |            | 
| | Qingdao Evergrowing Bank,       |   |           |  |   |            | 
| |  due at 6/13/2011              |   | 3,053,388 |  |   | 3,024,895  | 
| |                                 |   |           |  |   |            | 
| | Agricultural Bank of China      |   |           |  |   |            | 
| |  due at 9/17/2011              |   | 3,053,388 |  |   | -          | 
| |                                 | $ | 6,106,777 |  | $ | 4,249,977  | 

|11. | TAXES PAYABLES                                                                            
|--- | ------------------------------------------------------------------------------------------
|    |                                                                                           
|    | Taxes payable consisted of the following as of March 31,
      2011 and December 31, 2010:

19

---

AMERICAN LORAIN CORPORATION 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
MARCH 31, 2011
AND DECEMBER 31, 2010 
(Stated in US Dollars)

| |                              |   | 3/31/2011 |  |   | 12/31/2010 | 
| | ---------------------------- | - | --------- |  | - | ---------- | 
| | Value added tax payable      | $ | 80,623    |  | $ | 377,562    | 
| | Corporate income tax payable |   | 1,067,467 |  |   | 2,808,466  | 

| | Employee payroll tax withholding |   | 9,053     |  |   | 5,096     | 
| | -------------------------------- | - | --------- |  | - | --------- | 
| | Property tax payable             |   | 38,347    |  |   | 38,819    | 
| | Stamp tax payable                |   | 2,768     |  |   | 4,679     | 
| | Sales tax payable                |   | 11,794    |  |   | 76        | 
| | Land use tax payable             |   | 31,405    |  |   | 24,943    | 
| | Import tariffs                   |   | 6,926     |  |   | 6,861     | 
| |                                  | $ | 1,248,383 |  | $ | 3,266,502 | 

|12. | ACCRUED EXPENSES AND OTHER PAYABLES                                                                             
|--- | ----------------------------------------------------------------------------------------------------------------
|    |                                                                                                                 
|    | Accrued expenses and other payables consisted of the
      following as of March 31, 2011 and December 31,
2010:

| |                                 |   | 3/31/2011 |  |   | 12/31/2010 | 
| | ------------------------------- | - | --------- |  | - | ---------- | 
| | Accrued salaries and wages      | $ | 3,044     |  | $ | -          | 
| | Accrued utility expenses        |   | 116,409   |  |   | 24,825     | 
| | Accrued interest expenses       |   | 29,203    |  |   | 38,353     | 
| | Accrued transportation expenses |   | 192,522   |  |   | 472,836    | 
| | Other accruals                  |   | 286,163   |  |   | 110,683    | 
| | Business and other taxes        |   | 872,108   |  |   | 479,850    | 
| | Disbursement payable            |   | 242,953   |  |   | 177,543    | 
| | Accrued staff welfare           |   | 37,658    |  |   | 31,857     | 
| |                                 | $ | 1,780,060 |  | $ | 1,335,947  | 

|13. | LONG-TERM DEBT                                                                                                 
|--- | ---------------------------------------------------------------------------------------------------------------
|    |                                                                                                                
|    | Current portions of long-term debt consisted of the
      following as of March 31, 2011 and December 31,
2010:

| |                                                                                 |   | 3/31/2011 |  |   | 12/31/2010 | 
| | ------------------------------------------------------------------------------- | - | --------- |  | - | ---------- | 
| | Loans from Luotian Agricultural Development
      Bank                          |   |           |  |   |            | 
| |  Interest rate at 2.100% per
      annum due 12/11/2011                        |   | 26,718    |  |   | 26,468     | 
| |                                                                                 |   |           |  |   |            | 
| | Loans from East West Bank
      (Formerly United Commercial Bank), China Branch |   |           |  |   |            | 
| |  Interest rate at 5.494% per
      annum due 11/14/2011                        |   | 194,280   |  |   | 192,467    | 
| |                                                                                 |   |           |  |   |            | 
| |                                                                                 | $ | 220,998   |  | $ | 218,935    | 

Non-current portions of long-term debt consisted of the
following as of March 31, 2011 and December 31, 2010:

| |                                                                                 |   | 3/31/2011  |  |   | 12/31/2010 | 
| | ------------------------------------------------------------------------------- | - | ---------- |  | - | ---------- | 
| | Loans from Deutsche Investitions-und
      Entwicklungsgesellschaft mbH (DEG) |   |            |  |   |            | 
| |  Interest rate at 5.510% per
      annum due 9/16/2016                         |   | 15,126,807 |  |   | 5,030,930  | 
| |                                                                                 | $ | 15,126,807 |  | $ | 5,030,930  | 

The Companys loan with DEG will be repaid in semi-annual
installments beginning September 15, 2012. The loan was collateralized with the
following terms:

| | (a.) | Create and register a first ranking mortgage in
      the amount of about USD 12,000,000 on its land and building in favor of
      DEG.                                                                                    
| | ---- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |      |                                                                                                                                                                                                                             
| | (b.) | Undertake to provide a share pledge of Mr. Si
      Chen shares in the sponsor in the amount of about USD 12,000,000 and being
      the majority shareholder in the sponsor in form and substance satisfactory
      to DEG

20

---

AMERICAN LORAIN CORPORATION 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
MARCH 31, 2011
AND DECEMBER 31, 2010 
(Stated in US Dollars)

| | (c.) | The total amount of the first ranking mortgage
      as indicated in the Loan Agreement (Article 12(1)(a)) and the value of the
      pledged shares of Mr. Si Chen (Loan Agreement (Article 12(1)(a))) should
      be at least USD 24,000,000.
| | ---- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |      |                                                                                                                                                                                                                                                 
| | (d.) | Undertake to provide a guarantee from
      the Shareholder in form and substance satisfactory to DEG.                                                                                                                                          

|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. In connection with the financing, the
      Company also issued 1,037,858 and 489,330 warrants to the PIPE investors
      and placement agent, respectively. During 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
      shares; 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 its 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 March 31, 2011 was
      31,419,709.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|    | During the year 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.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|    | During the year 2010, the Company issued 2,000 shares to
      a service provider on February 10, 2010 and 81,155 warrants to various
      service providers on January 5, 2010. The Company issued to investors
      3,440,800 shares at an agreed price of $2.80 per share for a PIPE
      financing on September 10, 2010. This financing brought $8,955,730 net
      proceeds to the Company. The Company issued 5,000 shares to its employee
      on 9/23/2010. 731,707 shares of restricted stock were issued to the owner
      of Shandong Greenpia, Mr. Ji Zhenwei on September 24, 2010 as part of
      acquisition cost. The total number of shares issued and outstanding is
      34,419,709 as of March 31, 2011.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|    | During the year 2010, the Company transferred 5,161,176
      from retained earnings to additional paid up capital and 2,445,262 from
      retained earnings to statutory reserve. These transfers are to be used for
      future company development, recovery of losses and increase of capital, as
      approved, to expand production or operations.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|    | For the period ended March 31, 2011, the Company
      transferred 719,490 from retained earnings to statutory reserve. These
      transfers are to be used for future company development, recovery of
      losses and increase of capital, as approved, to expand production or
      operations.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    

American Lorain Corporation
Capitalization Reconciliation Table

Par value 
    authorized
    
    
    Issuance 
    date
    
    
    Shares 
    outstandingCommon stock at 1/1/2009
    
    200,000,000
    
    
    
    
    
    25,172,640New shares issued to employees and vendors during 2009
    
    
    
    
    Various dates
    
    
    56,393New shares issued to PIPE investors
    
    
    
    
    10/28/2009
    
    
    5,011,169New shares issued to service provider during 2010
    
    
    
    
    2/10/2010
    
    
    2,000New shares issued to PIPE investors
    
    
    
    
    9/10/2010
    
    
    3,440,800New shares
      issued to employee
    
    
    
    
    9/23/2010
    
    
    5,000


New shares issued as acquisition consideration
    
    
    
    
    9/24/2010
    
    
    731,707Common stock at 3/31/2011
    
    
    
    
    
    
    
    34,419,709


21

---

AMERICAN LORAIN CORPORATION 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
MARCH 31, 2011
AND DECEMBER 31, 2010 
(Stated in US Dollars)

Number of 
    warrantsWarrants
      and options
    
    or options
    
    
    Issuance date
    
    
    Expiration dateWarrants issued to investors in 2007 PIPE
    
    1,037,858
    
    
    5/3/2007
    
    
    5/2/2010Warrants issued to placement agent in 2007 PIPE
    
    489,330
    
    
    5/3/2007
    
    
    5/2/2010Employee stock options
    
    1,334,573
    
    
    7/28/2009
    
    
    7/27/2014Warrants issued to investors in 2009 PIPE - Series A
    
    1,753,909
    
    
    10/28/2009
    
    
    4/28/2015Warrants issued to investors in 2009 PIPE -
      Series B
    
    501,115
    
    
    10/28/2009
    
    
    10/28/2012Issued to
      service provider A during 2010
    
    50,722
    
    
    1/5/2010
    
    
    1/2/2014Issued to service provider B during 2010
    
    20,289
    
    
    1/5/2010
    
    
    1/2/2014Issued to
      service provider C during 2010
    
    10,144
    
    
    1/5/2010
    
    
    1/2/2014Total warrants and options
    
    5,197,940


|15. | NON-CONTROLLING INTERESTS                                                                                                                                                                 
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                           
|    | The non-controlling interest represents the 19.8% equity
      of Shandong Lorain 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 March 31, 2011 and 2010:                                                                                            

Category
    
    3/31/2011
    
    
    3/31/2010Chestnut
    $
    15,050,593
    
    $
    12,960,561Convenience food
    
    10,003,660
    
    
    7,089,176Frozen food
    
    5,395,552
    
    
    4,510,479Total
    $
    30,449,805
    
    $
    24,560,216


Revenue by geography consisted of the following as of March 31,
2011 and 2010:

Country
    
    3/31/2011
    
    
    3/31/2010Australia
    $
    48,395
    
    $
    -Belgium
    
    505,511
    
    
    369,076Canada
    
    -
    
    
    71,585China
    
    22,673,210
    
    
    19,346,486France
    
    224,221
    
    
    80,029Germany
    
    89,270
    
    
    64,631Hong Kong
    
    11,770
    
    
    10,413Indonesia
    
    20,686
    
    
    -Israel
    
    14,718
    
    
    -Japan
    
    3,435,980
    
    
    2,592,836Malaysia
    
    387,286
    
    
    300,747


22

---

AMERICAN LORAIN CORPORATION 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
MARCH 31, 2011
AND DECEMBER 31, 2010 
(Stated in US Dollars)

Netherlands
    
    293,123
    
    
    -Philippines
    
    96,140
    
    
    -Poland
    
    43,446
    
    
    -Singapore
    
    227,394
    
    
    157,718South Korea
    
    1,180,692
    
    
    1,151,811Spain
    
    -
    
    
    -Taiwan
    
    553,701
    
    
    45,362United Kingdom
    
    541,342
    
    
    297,616United States
    
    102,920
    
    
    41,068United Arab Emirates
    
    -
    
    
    30,838Total
    $
    30,449,805
    
    $
    24,560,216


|17. | INCOME TAXES                                                                                                                                                                  
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                               
|    | All of the Companys operations are in the PRC, and in
      accordance with the relevant tax laws and regulations of PRC, the
      corporate income tax rate is 25%.        
|    |                                                                                                                                                                               
|    | The following tables provide the reconciliation of the
      differences between the statutory and effective tax expenses for the
      periods ended March 31, 2011 and 2010.

3/31/2011
    
    
    3/31/2010Income attributed to PRC
    $
    3,745,126
    
    $
    2,951,843Loss attributed to US*
    
    (281,367
    )
    
    (261,002
    )Income before tax
    
    3,463,759
    
    
    2,690,841PRC Statutory Tax at 25% Rate
    
    895,868
    
    
    737,961Effect of tax exemption granted
    
    -
    
    
    (65,969
    )Income tax
    $
    895,868
    
    $
    671,992Per Share Effect of Tax
      Exemption3/31/2011
    
    
    3/31/2010$
    
    
    $Effect of tax exemption granted
    
    -
    
    
    (65,969
    )Weighted-Average Shares Outstanding
      Basic
    
    34,419,709
    
    
    26,075,413Per share effect
    $
    0.00
    
    $
    (0.003
    )


The difference between the U.S. federal statutory income tax
rate and the Companys effective tax rate was as follows for the periods ended
March 31, 2011 and 2010:

3/31/2011
    
    
    3/31/2010U.S. federal statutory income tax
      rate
    $
    35.00%
    
    $
    35.00%Lower rates in PRC, net
    
    -10.00%
    
    
    -10.00%Tax holiday for foreign investments
    
    -0.86%
    
    
    -0.03%The Companys effective tax rate
    $
    25.86%
    
    $
    24.97%


Effective January 1, 2008, the 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 25% tax rate, tax holidays were
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.

23

---

AMERICAN LORAIN CORPORATION 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
MARCH 31, 2011
AND DECEMBER 31, 2010 
(Stated in US Dollars)

The Company has accrued a deferred tax asset as a result of its
net operating loss in 2009 because the Company planned 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 2011 and 2010 in the following table.

Income Tax Rate
    
    2011
    
    
    2010International Lorain
    
    0%
    
    
    0%Junan Hongran
    
    25%
    
    
    25%Luotian Lorain
    
    25%
    
    
    15%Beijing Lorain
    
    15%
    
    
    15%Shandong Lorain
    
    25%
    
    
    25%Shandong Greenpia
    
    25%
    
    
    25%Dongguan Lorain
    
    25%
    
    
    25%


|18. | EARNINGS PER SHARE                                                                                                     
|--- | -----------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                        
|    | Components of basic and diluted earnings per share were
      as follows for the periods ended March 31, 2011 and
2010:

3/31/2011
    
    
    3/31/2010Basic Earnings Per Share NumeratorNet Income
    $
    2,426,288
    
    $
    1,860,531Income Available to Common Stockholders
    $
    2,426,288
    
    $
    1,860,531Diluted Earnings Per Share NumeratorIncome Available
      to Common Stockholders
    $
    2,426,288
    
    $
    1,860,531Income Available to Common Stockholders on Converted
      Basis
    $
    2,426,288
    
    $
    1,860,531Original Shares:Additions from Actual Events-Issuance of Common Stock
    
    34,419,709
    
    
    26,075,413Basic Weighted Average Shares
      Outstanding
    
    34,419,709
    
    
    26,075,413Dilutive Shares:Additions from Potential EventsExercise of Investor Warrants &
      Placement Agent Warrants
    
    81,520
    
    
    -Exercise of Employee & Director Stock Options
    
    654,729
    
    
    655,238Diluted Weighted Average Shares
      Outstanding:
    
    35,155,958
    
    
    26,730,651Earnings Per Share- Basic
    $
    0.07
    
    $
    0.07- Diluted
    $
    0.07
    
    $
    0.07Weighted Average Shares Outstanding- Basic
    
    34,419,709
    
    
    26,075,413- Diluted
    
    35,155,958
    
    
    26,730,651


24

---

AMERICAN LORAIN CORPORATION 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
MARCH 31, 2011
AND DECEMBER 31, 2010 
(Stated in US Dollars)

|19. | 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 March 31, 2011 and December 31, 2010,
the Company recorded a total of $173,702 and $890,209 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 March 31, 2011, 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:
    $
    1.5955Risk-free interest rate:
    
    2.24%Expected volatility:
    
    5.11%Expected life in months:
    
    39.00


25

---

AMERICAN LORAIN CORPORATION 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
MARCH 31, 2011
AND DECEMBER 31, 2010 
(Stated in US Dollars)

|20. | 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.
|    |                                                                                                                                                                                                                                       
|    | The minimum future lease payments for this property at
      March 31, 2011 are shown in the following
table:                                                                                                                         

From
    
    To
    
    
    Lease payment4/1/2011
    
    12/31/2011
    
    
    63,1941/1/2012
    
    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$
    662,370


The outstanding lease commitment as of March 31, 2011 was
$662,370.

The minimum future lease payments for this property at December
31, 2010 are shown in the following table:

From
    
    To
    
    
    Lease payment1/1/2011
    
    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$
    683,332


|    | The outstanding lease commitment as of December 31, 2010
      was $683,332.
|--- | ----------------------------------------------------------------------------
|    |                                                                             
|21. | RISKS                                                                       
|    |                                                                             
|    | A.                                                                          
|    |                                                                             
|    |                                                                             
|    |                                                                             
|    | B.                                                                          
|    |                                                                             
|    |                                                                             
|    |                                                                             
|    | C.                                                                          
|    |                                                                             
|    |                                                                             
|    |                                                                             
|    |                                                                             

26

---

AMERICAN LORAIN CORPORATION 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
MARCH 31, 2011 AND DECEMBER 31, 2010  
(Stated in US Dollars)

|D. | Environmental risks                                                                                                                                                                                                                                                                                                                                                    
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                        
|   | The Company has procured environmental licenses required by the PRC government. The Company has both a water treatment facility for water used in its production process and secure transportation to remove waste off site. In the
event of an accident, the Company has purchased insurance to cover potential damage to employees, equipment, and local environment.
|   |                                                                                                                                                                                                                                                                                                                                                                        
|E. | Inflation Risk                                                                                                                                                                                                                                                                                                                                                         
|   |                                                                                                                                                                                                                                                                                                                                                                        
|   | Management monitors changes in prices levels. Historically inflation has not materially impacted the company’s financial statements; however, significant increases in the price of raw materials and labor that cannot be
passed on the Company’s customers could adversely impact the Company’s results of operations.                                               

27

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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, 2010 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 equity 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 first quarter of 2011. We derive most of our revenues from sales in China,
Japan and South Korea. Our primary strategy for 2011 is to expand our brand equity in the Chinese market for our convenience foods products while maintaining the steady growth and brand recognition for our chestnut products and frozen products. In
addition, we are working to expand our marketing efforts in Asia, North America, Europe and the Middle East. We currently have limited sales and marketing activity in the United States, although our long-term plan is to significantly expand our
activities there.

Sales in the first quarter of 2011 benefited from exports to Korea and Japan and indicated that American Lorain’s key export markets in northeast Asia are continuing to rebound after a soft year in 2009. In the coming quarters, American Lorain
anticipates higher demand for its traditional chestnut product line along with its fast growing convenience business line, including the bean products, lunch boxes, and pickle vegetables.

Frozen foods sold primarily to select export markets in Europe and wholesale customers like Yums! Foods in China contributed approximately 17.7% in revenues for the quarter compared to 18.4% in the first quarter of 2010. American Lorain will
continue servicing its frozen food customers but as part of a broader marketing strategy and in response to a highly competitive environment, we are not actively seeking new customers.

American Lorain uses mostly outsourced, third party manufacturing facilities for its frozen foods and maintains limited production exposure and contractual obligations in this segment.

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 first quarter of 2011, the cost of our raw materials
increased from $17.2 million to $21.2 million, as compared to the first quarter of 2010, for an increase of approximately 24.7% . 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.

28

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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.

We have been working to reduce the seasonality in our business
primarily by putting more efforts in expanding our convenience food business
line. The percentage revenue contribution from convenience food increased from
28.9% in the first quarter of 2010 to 32.9% in the first quarter of 2011, while
revenue contribution from chestnuts declined from 52.8% to 49.4% over the same
period of time.

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. 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 funded approximately 23.0% of our working capital from the
proceeds of short-term loans from Chinese banks in the first quarter of 2011, as
compared to 68.4% over the same period last year, as we obtained $15 million
long term loan from Deutsche Investitions- und Entwicklungsgesellshaft (DEG)
and thus reduced our reliance on short term bank loans. However, 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
March 31, 2011 was approximately $16.1 million. The term of almost all such
loans is one year or less. Historically, we have rolled over such loans on an
annual basis. However, commencing 2010, the Chinese government is implementing
more stringent credit policies to curb inflation and soaring property prices,
which could negatively impact our ability to obtain or roll over these short
term loans, and hence not having sufficient funds available to pay all of our
borrowings upon maturity. 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. In addition, we completed two private placement
financings in September 2010 and October 2009 with net proceeds of $9.0 million
and $10.9 million, respectively, the proceeds of which were primarily used as
working capital. We can provide no assurances that we will be able to enter into
any future financing or refinancing agreements on terms favorable to us,
especially considering the current instability of the capital markets.

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.

The crisis of the financial and credit markets worldwide in the
second half of 2008 has led to a severe economic recession worldwide.
Furthermore, the European countries experienced severe debt crisis during 2010
which further weighed on the global economic conditions as well as the financial
market. The outlook for 2011 is still uncertain, but continuation or worsening
of unfavorable economic conditions, including the ongoing global economy and
capital markets disruptions, could have an adverse impact on our business,
operating results or financial condition in a number of ways. For example, we
may experience declines in revenues, profitability and cash flows as a result of
reduced orders, delays in receiving orders, delays or defaults in payment or
other factors caused by the economic problems of our customers and prospective
customers. We may experience supply chain delays, disruptions or other problems
associated with financial constraints faced by our suppliers and subcontractors.
In addition, changes and volatility in the equity, credit and foreign exchange
markets and in the competitive landscape make it increasingly difficult for us
to predict our revenues and earnings into the future.

In 2010, 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. 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.

Results of Operations

Three Months Ended March 31, 2011 Compared to Three Months
Ended March 31, 2010

The following table summarizes the results of our operations
during the three-month periods ended March 31, 2011 and March 31, 2010,
respectively and provides information regarding the dollar and percentage
increase or (decrease) from the three-month period ended March 31, 2011 compared to the three-month period ended
March 31, 2010.

29



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(All amounts, other than percentages, stated in thousands of
U.S. dollars)

|                                    |  | Three months ended March 31,   |   |  |                          |   |  |                               |  
|----------------------------------- |  | ------------------------------ | - |  | ------------------------ | - |  | ----------------------------- | -
|                                    |  | 2011 
    (In
      Thousands) |   |  | 2010 
    (In Thousands) |   |  | Dollar($) Increase (Decrease) |  
|Net revenues                        |  | 30,450                         |   |  | 24,560                   |   |  | 5,890                         |  
|Cost of revenues                    |  | (23,675                        | ) |  | (18,836                  | ) |  | (4,839                        | )
|Gross profit                        |  | 6,775                          |   |  | 5,724                    |   |  | 1,051                         |  
|Operating expenses                  |  |                                |   |  |                          |   |  |                               |  
|Selling and marketing expenses      |  | (1,363                         | ) |  | (1,372                   | ) |  | 9                             |  
|General and administrative expenses |  | (1,519                         | ) |  | (1,016                   | ) |  | (503                          | )
|Operating Income                    |  | 3,893                          |   |  | 3,336                    |   |  | 557                           |  
|Government subsidy income           |  | 302                            |   |  | 181                      |   |  | 121                           |  
|Interest and other income           |  | 38                             |   |  | 122                      |   |  | (84                           | )
|Other expenses                      |  | (116                           | ) |  | (28                      | ) |  | (88                           | )
|Interest expense                    |  | (653                           | ) |  | (920                     | ) |  | 267                           |  
|Earnings before tax                 |  | 3,464                          |   |  | 2,691                    |   |  | 773                           |  
|Income tax                          |  | (896                           | ) |  | (672                     | ) |  | (224                          | )
|Income before minority interests    |  | 2,568                          |   |  | 2,019                    |   |  | 549                           |  
|Minority interests                  |  | 136                            |   |  | 158                      |   |  | (22                           | )
|Net income                          |  | 2,432                          |   |  | 1,861                    |   |  | 571                           |  

Revenue

Net Revenues. Our net revenue for the three months ended
March 31, 2011 amounted to $30.4 million, which represents an increase of
approximately $5.9 million, or 24.0%, from the three-month period ended on March
31, 2010, in which our net revenue was $24.6 million. This increase was
attributable to the increased revenues generated from sales of each of our
product segments, as reflected in the following table:

|(in thousands of U.S. dollars) |  | Three months ended |           |  | Increase / Decrease |  |  | Increase / Decrease | 
|------------------------------ |  | ------------------ | --------- |  | ------------------- |  |  | ------------------- | 
|3/31/2011                      |  |                    | 3/31/2010
|Category                       |  | ($)                |           |  | ($)                 |  |  | ($)                 | 
|Chestnut products              |  | 15,050,594         |           |  | 12,960,561          |  |  | 2,090,033           | 
|Convenience products           |  | 10,003,660         |           |  | 7,089,176           |  |  | 2,914,484           | 
|Frozen products                |  | 5,395,552          |           |  | 4,510,479           |  |  | 885,073             | 
|Total                          |  | 30,449,805         |           |  | 24,560,216          |  |  | 5,889,589           | 

30

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Cost of Revenues. During the three months ended March
31, 2011, we experienced an increase in cost of revenue of $4.8 million, in
comparison to the three months ended March 31, 2010, from approximately $18.8
million to $23.7 million, reflecting an increase of approximately 25.7% .
Approximately 85.3%, or $4.2 million, of this increase was attributable to an
increase in raw material costs, which increased from $17.2 million during the
three months ended March 31, 2010 to $21.2 million, or approximately 24.7%,
during the three months ended March 31, 2011.

The factors that contributed to the remaining 14.7% increase in
cost of revenues were: an increase in wage expense for factory workers, an
increase in 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 $1.1 million,
or 18.4%, to $6.8 million for the three months ended March 31, 2011 from $5.7
million for the same period in 2010 as a result of higher revenues, offset by
higher costs of revenues, for the reasons indicated immediately above. Our gross
margins decreased from 23.3% to 22.2% because our product mix in the period
ended March 31, 2011 consisted of fewer chestnuts and more convenience foods, as
compared to the period ended March 31, 2010. Our convenience foods generate
slightly lower margins than our chestnut products. Gross profit margins by
product segment during the three months ended March 31, 2011 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 saw a modest $9,666 decrease during the first quarter of
2011, as compared to the same period over last year. The decrease was mostly due
to the decrease in sea transportation fees offsetting the increase in other
selling expenses. The following table reflects the main factors that contributed
to the 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
      March 31, 2011 over the Three Months Ended Mar 31, 2010 | 
|----------------- |  | --------------------------------------------------------------------------------------------------------- | 
|                  |  |                                                                                                           | 
|Wage              |  | 44,963                                                                                                    | 
|Entertainment     |  | 15,668                                                                                                    | 
|Supermarket fee   |  | 164,498                                                                                                   | 

The increases listed in the table above were mostly offset by
the decreases in sea transportation fees, due to some of our customers used FOB
instead of CIF in shipping and thus the sea transportation cost is born by our
customers.

General and Administrative Expenses. We experienced an
increase in general and administrative expense of approximately $0.5 million
from approximately $1.0 million to approximately $1.5 million for the three
months ended March 31, 2011, compared to the same period in 2010. 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:

|Factor               |  | Dollar Increase | 
|-------------------- |  | --------------- | 
|                     |  |                 | 
|Wages and welfare    |  | 151,319         | 
|Insurance
      Fees |  | 61,072          | 
|Repairment expense   |  | 63,076          | 

The increases listed in the table above were partially offset
by decreases in dollar amount of other factors, including office expenses,
entertainment fees, stock option expense, etc.

Income Before Taxation and Minority Interest

Income before taxation and minority interest increased $0.8
million, or 28.7%, to $3.5 million for the three months ended March 31, 2011
from $2.7 million for the same period of 2010. The increase was mainly
attributable to the increase of our sales revenue as described above in the
three months ended March 31, 2011 as compared to the three months ended March
31, 2010.

Income Taxes

Income taxes increased $223,876, or 33.3%, to $895,868 in the
first quarter of 2011, as compared to $671,992 in the first quarter of 2010.
This increase was primarily attributable to the higher earnings before tax and
in part attributable to a higher income tax rate for our subsidiary Luotian
Lorain in 2011 as compared to 2010.

Effective January 1, 2008, the PRC government implemented a new
25% tax rate across the board for all enterprises, without any tax holiday.
However, the PRC government has established a set of transition rules to allow
enterprises that already started tax holidays before January 1, 2008 to continue utilizing such tax holidays
until they are fully utilized.

31

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The income tax rates applicable to our Chinese operating
subsidiaries in 2011 and 2010 are depicted in the following table:

|                      |  | 2011 |  |  | 2010 | 
|--------------------- |  | ---- |  |  | ---- | 
|Junan Hongrun         |  | 25%  |  |  | 25%  | 
|Luotian
      Lorain  |  | 25%  |  |  | 15%  | 
|Beijing Lorain        |  | 15%  |  |  | 15%  | 
|Shandong
      Lorain |  | 25%  |  |  | 25%  | 
|Dongguan Lorain       |  | 25%  |  |  | 25%  | 
|Shandong Greenpia     |  | 25%  |  |  | 25%  | 

Net Income

Net income increased $571,774, or 30.7%, to $2.4 million for
the three months ended March 31, 2011 from $1.9 million for the same period of
2010. The increase was attributable to increased sales revenue and partially
offset by increased cost of goods sold, higher operating expenses and higher
income tax in the three months ended March 31, 2011 as compared to the three
months ended March 31, 2010.

Liquidity and Capital Resources

As of March 31, 2011, we had cash and cash equivalents
(including restricted cash) of $23.5 million. Our cash and cash equivalents
increased by approximately $8.4 million from December 31, 2010 as our operations
generate cash and as we obtain cash from financing activities. The following
table provides detailed information about our net cash flow for all financial
statements periods presented in this report.

|                                                          |  | Cash Flow (in
      thousands) |  
|--------------------------------------------------------- |  | ------------------------------ | -
|                                                          |  | Three Months Ended             |  
|                                                          |  | March 31,                      |  
|                                                          |  | 2011                           |  
|Net cash provided by (used in)
      operating activities |  | 3,761                          |  
|Net cash
      provided by (used in) investing activities |  | (2,006                         | )
|Net cash provided by (used in)
      financing activities |  | 2,929                          |  
|Net cash flow (outflow)                                   |  | 4,685                          |  

Operating Activities

Net cash provided by operating activities was $3.8 million for
the three months period ended March 31, 2011 and net cash used in operating
activities in the first quarter of 2010 was approximately $3.3 million. The
increase of approximately $7.0 million in net cash flows provided by operating
activities in the first three months of 2011 was primarily a result of
additional decrease in accounts and other receivables of $7.9 million, partially
offset by additional decrease in accounts and other payables of approximately
$2.1 million as compared to the same period in 2010.

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 three months
period ended March 31, 2011 was $2.0 million, representing an additional
increase of $1.8 million from net cash used in investing activities of $0.2
million for the same period of 2010. The increase was primarily due to increase
in restricted cash in 2011.

Financing Activities

Net cash provided by financing activities for the three months
period ended March 31, 2011 was $2.9 million, representing an increase of $3.0
million from $0.1 million net cash used in financing activities during the same
period in 2010. The increase of the net cash provided by financing activities
was primarily a result of net increase in bank borrowings as well as issuance of
notes in the first quarter of 2011.

32

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Loan Facilities

As of March 31, 2011, 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 $16.1 million as of March 31,
2011, compared with $25.2 million as of December 31, 2010. We are also carrying
a long term loan of $15 million from DEG due in March 2016, with eight equal
semi-annual principal payments commencing September 2010. In addition, on
February 8, 2011, Industrial and Commercial Bank of China granted us a line of
credit of approximately $16.2 million. The line of credit was granted to us with
specific allocation of 38% to Junan Hongrun, 38% to Shandong Lorain, and 24% to
Beijing Lorain, our three major operating subsidiaries. The line of credit is
effective for one year. As of March 31, 2011, we drew down $427,474 from this
line of credit.

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.

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.

As of March 31, 2011, the details pertaining to our
subsidiaries were as follows:

|Name of Company                     |  | Place of
      incorporation |  |  | Attributable equity
      interest % |  |   | Registered capital | 
|----------------------------------- |  | ---------------------------- |  |  | ------------------------------------ |  | - | ------------------ | 
|Shandong Lorain Co., Ltd            |  | PRC                          |  |  | 80.20                                |  | $ | 15,398,238         | 
|Luotian Lorain Co., Ltd             |  | PRC                          |  |  | 100                                  |  |   | 3,866,933          | 
|Junan Hongrun Foodstuff Co., Ltd    |  | PRC                          |  |  | 100                                  |  |   | 45,678,692         | 
|Beijing Lorain Co., Ltd             |  | PRC                          |  |  | 100                                  |  |   | 1,526,694          | 
|Shandong Greenpia Foodstuff Co.,Ltd |  | PRC                          |  |  | 100                                  |  |   | 2,345,002          | 
|Dongguan Lorain Co,,Ltd             |  | PRC                          |  |  | 100                                  |  |   | 152,669            | 
|International Lorain Holding Inc.   |  | Cayman Islands               |  |  | 100                                  |  |   | 47,508,817         | 

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.

33

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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 April 2010, the FASB issued an Accounting Standard Update (“ASU”) No.2010-13,”Compensation-Stock Compensation” (Topic 718): Effect of Denominating the Exercise Price of a Share-Based Payment Award in the Currency of the
Market in Which the Underlying Equity Security Trades,” which address the classification of a share-based payment award with an exercise price denominated in the currency of a market in which the underlying equity security trades. Topic 718 is
amended to clarify that a share-based payment award with an exercise price denominated in the currency of a market in which a substantial portion of the entity’s equity securities trades shall not be considered to contain a market,
performance, or service condition. Therefore, such an award is not to be classified as a liability if it otherwise qualifies as equity classification. The amendments in this update should be applied by recording a cumulative-effect adjustment to the
opening balance of retained earnings. The cumulative-effect adjustment should be calculated for all awards outstanding as of the beginning of the fiscal year in which the amendments are initially applied, as if the amendments had been applied
consistently since the inception of the award. ASU 2010-13 is effective for interim and annual periods beginning on or after December 15, 2010 and is not expected to have a material impact on the Company’s consolidated financial position or
results of the operations.

In January 2011, the FASB issued an Accounting Standard Update (“ASU”) No, 2011-01, “Receivables Topic 310): Disclosures about the Credit Quality of Financing Receivables and the Allowance for
Credit Losses, to be concurrent with
the effective date of the guidance for determining what constitutes a troubled debt restructuring, as presented in proposed Accounting Standards Update, Receivables (Topic 310): Clarifications to Accounting for Troubled Debt Restructurings by
Creditors. The amendments in this Update apply to all public-entity creditors that modify financing receivables within the scope of the disclosure requirements about troubled debt restructurings in Update 2010-20.  Under the existing effective date
in Update 2010-20, public-entity creditors would have provided disclosures about troubled debt restructurings for periods beginning on or after December 15, 2010. The amendments in this Update temporarily defer that effective date, enabling
public-entity creditors to provide those disclosures after the Board clarifies the guidance for determining what constitutes a troubled debt restructuring. The deferral in this Update will result in more consistent disclosures about troubled debt
restructurings. This amendment does not defer the effective date of the other disclosure requirements in Update 2010-20.  In the proposed Update for determining what constitutes a troubled debt restructuring, the Board proposed that the
clarifications would be effective for interim and annual periods ending after June 15, 2011. For the new disclosures about troubled debt restructurings in Update 2010-20, those clarifications would be applied retrospectively to the beginning of the
fiscal year in which the proposal is adopted. The Company does not expect to have a material impact on the Company’s consolidated financial position or results of the operations.

Off-Balance Sheet Arrangements

We do not have any off-balance arrangements.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not required.

34

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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 March 31, 2011. Based on that
evaluation, our Chief Executive Officer and Chief Financial Officer concluded that as of March 31, 2011, our disclosure controls and procedures were effective.

Changes in Internal Controls over Financial Reporting.

During the fiscal quarter ended March 31, 2011, 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.

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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

None

ITEM 3.     DEFAULTS UPON SENIOR SECURITIES

None

ITEM 4.     REMOVED AND RESERVED

Not applicable

ITEM 5.     OTHER INFORMATION

On January 28, 2011, we drew down the final $10 million from
the loan provided by DEG.

On February 8, 2011, Industrial and Commercial Bank of China
granted American Lorain a line of credit of approximately $16.2 million. The
line of credit was granted to American Lorain with specific allocation of 38% to
Junan Hongrun, 38% to Shandong Lorain, and 24% to Beijing Lorain, American
Lorain's three major operating subsidiaries. The line of credit is effective for
one year. As of March 31, 2011, we drew down approximately $427,474 from this
line of credit..

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.

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SIGNATURES

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

Date: May 16, 2011

AMERICAN LORAIN CORPORATION

/s/ Si Chen 
Si Chen 
Chief Executive Officer

/s/ David She 
David She 
Chief Financial Officer

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