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

FORM 10-Q

(Mark One)

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

For the quarterly period ended: June 30, 2009

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

Commission File No. 0-31619

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

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

Beihuan Road
Junan CountyShandong, 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 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. YesQNo
£

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 companyQ

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

The numbers of shares outstanding of the issuer's class of common stock as of
August 13, 2009 was 25,177,640.

---

|Table of Contents
|-----------------
|                 
|                 
|Item 1           
|Item 2           
|Item 3           
|Item 4           
|                 
|                 
|Item 6           
|Signatures       

2

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PART I FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS AND ACCOUNTANTS REPORT.

AMERICAN LORAIN CORPORATION

|CONTENTS                                                      | PAGE   
|------------------------------------------------------------- | -------
|REPORT OF INDEPENDENT REGISTERED PUBLIC
      ACCOUNTING FIRM | 4      
|CONSOLIDATED BALANCE SHEETS                                   | 5  6  
|CONSOLIDATED STATEMENTS OF INCOME                             | 7      
|CONSOLIDATED STATEMENTS OF CASH FLOWS                         | 8      
|CONSOLIDATED STATEMENTS OF STOCKHOLDERS
      EQUITY         | 9      
|NOTES TO FINANCIAL STATEMENTS                                 | 10  24

3

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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 June 30, 2009 and
December 31, 2008, and the related statements of income, stockholders equity,
and cash flows for the three-month and six-month periods ended June 30, 2009 and
2008. 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.

|South San Francisco, California | Samuel H. Wong & Co., LLP   
|------------------------------- | ----------------------------
|July 19, 2009                   | Certified Public Accountants

4

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AMERICAN LORAIN CORPORATION CONSOLIDATED BALANCE SHEETSAT JUNE 30, 2009 AND DECEMBER 31, 2008 (Stated in US Dollars)

|                                             |  |      |  |   |             |  |   | (Audited)   | 
|-------------------------------------------- |  | ---- |  | - | ----------- |  | - | ----------- | 
|                                             |  | Note |  |   | 6/30/2009   |  |   | 12/31/2008  | 
|ASSETS                                       |  |      |  |   |             |  |   |             | 
|Current Assets                               |  |      |  |   |             |  |   |             | 
|Cash and cash
      equivalents              |  |      |  | $ | 6,831,721   |  | $ | 2,841,339   | 
|Restricted cash                              |  | 3    |  |   | 993,364     |  |   | 3,715,998   | 
|Short-term investment                        |  |      |  |   | 110,303     |  |   | 113,069     | 
|Trade accounts receivable                    |  | 4    |  |   | 19,973,927  |  |   | 25,293,326  | 
|Other
      receivables                      |  | 5    |  |   | 11,157,063  |  |   | 5,107,719   | 
|Inventory                                    |  | 6    |  |   | 26,855,676  |  |   | 24,827,922  | 
|Advance to
      suppliers                   |  | 7    |  |   | 7,642,341   |  |   | 415,009     | 
|Prepaid expenses and taxes                   |  |      |  |   | 320,643     |  |   | 1,228,648   | 
|Total current assets                         |  |      |  | $ | 73,885,038  |  | $ | 63,543,030  | 
|Property, plant and equipment, net           |  | 8    |  |   | 40,062,736  |  |   | 40,201,686  | 
|Land use rights,
      net                   |  | 9    |  |   | 3,935,944   |  |   | 3,950,927   | 
|Other assets & goodwill                      |  |      |  |   | 2,045       |  |   | -           | 
|TOTAL ASSETS                                 |  |      |  | $ | 117,885,763 |  | $ | 107,695,643 | 
|LIABILITIES AND STOCKHOLDERS EQUITY         |  |      |  |   |             |  |   |             | 
|Current liabilities                          |  |      |  |   |             |  |   |             | 
|Short-term bank loans                        |  | 10   |  | $ | 31,956,810  |  | $ | 14,414,996  | 
|Notes payable                                |  | 11   |  |   | 1,614,364   |  |   | 5,208,485   | 
|Accounts payable                             |  |      |  |   | 2,858,388   |  |   | 6,072,883   | 
|Taxes payable                                |  |      |  |   | 1,095,717   |  |   | 2,682,658   | 
|Accrued liabilities and other
      payables |  | 12   |  |   | 6,316,533   |  |   | 10,291,237  | 
|Customers
      deposits                     |  |      |  |   | 952,954     |  |   | 748,732     | 
|Total Current Liabilities                    |  |      |  | $ | 44,794,766  |  | $ | 39,418,991  | 
|Long Term Liabilities                        |  |      |  |   |             |  |   |             | 
|Long term bank loans                         |  | 13   |  |   | 570,462     |  |   | 576,975     | 
|TOTAL LIABILITIES                            |  |      |  | $ | 45,365,228  |  | $ | 39,995,966  | 

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

5

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AMERICAN LORAIN CORPORATION CONSOLIDATED BALANCE SHEETS
(Continued) AT JUNE 30, 2009 AND DECEMBER 31, 2008 (Stated in US
Dollars)

|                                                                                                                                                                                                                      |  |      |  |   |             |  |   | (Audited)   | 
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---- |  | - | ----------- |  | - | ----------- | 
|                                                                                                                                                                                                                      |  | Note |  |   | 6/30/2009   |  |   | 12/31/2008  | 
|STOCKHOLDERS EQUITY                                                                                                                                                                                                  |  |      |  |   |             |  |   |             | 
|                                                                                                                                                                                                                      |  |      |  |   |             |  |   |             | 
|Common stock, $0.001 par value,
      200,000,000 shares      authorized; 25,177,640 and
      25,172,640 shares issued and      outstanding as
      of June 30, 2009 and December 31, 2008,     
      respectively |  | 15   |  |   | 25,177      |  |   | 25,172      | 
|Additional paid-in capital                                                                                                                                                                                            |  |      |  |   | 24,193,166  |  |   | 24,187,019  | 
|Statutory reserves                                                                                                                                                                                                    |  |      |  |   | 5,680,512   |  |   | 5,438,723   | 
|Retained earnings                                                                                                                                                                                                     |  |      |  |   | 31,118,042  |  |   | 27,748,126  | 
|Accumulated other comprehensive
      income                                                                                                                                                                          |  |      |  |   | 6,131,423   |  |   | 5,178,616   | 
|Non-controlling interests                                                                                                                                                                                             |  | 14   |  |   | 5,372,215   |  |   | 5,122,021   | 
|                                                                                                                                                                                                                      |  |      |  | $ | 72,520,535  |  | $ | 67,699,677  | 
|TOTAL LIABILITIES AND STOCKHOLDERS EQUITY                                                                                                                                                                            |  |      |  | $ | 117,885,763 |  | $ | 107,695,643 | 

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

6

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AMERICAN LORAIN CORPORATIONCONSOLIDATED
STATEMENTS OF INCOMEFOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2009
AND 2008 (Stated in US Dollars)

Three months ended June 30,
    
    
    Six months ended June 30,Note
    
    2009
    
    
    2008
    
    
    2009
    
    
    2008Net revenues
    
    17
    $
    23,965,924
    
    $
    21,524,427
    
    $
    45,166,461
    
    $
    38,952,726Cost of revenues
    
    
    
    (18,675,167
    )
    
    (16,338,272
    )
    
    (34,713,370
    )
    
    (29,818,596
    )Gross profit
    
    
    $
    5,290,757
    
    $
    5,186,155
    
    $
    10,453,091
    
    $
    9,134,130Operating expensesSelling and marketing expenses
    
    
    
    (1,220,317
    )
    
    (616,050
    )
    
    (2,391,164
    )
    
    (1,235,018
    )General and administrative expenses
    
    
    
    (914,892
    )
    
    (1,087,894
    )
    
    (1,891,197
    )
    
    (1,632,344
    )Operating income
    
    
    $
    3,155,548
    
    $
    3,482,211
    
    $
    6,170,730
    
    $
    6,266,768Investment income
    
    
    
    -
    
    
    (2,790
    )
    
    -
    
    
    (2,790
    )Government subsidy income
    
    
    
    97,663
    
    
    4,492
    
    
    196,252
    
    
    37,242Interest and other income
    
    
    
    127,279
    
    
    71,505
    
    
    208,648
    
    
    110,588Other expenses
    
    
    
    (69,286
    )
    
    (94,819
    )
    
    (181,603
    )
    
    (104,987
    )Interest expense
    
    
    
    (744,825
    )
    
    (683,401
    )
    
    (1,348,651
    )
    
    (1,273,698
    )Earnings before tax
    
    
    $
    2,566,379
    
    $
    2,777,199
    
    $
    5,045,376
    
    $
    5,033,124Income tax
    
    *2(r),*16
    
    (602,706
    )
    
    (493,194
    )
    
    (1,183,478
    )
    
    (883,575
    )Net income
    
    
    $
    1,963,673
    
    $
    2,284,005
    
    $
    3,861,898
    
    $
    4,149,549Net income attributable to:-Parent
    
    
    $
    1,855,628
    
    $
    2,117,374
    
    $
    3,611,704
    
    $
    3,849,078-Non-controlling Interest
    
    
    
    108,046
    
    
    166,631
    
    
    250,194
    
    
    300,471$
    1,963,674
    
    $
    2,284,005
    
    $
    3,861,898
    
    $
    4,149,549Earnings per share
    
    *2(v)*- Basic
    
    
    $
    0.0737
    
    $
    0.0850
    
    $
    0.1434
    
    $
    0.1544- Diluted
    
    
    $
    0.0737
    
    $
    0.0836
    
    $
    0.1434
    
    $
    0.1517Weighted average shares outstanding- Basic
    
    
    
    25,177,640
    
    
    24,923,179
    
    
    25,177,640
    
    
    24,923,178- Diluted
    
    
    
    25,177,640
    
    
    25,320,677
    
    
    25,177,640
    
    
    25,378,104


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

7

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AMERICAN LORAIN CORPORATION CONSOLIDATED STATEMENTS OF
CASH FLOWFOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2009 AND 2008
(Stated in US Dollars)

Three months ended June 30,
    
    
    Six months ended June 30,2009
    
    
    2008
    
    
    2009
    
    
    2008Cash flows from operating activitiesNet income
    attributable to parent
    $
    1,855,628
    
    $
    2,111,375
    
    $
    3,611,704
    
    $
    3,849,078Net income attributable to
    non-controlling interest
    
    108,046
    
    
    166,631
    
    
    250,194
    
    
    300,471Depreciation
    
    331,026
    
    
    152,589
    
    
    665,480
    
    
    513,157Amortization
    
    91,615
    
    
    170,289
    
    
    135,992
    
    
    197,770(Increase)/decrease in accounts & other receivables
    
    395,111
    
    
    5,344,818
    
    
    (729,946
    )
    
    12,415,790Decrease/(Increase) in
      restricted cash
    
    11,415
    
    
    -
    
    
    2,722,634
    
    
    -(Increase)/decrease in advances to suppliers
    
    (7,334,256
    )
    
    1,742,325
    
    
    (7,227,332
    )
    
    1,742,325(Increase)/decrease in
      inventories
    
    832,815
    
    
    (4,991,298
    )
    
    (2,027,754
    )
    
    (1,454,705
    )Decrease/(Increase) in prepaid expenses
    
    1,240,173
    
    
    -
    
    
    1,227,308
    
    
    -(Increase)/decrease in prepaid
      tax
    
    (237,742
    )
    
    (1,226,945
    )
    
    (319,303
    )
    
    (1,226,945
    )Increase/(decrease) in accounts and other payables
    
    (6,722,844
    )
    
    (3,687,836
    )
    
    (7,189,199
    )
    
    (13,699,587
    )Increase/(decrease) in tax
      payable
    
    51,177
    
    
    (389,393
    )
    
    (1,586,941
    )
    
    (389,393
    )Increase/(decrease) in customer deposit
    
    (414,499
    )
    
    1,036,497
    
    
    204,222
    
    
    1,036,497Net cash (used in)/provided by
      operating activities
    
    (9,792,335
    )
    
    435,051
    
    
    (10,262,941
    )
    
    3,284,458Cash flows from investing activitiesPurchase of plant and
      equipment
    
    (383,364
    )
    
    (2,420,849
    )
    
    (526,530
    )
    
    (5,657,923
    )Purchase of
      biological assets
    
    -
    
    
    115,731
    
    
    -
    
    
    -Payment of construction in
      progress
    
    -
    
    
    938,022
    
    
    -
    
    
    (315,133
    )(Increase)/decrease in restricted cash
    
    -
    
    
    (2,264,890
    )
    
    -
    
    
    (2,230,168
    )Payment of land use rights
    
    (98,320
    )
    
    (816,295
    )
    
    (121,009
    )
    
    (948,230
    )Investments
      in securities
    
    (13
    )
    
    (816,443
    )
    
    2,767
    
    
    (1,589,385
    )Payments for deposits
    
    213,860
    
    
    -
    
    
    (2,045
    )
    
    -Contribution to capital reserve
    
    
    
    
    1,609,161
    
    
    
    
    
    1,609,161Net cash used in investing
      activities
    
    (267,837
    )
    
    (3,655,563
    )
    
    (646,817
    )
    
    (9,131,678
    )Cash flows from financing activitiesBank borrowings
    
    2,886,255
    
    
    266,084
    
    
    17,535,302
    
    
    1,332,972Notes
      payable
    
    1,614,365
    
    
    3,814,058
    
    
    (3,594,121
    )
    
    3,814,058Issue of common stock
    
    6,147
    
    
    
    
    
    6,152
    
    
    -Net
      cash provided by/(used in) financing activities
    $
    4,506,767
    
    $
    4,080,143
    
    $
    13,947,333
    
    $
    5,147,031Net
      Increase/(decrease) of Cash and Cash Equivalents
    
    (5,553,405
    )
    
    859,631
    
    
    3,037,575
    
    
    (700,189
    )Effect of foreign currency translation on cash
      and cash equivalents
    
    141,404
    
    
    (1,221,076
    )
    
    952,807
    
    
    (168,732
    )Cash and cash equivalentsbeginning of year
    
    12,243,722
    
    
    6,262,497
    
    
    2,841,339
    
    
    6,769,973Cash and cash equivalentsend of year
    $
    6,831,721
    
    $
    5,901,052
    
    $
    6,831,721
    
    $
    5,901,052Supplementary cash flow information:Interest
      received
    
    1,620
    
    
    25,710
    
    
    66,610
    
    
    34,412Interest paid
    
    744,825
    
    
    607,641
    
    
    1,348,651
    
    
    976,719Taxes
      paid
    $
    602,706
    
    $
    374,134
    
    $
    1,183,478
    
    $
    2,079,565


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

8

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AMERICANLORAINCORPORATIONSTATEMENTOFSTOCKHOLDERSEQUITYFOR THEYEARSENDEDJUNE 30, 2009 ANDDECEMBER31, 2008(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, 2008                       |  | 24,923,178 |  | $ | 24,923 |  | $ | 24,187,268 |   | $ | 4,497,647 |  | $ | 13,985,824 |   | $ | 1,846,708     |  | $ | 3,887,021   |  | $ | 48,429,391 | 
|Issuance of Common Stock                       |  | 249,455    |  |   | 249    |  |   | (249       | ) |   | -         |  |   | -          |   |   | -             |  |   | -           |  |   | -          | 
|Share Adjustment to Match Transfer
      Agent |  | 7          |  |   | -      |  |   | -          |   |   | -         |  |   | -          |   |   | -             |  |   | -           |  |   | -          | 
|Net Income                                     |  | -          |  |   | -      |  |   | -          |   |   | -         |  |   | 14,703,378 |   |   | -             |  |   | -           |  |   | 14,703,378 | 
|Appropriations to Statutory Reserves           |  | -          |  |   | -      |  |   | -          |   |   | 941,076   |  |   | (941,076   | ) |   | -             |  |   | -           |  |   | -          | 
|Non-controlling Interests                      |  | -          |  |   | -      |  |   | -          |   |   | -         |  |   | -          |   |   | -             |  |   | 1,235,000   |  |   | 1,235,000  | 
|Foreign Currency Translation Adjustment        |  | -          |  |   | -      |  |   | -          |   |   | -         |  |   | -          |   |   | 3,331,908     |  |   | -           |  |   | 3,331,908  | 
|Balance, December 31, 2008                     |  | 25,172,640 |  | $ | 25,172 |  | $ | 24,187,019 |   | $ | 5,438,723 |  | $ | 27,748,126 |   | $ | 5,178,616     |  | $ | 5,122,021   |  | $ | 67,699,677 | 
|Balance, January 1, 2009                       |  | 25,172,640 |  | $ | 25,172 |  | $ | 24,187,019 |   | $ | 5,438,723 |  | $ | 27,748,126 |   | $ | 5 ,178,616    |  | $ | 5,122,021   |  | $ | 67,699,677 | 
|Issuance of Common Stock                       |  | 5,000      |  |   | 5      |  |   | 6,147      |   |   | -         |  |   | -          |   |   | -             |  |   | -           |  |   | 6,152      | 
|Net Income                                     |  | -          |  |   | -      |  |   | -          |   |   | -         |  |   | 3,611,705  |   |   | -             |  |   | -           |  |   | 3,611,705  | 
|Appropriations to Statutory Reserves           |  | -          |  |   | -      |  |   | -          |   |   | 241,789   |  |   | (241,789   | ) |   | -             |  |   | -           |  |   | -          | 
|Non-controlling Interests                      |  | -          |  |   | -      |  |   | -          |   |   | -         |  |   | -          |   |   | -             |  |   | 250,194     |  |   | 250,194    | 
|Foreign Currency Translation Adjustment        |  | -          |  |   | -      |  |   | -          |   |   | -         |  |   | -          |   |   | 952,807       |  |   | -           |  |   | 952,807    | 
|Balance, June 30, 2009                         |  | 25,177,640 |  | $ | 25,177 |  | $ | 24,193,166 |   | $ | 5,680,512 |  | $ | 31,118,042 |   | $ | 6,131,423     |  | $ | 5,372,215   |  | $ | 72,520,535 | 

|                                        |   | Comprehensive |  |   | Comprehensive |  |   |             | 
|--------------------------------------- | - | ------------- |  | - | ------------- |  | - | ----------- | 
|                                        |   | Income        |  |   | Income        |  |   |             | 
|                                        |   | 6/30/2009     |  |   | 12/31/2008    |  |   | Total       | 
|Net Income                              | $ | 3,611,704     |  | $ | 14,703,378    |  | $ | 18,315,082  | 
|Foreign Currency Translation Adjustment |   | 952,807       |  |   | 3,331,908     |  |   | 4,284,715   | 
|                                        | $ | 4,564,511     |  | $ | 18,035,286    |  | $ | $22,599,797 | 

SeeAccompanyingNotes toFinancialStatementsandAccountantsReport

9

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AMERICAN LORAIN CORPORATIONNOTES TO FINANCIAL
STATEMENTS - JUNE 30, 2009 AND DECEMBER 31, 2008 (Stated in US Dollars)

|1. | PRINCIPAL ACTIVITIES                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   | The Company develops, manufactures, and sells convenience
      foods (such as cut fruit and premixed salads, which are known as lightly
      processed; ready-to-cook (or RTC) meals; ready-to-eat (or RTE) meals
      and meals ready-to-eat (or MRE); chestnut products; and frozen, canned,
      and bulk 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, canned, and bulk food (FCB food).
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|2. | SUMMARY OF SIGNIFICANT ACCOUNTING
  POLICIES                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   | (a)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   | 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.                                                                                                                                                                                      
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   | (b)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   | 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 June 30, 2009, the detailed identities of the
      consolidating subsidiaries are as follows: -                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          

Name of Company
    
    Place of
      incorporation
    
    
    Attributable equity
      interest %
    
    
    Registered
      capitalShandong Green Foodstuff Co., Ltd
    
    PRC
    
    
    80.2
    
    $
    12,901,823
    
    
    (RMB 100,860,000
    )Luotian Green Foodstuff Co., Ltd
    
    PRC
    
    
    100
    
    $
    3,240,013
    
    
    (RMB 25,328,800
    )Junan Hongrun Foodstuff Co., Ltd
    
    PRC
    
    
    100
    
    $
    16,245,603
    
    
    (RMB 127,000,000
    )Beijing Green Foodstuff Co., Ltd
    
    PRC
    
    
    100
    
    $
    1,279,181
    
    
    (RMB 10,000,000
    )International Lorain Holding, Inc
    Cayman Islands
    
    100


| | (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.

10

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| |     |                             
| | --- | ----------------------------
| | (d) | Economic and political
risks

The Companys operations are conducted
in the PRC. Accordingly, the Companys business, financial condition and results
of operations may be influenced by the political, economic and legal environment
in the PRC, and by the general state of the PRC economy.

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

| | (e) | Lease prepayments
| | --- | -----------------

Lease prepayments represent the cost of
land use rights in the PRC. Land use rights are carried at cost and amortized on
a straight-line basis over the period of rights of 50 years.

| | (f) | Property, plant and
equipment
| | --- | -----------------------------

Plant and equipment are carried at cost
less accumulated depreciation. Depreciation is provided over their estimated
useful lives, using the straight-line method. Estimated useful lives of the
plant and equipment are as follows:

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

The cost and related accumulated
depreciation of assets sold or otherwise retired are eliminated from the
accounts and any gain or loss is included in the statement of income. The cost
of maintenance and repairs is charged to income as incurred, whereas significant
renewals and betterments are capitalized.

| | (g) | Accounting for the Impairment of Long-Lived
      Assets
| | --- | --------------------------------------------------------

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

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

11

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(h)

Construction in
progress

Construction in progress represents
direct costs of construction or acquisition and design fees incurred.
Capitalization of these costs ceases and the construction in progress is
transferred to plant and equipment when substantially all the activities
necessary to prepare the assets for their intended use are completed. No
depreciation is provided until it is completed and ready for intended use.

(i)

Investment
securities

The Company classifies its equity
securities into trading or available-for-sale. Trading securities are bought and
held principally for the purpose of selling them in the near term. All
securities not included in trading securities are classified as
available-for-sale.

Trading and available-for-sale
securities are recorded at fair value. Unrealized holding gains and losses on
trading securities are included in the net income. Unrealized holding gains and
losses, net of the related tax effect, on available for sale securities are
excluded from net income and are reported as a separate component of other
comprehensive income until realized. Realized gains and losses from the sale of
available-for-sale securities are determined on a specific-identification basis.

A decline in the market value of any
available-for-sale security below cost that is deemed to be other-than-temporary
results in a reduction in carrying amount to fair value. The impairment is
charged as an expense to the statement of income and comprehensive income and a
new cost basis for the security is established. To determine whether impairment
is other-than-temporary, the Company considers whether it has the ability and
intent to hold the investment until a market price recovery and considers
whether evidence indicating the cost of the investment is recoverable outweighs
evidence to the contrary. Evidence considered in this assessment includes the
reasons for the impairment, the severity and duration of the impairment, changes
in value subsequent to year end, and forecasted performance of the investee.

Premiums and discounts are amortized or
accreted over the life of the related available-for-sale security as an
adjustment to yield using the effective-interest method. Dividend and interest
income are recognized when earned.

(j)

Inventories

Inventories consisting of finished
goods and raw materials are stated at the lower of cost or market value.
Finished goods are comprised of direct materials, direct labor and an
appropriate proportion of overhead.

(k)

Trade
receivables

Trade receivables are recognized and
carried at the original invoice amount less allowance for any uncollectible
amounts. An estimate for doubtful accounts is made when collection of the full
amount is no longer probable. Bad debts are written off as incurred.

12

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(l)

Customer
deposits

Customer deposits were cash received
from customers in connection with orders of products to be delivered in future
periods.

(m)

Cash and cash
equivalents

The Company considers all highly liquid
investments purchased with original maturities of three months or less to be
cash equivalents.

(n)

Advertising

All advertising costs are expensed as
incurred.

(o)

Shipping and
handling

All shipping and handling are expensed
as incurred.

(p)

Research and
development

All research and development costs are
expensed as incurred.

(q)

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.

(r)

Income
taxes

The Company uses the accrual method of
accounting to determine and report its taxable reduction of income taxes for the
year in which they are available. 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.

13

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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%           

Based on the consolidated net income
for the period ended June 30, 2009 and the year ended December 31, 2008, the
Company shall not be subject to income tax.

(s)

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.

(t)

Foreign currency
translation

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

6/30/2009
    
    
    3/31/2009
    
    
    12/31/2008
    
    
    6/30/200*8*
    
    
    3/31/2008Year end RMB : US$ exchange rate
    
    6.84480
    
    
    6.84560
    
    
    6.8542
    
    
    6.8718
    
    
    7.0222Average yearly RMB : US$ exchange rate
    
    6.84323
    
    
    6.84659
    
    
    6.9622
    
    
    7.29063
    
    
    7.17568


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

(u)

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.

14

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The Company's revenue consists of
invoiced value of goods, net of a value-added tax (VAT). 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.

(v)

Earnings per
share

Basic earnings per share is computed by
dividing net income by the weighted average number of ordinary shares
outstanding during the period. Diluted earnings per share is computed by
dividing net income by the sum of the weighted average number of ordinary shares
outstanding and dilutive potential ordinary shares during the years. During the
six months ended June 30, 2009 and the year ended December 31, 2008, no dilutive
potential ordinary shares were issued.

The Company computes earnings per share
(EPS) in accordance with Statement of Financial Accounting Standards No. 128,
Earnings per share (SFAS No. 128), and SEC Staff Accounting Bulletin No. 98
(SAB 98). SFAS No. 128 requires companies with complex capital structures to
present basic and diluted EPS. Basic EPS is measured as the income or loss
available to common shareholders divided by the weighted average common shares
outstanding for the period. Diluted EPS is similar to basic EPS, but presents
the dilutive effect on a per share basis of potential common shares (e.g.,
convertible securities, options, and warrants) as if they had been converted at
the beginning of the periods presented, or issuance date, if later. Potential
common shares that have an anti-dilutive effect (i.e., those that increase
income per share or decrease loss per share) are excluded from the calculation
of diluted EPS.

(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 is the foreign
currency translation adjustment.

(y)

Recent accounting
pronouncements

In March 2008, the FASB issued SFAS No.
161, "Disclosures about Derivative Instruments and Hedging Activities, an
amendment of FASB Statement No. 133" ("SFAS 161"). SFAS 161 applies to all
derivative instruments and related hedged items accounted for under SFAS No.
133, "Accounting for Derivative Instruments and Hedging Activities" ("SFAS
133"). SFAS 161 requires entities to provide greater transparency about (a) how
and why an entity uses derivative instruments, (b) how derivative instruments
and related hedged items are accounted for under SFAS 133 and its related
interpretations, and (c) how derivative instruments and related hedged items
affect an entity's financial position, results of operations and cash flows.
SFAS 161 is effective for financial statements issued for fiscal
      years and interim periods beginning after November 15, 2008.

15

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|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   | In May 2008, the FASB issued SFAS No. 162, "The Hierarchy
      of Generally Accepted Accounting Principles" ("SFAS 162"). SFAS 162
      identifies the sources of accounting principles and the framework for
      selecting the principles used in the preparation of financial statements
      of nongovernmental entities that are presented in conformity with
      generally accepted accounting principles (the GAAP hierarchy). Statement
      162 will become effective 60 days following the SEC's approval of the
      Public Company Accounting Oversight Board amendments to AU Section 411,
      "The Meaning of Present Fairly in Conformity With Generally Accepted
      Accounting Principles."                               
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   | In May 2008, the FASB issued FSP Accounting Principles
      Board ("APB") 14-1 "Accounting for Convertible Debt Instruments That May
      Be Settled in Cash upon Conversion (Including Partial Cash Settlement)"
      ("FSP APB 14-1"). FSP APB 14-1 requires the issuer of certain convertible
      debt instruments that may be settled in cash (or other assets) on
      conversion to separately account for the liability (debt) and equity
      (conversion option) components of the instrument in a manner that reflects
      the issuer's non-convertible debt borrowing rate. FSP APB 14-1 is
      effective for fiscal years beginning after December 15, 2008 on a
      retroactive basis.                                       
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   | In September 2008, FASB issued FSP No. 133-1 and FIN
      45-4, Disclosures about Credit Derivatives and Certain Guarantees, an
      amendment of FASB Statement No. 133 and FASB Interpretation No. 45; and
      Clarification of the Effective Date of FASB Statement No. 161. This FSP is
      intended to improve disclosures about credit derivatives by requiring more
      information about the potential adverse effects of changes in credit risk
      on the financial position, financial performance, and cash flows of the
      sellers of credit derivatives. The provisions of the FSP that amend
      Statement 133 and FIN 45 are effective for reporting periods (annual or
      interim) ending after November 15, 2008.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   | This FSP amends FASB Statement No. 133, Accounting for
      Derivative Instruments and Hedging Activities, to require disclosures
      by sellers of credit derivatives, including credit derivatives embedded in
      hybrid instruments. This FSP also amends FASB Interpretation (FIN) No. 45,
      Guarantor's Accounting and Disclosure Requirements for Guarantees,
      Including Indirect Guarantees of Indebtedness to Others, to require an
      additional disclosure about the current status of the payment/performance
      risk of a guarantee. The provisions of the FSP that amend Statement 133
      and FIN 45 are effective for reporting periods (annual or interim) ending
      after November 15, 2008.                
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   | Finally, this FSP clarifies the effective date in FASB
      Statement No. 161, Disclosures about Derivative Instruments and Hedging
      Activities.The disclosures required by Statement 161 should be
      provided for any reporting period (annual or quarterly interim) beginning
      after November 15, 2008. For example, an entity with a March 31 fiscal
      year-end should provide the disclosures for its fourth quarter interim
      period ending March 31, 2009, in its 2009 annual financial statements.
      This clarification of the effective date of Statement 161 is effective
      upon issuance of the FSP.                                                                                                          
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   | The Company is currently evaluating the potential impact,
      if any, of the adoption of the above recent accounting pronouncements on
      its consolidated results of operations and financial condition.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|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 upon the duration of
      the related borrowing facility. 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.                                                                                                                                                                         

16

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|   |                          
|-- | -------------------------
|4. | TRADE ACCOUNTS
RECEIVABLE

| |                                      |   | 6/30/2009  |   |   | 12/31/2008 |  
| | ------------------------------------ | - | ---------- | - | - | ---------- | -
| | Trade accounts receivable            | $ | 20,199,256 |   | $ | 25,421,293 |  
| | Less:Allowance for doubtful accounts |   | (225,329   | ) |   | (127,967   | )
| |                                      | $ | 19,973,927 |   | $ | 25,293,326 |  
| | Allowance for bad debt:              |   | 6/30/2009  |   |   | 12/31/2008 |  
| | Beginning balance                    | $ | (127,967   | ) | $ | (172,309   | )
| | Additions to allowance               |   | (697,362   | ) |   | -          |  
| | Bad debt written-off                 |   | -          |   |   | 44,342     |  
| |                                      | $ | (225,329   | ) | $ | (127,967   | )

|   | The Company offers credit terms of between 30 to 60 days
      to most of their international distributors as well as domestic
      supermarkets and wholesalers, and between 0 to 15 days for most of their
      agents.
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                            
|5. | OTHER RECEIVABLES                                                                                                                                                                                                          
|   |                                                                                                                                                                                                                            
|   | Other receivables consisted of the following as of June
      30, 2009 and December 31, 2008:                                                                                                                              

| |                                                          |   | 6/30/2009  |  |   | 12/312008 | 
| | -------------------------------------------------------- | - | ---------- |  | - | --------- | 
| | Advances to employees for job/travel
      disbursements | $ | 7,714,372  |  | $ | 3,160,886 | 
| | Amount due by a non-related enterprise                   |   | 2,549,526  |  |   | 1,278,501 | 
| | tender deposit                                           |   | 566,103    |  |   | -         | 
| | Other                                                    |   | 327,062    |  |   | 668,332   | 
| |                                                          | $ | 11,157,063 |  | $ | 5,107,719 | 

|   | 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.
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                           
|6. | INVENTORY                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   | Inventories consisted of the following as of June 30,
      2009 and December 31, 2008:                                                                                                                                                                                                                                                                                                                                                   

| |                  |   | 6/30/2009  |  |   | 12/312008 | 
| | ---------------- | - | ---------- |  | - | --------- | 
| | Raw materials    | $ | 13,846,180 |  | $ | 9,636,050 | 
| | Work in progress |   | -          |  |   | 1,143,766 | 

| | Finished goods |   | 13,009,496 |  |   | 14,048,106 | 
| | -------------- | - | ---------- |  | - | ---------- | 
| |                | $ | 26,855,676 |  | $ | 24,827,922 | 

17

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|7. | ADVANCE TO SUPPLIERS                                                                                                                                                                                                                                                                                                                                                                                             
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                  
|   | Advance to suppliers represents prepayments made to
      vendors for goods and services that the Company anticipates using within
      its one year operating cycle. As a result of the seasonality of the
      Companys business, there are significant increases in the balance of this
      account before the Companys peak season, which are the third and fourth
      quarters of the calendar year.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                  
|   | Advance to suppliers consisted of the following as of
      June 30, 2009 and December 31, 2008:                                                                                                                                                                                                                                                                                                                 

| |                        |   | 6/30/2009 | 
| | ---------------------- | - | --------- | 
| | Raw materials          | $ | 5,471,897 | 
| | Packaging materials    |   | 90,781    | 
| | Shipping               |   | 55,442    | 
| | Equipment              |   | 18,058    | 
| | Construction materials |   | 1,869,665 | 
| | Other                  |   | 136,498   | 
| |                        |   | 7,642,341 | 

8.

PROPERTY, PLANT, AND EQUIPMENT

Property, plant, and equipment
consisted of the following as of June 30, 2009:

| |                                     |   | 6/30/2009  |   |   | 12/31/2008 |  
| | ----------------------------------- | - | ---------- | - | - | ---------- | -
| | At cost:                            |   |            |   |   |            |  
| | Buildings                           | $ | 27,837,026 |   | $ | 27,798,849 |  
| | Landscaping, plant, and tree        |   | 2,755,880  |   |   | 2,752,101  |  
| | Machinery and equipment             |   | 7,515,492  |   |   | 7,229,512  |  
| | Office equipment                    |   | 878,697    |   |   | 859,818    |  
| | Motor vehicles                      |   | 25,897     |   |   | 39,824     |  
| |                                     | $ | 39,012,992 |   | $ | 38,680,104 |  
| | Less:accumulated
      depreciation |   |            |   |   |            |  
| | Buildings                           |   | (1,501,952 | ) |   | (1,192,855 | )
| | Machinery and equipment             |   | (2,934,934 | ) |   | (2,628,710 | )
| | Office equipment                    |   | (472,566   | ) |   | (414,478   | )
| | Motor vehicles                      |   | (17,063    | ) |   | (24,992    | )
| |                                     |   | (4,926,515 | ) |   | (4,261,035 | )
| | Construction in Progress            |   | 5,976,259  |   |   | 5,782,617  |  
| |                                     | $ | 40,062,736 |   | $ | 40,201,686 |  

18

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|   | Construction in progress is mainly comprised of capital
      expenditures for construction of the Companys new corporate campus,
      including offices, factories, and staff dormitories. Capital commitments
      for the construction are immaterial for the two years above.
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                     
|   | Landscaping, plants, and trees are the Chestnut
      subsidiarys investment in the development of agricultural operations,
      which have not been the significant source of the raw materials needed for
      the Companys operations to date.                               
|   |                                                                                                                                                                                                                                                                                     
|9. | LAND USE RIGHTS, NET                                                                                                                                                                                                                                                                
|   |                                                                                                                                                                                                                                                                                     
|   | Land use rights consisted of the following as of June 30,
      2009 and December 31, 2008:                                                                                                                                                                                         

| |                               |   | 6/30/2009 |   |   | 12/31/2008 |  
| | ----------------------------- | - | --------- | - | - | ---------- | -
| | Land use rights, at cost      | $ | 4,357,274 |   | $ | 4,236,266  |  
| | Less:Accumulated amortization |   | (421,330  | ) |   | (285,339   | )
| |                               | $ | 3,935,944 |   | $ | 3,950,927  |  

|    | Land use rights represent the Companys purchase of usage
      rights for a parcel of land for a specified duration of time. The PRC
      government owns the land on which the Companys corporate campus is being
      constructed.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                         
|10. | SHORT-TERM BANK LOANS                                                                                                                                                                                                                   
|    |                                                                                                                                                                                                                                         
|    | Short-term bank loans consisted of the following as of
      June 30, 2009 and December 31, 2008:                                                                                                                                       

| |                                                               |   | 6/30/2009 |  |   | 12/31/2008 | 
| | ------------------------------------------------------------- | - | --------- |  | - | ---------- | 
| | Loans from Junan County Construction Bank,                    |   |           |  |   |            | 
| | ●Interest rate at 5.832% per annum due 2/18/2010              | $ | 379,850   |  | $ | -          | 
| | ●Interest rate at
      5.832% per annum due 7/2/2009         |   | 613,604   |  |   | -          | 
| | ●Interest rate at 5.832% per annum due 7/16/2009              |   | 146,096   |  |   | -          | 
| | ●Interest rate at
      5.832% per annum due8/6/2009          |   | 525,947   |  |   | -          | 
| | ●Interest rate at 7.452% per annum due 2/24/2009              |   |           |  |   | 102,127    | 
| | ●Interest rate at
      10.452% per annum due 1/22/2009       |   | -         |  |   | 1,575,676  | 
| | ●Interest rate at 7.236% per annum due 2/3/2009               |   | -         |  |   | 116,717    | 
| | Loan from Junan County Agriculture Bank,                      |   |           |  |   |            | 
| | ●Interest rate at 7.290% per annum due 9/24/2009              |   | 2,191,445 |  |   | -          | 
| | ●Interest rate at
      9.027% per annum due 11/21/2009       |   | 642,824   |  |   | -          | 
| | ●Interest rate at 7.965% per annum due 3/17/2010              |   | 3,360,215 |  |   | -          | 
| | ●Interest rate at
      7.290% per annum due 8/20/2009        |   | 1,168,770 |  |   | -          | 
| | ●Interest rate at 7.290% per annum due 8/20/2009              |   | 730,482   |  |   | -          | 
| | ●Interest rate at
      7.290% per annum due 9/30/2009        |   | 1,446,353 |  |   | -          | 
| | ●Interest rate at 12.699% per annum due 8/6/2009              |   | 584,385   |  |   | 583,584    | 
| | ●Interest rate at
      12.699% per annum due 8/18/2009       |   | 657,433   |  |   | 656,532    | 
| | ●Interest rate at 12.699% per annum due 8/1/2009              |   | 365,241   |  |   | 364,740    | 
| | ●Interest rate at
      10.577% per annum due 3/27/2009       |   |           |  |   | 1,458,959  | 
| | ●Interest rate at 7.290% per annum due 9/24/2009              |   | 1,753,156 |  |   |            | 
| | Loan from Junan County Industrial and Commercial
      Banks, |   |           |  |   |            | 
| | ●Interest rate at 5.3460% per annum due7/1/2009               |   | 496,727   |  |   |            | 

19

---

| | ●Interest rate at 4.8600% per annum due7/22/2009                            |   | 463,125   |  |   |            | 
| | --------------------------------------------------------------------------- | - | --------- |  | - | ---------- | 
| | ●Interest rate at
      4.8600% per annum due8/12/2009                      |   | 540,556   |  |   |            | 
| | ●Interest rate at 4.8600% per annum due 8/10/2009                           |   | 438,289   |  |   | -          | 
| | ●Interest rate at
      4.8600% per annum due 8/18/2009                     |   | 1,307,562 |  |   | -          | 
| | ●Interest rate at 6.120% per annum due 1/10/2009                            |   |           |  |   | 145,896    | 
| | ●Interest rate at
      8.541% per annum due 3/4/2009                       |   | -         |  |   | 393,919    | 
| | ●Interest rate at 3.1725% per annum due 2/19/2009                           |   | -         |  |   | 240,035    | 
| | ●Interest rate at
      3.1725% per annum due 2/19/2009                     |   | -         |  |   | 118,161    | 
| | ●Interest rate at 10.1825% per annum due 2/26/2009                          |   | -         |  |   | 120,762    | 
| | ●Interest rate at
      10.1825% per annum due 3/5/2009                     |   | -         |  |   | 173,670    | 
| | Loan from Junan County Agricultural
      Financial Institution,            |   |           |  |   |            | 
| | ●Interest rate at
      9.1155% per annum due 1/22/2010                     |   | 1,168,770 |  |   | -          | 
| | ●Interest rate at 9.1155% per annum due 12/23/2009                          |   | 438,289   |  |   | -          | 
| | ●Interest rate at
      9.1155% per annum due 12/23/2009                    |   | 146,096   |  |   | -          | 
| | ●Interest rate at 9.1155% per annum due
      12/23/2009                    |   | 438,289   |  |   | -          | 
| | Loan from Linyi Commercial Bank,                                            |   |           |  |   |            | 
| | ●Interest rate at 9.293% per annum due 6/15/2010                            |   | 1,460,963 |  |   | -          | 
| | ●Interest rate at
      9.293% per annum due 1/19/2010                      |   | 657,433   |  |   | -          | 
| | ●Interest rate at 9.293%per annum due 12/14/2009                            |   | 686,653   |  |   | -          | 
| | ●Interest rate at
      9.293% per annum due 6/16/2010                      |   | 1,460,963 |  |   | -          | 
| | ●Interest rate at 13.073% per annum due 1/5/2009                            |   | -         |  |   | 685,711    | 
| |                                                                             |   | 6/30/2009 |  |   | 12/31/2008 | 
| | ●Interest rate at 13.073% per annum due 1/5/2009                            | $ | -         |  | $ | 656,532    | 
| | ●Interest rate at
      8.539% per annum due 3/27/2009                      |   | -         |  |   | 1,458,959  | 
| | ●Interest rate at 8.539% per annum due 3/27/2009                            |   | -         |  |   | 141,885    | 
| | Loan from Beijing Miyun County Shilipu Rural
      *Financial Institution,* |   |           |  |   |            | 
| | ●Interest rates at 10.935% per annum due 9/30/2009                          |   | 2,775,830 |  |   | -          | 
| | ●Interest rates at
      7.434% per annum due 1/20/2010                     |   | 1,460,963 |  |   | -          | 
| | ●Interest rates at 8.539% per annum due 9/30/2009                           |   |           |  |   | 2,772,023  | 
| | Loan from China Merchants Bank, Beijing                                     |   |           |  |   |            | 
| | ●Interest rate at 5.310% per annum due 3/29/2010                            |   | 730,482   |  |   | -          | 
| | Loan from China Agricultural Bank, Luotian
      *Branch*                   |   |           |  |   |            | 
| | ●Interest rate at 7.47% per annum due 9/7/2009                              |   | 818,139   |  |   | 817,017    | 
| | ●Interest rate at 7.47%
      per annum due 9/7/2009                        |   | 292,193   |  |   | 291,792    | 
| | Bank of Beijing                                                             |   |           |  |   |            | 
| | ●Interest rate at
      7.722% per annum due 7/28/2009                      |   | 292,193   |  |   | 291,792    | 
| | Bank of China, Junan Branch,                                                |   |           |  |   |            | 
| | ●Interest rate at
      7.500% per annum due 5/19/2009                      |   | 1,171     |  |   | 4,014      | 

20

---

| | United Commercial Bank, China Branch                    |   |            |  |   |            | 
| | ------------------------------------------------------- | - | ---------- |  | - | ---------- | 
| | ●Interest rate at 5.494% per annum due 1/14/2009        |   | 965,690    |  |   | 1,156,955  | 
| | International Trust Co., Ltd.,                          |   |            |  |   |            | 
| | ●Interest rate at 6.804% per annum due 11/13/2009       |   | 350,629    |  |   | -          | 
| | Credit Union, Junan                                     |   |            |  |   |            | 
| | ●Interest rate at 8.5837% per annum due 1/7/2009        |   | -          |  |   | 43,769     | 
| | ●Interest rate at
      8.5837% per annum due 1/12/2009 |   | -          |  |   | 43,769     | 
| |                                                         | $ | 31,956,810 |  | $ | 14,414,996 | 

|    | The short-term loans are revolving lines of credit, which
      are denominated in the functional currency Renminbi (RMB), were primarily
      obtained for general working capital.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                      
|    | All overdue loans were extended by the financial
      institution.                                                                                                                  
|    |                                                                                                                                                                                      
|11. | NOTES PAYABLE                                                                                                                                                                        
|    |                                                                                                                                                                                      
|    | Notes payable consisted of the following as of June 30,
      2009 and December 31, 2008:                                                                                            

| |                                                            |   | 6/30/2009 |  |   | 12/31/2008 | 
| | ---------------------------------------------------------- | - | --------- |  | - | ---------- | 
| | Notes to Junan County Construction Bank,                   |   |           |  |   |            | 
| | Bank
      commission charge at 4%, due 1/12/2009          | $ | -         |  | $ | 554,405    | 
| | Bank commission charge
      at 5.8320%, due 8/13/2009     |   | 730,482   |  |   | -          | 
| | Bank
      commission charge at 5.8320%, due 8/25/2009     |   | 883,882   |  |   | -          | 
| | Notes to Junan County Agriculture Bank,                    |   |           |  |   |            | 
| | Bank
      commission charge at 4%, due 1/16/2009          |   | -         |  |   | 277,202    | 
| | Loan to Jinan Branch, Shenzhen Development Bank,           |   |           |  |   |            | 
| | Bank
      charge commission charge at 3.96%, due 2/6/2009 |   | -         |  |   | 4,376,878  | 
| |                                                            | $ | 1,614,364 |  | $ | 5,208,485  | 

All overdue notes were extended by the
financial institution.

12.

ACCRUED EXPENSES AND OTHER PAYABLE

Accrued expenses and other payables
consisted of the following as of June 30, 2009 and December 31, 2008:

| |                            |   | 6/30/2009 |  |   | 12/31/2008 | 
| | -------------------------- | - | --------- |  | - | ---------- | 
| | Business and other taxes   | $ | 997,287   |  | $ | 1,979,650  | 
| | Accrued staff welfare      |   | 1,711,481 |  |   | 103,269    | 
| | Accrued salaries and wages |   | 274,863   |  |   | 605,471    | 

| | Accrued utility expenses         |   | 474,460   |  |   | 481,678    | 
| | -------------------------------- | - | --------- |  | - | ---------- | 
| | Accrued interest expenses        |   | 140,913   |  |   | -          | 
| | Accrued transportation expenses  |   | 692,511   |  |   | 1,103,112  | 
| | Other accruals                   |   | 130,662   |  |   | -          | 
| | Purchases disbursements payables |   | 1,894,356 |  |   | 6,018,057  | 
| |                                  | $ | 6,316,533 |  | $ | 10,291,237 | 

21

---

13.

LONG-TERM DEBTS

Long-term debts consisted of the
following as of June 30, 2009 and December 31, 2008:

| |                                                              |   | 6/30/2009 |  |   | 12/31/2008 | 
| | ------------------------------------------------------------ | - | --------- |  | - | ---------- | 
| | Loan from Agricultural Development Luotian
      Government, |   |           |  |   |            | 
| | Interest rates at 0.67% per annum due 12/11/2010             | $ | 109,572   |  | $ | -          | 
| | Interest rates at
      2.10% per annum due 12/11/2011       |   | 25,567    |  |   | 25,532     | 
| | Loan from United Commercial Bank, China
      Branch         |   |           |  |   |            | 
| | Interest rates at
      5.494% per annum due 1/14/2011       |   | 435,323   |  |   | 551,443    | 
| |                                                              |   | $ 570,462 |  |   | $ 576,975  | 

|14. | NON-CONTROLLING INTERESTS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|    | The non-controlling interests represents the 19.8% equity
      of Shandong Green Foodstuff Co., Ltd. held by the Shandong Economic
      Development Investment Corporation, which is a state-owned
  interest.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|15. | CAPITALIZATION                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|    | Dating back to May 3, 2007, the Company underwent a
      reverse-merger and a concurrent financing transaction that resulted in
      24,923,178 shares of outstanding common stock that remained unchanged
      until through December 31, 2007. During the course of 2008, several
      holders of warrants issued in connection with the financing transaction
      exercised their rights to purchase shares at the prescribed exercise
      price. The holders of the warrants exercised the right to purchase a total
      of 360,207; however, because the holders did not pay in cash for the
      warrants, 110,752 of those shares were cancelled as consideration in lieu
      of the warrant holders paying in cash. Ultimately, 249,455 of new shares
      were issued to those who exercised their warrant. As detailed in the table
      below, the total number of outstanding shares at June 30, 2009 was
      25,177,640.   
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|16. | INCOME TAXES                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|    | All of the Groups income before income taxes and related
      tax expenses are from PRC sources. In accordance with the relevant tax
      laws and regulations of PRC, the corporation income tax rate is 33%.
      However, also in accordance with the relevant taxation laws in the PRC,
      some of the subsidiaries of the Group are eligible for tax exemption. In
      particular, from the time that a company has its first profitable tax
      year, the company is exempt from corporate income tax for
  its first two year and is then entitled to a 50% tax reduction for
the succeeding three year. Actual income tax expenses reported in the
consolidated statements of income and comprehensive income differ from the
amounts computed by applying the PRC statutory income tax rate of 33% to income
before income tax for the period from August 4, 2006 (date of incorporation) to
June 30, 2009 for the following reasons:

22

---



| |                                     |   | 6/30/2009  |   |   | 12/31/2008 |  
| | ----------------------------------- | - | ---------- | - | - | ---------- | -
| | Income before tax                   | $ | 5,170,937  |   | $ | 2,255,924  |  
| | Tax at the income tax rate          |   | 1,292,734  |   |   | 563,981    |  
| | Effect of tax exemption granted     |   | (109,256   | ) |   | (173,600   | )
| | Income tax                          | $ | 1,183,478  |   | $ | 390,381    |  
| | Per Share Effect of Tax Exemption   |   |            |   |   |            |  
| |                                     |   | 6/30/2009  |   |   | 12/31/2008 |  
| | Effect of tax exemption granted     | $ | 109,256    |   | $ | 173,600    |  
| | Weighted-Average Shares Outstanding |   | 25,177,640 |   |   | 24,923,179 |  
| | Per share effect                    | $ | 0.0043     |   | $ | 0.0070     |  

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 25%
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.

Based on the background of each
constituent of our group, the income tax rates applicable to the four
constituents for 2008 and 2009 are depicted in the following table.

Income Tax Rate
    2008
    2009Junan Hongrun
    15%
    25%Luotian Lorain
    15%
    15%Beijing Lorain
    0%
    15%Shandong Lorain
    25%
    25%


17.

SALES BY
PRODUCT TYPE

Sales by categories of product at June
30, was as follows:

| | Category         |   | 6/30/2009  |  |   | 6/30/2008  | 
| | ---------------- | - | ---------- |  | - | ---------- | 
| |                  |   |            |  |   |            | 
| | Chestnut         | $ | 26,546,837 |  | $ | 23,597,505 | 
| | Convenience Food |   | 7,347,253  |  |   | 6,690,5010 | 
| | FCB Food         |   | 11,272,335 |  |   | 8,644,280  | 
| | Others           |   |            |  |   | 20,440     | 
| | Total            | $ | 45,166,461 |  | $ | 38,952,726 | 

23

---

Revenue by geography at June 30, was as
follows:

| | Country              |   | 6/30/2009  |  |   | 6/30/2008  | 
| | -------------------- | - | ---------- |  | - | ---------- | 
| |                      |   |            |  |   |            | 
| | Belgium              | $ | 635,579    |  | $ | 839,578    | 
| | Chile                |   | -          |  |   | 72,424     | 
| | China                |   | 37,731,405 |  |   | 30,688,181 | 
| | France               |   | 250,885    |  |   | 380,509    | 
| | Germany              |   | -          |  |   | 33,355     | 
| | Holland              |   | 142,370    |  |   | -          | 
| | Hong Kong            |   | 95,424     |  |   | 69,501     | 
| | Japan                |   | 2,424,172  |  |   | 2,243,240  | 
| | Korea                |   | -          |  |   | 2,060,488  | 
| | Kuwait               |   | 76,981     |  |   | -          | 
| | Malaysia             |   | 246,747    |  |   | 242,603    | 
| | Netherlands          |   | -          |  |   | 399,301    | 
| | Saudi Arabia         |   | 993,246    |  |   | 110,890    | 
| | Singapore            |   | 328,319    |  |   | 263,666    | 
| | South Korea          |   | 1,631,680  |  |   | -          | 
| | Spain                |   | 154,639    |  |   | 37,724     | 
| | Taiwan               |   | 117,827    |  |   | 605,379    | 
| | United Arab Emirates |   | -          |  |   | 100,942    | 
| | UK                   |   | 158,644    |  |   | 633,446    | 
| | USA                  |   | 178,543    |  |   | 171,499    | 
| | Total                | $ | 45,166,461 |  | $ | 38,952,726 | 

18.

SUBSEQUENT
EVENT

On July 27, 2009, the Company filed a
Form S-8 with the US Securities and Exchange Commission registering the
underlying securities of the Companys 2009 Stock Incentive Plan (the Plan)
that was executed on the same date. The Plan is designed to retain directors,
executives and selected employees and consultants and reward them for making
major contributions to the success of the Company. The Company will account for
the issuance of the securities under the Plan in accordance with FASB Statement
No. 123R, Share-Based Payment.

24

---

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, 2008 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, canned, and bulk food.

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 chestnut processing 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 second quarter of 2009. We derive
most of our revenues from sales in China, Japan and South Korea. Our primary
strategy for 2009 is to expand our brand equity in the Chinese market for our
chestnut and convenience foods 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.

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 second quarter of 2009, the
cost of our raw materials increased from $9.2 million to $11.6 million, as
compared to the second quarter of 2008, for an increase of approximately 26%. 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.

25

---

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. In
the second quarter of 2009, we paid for approximately 15% of our raw materials
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 also fund approximately 56% of our working capital
requirements from the proceeds of short-term loans from Chinese banks. We expect
to continue to do so 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 June 30, 2009 was approximately $32.0 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, we may not have 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.

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 considering pursuing 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, and the
outlook for the remainder of 2009 is uncertain. A continuation or worsening of
unfavorable economic conditions, including the ongoing credit 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.

26

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

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

Results of Operations

Three Months Ended June 30, 2009 Compared to Three Months
Ended June 30, 2009

The following table summarizes the results of our operations
during the three-month periods ended June 30, 2009 and June 30, 2008,
respectively and provides information regarding the dollar and percentage
increase or (decrease) from the three-month period ended June 30, 2008 compared
to the three-month period ended June 30, 2009.

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

|                                    |   | Three months ended |   |   |            |   |   | **Percentage** |  
|----------------------------------- | - | ------------------ | - | - | ---------- | - | - | -------------- | -
|                                    |   | June 30,           |   |   | Dollar($)  |   |   | (%)            |  
|                                    |   |                    |   |   |            |   |   | Increase       |  
|                                    |   | 2009               |   |   | 2008       |   |   | (Decrease)     |  
|                                    |   | (In                |   |   | (In        |   |   |                |  
|                                    |   | Thousands)         |   |   | Thousands) |   |   |                |  
|Net revenues                        | $ | 23,966             |   | $ | 21,524     |   | $ | 2,441          |  
|Cost of revenues                    |   | 18,675             |   |   | 16,338     |   |   | 2,337          |  
|Gross profit                        |   | 5,291              |   |   | 5,186      |   |   | 105            |  
|Operating expenses                  |   |                    |   |   |            |   |   |                |  
|Selling and marketing expenses      |   | 1,220              |   |   | 616        |   |   | 604            |  
|General and administrative expenses |   | 914                |   |   | 1,087      |   |   | (173           | )
|Operating Income                    |   | 3,156              |   |   | 3,482      |   |   | (327           | )
|Government subsidy income           |   | 98                 |   |   | 4          |   |   | 94             |  
|Interest and other income           |   | 127                |   |   | 72         |   |   | 55             |  
|Other expenses                      |   | (69                | ) |   | (95        | ) |   | 25             |  
|Interest expense                    |   | (745               | ) |   | (683       | ) |   | 62             |  
|Earnings before tax                 |   | 2,566              |   |   | 2,777      |   |   | (211           | )
|Income tax                          |   | (603               | ) |   | (493       | ) |   | 110            |  
|Income before minority interests    |   | 1,964              |   |   | 2,284      |   |   | (320           | )
|Minority interests                  |   | 108                |   |   | 167        |   |   | (59            | )

|Net income | $ | 1,856 |  | $ | 2,117 |  | $ | (262 | ) |  | (12.4 | )
|---------- | - | ----- |  | - | ----- |  | - | ---- | - |  | ----- | -

27

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Revenue

Net Revenues. Our net revenue for the three months ended
June 30, 2009 amounted to $24.0 million, which represents an increase of
approximately $2.4 million, or 11.3%, from the three-month period ended on June
30, 2008, in which our net revenue was $21.5 million. The increased revenues
were attributable to increased revenues from sales of our chestnut and
convenience food products as a result of 10% and 11% increase in sales
respectively of such products thanks to our effective marketing efforts and well
established domestic and international distribution network.

Cost of Revenues.During the three months ended June 30,
2009, we experienced an increase in cost of revenue of $2.3 million, in
comparison to the three months ended June 30, 2008, from $16.3 million to $18.7
million, reflecting an increase of approximately 14.3% . Approximately 89%, or
$2.08 million, of this increase was attributable to an increase in raw material
costs, which increased from $15.8 million during the three months ended June 30,
2008 to $17.9 million, or approximately 13.3%, during the three months ended
June 30, 2009.

The factors that contributed to the remaining 11% 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 $.105 million,
or 2.0%, to $5.3 million for the three months ended June 30, 2009 from $5.2
million for the same period in 2008 as a result of higher net revenues, offset
by higher costs of revenues, for the reasons indicated immediately above.

Operating Expenses

Selling and Marketing Expenses. Our selling and
marketing expenses increased approximately $.604 million, or 98.1%, to $1.2
million in the second quarter of 2009 from $.62 million in the second quarter of
2008. The following table reflects the main factors that contributed to this
increase as well as the dollar amount that each factor contributed to this
increase:

(in thousands of U.S. dollars)
    Increase in Costs in the Three
      Months Ended June 30, 2009 over the Three Months Ended
      June 30, 2008Shipping and inspection fees
    $373Port surcharges
    $15Certification cost
    $11Supermarket fees
    $35Wages (sales personnel)
    $125


The increases listed in the table above were partially offset
by decreases in dollar amount of other factors, including customer lodging,
phone, postage and courier charges, toll road expense, warehousing costs and
expenses for professional movers.

Selling and marketing expenses increased because we expanded
the distribution of our products in China. In addition, we introduced several
new convenience food products and initiated a marketing and promotional campaign
for our chestnut and convenience food products.

28

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General and Administrative Expenses.We experienced a
decrease in general and administrative expense of approximately $.173 million
from approximately $1.1 million to approximately $0.9 million for the three
months ended June 30, 2009, compared to the same period in 2008. The following
table reflects the main factors that contributed to this decrease as well as the
dollar amount that each factor contributed to this decrease:

Factor
    Dollar DecreasePersonnel wages and benefits
    $40,066office expenses
    $9,060Consultation fees
    $5,993Inspection fees
    $17,535Agent fees
    $14,467


Income Before Taxation and Minority
Interest

Income before taxation and minority interest decreased $.211
million, or 7.6%, to $2.6 million for the three months ended June 30, 2009 from
$2.8 million for the same period of 2008. The decrease was mainly attributable
to the increase of our selling and marketing expenses as described above in the
three months ended June 30, 2009 as compared to the three months ended June 30,
2008.

Income Taxes

Income taxes increased $.110 million, or 22.2%, to $.603
million in the second quarter of 2009, as compared to $.493 million in the
second quarter of 2008. This increase was attributable to the higher income tax
rate in 2009 as compared to 2008.

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.

The income tax rates applicable to our Chinese operating
subsidiaries in 2008 and 2009 are depicted in the following table:

2008
    2009Junan Hongrun
    15%
    25%Luotian Lorain
    15%
    15%Beijing Lorain
    -
    15%Shandong Lorain
    25%
    25%


Net Income

Net income decreased $.262 million, or 12.4%, to $1.86 million
for the three months ended June 30, 2009 from $2.12 million for the same period
of 2008. The decrease was attributable to increased selling and marketing
expenses and higher income tax in the three months ended June 30, 2009 as
compared to the three months ended June 30, 2008.

29

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Six Months Ended June 30, 2009 Compared to Six Months Ended
June 30, 2008

The following table summarizes the results of our operations
during the six-month periods ended June 30, 2009 and June 30, 2008, respectively
and provides information regarding the dollar and percentage increase or
(decrease) from the six-month period ended June 30, 2008 compared to the
six-month period ended June 30, 2009.

|(All amounts, other than percentages,
      stated in thousands of U.S. dollars) |  
|-------------------------------------------------------------------------------- | -
|                                                                                 |  
|                                                                                 |  
|                                                                                 |  
|                                                                                 |  
|                                                                                 |  
|                                                                                 |  
|Net revenues                                                                     | $
|Cost of revenues                                                                 |  
|Gross profit                                                                     |  
|Operating expenses                                                               |  
|Selling and marketing expenses                                                   |  
|General and Administrative expenses                                              |  
|Operating Income                                                                 |  
|Government subsidy income                                                        |  
|Interest and other income                                                        |  
|Other expenses                                                                   |  
|Interest expense                                                                 |  
|Earnings before tax                                                              |  
|Income tax                                                                       |  
|Income before minority interests                                                 |  
|Minority interests                                                               |  
|Net income                                                                       | $

Revenue

Net Revenues. Our net revenue for the six months ended
June 30, 2009 amounted to $45.2 million, which is approximately $6.2 million or
16.0% more than that of the same period ended on June 30, 2008 where we had
revenue of $39.0 million. The increased revenues were attributable to the
success of the Company's marketing strategies, operational enhancements and
expansion of sales markets, primarily in China. In addition, through third party
agents that we contracted with, our products were sold to a total of
approximately 3,700 supermarkets in China as of June 30, 2009.

During the six months ended June 30, 2009, revenues from sales
of chestnut products increased by $2.9 million, or 12.5%, and revenues from
sales of convenience food products increased by $.66 million, or 9.8%, and sales
of frozen, canned and bulk food products increased $2.6 million, or 30.4%,
compared to the same period in 2008.

30

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Cost of Revenues. Our cost of goods sold, which consists
of raw materials, direct labor and manufacturing overhead expenses, was $34.7
million for the six month period ended June 30, 2009, an increase of $4.9
million or 16.4%, as compared to $29.8 million for the six month period ended
June 30, 2008. The cost of goods sold increased because the sales in the first
six months of 2009 increased as compared to the same period ended June 30,
2008.

Gross Profit. Our gross profit increased $1.3 million,
or 14.4% to $10.5 million for the six months ended June 30, 2009 from $9.1
million for the same period in 2008. This increase was attributable to increased
sales revenue.

Operating Expenses

Selling and Marketing Expenses. Selling and marketing
expenses increased $1.2 million, or 93.6% to $2.4 million for the six months
ended June 30, 2009 from $1.2 million for the same period in 2008. This increase
mainly resulted from increased efforts to market our products in our domestic
market.

General and Administrative Expenses. General and
administrative expenses increased $0.26 million, or 15.9% to $1.9 million for
the six months ended June 30, 2009 from $1.6 million for the same period of
2008. The increase of general and administrative expenses was primarily
attributable to increased transportation costs relative to our expanded
business, the increased compensation for managerial personnel andexpansion of our distribution channels.

Income Before Taxation and Minority
Interest

Income before taxation and minority interest increased $0.012
million or 0.2% to $5.045 million for the six months ended June 30, 2009 from
$5.033 million for the same period of 2008.The increase was primarily a
result of the higher revenue during the six month period ended on June 30, 2009
as compared to 2008.

Income Taxes

Income taxes increased $0.299 million or 33.9% to $1.183
million for the six months ended June 30, 2009 from $0.884 million for the same
period of 2008. The increase of tax paid was primarily a result of the increase
of income in the first six months ended June 30, 2009, as compared to the same
period in 2008.

Net Income

Net income decreased $0.237 million, or 6.2% to $3.612 million
for the six months ended June 30, 2009 from $3.849 million for the same period
of 2008. The decrease was primarily a result of higher selling and marketing
expenses and increased income tax.

Liquidity and Capital Resources

As of June 30, 2009, we had cash and cash equivalents
(including restricted cash) of $6.8 million. The following table provides
detailed information about our net cash flow for all financial statements
periods presented in this report.

|                                                          |   | Cash Flow (in thousands)  |  
|--------------------------------------------------------- | - | ------------------------- | -
|                                                          |   | Six Months Ended June 30, |  
|                                                          |   | 2009                      |  
|Net cash provided by (used in) operating
      activities | $ | (10,263                   | )

|Net cash provided by (used in) investing activities       | $ | (647   | ) | $ | (9,132 | )
|--------------------------------------------------------- | - | ------ | - | - | ------ | -
|Net cash provided by (used in) financing
      activities | $ | 13,947 |   | $ | 5,147  |  
|Net cash flow (outflow)                                   | $ | 3,038  |   | $ | (700   | )

31

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Operating Activities

Net cash provided by operating activities was $(10.3) million
for the six months period ended June 30, 2009, which is a decrease of $13.5
million from $3.3 million for the same period of 2008. The decrease of net cash
provided by operating activities was primarily a result of increase in accounts
and other receivables in the first half of fiscal 2009 of approximately $13.1
million and increase in advance to suppliers of approximately $8.9 million as
compared to the same period in 2008.

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 six months period
ended June 30, 2009 was $0.647 million, which is a decrease of $8.5 million from
net cash used in investing activities of $9.1 million for the same period of
2008. The decrease was primarily due to reduced investment in fixed assets in
2009.

Financing Activities

Net cash provided by financing activities for the six months
period ended June 30, 2009 was $13.9 million, which is an increase of $8.8
million from $5.1 million net cash provided by financing activities during the
same period in 2008. The increase of the net cash provided by financing
activities was primarily a result of increased short term bank borrowing in
2009.

Loan Facilities

As of June 30, 2009, 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 $31,956,810 as of June 30, 2009, compared
with $14,414,996 as of December 31, 2008. 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.

Obligations under Material Contracts

We do not have any material contractual obligations as of June
30, 2009.

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.

32

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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 June 30, 2009, the details pertaining to our subsidiaries
were as follows:

|                                  |  |               |  |  | Attributable |  |   |            |  |  |                  |  
|--------------------------------- |  | ------------- |  |  | ------------ |  | - | ---------- |  |  | ---------------- | -
|                                  |  | Place of      |  |  | Equity       |  |   | Registered |  |  |                  |  
|Name of Company                   |  | Incorporation |  |  | Interest     |  |   | Capital    |  |  |                  |  
|                                  |  |               |  |  | %            |  |   |            |  |  |                  |  
|Shandong Lorain Co., Ltd.         |  | PRC           |  |  | 80.2         |  | $ | 12,901,823 |  |  | (RMB 100,860,000 | )
|Luotian Lorain Co., Ltd.          |  | PRC           |  |  | 100          |  | $ | 3,240,013  |  |  | (RMB 25,328,800  | )
|Junan Hongrun Foodstuff Co., Ltd. |  | PRC           |  |  | 100          |  | $ | 16,245,603 |  |  | (RMB 127,000,000 | )
|Beijing Lorain Co., Ltd.          |  | PRC           |  |  | 100          |  | $ | 1,279,181  |  |  | (RMB 10,000,000  | )

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

If such assets are considered to be impaired, the impairment to
be recognized is measured by the amount by which the carrying amount of the
assets exceeds the fair value of the assets. Assets to be disposed of are
reported at the lower of the carrying amount or fair value less costs to sell.
During the reporting periods, 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.

33

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Recent Accounting Pronouncements

In March 2008, the FASB issued SFAS No. 161, "Disclosures about
Derivative Instruments and Hedging Activities, an amendment of FASB Statement
No. 133" ("SFAS 161"). SFAS 161 applies to all derivative instruments and
related hedged items accounted for under SFAS No. 133, "Accounting for
Derivative Instruments and Hedging Activities" ("SFAS 133"). SFAS 161 requires
entities to provide greater transparency about (a) how and why an entity uses
derivative instruments, (b) how derivative instruments and related hedged items
are accounted for under SFAS 133 and its related interpretations, and (c) how
derivative instruments and related hedged items affect an entity's financial
position, results of operations and cash flows. SFAS 161 is effective for
financial statements issued for fiscal years and interim periods beginning after
November 15, 2008.

In May 2008, the FASB issued SFAS No. 162, "The Hierarchy of
Generally Accepted Accounting Principles" ("SFAS 162"). SFAS 162 identifies the
sources of accounting principles and the framework for selecting the principles
used in the preparation of financial statements of nongovernmental entities that
are presented in conformity with generally accepted accounting principles (the
GAAP hierarchy). Statement 162 will become effective 60 days following the SEC's
approval of the Public Company Accounting Oversight Board amendments to AU
Section 411, "The Meaning of Present Fairly in Conformity With Generally
Accepted Accounting Principles."

In May 2008, the FASB issued FSP Accounting Principles Board
("APB") 14-1 "Accounting for Convertible Debt Instruments That May Be Settled in
Cash upon Conversion (Including Partial Cash Settlement)" ("FSP APB 14-1"). FSP
APB 14-1 requires the issuer of certain convertible debt instruments that may be
settled in cash (or other assets) on conversion to separately account for the
liability (debt) and equity (conversion option) components of the instrument in
a manner that reflects the issuer's non-convertible debt borrowing rate. FSP APB
14-1 is effective for fiscal years beginning after December 15, 2008 on a
retroactive basis.

In September 2008, FASB issued FSP No. 133-1 and FIN 45-4,
Disclosures about Credit Derivatives and Certain Guarantees, an amendment of
FASB Statement No. 133 and FASB Interpretation No. 45; and Clarification of the
Effective Date of FASB Statement No. 161. This FSP is intended to improve
disclosures about credit derivatives by requiring more information about the
potential adverse effects of changes in credit risk on the financial position,
financial performance, and cash flows of the sellers of credit derivatives. The
provisions of the FSP that amend Statement 133 and FIN 45 are effective for
reporting periods (annual or interim) ending after November 15, 2008.

This FSP amends FASB Statement No. 133, Accounting for
Derivative Instruments and Hedging Activities, to require disclosures by
sellers of credit derivatives, including credit derivatives embedded in hybrid
instruments. This FSP also amends FASB Interpretation (FIN) No. 45,
Guarantor's Accounting and Disclosure Requirements for Guarantees, Including
Indirect Guarantees of Indebtedness to Others, to require an additional
disclosure about the current status of the payment/performance risk of a
guarantee. The provisions of the FSP that amend Statement 133 and FIN 45 are
effective for reporting periods (annual or interim) ending after November 15,
2008.

Finally, this FSP clarifies the effective date in FASB
Statement No. 161, Disclosures about Derivative Instruments and Hedging
Activities. The disclosures required by Statement 161 should be provided for
any reporting period (annual or quarterly interim) beginning after November 15,
2008. For example, an entity with a March 31 fiscal year-end should provide the
disclosures for its fourth quarter interim period ended March 31, 2009, in its
2009 annual financial statements. This clarification of the effective date of
Statement 161 is effective upon issuance of the FSP.

34

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We are currently evaluating the potential impact, if any, of
the adoption of the above recent accounting pronouncements on our consolidated
results of operations and financial condition.

Off-Balance Sheet Arrangements

We do not have any off-balance arrangements.ITEM 3.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not required.

ITEM 4. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

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

As required by Rule 13a-15 under the Exchange Act, our
management, including our Chief Executive Officer and Chief Financial Officer,
evaluated the effectiveness of our disclosure controls and procedures as of June
30, 2009. Based on that evaluation, our Chief Executive Officer and Chief
Financial Officer concluded that as of June 30, 2009, our disclosure controls
and procedures were effective.

Changes in Internal Controls over Financial Reporting.

During the fiscal quarter ended June 30, 2009, 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.

PART II. OTHER INFORMATION

ITEM 6. EXHIBITS

|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.

35

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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: August 14, 2009

AMERICAN LORAIN
CORPORATION

/s/ Si
Chen      Si Chen
      Chief Executive Officer

/s/ Yilun
Jin      Yilun Jin
      Chief Financial Officer

36

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EXHIBIT INDEX



|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.

37

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