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



FORM 10-Q/A

Amendment No. 1



(Mark One)

Q QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended: June 30, 2007



 ̈ 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) | (IRS Employer ID No.)



Beihuan Zhong Road

Junan County

Shandong, China 276600

(Address of principal executive offices)



(86) 539-7318818

(Issuer's telephone number)



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

Yes
Q          No ̈



Indicate by check mark whether the registrant is a larger accelerated filer, an accelerated filer, or a non-accelerated filer.  See definition of "accelerated filer and large accelerated filer" in Rule 12b-2 of the Exchange Act. (Check one)

Large accelerated filer
 ̈         Accelerated filer
 ̈         Non-accelerated filer
Q



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

Yes
 ̈       No  Q



The numbers of shares outstanding of each of the issuers classes of common equity, as of November 14, 2007, are as follows:



|Class of Securities            | Shares Outstanding
|------------------------------ | ------------------
|Common Stock, $0.001 par value | 24,923,178        



---



EXPLANATORY NOTE



American Lorain Corporation (the Company) is filing this Amendment No. 1 to its Quarterly Report on Form 10-Q for the period ended June 30, 2007 (the Original Filing) to, among other things, correct certain amounts presented as of June 30, 2007 contained in the Companys financial statement included in the Original Filing, as filed with the U.S. Securities and Exchange Commission (the SEC) on August 20, 2007.  The primary changes to the Original Filing made in this amendment are as follows:



•

This amendment changes the consolidated statements of cash flows for the six months ended June 30, 2007 and the three months ended June 30, 2007 (the Original Cash Flow Statements) by adding a new item cash acquired from shell upon reverse-merger, which records the Companys acquisition of cash from a shell company in an amount of $5,268 in connection with the reverse merger completed on May 3, 2007, as described in the Companys Form 8-K filed with the SEC on May 9, 2007. Accordingly, this amendment also changes the amounts listed in the Original Cash Flow Statements regarding the following items: cash (used)/ sourced in investing activities, net increase and financing activities, net increase in cash and cash equivalent for the period, and cash & cash equivalent at the end of the period.

•

This amendment changes the wording in Section (j) of Note 1 to Consolidated Financial Statement in the Original Filing in order to better describe the nature of the rights obtained by the Company in connection with the use of certain land in China.

•

Finally, this amendment adds a section titled Per Share Effect of Tax Exemption in Note 9 to Consolidated Financial Statement in the Original Filing.



No other material information in the Original Filing is amended hereby. This Form 10-Q/A continues to describe conditions as of the date of the Original Filing, and accordingly, the Company has not updated the disclosures contained herein to reflect events that occurred at a later date, [except for disclosures of certain tax law updates in Note 10 to Consolidated Financial Statement.] Pursuant to Rule 12b-15 (the Rule 12b-15) under the Securities Exchange Act of 1934, as amended, this Amendment contains the complete text of the items of the Original Filing that are being amended and restated, in addition to the text of the unaffected items or exhibits.

As required by Rule 12b-15, the Companys principal executive officer and principal financial officer are providing Rule 13a-14(a) certifications in connection with this Form 10-Q/A (but otherwise identical to their prior certifications) and are also furnishing, but not filing, Rule 13a-14(b) certifications in connection with this Form 10-Q/A (but otherwise identical to their prior certifications).



---



PART I

ITEM 1. FINANCIAL STATEMENT



|AMERICAN LORAIN CORPORATION              
|-----------------------------------------
|                                         
|CONSOLIDATED BALANCE SHEETS              
|AS OF JUNE 30, 2007 AND DECEMBER 31, 2006
|(Stated in US Dollars)                   



|                                      | Notes |   | 2007       |   | 2006      
|------------------------------------- | ----- | - | ---------- | - | ----------
|ASSETS                                |       |   |            |   |           
|Current assets                        |       |   |            |   |           
|Cash and cash equivalents             |       | $ | 2,531,695  | $ | 2,290,676 
|Restricted cash                       | 3     |   | 6,536,540  |   | 2,549,321 
|Trade accounts receivable             | 4     |   | 8,903,779  |   | 11,805,231
|Prepayments for raw materials         |       |   | 3,353,642  |   | 2,406,160 
|Income tax prepayment                 |       |   | -          |   | 38,375    
|Other receivables                     |       |   | 9,637,204  |   | 4,683,630 
|Inventories                           | 5     |   | 13,773,027 |   | 12,294,354
|Total current assets                  |       | $ | 44,735,887 | $ | 36,067,747
|                                      |       |   |            |   |           
|Other Assets                          |       |   |            |   |           
|Property, plant and equipment, net    | 6     |   | 19,382,664 |   | 13,517,908
|Investment securities                 |       |   | 6,951      |   | 26,620    
|Land use rights, net                  | 7     |   | 2,852,723  |   | 2,777,475 
|Total Non Current Assets              |       | $ | 22,242,338 | $ | 11,687,559
|                                      |       |   |            |   |           
|TOTAL ASSETS                          |       | $ | 66,978,225 | $ | 52,389,750
|                                      |       |   |            |   |           
|                                      |       |   |            |  
|LIABILITIES AND STOCKHOLDERS EQUITY  |       |   |            |  
|Current liabilities                   |       |   |            |   |           
|Short term bank loans                 |       | $ | 16,062,061 | $ | 21,858,467
|Current maturities of long term debts |       |   | -          |   | 5,117     
|Accounts payable                      |       |   | 992,598    |   | 2,327,620 
|Notes payable                         |       |   | 2,623,020  |   | 3,466,581 
|Customers deposits                   |       |   | 727,216    |   | 843,091   
|Accrued expenses and other payables   |       |   | 6,011,081  |   | 2,570,262 
|Income tax payable                    |       |   | 307,376    |   | 402,216   
|Total current liabilities             |       | $ | 26,723,352 | $ | 31,473,354
|                                      |       |   |            |   |           
|Long term bank loans                  |       |   | 1,416,921  |   | 1,384,742 
|                                      |       |   |            |   |           
|Minority interest                     |       |   | 3,042,800  |   | 2,922,355 
|                                      |       |   |            |   |           
|                                      |       |   |            |   |           
|TOTAL LIABILITIES                     |       | $ | 31,183,073 | $ | 35,780,451
|                                      |       |   |            |   |           



See notes to consolidated financial statements and accountant's report

---



|                                         
|-----------------------------------------
|AMERICAN LORAIN CORPORATION              
|                                         
|CONSOLIDATED BALANCE SHEETS (Continued)  
|AS OF JUNE 30, 2007 AND DECEMBER 31, 2006
|(Stated in US Dollars)                   



|                                        | Notes |   | 2007       |   | 2006      
|--------------------------------------- | ----- | - | ---------- | - | ----------
|                                        |       |   |            |   |           
|STOCKHOLDERS EQUITY                    |       |   |            |   |           
|                                        |       |   |            |   |           
|Common stock, $0.001 par value,         |       |   |            |   |           
|200,000,000 shares authorized;          |       |   |            |   |           
|24,923,178 and 17,932,777 shares issued |       |   |            |   |           
|and outstanding at June 30, 2007 and    |       |   |            |   |           
|December 31, 2006                       | 8     |   | 24,923     |   | 17,933    
|Additional Paid-in Capital              | 8     |   | 24,127,536 |   | 6,846,620 
|Statutory reserves                      |       |   | 4,463,166  |   | 4,439,604 
|Retained earnings                       |       |   | 5,595,769  |   | 4,298,947 
|Accumulated other comprehensive income  |       |   | 1,583,758  |   | 1,006,195 
|                                        |       |   |            |   |           
|Total Stockholders Equity              |       | $ | 35,795,152 | $ | 16,129,961
|                                        |       |   |            |   |           
|                                        |       |   |            |   |           
|TOTAL LIABILITIES AND                   |       |   |            |   |           
|STOCKHOLDERS EQUITY                    |       | $ | 66,978,225 | $ | 52,389,750
|                                        |       |   |            |   |           

















See notes to consolidated financial statements and accountant's report

---



|                                            
|--------------------------------------------
|AMERICAN LORAIN CORPORATION                 
|                                            
|CONSOLIDATED STATEMENTS OF INCOME           
|FOR THE PERIODS ENDED JUNE 30, 2007 AND 2006
|(Stated in US Dollars)                      



|                                     |      |   | Six months ended
June 30, |   | Three months ended
June 30,
|------------------------------------ | ---- | - | ------------------------- | - | ---------------------------
|                                     | Note |   | 2007                      |   | 2006                       
|Revenue                              |      |   |                           |   |                            
|Net revenues                         |      | $ | 25,242,021                | $ | 15,167,690                 
|Cost of revenues                     |      |   | (19,341,479)              |   | (11,725,331)               
|                                     |      |   |                           |   |                            
|                                     |      |   |                           |   |                            
|Gross profit                         |      |   | 5,900,542                 |   | 3,442,359                  
|                                     |      |   |                           |   |                            
|Operating expenses                   |      |   |                           |   |                            
|Selling and marketing expenses       |      |   | (422,750)                 |   | (623,870)                  
|General and administrative expenses  |      |   | (820,140)                 |   | (673,868)                  
|                                     |      |   |                           |   |                            
|                                     |      |   |                           |   |                            
|Income from continuing operations    |      |   | 4,657,652                 |   | 2,144,621                  
|                                     |      |   |                           |   |                            
|Finance costs, net                   |      |   | (1,303,281)               |   | (744,074)                  
|Government grant                     |      |   | -                         |   | (2,910)                    
|Sundry                               |      |   | 33,824                    |   | -                          
|Other income                         |      |   | -                         |   | (58,751)                   
|Other expenses                       | 9    |   | (1,333,429)               |   | (34,148)                   
|                                     |      |   |                           |   |                            
|Income before taxation               |      |   | 2,054,766                 |   | 1,304,738                  
|Income tax                           | 10   |   | (615,577)                 |   | (270,129)                  
|                                     |      |   |                           |   |                            
|                                     |      |   |                           |   |                            
|Net income before minority interests |      |   | 1,439,189                 |   | 1,034,609                  
|Minority interests                   |      |   | (118,805)                 |   | 4,283                      
|                                     |      |   |                           |   |                            
|                                     |      |   |                           |   |                            
|Net income                           |      | $ | 1,320,384                 | $ | 1,038,892                  
|                                     |      |   |                           |   |                            
|                                     |      |   |                           |   |                            

|Earnings per share          |   |            |   |            |   |            |   |           
|--------------------------- | - | ---------- | - | ---------- | - | ---------- | - | ----------
|Basic                       | $ | 0.0654     | $ | 0.0579     | $ | (0.0094)   | $ | 0.0719    
|Diluted                     | $ | 0.0641     | $ | 0.0579     | $ | (0.0090)   | $ | 0.0719    
|                            |   |            |   |            |   |            |   |           
|Weighted average shares     |   |            |   |            |   |            |   |           
|outstanding of common stock |   |            |   |            |   |            |   |           
|Basic                       |   | 20,185,241 |   | 17,932,778 |   | 22,437,703 |   | 17,932,778
|Diluted                     |   | 20,594,213 |   | 17,932,778 |   | 23,255,647 |   | 17,932,778
|                            |   |            |   |            |   |            |   |           



See notes to consolidated financial statements and accountant's report



---



|                                                                
|----------------------------------------------------------------
|AMERICAN LORAIN CORPORATION                                     
|                                                                
|CONSOLIDATED STATEMENTS OF CASH FLOWS                           
|FOR THE SIX-MONTHS AND THREE-MONTHS ENDED JUNE 30, 2007 AND 2006
|(Stated in US Dollars)                                          

|                                                                  |        | Six months ended
June 30, |   | Three months ended
June 30,
|----------------------------------------------------------------- | ------ | ------------------------- | - | ---------------------------
|                                                                  |        | 2007                      |   | 2006                       
|Cash Flows from Operating Activities                              |        |                           |   |                            
|Net income                                                        | $      | 1,320,384                 | $ | 1,038,892                  
|Depreciation                                                      |        | 345,003                   |   | 378,516                    
|Amortization                                                      |        | 24,019                    |   | 24,019                     
|Minority interest                                                 |        | 118,805                   |   | (4,283)                    
|(Increase)/decrease in accounts and other receivables             |        | (3,178,691)               |   | (4,681,372)                
|(Increase)/decrease in inventories                                |        | (1,478,673)               |   | (8,189,298)                
|Increase/(decrease) in accounts and other payables                |        | (6,147,360)               |   | 16,012,172                 
|                                                                  |        |                           |   |                            
|Net cash (used in)/provided by operating activities               | $      | (8,996,513)               | $ | 4,578,646                  
|                                                                  |        |                           |   |                            
|Cash Flows from Investing Activities                              |        |                           |   |                            
|Purchase of landscaping, plant and tree                           |        | (1,031,299)               |   | (1,000,000)                
|Purchase of plant and equipment                                   |        | -                         |   | (7,506,599)                
|Purchase of land use rights                                       |        | -                         |   | (1,530,817)                
|(Increase)/Decrease in restricted cash                            |        | (3,987,219)               |   | 2,838,067                  
|Payment of cost of lease payment                                  |        | -                         |   | -                          
|Investment in short term securities                               |        | 19,667                    |   | 16,474                     
|Construction in Progress                                          |        | (777,177)                 |   | (500,000)                  
|Cash acquired from shell upon reverse-merger                      | Note 8 | 5,268                     |   | -                          
|                                                                  |        |                           |   |                            
|Cash (Used)/Sourced in Investing Activities                       | $      | (5,770,760)               |   | (7,682,875)                
|                                                                  |        |                           |   |                            
|Cash Flows from Financing Activities                              |        |                           |   |                            
|Proceeds from bank borrowings                                     |        | 4,268,345                 |   | -                          
|Repayment of bank loans                                           |        | (10,037,688)              |   | (2,675,029)                
|Issue of common stock                                             |        | 6,990                     |   | -                          
|Additional Paid-in capital                                        |        | 20,357,312                |   | -                          
|                                                                  |        |                           |   |                            
|Cash (Used)/Sourced in Financing Activities                       | $      | 14,594,959                | $ | (2,675,029)                
|                                                                  |        |                           |   |                            
|Net Increase in Cash & Cash Equivalents for the Period            | $      | (172,314)                 | $ | (5,779,258)                
|                                                                  |        |                           |   |                            
|Effect of foreign currency translation on Cash & Cash equivalents |        | 387,584                   |   | (220,895)                  
|                                                                  |        |                           |   |                            
|Cash & Cash Equivalents at Beginning of Period                    |        | 2,316,425                 |   | 7,429,038                  
|                                                                  |        |                           |   |                            
|Cash & Cash Equivalents at End of Period                          | $      | 2,531,695                 |   | 1,428,885                  



See notes to consolidated financial statements and accountant's report

---



AMERICAN LORAIN CORPORATION



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE PERIODS ENDED JUNE 30, 2007 AND DECEMBER 31, 2006

(Stated in US Dollars)



1.

ORGANIZATION, BASIS OF PRESENTATION, AND PRINCIPAL ACTIVITIES



(a)

Organization history of American Lorain Corporation (formerly known as Millennium Quest, Inc.)



American Lorain Corporation (the Company or ALC) is a Delaware corporation incorporated on February 4, 1986.  From inception through May 3, 2007, the Company did not engage in any active business operations other than in search and evaluation of potential business opportunity to become an acquiree of a reverse-merger deal.



(b)

Organization History of International Lorain Holding Inc. and its subsidiaries



International Lorain Holding Inc. (ILH) is a Cayman Islands company incorporated on August 4, 2006 and was until May 3, 2007 wholly-owned by Mr. Hisashi Akazawa.  Through restructuring and acquisition in 2006, the Company presently has two direct wholly-owned subsidiaries, Junan Hongrun and Luotian Lorain, and one indirectly wholly-owned subsidiary through Junan Hongrun, which is Beijing Lorain.



In addition, the Company directly and indirectly has 80.2% ownership of Shandong Lorain.  The rest of the 19.8%, which is owned by the State under the name of Shandong Economic Development Investment Co. Ltd., is not included as a part of the Group.



(c)

Reverse-Merger



On May 3, 2007, the Company entered into a share exchange agreement with International Lorain Holding Inc. (ILH) whereby the Company consummated its acquisition of ILH by issuance of 697,663 Series B voting convertible preferred shares to the shareholders of ILH in exchange of 5,099,503 ILH shares.  Concurrently on May 3, 2007, the Company also entered into a securities purchase agreement with certain investors and Mr. Hisashi Akazawa and Mr. Si Chen (each a beneficial owner) whereby the Company issued 319,913 (after reverse-split at 32.84 from 10,508,643) common shares to its shareholders as consideration of the Companys reverse-merger with Lorain.  Concurrently on May 3, 2007, the Company issued 299,058.78 Series B voting convertible preferred shares (immediately converted to 6,990,401 common shares) at a selling price of $2.87 per share to certain private investors.



The share exchange transaction and the private financing transaction are collectively referred to hereafter as the reverse-merger transaction.  The share exchange transaction has been accounted for as a recapitalization of ALC where the Company (the legal acquirer) is considered the accounting acquiree and ILH (the acquiree) is considered the accounting acquirer.  As a result of this transaction, the Company is deemed to be a continuation of the business of ILH.



Accordingly, the accompanying consolidated financial statements are those of the accounting acquirer, ILH.  The historical stockholders equity of the accounting acquirer prior to the share exchange has been retroactively restated as if the share exchange transaction occurred as of the beginning of the first period presented.  See also Note 8. Capitalization.



(d)

Business 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 19 provinces and administrative regions in China and 23 foreign countries.  Food products are categorized into three types: (1) chestnut products, (2) convenience food, and (3) frozen, canned, and bulk food.



---





2.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES



(a)

Method of Accounting



The Company maintains its general ledger and journals with the accrual method accounting for financial reporting purposes.  The financial statements and notes are representations of management.  Accounting policies adopted by the Company conform to generally accepted accounting principles in the United States of America and have been consistently applied in the presentation of financial statements, which are compiled on the accrual basis of accounting.



(b)

Principles of Consolidation



The consolidated financial statements which include the Company and its subsidiaries are compiled in accordance with generally accepted accounting principles in the United States of America.  All significant inter-company accounts and transactions have been eliminated.  The consolidated financial statements include 100% of assets, liabilities, and net income or loss of those wholly-owned subsidiaries; ownership interests of minority investors are recorded as minority interests.



The Company owned the four subsidiaries since its reverse-merger on May 3, 2007.  As of June 30, 2007, the detailed identities of the consolidating subsidiaries are as follows: -



|Name of Company                   | Place of incorporation | Attributable equity interest % | Registered capital |                  
|--------------------------------- | ---------------------- | ------------------------------ | ------------------ | -----------------
|Shandong Green Foodstuff Co., Ltd | PRC                    | 80.2                           | $12,901,823        | (RMB 100,860,000)
|Luotian Green Foodstuff Co., Ltd  | PRC                    | 100                            | $1,279,181         | (RMB 10,000,000) 
|Junan Hongrun Foodstuff Co., Ltd  | PRC                    | 100                            | $2,430,445         | (RMB 19,000,000) 
|Beijing Green Foodstuff Co., Ltd  | PRC                    | 100                            | $1,279,181         | (RMB 10,000,000) 



(c)

Use of Estimates



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



(d)

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)

Cash and cash equivalents



The Company considers all highly liquid investments purchased with original maturities of three months or less to be cash equivalents. The Company maintains bank accounts only in the PRC.
The Company does not maintain any bank accounts in the United States of America.



---





(f)

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.



(g)

Inventories



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



(h)

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.



(i)

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.



(j)

Land Use Rights



Land use rights represent the cost of using land in the PRC.  Land use rights are carried at cost and amortized on a straight-line basis over the life of the rights. The Company may use the parcel, on which it has built plant and facilities, for 50 years.



(k)

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 periods, there was no impairment loss.



(l)

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 andduration 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.



(m)

Customer deposits



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



(n)

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.



(o)

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.



(p)

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 collectability is reasonably assured. Payments received before all of the relevant criteria for revenue recognition are satisfied are recorded as unearned revenue.



---





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



(q)

Advertising



All advertising costs are expensed as incurred.



(r)

Shipping and handling



All shipping and handling are expensed as incurred.



(s)

Research and development



All research and development costs are expensed as incurred.



(t)

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.



(u)

Income taxes



The Company accounts for income tax using an asset and liability approach and allows for recognition of deferred tax benefits in future years.  Under the asset and liability approach, deferred taxes are provided for the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes.  A valuation allowance is provided for deferred tax assets if it is more likely than not these items will either expire before the Company is able to realize their benefits, or that future realization is uncertain.



(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.



(w)

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.

|                                       |               |  |                   |  |              
|-------------------------------------- | ------------- |  | ----------------- |  | -------------
|                                       | June 30, 2007 |  | December 31, 2006 |  | June 30, 2006
|Year end RMB : US$ exchange rate       | 7.6248        |  | 7.8175            |  | 8.0065       
|Average yearly RMB : US$ exchange rate | 7.72999       |  | 7.98189           |  | 8.03924      

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.

---



(x)

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.



(y)

Segment reporting



The Company uses the management approach in determining reportable operating segments.  The management approach considers the internal organization and reporting used by the Companys chief operating decision maker for making operating decisions and assessing performance as the source for determining the Companys reportable segments.



(z)

Recent accounting pronouncements



In July 2006, the FASB issued FIN 48, Accounting for Uncertainty in Income Taxesan Interpretation of FASB Statement No. 109, which clarifies the accounting for uncertainty in tax positions. This Interpretation requires that the Company recognizes in its consolidated financial statements the impact of a tax position if that position is more likely than not of being sustained on audit, based on the technical merits of the position. The provisions of FIN 48 are effective for the Company on January 1, 2007, with the cumulative effect of the change in accounting principle, if any, recorded as an adjustment to opening retained earnings.

In September 2006, the FASB issued SFAS 157, Fair Value Measurements, which defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles, and expands disclosures about fair value measurements. SFAS 157 applies under other accounting pronouncements that require or permit fair value measurements, where fair value is the relevant measurement attribute. The standard does not require any new fair value measurements. SFAS 157 is effective for financial statements issued for fiscal years beginning after November 15, 2007, and interim periods within those fiscal years.

In September 2006, the SEC issued SAB No. 108, which provides guidance on the process of quantifying financial statement misstatements. In SAB No. 108, the SEC staff establishes an approach that requires quantification of financial statement errors, under both the iron-curtain and the roll-over methods, based on the effects of the error on each of the Companys financial statements and the related financial statement disclosures. SAB No.108 is generally effective for annual financial statements in the first fiscal year ending after November 15, 2006. The transition provisions of SAB No. 108 permits existing public companies to record the cumulative effect in the first year ending after November 15, 2006 by recording correcting adjustments to the carrying values of assets and liabilities as of the beginning of that year with the offsetting adjustment recorded to the opening balance of retained earnings.

In February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial Assets and Financial LiabilitiesIncluding an Amendment of SFAS 115 (SFAS No. 159), which allows for the option to measure financial instruments and certain other items at fair value.  Unrealized gains and losses on items for which the fair value option has been elected are reported in earnings.  The objective of SFAS 159 is to provide opportunities to mitigate volatility in reported earnings caused by measuring related assets and liabilities differently without having to apply hedge accounting provisions.  SFAS 159 also establishes presentation and disclosure requirements designed to facilitate comparisons between companies that choose different measurement attributes for similar types of assets and liabilities.  This statement is effective for financial statements issued for fiscal years beginning after November 15, 2007.  The Company is currently evaluating the impact of SFAS No. 159 on our consolidated financial statements.

The Company adopted the above standards, which did not have any material impact on these consolidated financial statements

---



3.

RESTRICTED CASH



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



4.

TRADE ACCOUNTS RECEIVABLE

|                                      |   | 2007      |   | 2006      
|------------------------------------- | - | --------- | - | ----------
|Trade accounts receivable             | $ | 9,130,660 | $ | 12,032,110
|Less: Allowance for doubtful accounts |   | (221,881) |   | (226,881) 
|                                      |   |           |   |           
|                                      |   |           |   |           
|                                      | $ | 8,903,779 | $ | 11,805,229
|                                      |   |           |   |           



The Group offer credit terms of between 90 to 180 days to most of their international distributors and between 30 to 90 days for most of their domestic distributors.



An analysis of the allowance for doubtful accounts for the period ended June 30, 2007 and December 31, 2006 is as follows: -



|                                  |   | 2007    |   | 2006   
|--------------------------------- | - | ------- | - | -------
|Balance at beginning of year      | $ | 226,881 | $ | -      
|Arising through acquisition       |   | -       |   | 67,090 
|Addition of bad debt expense, net |   | -       |   | 159,791
|                                  |   |         |   |        
|                                  |   |         |   |        
|Balance at end of year            | $ | 226,881 | $ | 226,881
|                                  |   |         |   |        



5.

INVENTORIES



Inventories at June 30, 2007 and December 31, 2006 consisted of the following: -



|               |   | 2007       |   | 2006      
|-------------- | - | ---------- | - | ----------
|Raw materials  | $ | 6,560,319  | $ | 7,785,927 
|Finished goods |   | 7,212,708  |   | 4,508,427 
|               |   |            |   |           
|               |   |            |   |           
|               | $ | 13,773,027 | $ | 12,294,354
|               |   |            |   |           



6.

PROPERTY, PLANT, AND EQUIPMENT



Property, plant, and equipment at June 30, 2007 consist of the following: -



|At cost                        |   | 2007        |   | 2006       
|------------------------------ | - | ----------- | - | -----------
|Buildings                      | $ | 13,029,492  | $ | 8,967,534  
|Machinery and equipment        |   | 4,869,942   |   | 4,362,645  
|Office equipment               |   | 227,060     |   | 213,527    
|Motor vehicles                 |   | 329,043     |   | 320,932    
|                               |   |             |   |            
|                               |   |             |   |            
|                               | $ | 18,455,537  | $ | 13,864,638 
|Less: accumulated depreciation |   | (2,529,175) |   | (2,184,172)
|Landscaping, plant and tree    |   | 1,031,299   |   | 1,005,878  
|Construction in progress       |   | 2,425,003   |   | 831,564    
|                               |   |             |   |            
|                               | $ | 19,382,664  | $ | 13,517,908 
|                               |   |             |   |            

---





Construction in progress mainly comprises capital expenditures for construction of the Companys new corporate campus, including offices, factories and staff dormitories.



Landscaping, plant and tree is chestnut trees in the growing bases, which have not been the significant procurement source.



7.

LAND USE RIGHTS



Leasehold Land at June 30, 2007 and December 31, 2006 consists of the following: -



|                               |   | 2007      |   | 2006     
|------------------------------ | - | --------- | - | ---------
|Leasehold Land, at cost        | $ | 2,985,853 | $ | 2,886,587
|Less: Accumulated amortization |   | (133,130) |   | (109,111)
|                               |   |           |   |          
|                               | $ | 2,852,723 | $ | 2,777,476
|                               |   |           |   |          



Land use rights represents the long term lease of the parcel of land, that the PRC government owns, on which the Companys corporate campus is being constructed.



Amortization expense, which is calculated by straight-line, for the above leasehold land was $24,019 and $23,788 for the period ended June 30, 2007 and December 31, 2006.



8.

CAPITALIZATION



As a result of the reverse-merger on May 3, 2007 involving an exchange of shares and issuance of shares to private investors and other parties involved in the deal, the total number of the Companys common stock shares at 24,923,178 and 17,932,777 issued and outstanding at June 30, 2007 and December 31, 2006 respectively have been retroactively restated to recognize the recapitalization as depicted in the following table:



|Name of Shareholder                                                                                                                                           |   | Number of Shares |   | Stock Capital |   | Additional Paid-in capital
|------------------------------------------------------------------------------------------------------------------------------------------------------------- | - | ---------------- | - | ------------- | - | --------------------------
|Shareholders of International Lorain Holding Inc. (697,663 Series B preferred shares converted to common shares at one for  23.375 split)                     | $ | 16,307,872       | $ | 16,308        | $ | -                         
|Halter Financial Investments LP and Other (100,000 Series A preferred shares converted to common shares:
100,000 x 428.56 =42,856,000 / 32.84) Reversed-split |   | 1,304,992        |   | 1,305         |   | -                         
|Original Shareholders of Millennium Quest (Shell) 10,508,643 shares / 32.84 reverse-split adjusted for round-down                                             |   | 319,913          |   | 320           |   | -                         
|Original additional paid-in capital from the                                                                                                                  |   |                  |   |               |   |                           
|4 PRC subsidiaries                                                                                                                                            |   | -                |   | -             |   | 6,846,620                 
|                                                                                                                                                              |   |                  |   |               |   |                           
|Private Investors (299,055.78 Series B preferred shares converted to common shares at 23.375 = 6,990,401 shares)                                              |   | 6,990,401        |   | 6,990         |   | 19,318,943                
|Less: Cost of issue                                                                                                                                           |   | -                |   | -             |   | (2,043,295)               
|Cash acquired from Shell (Millennium Quest Inc.) upon reverse-merger on May 3, 2007 credited to APIC                                                          |   | -                |   | -             |   | 5,268                     
|                                                                                                                                                              |   |                  |   |               |   |                           
|                                                                                                                                                              |   | 24,923,178       |   | 24,923        |   | 24,127,536                
|                                                                                                                                                              |   | ========         |   | ======        |   | ==========                
|                                                                                                                                                              |   |                  |   |               |   |                           

---





9.

OTHER EXPENSES

The majority of other expenses incurred were related to casualty loss on the Companys Beijing production facility, which had a fire due to electricity short-circuit on May 26, 2007.  The cost to rebuild the facility and replace equipment incurred during the current quarter amounted to $1,243,000 (RMB 9,500,000).  Production was restored to normal during early August 2007.



10.

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 December 31, 2006 for the following reasons: -



|                                |   | 2007      |   | 2006     
|------------------------------- | - | --------- | - | ---------
|                                |   |           |   |          
|Income before tax               | $ | 2,054,766 | $ | 5,411,264
|                                |   |           |   |          
|Tax at the income tax rate      |   | 678,072   |   | 1,785,717
|                                |   |           |   |          
|Effect of tax exemption granted |   | (62,495)  |   | (842,586)
|                                |   |           |   |          
|Income tax                      | $ | 615,577   | $ | 943,131  
|                                |   |           |   |          



|Per Share Effect of Tax Exemption   |   |            |   |           
|----------------------------------- | - | ---------- | - | ----------
|                                    |   | 2007       |   | 2006      
|                                    |   |            |   |           
|Effect of tax exemption granted     | $ | 62,495     | $ | 842,586   
|                                    |   |            |   |           
|Weighted-Average Shares Outstanding |   | 25,332,151 |   | 17,932,778
|                                    |   |            |   |           
|Per share effect                    | $ | 0.0025     | $ | 0.0470    



As of June 30, 2007, there existed no deferred tax assets or liabilities for the Group pursuant to the PRC tax law.



---



PART II

ITEM 6. EXHIBITS



|Exhibit | Description                                                                                                                                                                               
|------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|        |                                                                                                                                                                                           
|31.1    | Certification of Principal Executive Officer filed pursuant to Section 302
    of the Sarbanes-Oxley Act of 2002.                                                                         
|        |                                                                                                                                                                                           
|31.2    | Certification of Principal Financial Officer filed pursuant to Section 302
    of the Sarbanes-Oxley Act of 2002.                                                                         
|        |                                                                                                                                                                                           
|32.     | Certification of Principal Executive Officer and Financial Officer furnished
    pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.











---



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 hereunto duly authorized.

|Date: February 20,
    2008 |                            
|--------------------------- | ---------------------------
|                            |                            
|                            | AMERICAN LORAIN CORPORATION
|                            |                            
|                            | By: /S/ SiChen             
|                            | Si Chen                    
|                            | Chief Executive Officer    





























---



EXHIBIT INDEX





|Exhibit | Description                                                                                                                                                                               
|------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|        |                                                                                                                                                                                           
|31.1    | Certification of Principal Executive Officer filed pursuant to Section 302
    of the Sarbanes-Oxley Act of 2002.                                                                         
|        |                                                                                                                                                                                           
|31.2    | Certification of Principal Financial Officer filed pursuant to Section 302
    of the Sarbanes-Oxley Act of 2002.                                                                         
|        |                                                                                                                                                                                           
|32.     | Certification of Principal Executive Officer and Financial Officer furnished
    pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.









---