---

UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549

FORM 10-K/A

Amendment No. 1

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

For the fiscal year ended: December 31, 2013

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

For the transition period from ____________to ____________

Commission File Number:001-34449

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

|Nevada                          | 87-0430320                                   
|------------------------------- | ---------------------------------------------
|(State or other jurisdiction of | (I.R.S. Employer Identification
      Number)
|incorporation or organization)  |                                              

BeihuanZhong RoadJunan CountyShandong, Peoples Republic of China, 276600(Address of principal executive office and zip code)

(86) 539-7317959(Registrants telephone
number, including area code)

Securities registered pursuant to
Section 12(b) of the Act:

|Title of each class                      | Name of each exchange on which
      registered
|---------------------------------------- | -----------------------------------------------
|Common Stock, par value $0.001 per share | NYSE AMEX                                      

Securities registered pursuant to Section 12(g) of the
Act:None

Indicate by check mark if the registrant is a well-known
seasoned issuer, as defined in Rule 405 of the Securities Act.

Yes [ 
]              
No [X]

Indicate by check mark if the registrant is not required to
file reports pursuant to Section 13 or Section 15(d) of the Act.

Yes [
 ]              
No [X]

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

Yes
[X]              
No [  ]

---

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

Yes [X]              
No [  ]

Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K (§ 229.405) is not contained herein, and
will not be contained, to the best of registrants knowledge, in definitive
proxy or information statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K. [  ]

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

| | Large accelerated filer  [  ]                       | Accelerated filer [  ]       
| | --------------------------------------------------- | -----------------------------
| | Non-accelerated filer [  ]                          | Smaller reporting company [X]
| | (Do not check if a smaller reporting
      company) |                              

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

Yes [ 
]              
No [X]

The number of shares and aggregate market value of common stock
held by non-affiliates as of the last business day of the registrants most
recently completed second fiscal quarter were 19,220,142 and $19,796,746,
respectively.

There were 34,616,714 shares of common stock outstanding as of
March 31, 2014.

Documents Incorporated by Reference: Portions of the
registrant's Proxy Statement related to its 2014 Annual Stockholders' Meeting to
be filed subsequently are incorporated by reference into Part III of this Annual
Report on Form 10-K. Except as expressly incorporated by reference, the
registrant's Proxy Statement shall not be deemed to be part of the report.

---

FORM 10-K/A INDEX

|Explanatory Note
|----------------
|                
|PART I          
|ITEM 1.         
|ITEM 1A.        
|ITEM 1B.        
|ITEM 2.         
|ITEM 3.         
|ITEM 4.         
|PART II         
|ITEM 5.         
|ITEM 6.         
|ITEM 7.         
|ITEM 7A.        
|ITEM 8.         
|ITEM 9.         
|ITEM 9A         
|ITEM 9B.        
|PART
      II   
|ITEM 10.        
|ITEM 11.        
|ITEM 12.        
|ITEM 13.        
|ITEM 14.        
|PART IV         
|ITEM 15.        

---

Explanatory Note

In response to a comment letter received from the
Securities and Exchange Commission (the SEC), dated January 22, 2015, American
Lorain Corporation (the Company, we, us or our) is filing this Amendment
No. 1 on Form 10-K/A to our Annual Report on Form 10-K for the year ended
December 31, 2013, originally filed with the SEC on March 31, 2014 (the
Original Form 10-K) to include the copies of Notes Subscription Agreements
entered by the Company in 2013 ("the Agreements") as exhibits to this Form
10-K/A. These copies of Agreements were not originally filed as exhibits to the
Original Form 10-K.

This Form 10-K/A should be read in conjunction with the
Companys periodic filings made with the SEC subsequent to the filing date of
the Original Form 10-K, including any amendments to those filings, as well as
any Current Reports, filed on Form 8-K subsequent to the date of the Original
Form 10-K. In addition, in accordance with applicable rules and regulations
promulgated by the SEC, this Form 10-K/A includes updated certificates from our
Chief Executive Officer and Chief Principal Financial Officer as Exhibit 32.1.
Other than the revision of the disclosures as discussed above, no other changes
have been made to the Form 10-K and this Form 10-K/A speaks as of the original
filing date of the Original Form 10-K and has not been updated to reflect other
events occurring subsequent to the original filing date. This includes
forward-looking statements and all other sections of this Form 10-K/A that were
not directly impacted by this amendment, which should be read in their
historical context. The following items have been amended as a result of the
amended disclosures:

Part IV Item 15. Exhibits and Financial Statements Schedules
Signature Page.

PART I

Use of Certain Defined Terms

In this annual report on Form 10-K:

- We, us and our refer to ALN, and except where the context requires otherwise, our wholly-owned and majority-owned direct and indirect operating subsidiaries.
- ALN refers to American Lorain Corporation, a Nevada corporation (formerly known as Millennium Quest, Inc.).
- Athena refers to Athena, a limited liability company organized under the laws of France that is majority-owned by Junan Hongrun.
- ILH refers to International Lorain Holding, Inc., a Cayman Islands company that is wholly - owned by ALN.
- Junan Hongrun refers to Junan Hongrun Foodstuff Co., Ltd.
- Luotian Lorain refers to Luotian Green Foodstuff Co., Ltd.
- Beijing Lorain refers to Beijing Green Foodstuff Co., Ltd.
- Shandong Lorain refers to Shandong Green Foodstuff Co., Ltd.
- Dongguan Lorain refers to Dongguan Green Foodstuff Co., Ltd.
- Shandong Greenpia refers to Shandong Greenpia Foodstuff Co., Ltd.
- RMB refers to Renminbi, the legal currency of China.
- U.S. dollar, $ and US$ refer to the legal currency of the United States.
- China and PRC refer to the Peoples Republic of China (excluding Hong Kong and Macau).

This report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, including, without limitation, statements regarding our expectations, beliefs,
intentions or future strategies that are signified by the words expect, anticipate, intend, believe, or similar language. All forward-looking statements included in this document are based on
information available to us on the date hereof, and we assume no obligation to update any such forward-looking statements. Our business and financial performance are subject to substantial risks and uncertainties. Actual results could differ
materially from those projected in the forward-looking statements. In evaluating our business, you should carefully consider the information set forth under the heading Risk Factors. Readers are cautioned not to place undue reliance on
these forward-looking statements.

ITEM 1. BUSINESS

Overview of Our Business

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

- Chestnut products;
- Convenience foods (including ready-to-cook, or RTC, foods, ready-to-eat, or RTE, foods and meals ready-to-eat, or MRE); and
- Frozen food products.

We conduct our production activities in China and through our majority-owned subsidiary in France. Our products are sold in Chinese domestic markets as well as exported to foreign countries and regions such as Japan, South Korea and Europe. We
derive most of our revenues from sales in China, Japan and South Korea. In 2014, our primary strategy is to continue building our brand recognition in China through consistent marketing efforts towards supermarkets, wholesalers, and significant
customers, enhancing the cooperation with other manufacturers and factories and enhancing the turnover for our existing chestnut, convenience and frozen food products. In addition, we are working to expand our marketing efforts in Asia, 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.

1

---

Organizational Structure

ALN is a Nevada corporation that was incorporated on February 4, 1986 and was formerly known as Millennium Quest, Inc. Effective November 12, 2009, ALN reincorporated in Nevada from Delaware.

ALN owns 100% of ILH. ILH wholly owns two Chinese operating subsidiaries, Luotian Lorain and Junan Hongrun, directly. Junan Hongrun, in turn, wholly owns Dongguan Lorain. In addition, together with Junan Hongrun, ILH wholly owns Beijing Lorain,
Shandong Greenpia, and owns approximately 80% of Shandong Lorain (Shandong Economic Development Investment Co. Ltd. owns approximately 20%). We sometimes refer to our six Chinese operating subsidiaries throughout this annual report on Form 10-K as
the Lorain Group Companies. Below is an organizational chart of ALN, ILH and the Lorain Group Companies:



*Athena is a holding company which holds all of the capital and the voting shares of Conserverie Minerve, a company organized under French law. Conserverie Minerve specializes in the processing and sale of chestnut and prepared foods
products in Europe. Conserverie Minerve operates its businesses through the following, direct and indirect, wholly owned subsidiaries:

- Sojafrais, a company organized under French law;
- SCI SIAM, a real estate company organized under French law;
- SCI GIU LONG, a real estate company organized under French law; and
- CACOVIN, a company organized under Portuguese law.

2

---

Recent Developments

On February 7, 2014, ALN through its indirect wholly-owned subsidiary, Junan Hongrun, entered into a Reiterative Share Purchase Agreement with Biobranco II, a company organized under Portuguese law (the Biobranco Purchase Agreement) to
acquire from Biobranco II 2,750 shares of Athena, or 11% of the share capital of Athena, for an aggregate purchase price of 495,000 (or approximately US$670,600). The transaction was completed on March 13, 2014 upon payment of the purchase
price.

On February 7, 2014, Junan Hongrun also entered into a Share Purchase Agreement with Intiraimi, a limited liability company organized under the laws of France (the Intiraimi Purchase Agreement) to acquire from Intiraimi 10,000 shares of
Athena, or 40% of the share capital of Athena, for an aggregate purchase price of 1,500,000 (or approximately US$2,032,050) of which (i) 1,000,000 (or approximately US$1,354,700) will be payable at closing, and (ii) the remaining
500,000 (or approximately US$677,350) (Deferred Payment) will be payable on February 7, 2015 if certain conditions are met. The Intiraimi Purchase Agreement also contains customary non-competition and non-solicitation clauses
for Intiraimi and Pedro Quintana, Intiraimis President. The initial payment under the Intiraimi Purchase Agreement in the amount of 1,000,000 (or approximately US$1,354,700) was paid on March 13, 2014. As a result of the Biobranco
Purchase Agreement and the Intiraimi Purchase Agreement, Junan Hongrun owns 12,750 shares, or 51% share capital, of Athena. Junan Hongrun agreed to pledge 12,750 shares, or 51% of share capital, of Athena acquired in the above transactions to
Intiraimi to guarantee the Deferred Payment.

In connection with the acquisition of a 51% controlling interest in Athena, on February 7, 2014, Junan Hongrun entered into a Shareholders Agreement (the Shareholder Agreement) with Athena and each of the other shareholders of
Athena (Current Shareholders), which defines the rights of the Junan Hongrun and the Current Shareholders, and their respective undertaking as it relates to Athena, including, but not limited to:

- The settlement of certain claims the Current Shareholders have against Athena through the assignment of certain claims Athena, through its wholly owned subsidiary, Conserverie Minerve, has against Branco Group Companies for the benefit of the
Current Shareholders;
- The handling of the commitment to install a Nunziata 4 burner chestnut shelling machine at the Cacovin facility, a company indirectly owned by Athena;
- The Junan Hongruns right to appoint the chief executive officer for Athena and its subsidiaries;
- The Junan Hongruns right, with the prior consent of the Current Shareholders, to appoint a general manager for Athena and its subsidiaries;
- Protective provisions granted to Current Shareholders;
- Information rights;
- Certain restrictions on transfer of Athenas shares;
- Rights of pre-emption in connection with assignment; and
- Granting the Company a call option right to purchase 2,250 of the shares of Athena (or 9% of the share capital of Athena) for a purchase price of 900,000 (or approximately US$1,219,230), subject to downward adjustment to 405,000 (or
approximately US$548,654) if the Current Shareholders failed to fulfill certain obligations under the Shareholder Agreement. The call option is exercisable within six (6) months after February 7, 2015.

The Shareholder Agreement expires ten (10) years from the date Junan Hongrun pays the initial purchase price under the Intiraimi Purchase Agreement and the purchase price under the Biobranco Purchase Agreement.

Products

Our products are categorized into the following three segments:

- Chestnut products,
- Convenience food products, and
- Frozen food products.

We produced 234 products in 2013, including 6 new products in the chestnut, convenience and frozen foods segment. We also discontinued 10 products in 2013 in the convenience segment.

3

---

Historically, chestnut products and convenience foods were our main profit centers. Sales of our chestnut and convenience foods segment slowed down 2013 due to weaker demand in domestic market. Sales was also impacted by a stronger RMB against
foreign currencies such as Japanese Yen for our export sales. However, we are experiencing stronger sales for our frozen food products due to demand in both domestic and abroad. Frozen food products accounted for 17.8% of our revenues in 2013 as
compared with 14.6% in 2012.

Chestnut Products

We believe that we are the largest chestnut processor and manufacturer in China. In addition, we have been giving increasing emphasis in recent years to building a stronger international sales network. As a result of our acquisition of control in
Athena in the first quarter of 2014, we now have chestnut processing and manufacturing capabilities in France which will enable us to achieve a strategic command of the chestnut industry value chain in Europe.

We have developed brand equity for our chestnut products in China, Japan and South Korea over the past 10 to 15 years. We produced 58 high value-added processed chestnut products in 2013. In 2013 and 2012, this segment contributed 53.3% and 52.2% of
our total revenues, respectively.

Our best selling products in 2013 included our aerated open-bottom chestnuts, which are chestnuts packaged with nitrogen; chestnuts in syrup, which are very popular in Japan and South Korea; and golden chestnut kernels. The majority of our chestnut
products are natural and do not contain chemical additives.

The chestnut, in contrast to many other tree nuts, contains small quantities of oil and is very high in complex carbohydrates. This makes them useful for a wider food range than other common nuts. Chestnuts are commonly steamed, boiled, sugar
stir-fried, roasted or added into dishes or desserts as an ingredient.

China is the largest grower of chestnuts in the world, followed by South Korea and Japan. In recent years, the chestnut production in South Korea and Japan has declined. This has been attributed to the increasing labor costs and operational costs
incurred in growing chestnuts. Because of the declining domestic production, South Korean and Japanese customers have grown to rely more on imported chestnut products. Our strategy is to take advantage of these trends.

We differentiate our chestnut products based on flavor, size and method of packaging. For instance, some of our chestnut products that are sold in Japan are packaged in plastic bags or tin cans, each considered a different product. Similarly, some
of our chestnut products are processed with hot water or cold water, each considered a different product.

Chestnut season in China lasts from September to January. We purchase and produce raw chestnuts during these months and store them in our refrigerated storage facilities throughout the year. Once we obtain a purchase order during the rest of the
year we remove the chestnuts from storage, process them and ship them within one day of production.

Convenience Foods

Our convenience food products are characterized as follows:

- Ready-to-cook, or RTC, food products,
- Ready-to-eat, or RTE, food products and
- Meals ready-to-eat, or MRE, food products.

These products are intended to meet the current demands of our customers for safe, wholesome and tasty foods that are easily prepared.

RTCs can be served after a few easy cooking procedures. Typically, when preparing a RTC, customers need only to heat the food in a microwave or boil it for several minutes before eating. Our best-selling RTCs in 2013 were French fries.

4

---

RTEs can be served without any cooking. Our best-selling RTEs
in 2013 were various bean products and pickle products.

MREs are meal kits with self-heating devices or microwavable
kits, such as microwavable rice boxes. Our self-heating MREs are primarily for
military use where no cooking device or other means are needed other than water.
We also introduced microwavable MREs for civilian uses such as camping,
traveling and other occasions where only simple preparation using a cooking
device such as a microwave oven is required.

We produce various MREs based on Chinese cuisine, the best
sellers of which were our pork with garlic sauce over rice and kungpao chicken
with rice in 2013. Many of our convenience products are natural and do not
contain chemical additives.

We produced 114 convenience food products in 2013, including 6
new products such as boiled vegetables. In 2013 and 2012, this segment
contributed 28.9% and 33.2%, respectively, of our total revenues.

Frozen Food Products

We produce a variety of frozen foods, mostly frozen vegetables
and frozen fruits. We produced 62 frozen food products in 2013. Our best-selling
frozen foods in 2013 were frozen asparagus and frozen strawberries.

Our frozen food business allows us to mitigate the significant
production seasonality of chestnut products and to increase the utilization rate
of our production capacity. We are seeing steady increase in sales of our frozen
food segment due to demands from both domestic and international markets. The
frozen foods accounted for in our total revenue increased from 14.6% in 2012 and
17.8% in 2013. Gross margins in this segment are lower than the margins for
chestnut products and convenience foods.

Our Manufacturing Facilities

General

We currently manufacture our products in six facilities in
China, three of which are located in Junan County, Shandong Province, one in
Luotian County, Hubei Province, one in Miyun County, Beijing and one leased
facility in Dongguan, Guangdong Province. In addition, as a result of our
acquisition of control in Athena in the first quarter of 2014, we now have
chestnut and manufacturing capabilities in France.

The following table indicates the year that operations
commenced at each of the facilities and the size of the facilities.

Year Operations
    Facility SizeFacility
    Commenced
    (square meters)Junan Hongrun
    2002
    38,865Shandong Lorain
    1995
    15,392Beijing Lorain
    2003
    21,000Luotian Lorain
    2003
    9,558Dongguan
    2008
    9,250Shandong Greenpia
    2010
    9,179Conserverie Minerve*
    1968
    15,142* a wholly-owned subsidiary of Athena, a
      company controlled by Junan Hongrun


5

---

Production Lines

We currently manufacture our products using 31 production
lines. Each production line is used to produce between 10 and 50 products. We
currently run three types of product lines:

- Deep-freezing lines, which are used to freeze raw materials for year-round
  production and to produce frozen food;
- Canning lines, which are used to produce canned products, including
  chestnut products; and
- Convenience food lines, which are used for producing RTCs, RTEs and MREs,
  all of which have nitrogen preservation capacity.

The production process for our chestnut products initially
involves sorting and cleaning the raw chestnuts purchased during the chestnut
season. We then store the raw chestnuts in our refrigerated storage facilities
throughout the year. Once we obtain a purchase order, we remove the chestnuts
from storage and process them by steaming, decladding and deep-freezing the
chestnuts, depending on the particular product. We then package and ship the
processed chestnuts within one day of production.

The production process of our convenience products generally
involves various steps, including soaking, boiling, coating, drying, deep
freezing, packing, sealing and sterilizing.

The following table shows the number and types of production
lines, the types of products produced and the production capacity at each
facility:

Facilities
    Production Lines
    Product Portfolio
    2013 CapacityJunan Hongrun
    3
      Deep-freezing line 3 Convenience food lines 4 Canning lines
    Chestnut products,
      frozen foods, beans, bean paste
    Multi-purpose
      production lines with 54,000 tons of production capacity and
      24,900 tons of cold and frozen storageShandong Lorain
    1 Deep-freezing line 1
      Convenience food line
    Chestnut products, convenience
      frozen foods
    foods, Multi-purpose
      production lines with 20,000 tons of production capacity and 3,500
      tons of cold and frozen storageBeijing Lorain
    6 Convenience
      food lines 1 Deep-freezing line
    Chestnut products,
      frozen foods
    Multi-purpose
      production lines with 34,000 tons of production capacity and 4,650
      tons of cold and frozen storageLuotian Lorain
    3 Convenience food lines
      2 Deep-freezing lines
    Chestnut products, convenience
      foods, frozen foods
    Multi-purpose production
      lines with 24,000 tons of production capacity and 6,500 tons of
      cold and frozen storageDongguan factory
    2 Convenience
      food lines
    Convenience food
    Multi-purpose
      production lines with 3,000 tons of production capacity and 
    2,250 tons of cold and frozen storageShandong Greenpia
    2 Convenience food lines
    Chestnut products, convenience foods
    Multi-purpose production lines with
      9,000 tons of production capacity and 1,500 tons of cold and
      frozen storageConserverie Minerve*
    2 Convenience food lines 
    1 Deep-freezing line
    Chestnut products, convenience foods
    Multi-purpose production lines with
      8,900 tons of production capacity and 11,920 tons of cold and
      frozen storage* a wholly-owned subsidiary of Athena, a company controlled by
Junan Hongrun


6

---

Our production lines and facilities have all been designed to
meet the standards and requirements of our largest customers in Japan and
Europe, with Japan being our largest export market.

In the last quarter of 2013, we completed the installation of
one chestnut decladding machine at our Junan Hongrun facility. This machinery,
imported from Europe, preheats the chestnuts into dry condition, and declads the
chestnuts using ejected natural gas flames. Unshelled chestnuts are then carried
directly to frozen storage through connected pipeline. Average processing
capacity could reach 3 metric tons per hour.

In the last quarter of 2013, we initiated a project to enhance
the automation and quality for our production line at our Junan Hongrun
facility, and it is expected to be finished by mid-2014. The project entails
replacement and automation upgrades for key production procedures for chestnut
products, and introduces numerous new equipment such as an additional chestnut
decladding line, automated chestnut packaging line, chestnut vacuum saturator,
chestnut sorting line, etc. The project also includes the construction of a
10,000 m2 new workshop. The project was listed as a key supported
project by National Development and Reform Commission (NDRC).

We employ advanced methods of quality control and have obtained
various certifications for many of our products, packages and processes,
including ISO 9000 or ISO 9001 certification for certain of our chestnut and
frozen vegetable products, BRC certification for certain of our frozen fruit and
vegetable products and HACCP certification for certain of our frozen vegetable,
fruit and chestnut products and our bottom-open chestnuts. We believe that our
quality controls and standards of products distinguish us from other
manufacturers in both domestic and international markets.

With limited exception, we operate our production lines year
round. In the past, when our production was focused almost exclusively on
chestnuts, we experienced seasonal underutilization of our product lines.
However, our current facilities have multiple-function designs allowing us to
use our production lines for our convenience and frozen products when we are not
producing chestnuts at full capacity. Consequently, as we have increased our
processed and convenience food offerings over the last several years, we have
generally been able to run our production lines at increasing efficiency.

Previously, most of our convenience foods were produced at our
Beijing Lorain plant. With the introduction of bean products in 2009, we
expanded our facility in Junan Hongrun with the addition of three convenience
food production lines designed specifically for bean products with current
annual capacity of 13,500 metric tons.

We believe our facilities are adequate for our current levels
of production. We anticipate, however, that we may require additional facilities
and/or product lines as our business grows. We are exploring the possibility of
alliances with one or more OEM partners for the production, in the short-term,
of some of our convenience food products and frozen products should our
facilities be inadequate to meet increasing demand. We are also exploring the
possibility of leasing additional production lines to expand our production
capacity. We did not lease any production facility during 2013. We may decide to lease additional facilities in
2014, should circumstances require and subject to acceptable costing. In the
long-term, we plan to increase our own production capacity by acquiring or
building new facilities, subject to the availability of adequate sources of
funding.

7

---

Storage Capacity

Storage of our raw materials and inventory is a critical
element of our business. Our raw materials and partially finished products need
to be preserved in frozen storages (-18oC to -20oC) or constant temperature
storages (-5oC to 5oC). Storage is particularly critical for our chestnut
products because chestnuts are a seasonal fruit.

The following table illustrates on a facility by facility basis
the type and capacity of our storage resources:

|                                                                             |                            | Number of     | Capacity     
|---------------------------------------------------------------------------- | -------------------------- | ------------- | -------------
|Facility                                                                     | Storage Type               | Storage Units | (metric tons)
|Junan Hongrun                                                                | Frozen
      Storage       | 19            | 20,100       
|                                                                             | Constant Temperature       | 8             | 4,800        
|Shandong Lorain                                                              | Frozen
      Storage       | 5             | 2,000        
|                                                                             | Constant Temperature       | 3             | 1,500        
|Beijing Lorain                                                               | Frozen
      Storage       | 6             | 2,850        
|                                                                             | Constant Temperature       | 3             | 1,800        
|Luotian Lorain                                                               | Frozen
      Storage       | 8             | 4,500        
|                                                                             | Constant Temperature       | 4             | 2,000        
|Dongguan                                                                     | Frozen
      Storage       | 2             | 800          
|                                                                             | Constant Temperature       | 2             | 1,450        
|Shandong Greenpia                                                            | Constant
      Temperature | 4             | 1,500        
|Conserverie Minerve*                                                         | Frozen Storage             | 7             | 420          
|                                                                             | Constant
      Temperature | 3             | 11,500       
|TOTAL                                                                        |                            | 74            | 55,220       
|* a wholly-owned subsidiary of Athena, a company controlled by
Junan Hongrun

As we have expanded our production capacity, we have also
expanded our storage capacity. All of the listed storage facilities are owned by
us. In 2009, we expanded our storage capacity in Junan Hongrun by an additional
3,600 metric tons. In 2010, we also expanded our storage facility in Dongguan by
1,000 metric tons and, through our acquisition of Shandong Greenpia, we have
added four additional storage units with an aggregate capacity of 1,500 metric
tons. We also added 13,500 metric tons of cold storage at the Junan Hongrun
facility during 2011. We did not add to our storage capacity during 2013. In
2014, we may build or lease additional storage facilities from time to time
should circumstance require.

Agricultural Operations

We grow or set up agricultural co-ops with local farmers to
supply ourselves with a small portion of chestnut, fruit and vegetable products.
For the year ended December 31, 2013 and 2012, the supplies coming from
agricultural operations have been immaterial. We believe, however, that
development of agricultural facilities is a good strategy for the long-term. We
anticipate that self-grown agricultural products and agricultural products grown
in cooperation with local farmers will enable us to assure adequacy of supply,
promote quality and reduce cost, particularly for our high margin offerings. For
example, by growing Korean cultivar chestnuts domestically, we expect to
significantly reduce our supply costs for this premium product, while ensuring
superior quality.

Lands in which we grow our agricultural products for such
products are shown in the following table.

8

---

|                                                             | Area    | Location      
|------------------------------------------------------------ | ------- | --------------
|Harvest                                                      | (acres) | (PRC)         
|Chestnut (South Korean,
      Japanese, Australian cultivar) | 329     | Shandong      
|Chestnut (Japanese cultivar)                                 | 165     | Beijing       
|Sticky Corn                                                  | 342     | Beijing       
|Sweet Corn                                                   | 118     | Beijing       
|Green Pea                                                    | 217     | Beijing       
|Sweet Pea                                                    | 167     | Beijing       
|Organic Chestnut                                             | 165     | Beijing       
|Mixed Vegetables                                             | 417     | Shandong      
|Mixed Vegetables                                             | 83      | Beijing       
|Japanese Pumpkin                                             | 197     | Inner Mongolia
|Black Beans                                                  | 500     | Shandong      
|Strawberry                                                   | 392     | Shandong      
|Broccoli                                                     | 165     | Beijing       
|Green Asparagus                                              | 591     | Beijing       
|White Asparagus                                              | 263     | Shandong      
|Sweet Potato                                                 | 500     | Shandong      
|Peach                                                        | 329     | Beijing       
|Apricot                                                      | 411     | Beijing       
|Pear                                                         | 329     | Beijing       
|Blackberry                                                   | 165     | Beijing       

We began growing chestnuts in Shandong Province in 2003. Unlike
most vegetables and fruits, chestnut trees have a 3-5 year growing phase before
they can be harvested. Our current chestnut planting base has been
self-supplying limited quantities of chestnuts to our production since 2007.

We began growing strawberries in 2008 in Shandong and peaches,
apricots, pears and blackberries in 2009 in Beijing. We use these fruits in some
of our frozen fruit products. We plan to continue to expand our agricultural
operations over the next few years. Among other things, we plan to increase our
self-production in China of Korean cultivar chestnuts. We expect to obtain
funding for this expansion through a combination of commercial and government
loans, including loans under Chinese government programs to promote agricultural
industrialization. There is no assurance, however, that adequate funding for
these purposes will be available to us.

Raw Materials

In 2013 and 2012, approximately 85% and 86% of our procured raw
materials, respectively, consisted of agricultural products, including primarily
chestnuts and vegetables, approximately 7% and 7%, respectively, consisted of
packaging materials and approximately 8% and 7% consisted of condiments such as
sugar, salt and flour.

Our Supply Sources

Our business depends on obtaining a reliable supply of various
agricultural products, including chestnuts, vegetables, red meat, fish, eggs,
rice and flour. Because of the diversity of available sources of these raw
materials, we believe that our raw materials are currently in adequate supply
and will continue to be so in the future.

We obtain our agricultural raw materials from three sources:
domestic procurement (excluding self-supply), overseas markets, and self-supply.
Domestic and overseas procurement accounted for 96.8% and 3.0%, respectively, of
our total raw material costs in 2013, with self-supply accounted for less than
1%. We obtained substantially all of our agricultural raw materials from
domestic sources during 2013.

In 2013 and 2012, respectively, we procured approximately
53,559 and 62,934 metric tons of chestnuts and approximately 49,909 and 72,254
metric tons of vegetables and other raw materials from a number of third party
suppliers, domestic and overseas, and produced approximately 255 and 160 metric
tons of chestnuts and other products from our own agricultural operations.

We select suppliers based on price and product quality. We
typically rely on numerous domestic and international suppliers, including some
with whom we have a long-term relationship. Our top 10 suppliers accounted for
23.7% and 34.1%, respectively, of the total procurement in 2013 and 2012 in value terms. We purchase from suppliers and farmers pursuant to supply contracts and underlying purchase orders. We have not entered into any long-term contracts with any of
our suppliers.

9

---

Our suppliers generally include wholesale agricultural product companies, agricultural associations and distributors. Some raw materials must be imported at higher costs, however. Occasionally, we also work directly with farmers. For instance, we
operate an initiative which involves a series of cooperation and lease agreements between Shandong Lorain, Beijing Lorain and local farmers. This initiative involves approximately 1,000 acres of land which is used primarily to produce Japanese and
Korean style chestnuts, sticky corn and pumpkins for our operations.

Procurement Cost and Quality Control

To control procurement costs, we have built our facilities near domestic sources of agricultural raw materials. For example, Junan Hongrun and Shandong Lorain are located in Shandong Province, which is Chinas largest supplier of fresh products
by volume. Shandong Province is also a major chestnut producing region. Local procurement reduces our costs, especially transportation costs. It also gives us first-hand harvest and market information, which provides us with an advantage in price
negotiations with suppliers.

Some raw materials must be imported at higher cost. As discussed, we have begun to develop our agricultural capabilities in order to control costs, particularly with respect to imported raw materials such as Korean-style chestnuts.

Pricing for agricultural products reflects several external factors, such as weather conditions and commodity market fluctuations, which are beyond our control. We obtain contemporaneous information on local harvests and collect daily reported price
information on harvests in other markets from which we procure our products. We also attempt to predict harvest yields in advance based on our information gathering. We use this harvest information to negotiate best pricing with our suppliers.

We impose strict standards on our suppliers. During the harvest season, our internal procurement function may visit our sources of supply to assure that the products we are purchasing comply with our standards.

Our Customers

Our products are sold in Chinese domestic markets as well as exported to foreign countries and regions such as Japan, South Korea and Europe. In 2013 and 2012, approximately 73.8 and 71.3%, respectively, of our sales were made domestically in China
and approximately 26.2% and 28.7%, respectively, were to international customers, primarily Japan and South Korea. Our top ten customers contributed 12.9% and 15.4% of our total revenues in 2013 and 2012.

Domestic

In China, we sell our products through our own sales team and through third-party distributors. We have 36 sales offices in 31 provinces in China. In 2013 and 2012, we sold approximately 74.6% and 95.2%, respectively, of our products directly to our
Chinese customers and approximately 25.4% and 4.8% through third-party distributors.

We sell our products in all first-tier cities in China, including Beijing, Shanghai, Tianjin and Guangzhou, through our own sales team in order to capture the profit margin that would otherwise go to intermediate wholesalers and to enhance our brand
recognition. Our sales team sells our products directly to supermarket chains, mass merchandisers, large wholesalers and others in these markets. In second-tier and third-tier cities, we currently sell our products to third-party distributors, such
as food companies or trading companies with established distribution channels in such regions, rather than through our own sales team, in order to enable us to penetrate such markets more quickly without spending significant capital. We also sell to
small customers through independent sales representatives.

10

---

Generally, our direct sales customers are required to pay us on 30 to 60 day credit terms. Third-party distributors, however, generally do not pay on credit, allowing us to obtain quicker payment terms and thereby decrease our accounts
receivables.

The terms of a typical sales contract between us and our distributors provide that we are responsible for transportation costs and the distributors are responsible for storage costs. Furthermore, the distributors have the right to return products
that fail to satisfy specified quality standards, at our cost. The majority of such contracts require the distributors to pay us in cash in full upon delivery, and the remaining contracts provide for short-term credit, usually two to three weeks. In
addition, we typically offer distributors performance-based incentives, such as a cash bonus equal to 1% of total revenues generated by such distributor which exceed previously established sales targets.

We plan to gradually increase the portion of sales to third party distributors in order to access new markets in China in a cost efficient manner and to improve our cash position. Such plans are subject to our ability to restructure the sales force
and manage the increased number of distributors without compromising our profit margins.

International

Our export sales destinations include:

- Asia pacific, primarily Japan, South Korea and Malaysia, but also Singapore, Philippines, and Australia;
- Europe, primarily Belgium and the United Kingdom, but also France, Germany, the Netherlands, Spain, Poland, and Denmark
- the Middle East, primarily Saudi Arabia and Israel;
- North America, including the United States and Canada

Outside China, we generate most of our sales in Asia. In 2013 and 2012, respectively, approximately 92.7% and 94.2% of our international sales were in Asia and approximately 6.4% and 5.5% were in Europe.

We sell our products to international markets primarily through export and trading agents and companies in China, as well as our own sales team located in China. Our sales team sells directly to wholesalers, food processors and mass merchandisers.
Many of our customers are well known in their local food market. We have established long-term relationships with many international customers, especially in Japan and South Korea. We currently have no sales offices outside of China and do not use
alternative methods to sell our products outside of China. We attend trade shows in Europe and other international markets in order to promote our products.

We have also been giving increasing emphasis in recent years to building a stronger international sales network. Our acquisition in France marks an important step for American Lorain along with our sustained marketing and operating efforts in Japan
as well as domestic China. France is in a central position in Europes food supply as well as logistics, and this acquisition will potentially enable American Lorain to achieve a strategic command of the whole chestnut industry value chain in
Europe, yielding significant synergy together with our China operations. We will provide strong support for raw material as well as procurement of Asian food supplies in China, and will also be able to take full advantage of Athenas existing
sales channels in Europe to supply not only chestnuts but also other food products desired by the European market.

Our Sales and Marketing Efforts

We seek to expand our customer base by:

- Direct sales communications with our large customers;
- Sales through distributors to new customer bases;
- Referrals from existing customers; and
- Participation in domestic and international food exhibitions and trade conferences.

We have not spent a significant amount of capital on advertising in the past, and our advertising budget continues to be limited. In 2013 our marketing and branding efforts included supermarket advertising and internet advertising.

11

---

We intend to increase our advertising and branding efforts given the consumer nature for many of our products. For the near future, our marketing efforts will continue to focus primarily on the domestic Chinese market for our chestnut and
convenience food products.

Competition and Market Position

The overall food market is diverse, both globally and in China. We do not have a significant market share in any of our business segments.

Chestnut Products

We compete in the chestnut market primarily on the basis of the uniqueness of our products, quality, price and brand recognition. We also utilize our proprietary, patented and patent-pending technology in the production of our chestnut products to
our competitive advantage.

The world market for chestnut products is highly fragmented. Our principal competitors in the chestnut product market are currently Hebei Liyuan, a Chinese company, and Foodwell Corporation, a South Korean company.

Convenience Food Products

The market competition for convenience food products is based mostly upon quality and product variety. We attempt to use our modern food processing technology, such as nitrogen preservation, to produce a wide variety of high quality convenience
foods.

The convenience food market in China is highly fragmented and we do not face competitive pressure from any particular competitor or small group of competitors.

Frozen Food Products

In the frozen food product market, competition is based primarily upon quality, ability to provide a reliable product supply and customer relationships.

Our strongest competitors in the frozen food products market are currently Weifang Langdong Food Co. Ltd., Yuyao Hongji Food Co. Ltd. And Yantai Pengshun Food Co. Ltd., all of which are located in China.

Competitive Advantages

We believe that we enjoy a number of competitive advantages, both domestically and internationally.

We have developed brand equity for our chestnut products in China, Japan and South Korea over the past 10 to 15 years. Our customers are willing to pay a premium for some of our chestnut products because of our brand equity. In addition, we believe
that we have a strong distribution channel for our products in the markets in which we currently operate.

We believe that we are able to provide our customers with greater selection and a more reliable supply than many of our competitors, which is especially important for our supermarket chain and large wholesaler customers. We produced 58 chestnut
products in 2013. We believe that we are the sole provider of certain bottom-open chestnut and sweetheart chestnut products in China.

Labor is a large portion of total operating costs for food companies. We believe that we have a lower labor cost structure and a more abundant labor supply than many of our international competitors.

We are focused on managing our costs in other ways as well. We seek to locate our production facilities in close proximity to our main domestic sources of raw material supply to reduce transportation costs and give us first-hand
knowledge of market factors affecting our cost of raw material supply. Our agricultural self-supply program, while modest at present, is expected to grow and to become a significant element of our cost containment efforts.

12

---

We use modern food processing technology and innovation in our formulation and manufacturing processes to create high quality products. Nitrogen preservation in particular, used in the production of convenience foods, is an innovative technology
which has not been widely applied in China.

In 2008, we submitted an application for patent protection in the PRC for two of our technologies which support the production of our chestnut and convenience food products, with one successful patent grant and one denial. During 2009 and 2010, we
submitted four additional patent applications, with three successful patent grants and one denial. (See Intellectual Property below.) We believe that our technology gives us an advantage over our Chinese competitors, allowing us to
produce chestnut and convenience food products that are superior in quality and to offer more product varieties.

We believe that our reputation for quality contributes to our competitiveness. We maintain high food safety standards, in order to satisfy both domestic and international requirements. We also regularly conduct tests for quality of our products and
compliance with standards.

Intellectual Property

Trademarks

We have registered in the PRC the trademark
 which we use on all of our products sold in China.

Patents

We have developed the following six proprietary technologies to support our chestnut and convenience food production:

- The sweetheart chestnut is a premium product that is more expensive, and yields greater profit margins than our other chestnut products. Our proprietary technology relates to the process for evenly distributing throughout the chestnuts the syrup
used to preserve the chestnuts. This technology enhances the texture of the chestnuts, preserves the natural form of the chestnuts and promotes the stability and uniformity of the chestnuts sweetness. In 2008, our patent application for this
technology was approved by the State Intellectual Property Office of the PRC and is protected by PRC patent law for 20 years. We expect this technology to contribute to the growth of our sales of sweetheart chestnuts, which had been increasing at an
annual rate of 25% to 30% over the past several years.
- Oden is a popular traditional Japanese dish, typically consisting of boiled eggs, daikon radish, konnyaku and processed fish cakes stewed in a light, soy-flavored dashi broth. Our technology relates to the process used to control the sterilization
of the packaging for oden eggs. Our technology enables us to deliver convenience food products with unique freshness and authentic taste. This technology has been an important factor in expanding the market for our convenience foods products,
particularly in Japan. Our patent application for this product was approved by the State Intellectual Property Office in February 2009.
- The pickle vegetable exhibition counter is ideal for shopping malls and supermarkets. It consists of the refrigerator cabinet which keeps the temperature low, and the exhibition cabinet, which sits above the refrigerator cabinet and with glass
covers. The exhibition counter is intended for convenience observation and better preservation for the pickle vegetables. Our patent for this device was granted in April 2009.
- High-temperature chestnut roasting machine is an innovative chestnut roasting device, which overcomes shortcomings of traditional roasters such as low efficiency and uneven heating. It is a sealed cylinder device equipped with thermometer and
manometer to gauge the temperature and pressure inside the roaster. This new roasting device is also energy efficient and environmentally friendly. Our patent application for this device was approved by the State
Intellectual Property Office in July 2011, and protected by PRC patent law for
10 years.

13

---

We were granted two additional patents by the State
Intellectual Property Office of the PRC during 2012, including the preparation
of aerated snack beans and frozen bottom open chestnuts. We also submitted one
additional patent application during 2012 for the preservation, storage and
processing procedures for chestnuts, which is currently under review. The
approval for patents typically takes 3 to 4 years.

We take reasonable steps to protect our proprietary information
and trade secrets, such as limiting disclosure of proprietary plans, methods and
the like on a need-to-know basis and requiring employees with access to our
proprietary technology to enter into confidentiality arrangements. We believe
that our proprietary technology and trade secrets are adequately protected.

Our Employees

As of December 31, 2013, we had a total of 1,839 full-time
employees and 480 part-time employees. 768 of our full-time employees are
directly employed by our subsidiary companies and the remaining employees are
employed by Linyi Zhifu Labor Service Company, an outsourcing company that we
use to meet our staffing needs. As required by Chinese law, all employees are
party to a written employment contract. We compensate the employees outsourced
from Linyi Zhifu directly and pay Linyi Zhifu a service fee. Linyi Zhifu is
responsible for the pension and social insurance benefits of the leased
employees, as described below.

The following table sets forth the allocation of employees,
both direct and leased, by job function.

Number ofDepartment
    
    EmployeesProduction
    
    1,848Quality Control
    
    82Domestic Sales
    
    168Human Resources
    
    8Research and Development
    
    45International Sales
    
    45Finance
    
    42Procurement
    
    24Administration
    
    50Strategic planning
    
    7Total
    
    2,319


We believe that the relationship between management and our
employees is good. We have not experienced any significant problems or
disruption to our operations due to labor disputes, nor have we experienced any
difficulties in recruitment and retention of experienced staff.

Our Shandong Lorain subsidiary has an employee relations
department for the purpose of advancing employee welfare, encouraging employee
participation in decision making and enhancing relations among employees and
between employees and our management team.

We compensate our production line employees by unit produced
(piece work) and compensate other employees with a base salary and bonus based
on performance. We also provide training for our staff from time to time to
enhance their technical and product knowledge, including knowledge of industry
quality standards.

Our employees in China participate in a state pension scheme
organized by Chinese municipal and provincial governments. We were required to
contribute to the scheme on behalf of our direct employees at a rate of 24% of
the average monthly salary for the years ended December 31, 2013 and 2012. In
addition, we are required by Chinese law to cover our employees with various
types of social insurance. We made contributions to the social insurance
scheme on behalf of our direct employees at a rate of 4% of the average monthly salary for each employee for the years ended December 31, 2013 and 2012. As indicated above, Linyi Zhifu is responsible for contributions on behalf of the leased
employees.

14

---

Our Research and Development Activities

Our research and development efforts are focused on three objectives:

- Superior product safety and quality;
- Reduction of operating costs; and
- Driving growth through the development of new products.

We have research and development staff at each of our facilities. In total, 45 employees are dedicated to research and development.

We rely heavily on customer feedback to assist us in the modification and development of our products. We also utilize customer feedback to assist us in the development of new products. Over the past several years, on average, we added 10 to 20 new
varieties to our product portfolio each year. In 2013, we added 6 new products in our convenience foods segment and discontinued 10 products in the convenience food segment primarily due to slow sales.

The amount we spent on research and development activities during the years ended December 31, 2013 and 2012 was not a material portion of our total expenses for those years.

Government Regulation

As a manufacturer and distributor of food products, we are subject to regulations of Chinas Agricultural Ministry and Ministry of Health. This regulatory scheme governs the manufacture (including composition and ingredients), labeling,
packaging and safety of food. It also regulates manufacturing practices, including quality assurance programs, for foods through its current manufacturing practice regulations, and specifies the standards of identity for certain foods, including the
products sold by us, and prescribes the format and content of many of the products sold by us, the format and content of certain nutritional information required to appear on food products labels and approves and regulates claims of health benefits
of food products.

We have obtained approvals from Chinese authorities for the production of certain categories of products, including chestnuts, frozen vegetables and fruits, fish, and canned products. Production of new products that do not fall into approved
categories of products would require separate approval from the appropriate Chinese authorities. We have consistently obtained such approvals for our newly developed products in the past and do not anticipate any difficulties in obtaining new
approvals in the future if needed.

In addition, we are required to obtain governmental approval, and to register with the State Administration for Industry and Commerce, in order to open a new facility in China. We have consistently obtained such approvals, and made such
registrations, for our new facilities in the past and do not anticipate any difficulties in filing new registrations and obtaining new approvals in the future if needed.

Under the relevant PRC sanitation laws governing food export, unless an exporters products are exempted from inspection, products must be inspected in accordance with the Law of the PRC on Import and Export Commodity Inspection. We have not
been exempted from inspection. In the past, we were authorized by the relevant authorities to conduct self-inspection of certain of our export products. However, currently, the relevant authorities have imposed tighter food safety control in China,
and as a result, all of our exported food products must be inspected by relevant government agencies. We believe that all of our exported products are currently in compliance with such requirements and we do not anticipate any difficulties in
complying with such rules in the future.

15

---

In addition, we are required to obtain a license from the local branch of the Entry-Exit Inspection and Quarantine Bureau of China for our exported products. We have consistently obtained such licenses in the past and we do not anticipate any
difficulties in obtaining such licenses in the future.

ITEM 1A. RISK FACTORS

RISK FACTORS

Business Risks

We may not be able to obtain an adequate supply of high quality raw materials.

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 2013, the cost of our raw materials decreased from
$145,460,250 to $141,159,775 for a decrease of approximately 3.0% . 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.

The prices that we have paid for our raw materials recently have experienced significant fluctuation. If these price fluctuations continue, our profit margins may be materially adversely affected.

The average price that we paid for chestnuts in 2013 and 2012 was approximately $1,507 per metric ton and $1,433 per metric ton, respectively, excluding value added taxes. We do not currently hedge against changes in our raw material prices.
Consequently, if the costs of our raw materials increase further, and we are unable to offset these increases by raising the prices of our products, our profit margins and financial condition could be adversely affected.

Price inflation in China could affect our results of operation if we are unable to pass along raw material price increases to our customers.

Inflation in China has been consistently increasing in recent years. Because we purchase raw materials from suppliers in China, price inflation directly causes an increase in the cost of our raw materials. Price inflation could affect our results of
operation if we are unable to pass along raw material price increases to customers. In addition, if inflationary trends continue in China, China could lose its competitive advantage as a low-cost manufacturing venue, which could in turn lessen some
of the competitive advantages of our being based in China. Accordingly, inflation in China may weaken our competitiveness domestically or in international markets.

Our sales and reputation may be affected by product liability claims, litigation or, product recalls in relation to our products.

The sale of products for human consumption involves an inherent risk of injury to consumers. We face risks associated with product liability claims, litigation, or product recalls, if our products cause injury or become adulterated or misbranded.
Our products are subject to product tampering and contamination, such as mold, bacteria, insects, shell fragments and off-flavor contamination, during any of the procurement, production, transportation and storage processes. If any of our products
were to be tampered with, or become tainted in any of these respects, and we were unable to detect this, our products could be subject to product liability claims or product recalls. Our ability to sell products could be reduced if certain
pesticides, herbicides or other chemicals used by growers have left harmful residues on portions of our raw materials or if our raw materials have been contaminated by other agents.

16

---

We have never had a product recall in the past but we have experienced product liability claims that were made by our customers. The amounts of such claims were immaterial. However, claims of product defect or product liability for material amounts,
individually or in the aggregate, may be made in the future.

We have not procured a product liability or general liability insurance policy for our business, as the insurance industry in China is still in an early stage of development. To the extent that we suffer a loss of a type which would normally be
covered by product liability or general liability insurance in the United States, we would incur significant expenses in defending any action against us and in paying any claims that result from a settlement or judgment against us. Product liability
claims and product recalls could have a material adverse effect on the demand for our products and on our business goodwill and reputation. Adverse publicity could result in a loss of consumer confidence in our products.

We may be unable to manage future rapid growth.

We have grown rapidly over the last few years. Our sales increased from $27,735,833 in 2004 to $215,279,785 in 2013. The number of product types we sold increased from approximately 100 in 2004 to approximately 234 in 2013. We intend to
continue to expand the volume and variety of products we offer, as well as the geographical scope of our sales and production facilities. Our business growth could place a significant strain on our managerial, operational and financial resources.
Our ability to manage future growth will depend on our ability to continue to implement and improve operational, financial and management information systems on a timely basis and to expand, train, motivate and manage our workforce. Our personnel,
systems, procedures and controls may not be adequate to support our future growth. Failure to effectively manage our expansion may lead to increased costs, a decline in sales and reduced profitability.

Our expansion strategy may not prove successful and could adversely affect our existing business.

Our growth strategy includes the expansion of our manufacturing operations, including new production lines and agricultural operations. We plan to expand our sales in China and internationally. We will need to engage in various forms of promotional
and marketing activities in order to further develop the branding of our products and to increase our market share in new and existing markets. The implementation of this strategy may involve large transactions and present financial, managerial and
operational challenges. We could also experience financial or other setbacks if any of our growth strategies incur problems of which we are not presently aware. If we fail to generate sufficient sales in new markets or increase our sales in existing
markets, we may not be able to recover the production, distribution, promotional and marketing expenses, as well as administrative costs we have incurred in developing such markets.

Our results of operations could be affected by natural events in the locations in which our customers operate.

Several of our customers have operations in locations that are subject to natural disasters, such as severe weather and geological events, which could disrupt the operations of those customers and suppliers as well as our operations. If our
customers suffer from these events, their operations may be negatively impacted. As a result, some or all of those customers may reduce their orders for our products, which could adversely affect our revenue and results of operations.

The acquisition of other businesses could pose risks to our profitability.

We may try to grow through acquisitions in the future. Any proposed acquisition could result in accounting charges, potentially dilutive issuances of equity securities, and increased debt and contingent liabilities, any of which could have a
material adverse effect on our existing business and the market price of our common stock. Acquisitions, in general, entail many risks, including risks relating to the failed integration of the acquired operations, diversion of managements
attention, and the potential loss of key employees of the acquired organizations. We may be unable to successfully integrate businesses or the personnel of any business that might be acquired in the future, and our failure to do so could have a
material adverse effect on our business and on the market price of our common stock.

17

---

We are subject to risks of doing business internationally. If the international market does not grow as we expect, our business and financial condition may be adversely affected.

We conduct a substantial amount of business internationally. Our export sales destinations include countries in Asia, Europe, the Middle East and North America. Our international operations are subject to a number of inherent risks, including:

- chestnut products may not be widely recognized internationally, especially in Western countries;
- local economic and political conditions, including disruptions in trading markets;
- restrictive foreign governmental actions, including restrictions on transfers of funds and trade;
- protection measures, including export duties and quotas and customs tariffs;
- currency exchange rate fluctuations;
- earthquakes, tsunamis, floods or other major disasters may limit the imported food products; and
- unexpected incidents related to food safety.

Any of the foregoing risks could have a material and adverse effect on our operating results.

A significant amount of our revenues is dependent on a limited number of customers and the loss of any one of our major customers could materially and adversely affect our growth and our revenues.

A significant portion of our revenues has historically been derived from a limited number of customers, particularly in our chestnut products segment. Sales to our ten largest customers accounted for approximately 12.9% and 15.4% of our total
revenues in 2013 and 2012, respectively. The loss of any one of these customers, or a material decrease in purchases by any one of these customers, could adversely impact our revenues.

We rely primarily on distributors to sell our products. Any delays in delivery or poor handling by our distributors or third-party transport operators may affect our sales and damage our reputation.

In 2013, we sold our products through over 100 distribution service providers. The services provided could be suspended and could cause interruption to the supply of our products to domestic or overseas customers. Delivery disruptions may occur for
various reasons beyond our control, including poor handling by service providers or third party transport operators, transportation bottlenecks, natural disasters and labor strikes, and could lead to delayed, damaged or lost deliveries. If our
products are not delivered in a timely manner, our reputation could be harmed. If our products are damaged in the process of being delivered, we may be liable to pay for such damages incurred.

Failure of the market to accept our new products, or failure to obtain regulatory approval for our new products, may cause us to lose our competitive position in the food industry.

We introduced 16 new products in 2011, 7 new products in 2012 and 6 new products in 2013. We plan to introduce approximately 10 to 20 new products in 2014. The success of the new products we introduce depends on our ability to anticipate the tastes
and dietary habits of consumers and to offer products that appeal to their preferences. We intend to introduce new products as well as alternative flavors, sizes and packaging for our existing products. We may not be able to gain market acceptance
for our new products. Consumer preferences change, and any new products that we introduce may fail to meet the particular tastes or requirements of consumers, or may be unable to replace their existing preferences. Our failure to anticipate,
identify or react to these particular tastes or changes could result in reduced demand for our products, which could in turn cause us to be unable to recover our development, production and marketing costs.

We are dependent on certain key personnel and loss of these key personnel could have a material adverse effect on our research and development, operations and revenue.

The Lorain Group Companies were founded in 1994 by Si Chen, our chairman and chief executive officer. Mr. Chen, together with other senior management, has been a key driver of our strategy and has been fundamental to our achievements to date. The
successful management of our business is, to a considerable extent, dependent on the services of Mr. Chen and other senior management. We compete for qualified personnel with other food processing
companies, food retailers and research institutions. Consequently, we may either lose key employees to our competitors or we may need to significantly increase the compensation of such employees in order to retain them. The loss of the services of
any key management employee or failure to recruit a suitable or comparable replacement could have a significant impact upon our ability to manage our business effectively, and our business and future growth may be adversely affected.

18

---

We face increasing competition from domestic and foreign companies.

The food industry in China is fragmented. Our ability to compete against other national and international enterprises is, to a significant extent, dependent on our ability to distinguish our products from those of our competitors by providing large
volumes of high quality products that appeal to consumers tastes and preferences at reasonable prices. Some of our competitors have been in business longer than we have and are more established. Our competitors may provide products comparable
or superior to those we provide or adapt more quickly than we do to evolving industry trends or changing market requirements. Increased competition may result in price reductions, higher raw materials prices, reduced margins and loss of market
share, any of which could materially adversely affect our profit margins.

An increase in the cost of energy could affect our profitability.

Recently, we have experienced significant increases in energy costs, and energy costs could continue to rise, which would result in higher distribution, freight and other operating costs. Our future operating expenses and margins will be dependent
on our ability to manage the impact of cost increases.

Our products are subject to counterfeiting or imitation, which could impact our reputation.

To date, we have experienced limited counterfeiting and imitation of our products. However, counterfeiting or imitation of our products may occur in the future and we may not be able to detect it and deal with it effectively. Any occurrence of
counterfeiting or imitation could impact negatively upon our reputation, particularly if the counterfeit or imitation products cause sickness, or injury to consumers. In addition, counterfeit or imitation products could result in our need to incur
costs with respect to the detection or prosecution of such activities.

We rely on an outside contractor to provide a majority of our labor.

We have hired Linyi Zhifu Labor Service Company to provide employees to our production facilities. Should Linyi Zhifu Labor Service Company be unable to continue to provide the number of employees we need, our production could be disrupted. In
addition, Linyi Zhifu Labor Service Company could raise their service fees or terminate their relationship with us in the future, which may result in increased production costs.

Regulatory Risks

We are subject to extensive regulations by the Chinese government.

The food industry is subject to extensive regulations by Chinese government agencies. Among other things, these regulations govern the manufacturing, importation, processing, packaging, storage, exportation, distribution and labeling of our
products. New or amended statutes and regulations, increased production at our existing facilities, and our expansion into new operations and jurisdictions may require us to obtain new licenses and permits and could require us to change our methods
of operations at costs that could be substantial.

Our failure to comply with PRC environmental laws may require us to incur significant costs.

We carry on our business in an industry that is subject to PRC environmental protection laws and regulations. These laws and regulations require enterprises engaged in manufacturing and construction that may cause environmental waste to adopt
effective measures to control such waste. In addition, such enterprises are required to pay fines, or to cease operations entirely under extreme circumstances, should they discharge waste substances. The Chinese government may also change the
existing laws or regulations or impose additional or stricter laws or regulations,
compliance with which may cause us to incur significant capital expenditures, which we may be unable to pass on to our customers through higher prices for our products.

19

---

Our failure to comply with PRC hygiene laws may require us to incur significant costs.

Manufacturers in the Chinese food industry are subject to compliance with PRC food hygiene laws and regulations. These food hygiene laws require all enterprises engaged in the production of chestnuts and various vegetables and fruits to obtain a
hygiene license for each of their production facilities. Such laws also require manufacturers to comply with regulations with respect to food, food additives, packaging, and food production sites, facilities and equipment. Failure to comply with PRC
food hygiene laws may result in fines, suspension of operations, loss of hygiene licenses and, in more extreme cases, criminal proceedings against an enterprise and its management. The Chinese government may also change the existing laws or
regulations or impose additional or stricter laws or regulations, compliance with which may cause us to incur significant capital expenditures, which we may be unable to pass on to our customers through higher prices for our products.

Financial Risks

Our operations are cash intensive, and our business could be adversely affected if we fail to maintain sufficient levels of working capital.

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, do not allow us to pay on
credit. However, some of the suppliers with whom we have a long-standing business relationship allow us to pay on credit. We fund the majority of our working capital requirements out of cash flow generated from operations. If we fail to generate
sufficient sales, or if our suppliers stop offering us credit terms, we may not have sufficient liquidity to fund our operating costs and our business could be adversely affected.

We also fund approximately 21.1% of our working capital requirements from the proceeds of short-term loans from Chinese banks. Our average loan balance from short-term bank loans in 2013 was approximately $32.8 million. 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. 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 be able to roll over such loans in the future or 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.

Management anticipates 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 through 2014. 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 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.

We are subject to credit risk in respect of account receivables.

In 2008 and 2009, some of our customers, including some of our large supermarket customers, delayed their payments for up to 60 to 90 days beyond their term. Our cash flow suffered while waiting for such payments. Consequently, at times we had to
delay payments to our suppliers and to postpone business expansion as a result of these delayed payments. Starting in 2008 and through 2013, we gradually shortened credit terms for many of our international and domestic customers 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.

20

---

The discontinuation of any preferential tax treatment or other incentives currently available to us in the PRC could materially and adversely affect our business, financial condition and results of operations.

Our subsidiaries are entitled to certain special or preferential tax treatments regarding foreign enterprise income tax in accordance with the Income Tax Law of the PRC for Enterprises with Foreign Investment and Foreign Enterprises and
related rules.

Accordingly, we have been entitled to tax concessions whereby the profit for the first two financial years beginning with the first profit-making year (after setting off tax losses carried forward from prior years) is exempt from income tax in the
PRC and the profit for each of the subsequent three financial years is taxed at 50% of the prevailing tax rates set by the relevant tax authorities. However, on March 16, 2007, the PRCs National Peoples Congress passed a new corporate
income tax law, which became effective on January 1, 2008. This new corporate income tax unifies the corporate income tax rate, cost deduction and tax incentive policies for both domestic and foreign-invested enterprises. According to the new
corporate income tax law, the applicable corporate income tax rate of our operating subsidiaries has been increased to a rate of 25% over a five-year grandfather period. This tax rate increase applies across the board, for all enterprises whether
domestic or foreign. 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 the tax holidays until fully utilized. The discontinuation of any
such special or preferential tax treatment or other incentives could have an adverse effect on our business, financial condition and results of operations.

In addition, under current PRC tax law, regulations and rulings, dividends from our operations in China paid to us are not currently subject to PRC income tax. If these distributions become subject to tax in the future, our net income would be
adversely affected.

We may enter into additional financing agreements which may have a dilutive effect to our earnings per share and the rights of certain stockholders.

Additional financings could result in significant dilution to our earnings per share or the issuance of securities with rights superior to our current outstanding securities. For instance, we may grant registration rights to investors purchasing our
equity or debt securities in the future.

We may be unable to raise additional capital.

If we are unable to raise additional financing when needed, we may be unable to implement our long-term business plan, develop or enhance our products and services, take advantage of future opportunities or respond to competitive pressures on a
timely basis, if at all. In addition, a lack of additional financing could force us to substantially curtail or cease operations.

We may be exposed to potential risks relating to our internal control over financial reporting and our ability to have such controls attested to by our independent auditors.

The SEC, under Section 404 of the Sarbanes-Oxley Act of 2002, adopted rules requiring public companies to provide in their annual reports on Form 10-K a report by management with respect to the companys disclosure controls and procedures and
internal control over financial reporting. We are currently required to comply with this requirement. In addition, such rules require the independent registered public accounting firm auditing a companys financial statements to attest to the
operating effectiveness of such companys internal controls. However, because we are a smaller reporting company, we are not required to receive an attestation report from a registered public accounting firm. We can provide no assurance that we
will comply with all of the requirements imposed thereby. Further, we cannot assure that we will receive a positive attestation from our independent auditors. Investors and others may lose confidence in the reliability of our financial statements in
the event we identify significant deficiencies or material weaknesses in our internal controls that we cannot remediate in a timely manner or if we are unable to receive a positive attestation from our independent auditors with respect to our
internal controls.

21

---

Risks Related To Doing Business In China

Changes in Chinas political or economic situation could harm us and our operating results.

Economic reforms adopted by the Chinese government have had a positive effect on the economic development of the country. However, the Chinese government could change these economic reforms at any time. Such changes could negatively impact our
operations and profitability.

The structure of the Chinese economy may inhibit our ability to expand our business.

The Chinese economy differs from the economies of most countries belonging to the Organization for Economic Cooperation and Development, or OECD, in several ways. For example, state-owned enterprises constitute a large portion of the Chinese
economy. In addition, weak corporate governance practices and the lack of flexible currency exchange policies continue to persist. As a result of these differences, we may not develop in the same way or at the same rate as might be expected if the
Chinese economy were similar to those of the OECD member countries.

Our business is largely subject to the uncertain legal environment in China.

The Chinese legal system is a civil law system based on written statutes. Unlike common law systems, it is a system in which precedents set in earlier legal cases are not generally used. Laws, regulations and legal requirements relating to foreign
investments in China are still evolving, and their interpretation and enforcement involve uncertainties. These uncertainties could limit the legal protections available to foreign investors, such as the right of foreign enterprises to hold required
business licenses and permits.

It may be difficult for our stockholders to effect service of process against our subsidiaries or our officers and directors.

Our operating subsidiaries were organized under the laws of China and substantially all of their assets are located outside the U.S. In addition, our executive officers and directors are residents of China and substantially all of their assets are
located outside the U.S. As a result, it could be difficult for our stockholders to effect service of process in the U.S., or to enforce a judgment obtained in the U.S., against our officers and directors.

Restrictions on currency exchange may limit our ability to receive and use our revenues effectively.

The majority of our revenues are settled in Renminbi and U.S. dollars, and any future restrictions on currency exchanges may limit our ability to use revenue generated in Renminbi to fund any future business activities outside China or to make
dividends or other payments in U.S. dollars. Although the Chinese government introduced regulations in 1996 to allow greater convertibility of the Renminbi for current account transactions, significant restrictions still remain. For instance,
foreign enterprises may only buy, sell or remit foreign currencies after providing valid commercial documents at banks in China authorized to conduct foreign exchange business. In addition, conversion of Renminbi for capital account items, including
direct investment and loans, is subject to governmental approval in China, and companies are required to open and maintain separate foreign exchange accounts for capital account items. The Chinese regulatory authorities may impose more stringent
restrictions on the convertibility of the Renminbi in the future.

Failure to comply with PRC regulations relating to the establishment of offshore special purpose companies by PRC residents may have negative effects on our company.

In October 2005, the PRC State Administration of Foreign Exchange, or SAFE, issued the Notice on Relevant Issues in the Foreign Exchange Control over Financing and Return Investment Through Special Purpose Companies by Residents Inside China,
generally referred to as Circular 75, which required PRC residents to register with the local SAFE branch before establishing or acquiring control over an offshore special purpose company, or SPV, for the purpose of engaging in an equity financing
outside of China on the strength of domestic PRC assets originally held by those residents. Internal implementing guidelines issued by SAFE, which became public in June 2007 (known as Notice 106), further expanded the reach of Circular 75.

22

---

ILH acquired certain interests in the Lorain Group Companies controlled by Si Chen, our Chairman and Chief Executive Officer. Pursuant to Notice No. 75 and Notice 106, if a PRC resident has completed a round-trip investment through its established
SPV but has not yet completed the required procedures of SAFE registration for offshore investment of the SPV, he must retroactively register the SPV with SAFE.

In order to avoid such SAFE registration requirements, a Japanese individual, Hisashi Akazawa, was designated as a nominee holder of ILH when ILH was established. Mr. Akazawa granted an option to our Chairman and Chief Executive Officer, Mr. Chen,
allowing Mr. Chen to buy 90% of Mr. Akazawas interest in the Company at a fixed price at a future time in accordance with the terms of an option agreement between the two parties. On December 22, 2008, Mr. Chen exercised this option. In
addition, on that date, Mr. Chen acquired all of the remaining shares of our company held by Mr. Akazawa. As a result, Mr. Chen is the beneficiary of ILH and may be required to register with and obtain approvals from SAFE or its agency with respect
to the direct offshore investment activities related to the acquisition of the Lorain Group Companies.

If the failure to identify and characterize Mr. Chen as a beneficial owner of ILH is determined by the PRC authorities to be a serious violation of the requirements of the PRC Company Law and the PRC Regulation of Registration of Companies, the
Lorain Group Companies may be ordered by the company registration authority in the PRC to make corrections on its filed registration, to be fined an amount no less than RMB 5,000 and no more than RMB 50,000 or, in the worse scenario, to have its
company registration certificate revoked or its business licenses canceled.

Moreover, because of uncertainty over how Circular 75 will be interpreted and implemented, and how or whether SAFE will apply it to us, we cannot predict how it will affect our business operations or future strategies, such as our present and
prospective PRC subsidiaries ability to conduct foreign exchange activities including the remittance of dividends and foreign currency-denominated borrowings. In addition, our PRC resident beneficial holders may be subject to compliance with
Circular 75. Such holders may not be able to complete the necessary registration procedures required by Circular 75.

Our financial condition is affected by the foreign exchange rate between the U.S. dollar and the Renminbi.

Our financial condition is affected by the foreign exchange rates, primarily the rate between the U.S. dollar and the Renminbi. In the event that the Renminbi appreciates against the U.S. dollar, our costs will increase.

Risks Related To the Market For Our Stock

Certain of our stockholders have the ability to delay or prevent adoption of important business decisions based on their ownership of a significant percentage of our outstanding voting securities.

Mr. Chen is the record owner of approximately 42.6% of our outstanding voting securities. As a result, he possesses significant influence over our business. For instance, Mr. Chen may elect our board of directors, authorize significant corporate
transactions or prevent a future change in control of our company.

Certain provisions of our Articles of Incorporation may make it more difficult for a third party to effect a change-in-control.

Our Articles of Incorporation authorize our board of directors to issue up to 5,000,000 shares of preferred stock without stockholder approval. The preferred stock may be issued in one or more series, the terms of which may be determined at the time
of issuance by the board of directors without further action by the stockholders. These terms may contain voting rights, including the right to vote as a series on particular matters, preferences as to dividends and liquidation, conversion rights
and redemption rights provisions. The issuance of any preferred stock could diminish the rights of holders of our common stock, and therefore could reduce the value of such common stock. In addition, specific rights granted to future holders of
preferred stock could be used to restrict our ability to merge with, or sell assets to, a third party. The ability of our board of directors to issue preferred stock could make it more difficult to acquire our company and could negatively affect the
market price of our common stock.

23

---

The exercise of outstanding warrants issuable for shares
of our common stock may cause dilution to existing shareholders.

There are currently warrants outstanding to purchase up to an
aggregate of 1,753,909 shares of our common stock at an exercise price of $3.70,
subject to adjustments. These warrants expire in April 2015. If holders of these
warrants exercise the warrants in exchange for shares of our common stock, such
issuances may have a dilutive effect on the stock ownership of existing
shareholders and may harm the market price of our stock. Furthermore, if we were
to attempt to obtain additional financing during the term of these warrants, the
terms on which we obtain such financing may be adversely affected by the
existence of these warrants.

We do not expect to pay dividends in the future, and any
return on your investment may be limited to the value of the shares you acquire.

Other than a special cash dividend which we paid to holders of
our common stock as of April 16, 2007, we have never declared or paid cash
dividends. We do not anticipate paying any cash dividends on our common stock in
the foreseeable future and any return on your investment may be limited to the
value of the shares of our common stock that you acquire. We currently intend to
retain and use any future earnings for the development and expansion of our
business.

ITEM 1B. UNRESOLVED STAFF COMMENTS

None.

ITEM 2. PROPERTIES

Our primary facilities, which are owned except where otherwise
indicated, are as follows:

|Facility                                                                           | Location                                       | Approximate Size | Owned or Leased
|---------------------------------------------------------------------------------- | ---------------------------------------------- | ---------------- | ---------------
|                                                                                   |                                                | (Square Meters)  |                
|Junan Hongrun                                                                      | Junan County,
      Shandong Province, PRC     | 197,637          | Owned          
|Shandong Lorain                                                                    | Junan County, Shandong Province,
      PRC     | 31,459           | Owned          
|Beijing Lorain                                                                     | Miyun County,
      Beijing Province, PRC      | 22,677           | Owned          
|Luotian Lorain                                                                     | Luotian County, Hubei Province,
      PRC      | 54,251           | Owned          
|Dongguan Lorain                                                                    | Dongguan County,
      Guangdong Province, PRC | 5,472            | Leased         
|Shandong Greenpia                                                                  | Junan County, Shandong Province,
      PRC     | 33,332           | Owned          
|Conserverie Minerve*                                                               | France and Portugal                            | 35,645           | Owned          
|* a wholly-owned
      subsidiary of Athena, a company controlled by Junan Hongrun

We may also own or lease space for additional facilities,
including refrigerated storage facilities, and smaller offices, including sales
offices, located in China.

In the aggregate, we currently have land use rights to, or
lease, 79 properties with approximately 380,473 square meters, consisting of
manufacturing facilities, office buildings and land reserved for future
expansion. We believe our current facilities provide adequate capacity for our
current and projected needs.

All land in China is owned by the State. Individuals and
companies are permitted to acquire land use rights for specific purposes. In the
case of land used for industrial purposes, the land use rights are granted for a
period of up to 50 years. This period may be renewed at the expiration of the
initial and any subsequent terms. Granted land use rights are transferable and
may be used as security for borrowings and other obligations.

24

---

ITEM 3. LEGAL PROCEEDINGS

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

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

PART II

ITEM 5. MARKET FOR REGISTRANTS COMMON EQUITY, RELATED
STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.

Market for our Common Stock

Our common stock is quoted on the NYSE AMEX under the symbol
ALN. As of March 28, 2014 the closing price for our common stock was
$1.15 per share.

The following table sets forth, for the periods indicated, the
high and low sales prices of our common stock. These prices reflect inter-dealer
prices, without retail mark-up, mark-down or commission, and may not represent
actual transactions.

Common
      StockMarket
      PricesHigh
    
    
    LowFiscal Year Ended
      December 31, 2013First Quarter
    $
    1.40
    
    $
    1.20Second Quarter
    $
    1.29
    
    $
    1.02Third Quarter
    $
    1.11
    
    $
    0.61Fourth Quarter
    $
    0.97
    
    $
    0.68Fiscal Year Ended
      December 31, 2012First Quarter
    $
    1.74
    
    $
    1.31Second Quarter
    $
    1.39
    
    $
    1.10Third Quarter
    $
    1.30
    
    $
    1.03Fourth Quarter
    $
    1.45
    
    $
    1.13


Approximate Number of Holders of Our Common
Stock

As of March 4, 2014, there were 291 stockholders of record of
our common stock. This does not include the holders whose shares are held in a
depository trust in street name.

Dividend Policy

We have not declared or paid cash dividends other than the
payment of a dividend in April 2007 in connection with our reverse merger. Any
future decisions regarding dividends will be made by our board of directors. We
currently intend to retain and use any future earnings for the development and
expansion of our business and do not anticipate paying any cash dividends in the
foreseeable future.

Issuances of Unregistered Securities

None.

25

---

Securities Authorized for Issuance under Equity Compensation Plans

The information in Item 12 of this report is incorporated herein by reference.

ITEM 6. SELECTED FINANCIAL DATA

Not applicable.

ITEM 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Overview

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

- Chestnut products,
- Convenience foods (including ready-to-cook, or RTC, foods, ready-to-eat, or RTE, foods and meals ready-to-eat, or MRE); and
- Frozen food products.

We conduct our production activities in China. Our products are sold in the Chinese domestic markets as well as exported to foreign countries and regions such as Japan, South Korea and Europe. We believe that we are the largest chestnut processor
and 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 58 high value-added chestnut products in 2013. We derive most of our revenues from sales in
China, Japan and South Korea. In 2014, our primary strategy is to continue building our brand recognition in China through consistent marketing efforts towards supermarkets, wholesalers, and significant customers, enhancing the cooperation
with other manufacturers and factories, and enhancing the turnover for our existing chestnut, convenience and frozen food products. In addition, we are working to expand our marketing efforts in Asia, 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 2013, the cost of our raw materials decreased from
$145,460,250 to $141,159,775, for a decrease of approximately 3.0% . 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.

The average price that we paid for chestnuts in 2013 and 2012 was approximately $1,507 metric ton and $1,433 per metric ton, respectively, excluding value added taxes. In the past few years, increasing inflation pressures weighed on the
Chinese economy which reflected on agricultural product prices. We do not have effective means and do not currently hedge against changes in our raw material prices. Consequently, if the costs of our raw materials increase further and we are unable
to offset these increases by raising the prices of our products, our profit margins and financial condition could be adversely affected.

26

---

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 pay for their
supplies in cash on the same day that such supplies are delivered to us. However, some of the suppliers with whom we have a long-standing business relationship allow us to pay on credit. We fund the majority of our working capital requirements out
of cash flow generated from operations. If we fail to generate sufficient sales, or if our suppliers stop offering us credit terms, we may not have sufficient liquidity to fund our operating costs and our business could be adversely affected.

We also funded approximately 21.1% and 24.4% of our working capital requirements in 2013 and 2012, respectively, 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 average loan balance from short-term bank loans in 2013 and 2012 were approximately $32.8 million and $34.4 million, respectively. The term of almost all such loans is
one year or less. Historically, we have rolled over such loans on an annual basis. However, in recent years, the Chinese government has implemented more stringent credit policies to curb inflation and soaring property prices, which could negatively
impact our ability to obtain or roll over these short term loans, and hence not having sufficient funds available to pay all of our borrowings upon maturity. Failure to roll over our short-term borrowings at maturity or to service our debt could
result in the imposition of penalties, including increases in rates of interest, legal actions against us by our creditors, or even insolvency. In addition, we completed two private placement financings in September 2010 and October 2009 with net
proceeds of $9.0 million and $10.9 million, respectively, the proceeds of which were primarily used as working capital. We also secured a $15 million loan from Deutsche Investitions- und Entwicklungsgesellshaft (DEG) in May
2010, which we have fully drawn down in 2011. We can provide no assurances that we will be able to enter into any future financing or refinancing agreements on terms favorable to us, especially considering the
current instability of the capital markets.

We anticipate that our existing capital resources, cash flows from operations and current and expected short-term bank loans will be adequate to satisfy our liquidity requirements through 2014. 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 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.

In 2008 and 2009, some of our customers, including some of our large supermarket customers, delayed their payments for up to 60 to 90 days beyond their term. Our cash flow suffered while waiting for such payments. Consequently, at times we had to
delay payments to our suppliers and to postpone business expansion as a result of these delayed payments. Starting in 2008 and through 2013 we gradually shortened credit terms for many of our international and domestic customers 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.

Recent Developments and Events

On March 13, 2014, we acquired 12,750 shares, or 51% share capital, of Athena from two existing shareholders of Athena for an aggregate purchase price of 1,995,000 (or approximately US$2,702,650) of which 500,000 (or approximately
US$677,350) (Deferred Payment) remains due and payable to Intiraimi on February 7, 2015 under the Intiraimi Purchase Agreement if certain conditions are met. Under the terms of the Intiraimi Purchase Agreement, we agreed to pledge
12,750 shares, or 51% share capital, of Athena to Intiraimi to guarantee the Deferred Payment.

Athena is a holding company which holds all of the capital and the voting shares of Conserverie Minerve, a company organized under French law. Conserverie Minerve specializes in the processing and sale of chestnut and prepared foods products in the Europe. Conserverie Minerve
operates its businesses through the following, direct and indirect, wholly owned
subsidiaries:

27

---

- Sojafrais, a company under French law;
- SCI SIAM, a real estate company under French law;
- SCI GIU LONG, a real estate company under French law; and
- CACOVIN, a company under Portuguese law.

In connection with the Athena acquisition, on March 13, 2014,
we issued a Convertible Promissory Note (Note) in the principal amount of
US$3.5 million (the Principal Amount) to an investor. Under the terms of the
Note, interest on the outstanding Principal Amount accrues at a rate of 4.5% per
annum, and all accrued but unpaid interest is due and payable on June 30, 2014
and on the last day of each quarter thereafter. If the Note is not converted
pursuant to the terms of the Note, additional interest on the outstanding
Principal Amount shall accrue at a rate of 4.5% per annum and payable at the
maturity of the Note. Unless the Note is otherwise accelerated or converted, the
unpaid Principal Amount of the Note, together with all accrued but unpaid
interest, is due and payable, at the election of the investor, on September 13,
2014 or March 13, 2015 (Maturity Date), provided, however, if the investor
fails to notify the Company in writing by August 13, 2014 that it elects the
maturity date of September 13, 2014, then the Maturity Date will be extended to
March 13, 2015. In addition, under the terms of the Note, at any time commencing
on or after September 13, 2014 and before March 13, 2015, the investor may
convert in whole or in part the outstanding Principal Amount into a number of
shares of our Common Stock of the Company on a per share conversion price of
$1.15, as may be adjusted from time to time pursuant to the terms and conditions
of the Note (Conversion Price); provided, however, the Company will not effect
any conversion of the Note, and the investor will not have the right to convert
any portion of the Note, to the extent (but only to the extent) that the Holder
would beneficially own in excess of the Beneficial Ownership Limitation (as
defined below), which beneficial ownership will be calculated in accordance with
Section 13(d) of the Securities Exchange Act of 1934, as amended. The
Beneficial Ownership Limitation is 9.99% of the number of shares of Common
Stock outstanding immediately after giving effect to the issuance of shares of
Common Stock issuable upon conversion of the Note. The Note is secured by the
personal guarantee of Si Chen, our chief executive officer and chairman.

Results of Operations

The following tables set forth key components of our results of
operations for the periods indicated, and the differences between the two
periods expressed in dollars and percentages.

|                                        |  | Year Ended
      December 31, |   |  | Increase/Decrease |   |  | Increase/Decrease |  
|--------------------------------------- |  | ----------------------------- | - |  | ----------------- | - |  | ----------------- | -
|(in thousands of U.S. dollars)          |  | 2013 ($)                      |   |  | 2012 ($)          |   |  | ($)               |  
|Revenue                                 |  | 215,280                       |   |  | 239,673           |   |  | (24,393           | )
|Cost of Revenue                         |  | (172,108                      | ) |  | (188,565          | ) |  | 16,457            |  
|                                        |  |                               |   |  |                   |   |  |                   |  
|Gross profit                            |  | 43,172                        |   |  | 51,108            |   |  | (7,936            | )
|                                        |  |                               |   |  |                   |   |  |                   |  
|Operating Expenses:                     |  |                               |   |  |                   |   |  |                   |  
|Selling and Marketing                   |  | (10,508                       | ) |  | (11,742           | ) |  | 1,234             |  
|General and administrative              |  | (7,231                        | ) |  | (7,507            | ) |  | 276               |  
|                                        |  |                               |   |  |                   |   |  |                   |  
|Income from continuing
      operations |  | 25,433                        |   |  | 31,859            |   |  | (6,426            | )
|                                        |  |                               |   |  |                   |   |  |                   |  
|Non-operating Income                    |  |                               |   |  |                   |   |  |                   |  
|(Expenses):                             |  |                               |   |  |                   |   |  |                   |  
|Government grant                        |  | 1,607                         |   |  | 1,225             |   |  | 381               |  
|Interest income                         |  | 80                            |   |  | 338               |   |  | (258              | )
|Other income                            |  | 1,485                         |   |  | 178               |   |  | 1,307             |  
|Other expense                           |  | (189                          | ) |  | (87               | ) |  | (102              | )
|Interest Expense                        |  | (5,153                        | ) |  | (4,032            | ) |  | (1,121            | )
|                                        |  |                               |   |  |                   |   |  |                   |  
|Income before taxes                     |  | 23,262                        |   |  | 29,481            |   |  | (6,219            | )
|Income Taxes                            |  | (5,574                        | ) |  | (7,737            | ) |  | 2,163             |  
|Income before Minority Interest         |  | 17,689                        |   |  | 21,744            |   |  | (4,055            | )
|Minority Interest                       |  | (1,054                        | ) |  | (1,321            | ) |  | 267               |  
|                                        |  |                               |   |  |                   |   |  |                   |  
|Net Income                              |  | 16,634                        |   |  | 20,423            |   |  | (3,789            | )

28

---

Revenue

Net Revenues. Net revenues decreased by $24.4 million, or
approximately 10.2%, to $215.3 million in 2013 from $239.7 million in 2012. This
decrease was attributable to the decreased revenues from sales of our chestnut
and convenience food products, as reflected in the following table:

|                                     |  | Year Ended
      December 31, |  |  |             |  |  |             |  
|------------------------------------ |  | ----------------------------- |  |  | ----------- |  |  | ----------- | -
|                                     |  | 2013                          |  |  | 2012        |  |  | Increase /  |  
|                                     |  | Revenues                      |  |  | Revenues    |  |  | Decrease    |  
|(in thousands of U.S.
      dollars) |  | ($)                           |  |  | ($)         |  |  | ($)         |  
|Chestnut                             |  | 114,709,005                   |  |  | 125,101,585 |  |  | (10,392,580 | )
|Convenience food                     |  | 62,213,432                    |  |  | 79,575,069  |  |  | (17,361,637 | )
|Frozen food                          |  | 38,357,348                    |  |  | 34,996,809  |  |  | 3,360,539   |  
|Total                                |  | 215,279,785                   |  |  | 239,673,463 |  |  | (24,393,678 | )

The decrease in revenue was due to decrease in both our Chinese
domestic sales and exports. Revenues from sales in the Chinese domestic market
decreased by approximately $12.0 million, or approximately 7.0%, in 2013. As a
percentage of total revenues, revenues from sales in the domestic PRC market
increased slightly to approximately 73.8% from approximately 71.3% in 2012.

In addition, in 2013, revenues from international sales to
Japan, South Korea, United Kingdom, and Belgium as well as other countries
decreased, in the aggregate, approximately $12.4 million, or 18.0%, compared to
2012. See Note 15 to the financial statements contained in this report for more
information on the breakdown of our sales pursuant to geographic region.

Cost of Revenues. Our cost of revenues decreased $16.5
million, or approximately 8.7%, to $172.1 million in 2013 from $188.6 million in
2012. This decrease was attributable to the following factors, by
percentage:

29

---

|                                                                                         |  | Increase      | 
|---------------------------------------------------------------------------------------- |  | ------------- | 
|                                                                                         |  | (Decrease) in | 
|                                                                                         |  | Cost          | 
|                                                                                         |  | of Revenues   | 
|Category                                                                                 |  | (%)           | 
|Raw Materials                                                                            |  | -3.0%         | 
|External Purchases                                                                       |  | -42.9%        | 
|Other Allocated Overhead
      (depreciation, utilities, freight, equipment consumables) |  | 2.1%          | 
|Wages                                                                                    |  | 30.9%         | 

Raw material costs decreased to $141,159,775, or approximately
3.0%, in 2013 from $145,460,250 in 2012; external purchases of finished products
decreased by 42.9%, primarily reflecting our decreased operation and sales.
Overhead expenses increased primarily due to increased depreciation expenses and
utility expenses. Wages increased primarily due to increase in salary level. The
following table reflects the changes in our cost of revenues in 2013 as compared
to 2012 among our different segments:

|(thousands of        |  | 2013 Cost of |  |  | 2012 Cost of |  |  | Increase/  | 
|-------------------- |  | ------------ |  |  | ------------ |  |  | ---------- | 
|U.S. dollars)        |  | Revenues ($) |  |  | Revenues ($) |  |  | (Decrease) | 
|                     |  |              |  |  |              |  |  | (%)        | 
|Chestnut Products    |  | 89,900       |  |  | 96,325       |  |  | -6.7%      | 
|Convenience Products |  | 50,156       |  |  | 62,820       |  |  | -20.2%     | 
|Frozen Products      |  | 32,052       |  |  | 29,420       |  |  | 8.9%       | 
|Total                |  | 172,108      |  |  | 188,565      |  |  | -8.7%      | 

Gross Profit. Our gross profit decreased $7.9 million,
or 15.5%, to $43.2 million in 2013 from $51.1 million in 2012 as a result of
lower net revenues, partially offset by lower cost of revenues, for the reasons
indicated above.

Operating Expenses

Selling and Marketing Expenses. Our selling and
marketing expenses decreased approximately $1.2 million, or 10.5%, to $10.5 in
2013 from $11.7 million in 2012. 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:

Decrease incosts
      in 2013(in U.S. dollars)
    
    over
      2012 ($)Advertising
    
    (45,712
    )Transportation
    
    (485,222
    )Commission
    
    (100,731
    )Port Fee
    
    (1,076,115
    )


The decrease listed in the table above were partially offset by
an aggregate of $0.8 million increase of other factors, including wages of sales
personnel, storage rental, and supermarket fee.

General and Administrative Expenses. Our general and
administrative expenses decreased approximately $0.3 million, or 3.7%, to $7.2
million in 2013 from $7.5 million in 2012. 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:

30

---

Decrease incosts
      in 2013(in U.S. dollars)
    
    over
      2012 ($)Wage and Benefit
    
    (218,904
    )Provision for Bad Debts
    
    (83,618
    )Social Security
    
    (136,910
    )Land Use Fees
    
    (83,450
    )


Government Subsidy Income

Government subsidy income increased from approximately $1.2
million in 2012 to $1.6 million in 2013, representing grants received mostly
from the Junan County government and Beijing government to assist us in our
research and business development.

Income Before Taxation and Minority Interest

Income before taxation and minority interest decreased $6.2
million, or 21.1%, to $23.3 million in 2013 from $29.5 million in 2012 as a
result of lower revenues, partially offset by lower costs of revenues and
operating expenses, for the reasons indicated above.

Income Taxes

Income taxes decreased approximately $2.2 million, or 28.0%, to
$5.6 million in 2013, as compared to $7.7 million in 2012. This decrease was
attributable to the lower income earned in 2013 as compared to 2012.

Minority
Interest

Shandong Economic Development Investment holds 19.8% of the
equity of our subsidiary Shandong Lorain, which is reflected in the minority
interest of $1.1 million in 2013 and $1.3 million in 2012.

Net Income

Net income decreased $3.8 million, or 18.6%, to $16.6 million
in 2013 from $20.4 million in 2012, as a result of the factors described above.

Liquidity and Capital Resources

General

Our primary capital needs have been to fund the working capital
requirements necessitated by our sales growth, adding new products and expanding
our facilities. In the past, our primary sources of financing have been cash
generated from operations and short-term loans from banks in China. In October
2009 and September 2010, we obtained approximately $11 million and 9 million,
respectively, from two private placement transactions. We also secured a $15
million loan from Deutsche Investitions- und Entwicklungsgesellshaft (DEG) in
May 2010 which we have fully drawn down in 2011. Proceeds from the private
placement transactions and cash drawn down from the DEG loan, together with cash
generated from operations and short-term bank loans, have been primarily used to
fund our working capital needs, as well as addition to our construction in
progress and purchase of fixed assets. At December 31, 2013 and 2012, cash and
cash equivalents (including restricted cash) were $35.7 million and $36.3
million, respectively.

We expect to continue to finance our operations and working
capital needs in 2014 from cash generated from operations and short-term bank
loans. We expect that anticipated cash flows from operations and short-term bank
loans will be sufficient to fund our operations through at least the next twelve
months.

Based upon our present plans, we believe that cash on hand,
cash flows from operations and funds available under our bank facilities will be
sufficient to fund our capital needs for the next twelve (12) months. However,
if available liquidity is not sufficient to meet our operating and loan
obligations as they come due, our plans include pursuing alternative financing arrangements or reducing expenditures as
necessary to meet our cash requirements. However, there is no assurance that we
will be able to raise additional capital or reduce discretionary spending to
provide liquidity, if needed. Currently, the capital markets for small
capitalization companies are difficult. Accordingly, we cannot be sure of the
availability or terms of any alternative financing arrangements.

31

---

The following table provides detailed information about our net
cash flow for all financial statements periods presented in this report.

|Cash Flows Data:                                                |  | For year
      ended December 31, |  
|--------------------------------------------------------------- |  | --------------------------------- | -
|(in thousands of U.S. dollars)                                  |  | 2013                              |  
|Net cash flows provided by
      (used in) operating activities |  | (8,446                            | )
|Net cash flows provided by (used in)
      investing activities |  | (20,969                           | )
|Net cash flows provided by
      (used in) financing activities |  | 28,988                            |  

Operating Activities

Net cash used in operating activities for 2013 was $8.4 million
and net cash provided by operating activities for 2012 was $9.0 million. The
decrease of approximately $17.4 million in net cash flows provided by operating
activities resulted primarily from a lower net income of $4.1 million, a higher
prepayment of $1.5 million, and a higher increase in accounts and other
receivables of $13.6 million.

Investing Activities

During 2013, our uses of cash for investment activities are
primarily to purchase equipment and land use rights. Net cash used in investing
activities for 2013 and 2012 were $21.0 million and $3.3 million, respectively,
with the increase of approximately $17.6 million cash used in investing
activities resulted primarily from $11.4 million higher payment for the purchase
of land use rights, $15.0 million higher payment for the purchase of plant and
equipment, partially offset by $15.3 million decrease of security deposit.

Financing Activities

Net cash provided by financing activities for 2013 and 2012 were
$29.0 million and $8.3 million, respectively. The increase of approximately
$20.7 million in net cash provided by financing activities resulted primarily
from an increase of $30.2 million in long-term borrowings and notes payable,
partially offset by $8.7 million decrease in long term bank borrowings.

Loan Facilities

As of December 31, 2013 and 2012, we carried $29.4 million and
$28.7 million short term bank loans from Chinese domestic banks. Please refer to
Note 9 of the consolidated financial statements for details.

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
the 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 the more 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. The financial statements and notes are representations of management.
Accounting policies adopted by us 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.

32

---

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.

The use of estimates is critical to carrying value of asset
accounts such as accounts receivable, inventory, fixed assets, and intangible
assets. We use estimates to account for the related bad debt allowance,
inventory impairment charges, depreciation and amortization of our assets. In
the food processing industry these accounts have a significant impact on the
valuation of our balance sheet and the results of our operations.

Principles of consolidation -- The consolidated
financial statements are presented in US Dollars and include the accounts of the
Company and its commonly controlled entity. All significant inter-company
balances and transactions are eliminated in combination.

As of December 31, 2013, the particulars of the commonly
controlled entities are as follows:

Place of
    
    
    Attributable
      equity
    
    
    RegisteredName of Company
    
    incorporation
    
    
    interest
    
    
    capital***%***
    
    
    $Shandong Lorain Co., Ltd
    
    PRC
    
    
    80.2
    
    
    13,238,040Luotian Lorain Co., Ltd
    
    PRC
    
    
    100
    
    
    4,145,195Junan Hongrun Foodstuff Co.,
      Ltd
    
    PRC
    
    
    100
    
    
    48,965,698Beijing Lorain Co., Ltd
    
    PRC
    
    
    100
    
    
    1,636,554Shandong Greenpia Foodstuff
      Co., Ltd
    
    PRC
    
    
    100
    
    
    2,513,747Dongguan Lorain Co., Ltd
    
    PRC
    
    
    100
    
    
    163,655International Lorain Holding
      Inc.
    
    Cayman
      Islands
    
    
    100
    
    
    50,927,518


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 years, 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, we have
no other significant obligations 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 (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.

33

---

We believe that when custody and title of goods has been passed
to our customers, or third party transporters, revenue is recognized. Our
industry does not call for revenue recognition under multiple deliverable
arrangements.

Financial Instruments

Our financial instruments are cash and cash equivalents,
accounts receivable, other receivable, advances to suppliers, advances to
employees, bank loans and notes, accounts payable, other payable, accrued
liabilities, and long-term liabilities.

The recorded values of cash and cash equivalents, accounts
receivable, other receivable, advances to suppliers, advances to employees, bank
loans and notes, accounts payable, other payable, and accrued liabilities
approximate their fair values based on their short-term nature. The recorded
values of long-term liabilities approximate their fair values, as interest
approximates market rates.

We have the accounting policy regarding financial instruments
for our financial statements in 2013 and 2012. We consider it critical because
our business is becoming more global in nature and the use of fair value for
financial instruments has been widely adopted by accounting bodies around the
globe. With financial statements that are widely accepted and comparable in many
jurisdictions we will have greater access to capital locally.

Recent accounting pronouncements

In January 2013, the FASB issued ASU No. 2013-01,
Clarifying the Scope of Disclosures about Offsetting Assets and Liabilities
(ASU 2013-01).The Update clarifies that ordinary trade receivables and
receivables are not in the scope of Accounting Standards Update No. 2011-11,
Balance Sheet (Topic 210): Disclosures about Offsetting Assets and Liabilities.
Specifically, Update 2011-11 applies only to derivatives, repurchase agreements
and reverse purchase agreements, and securities borrowing and securities lending
transactions that are either offset in accordance with specific criteria
contained in FASB Accounting Standards Codification® or subject to a
master netting arrangement or similar agreement. The amendments in this Update
are effective for fiscal years, and interim periods within those years,
beginning on or after January 1, 2013. Management does not expect the adoption
of this standard has a significant effect on the Companys consolidated
financial position or results of operations.

For public entities, the amendments that are subject to the
transition guidance is effective for fiscal periods beginning after December 15,
2012. Management does not expect the adoption of this standard will have a
significant effect on the Companys consolidated financial position or results
of operations.

In February 2013, the FASB issued ASU No. 2013-02, Reporting
of Amounts Reclassified Out of Accumulated Other Comprehensive Income (ASU
2013-02). The amendments require an organization to:

| | a. | Present (either on the face of the statement where net
      income is presented or in the notes) the effects on the line items of net
      income of significant amounts reclassified out of accumulated other
      comprehensive incomebut only if the item reclassified is required under
      U.S. GAAP to be reclassified to net income in its entirety in the same
      reporting period.                                                                                                                                           
| | -- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | b. | Cross-reference to other disclosures currently required
      under U.S. GAAP for other reclassification items (that are not required
      under U.S. GAAP) to be reclassified directly to net income in their
      entirety in the same reporting period. This would be the case when a
      portion of the amount reclassified out of accumulated other comprehensive
      income is initially transferred to a balance sheet account (e.g.,
      inventory for pension-related amounts) instead of directly to income or
      expense.

The amendments are effective for reporting periods beginning
after December 15, 2012, for public companies. Management does not expect the
adoption of this standard will have a significant effect on the Companys
consolidated financial position or results of operations.

In February 2013, the FASB issued ASU No. 2013-03, Clarifying
the Scope and Applicability of a Particular Disclosure to Nonpublic Entities
(ASU 2013-03). The amendment clarifies that the requirement to disclose the
level of the fair value hierarchy within which the fair value measurements are categorized in their entirety (as Level 1, Level 2, or Level 3) does not apply to private companies and nonpublic not-for-profits for items that are not measured at fair
value in the statement of financial position, but for which fair value is disclosed. The amendments are effective upon issuance. Management does not expect the adoption of this standard will have a significant effect on the Companys
consolidated financial position or results of operations.

34

---

In March 2013, the FASB issued ASU No. 2013-04, Obligations Resulting from Joint and Several Liability Arrangements for Which the Total Amount of the Obligation Is Fixed at the Reporting Date (ASU 2013-04). The update
provides guidance for the recognition, measurement, and disclosure of obligations resulting from joint and several liability arrangements for which the total amount of the obligation within the scope of this ASU is fixed at the reporting date,
except for obligations addressed within existing guidance in US GAAP. The guidance requires an entity to measure those obligations as the sum of the amount the reporting entity agreed to pay on the basis of its arrangement among its co-obligors and
any additional amount the reporting entity expects to pay on behalf of its co-obligors. The guidance in this ASU also requires an entity to disclose the nature and amount of the obligation as well as other information about those obligations. The
amendments in this ASU are effective for fiscal years, and interim periods within those years, beginning after December 15, 2013. Management does not expect the adoption of this standard will have a significant effect on the Companys
consolidated financial position or results of operations.

In March 2013, the FASB issued ASU No. 2013-05, Parents Accounting for the Cumulative Translation Adjustment upon Derecognition of Certain Subsidiaries or Groups of Assets within a Foreign Entity or of an Investment in a Foreign
Entity (ASU 2013-05). The ASU clarifies that when a parent entity ceases to have a controlling financial interest in a subsidiary or group of assets that is a nonprofit activity or a business (other than a sale of in substance real
estate or conveyance of oil and gas mineral rights) within a foreign entity, the parent is required to apply the guidance in Accounting Standards Codification 830-30 to release any related cumulative translation adjustment into net income. The ASU
provides that the cumulative translation adjustment should be released into net income only if the sale or transfer results in the complete or substantially complete liquidation of the foreign entity in which the subsidiary or group of assets had
resided. The amendments take effect prospectively for public companies for fiscal years beginning after December 15, 2013, and interim reporting periods within those years. Management does not expect the adoption of this standard will have a
significant effect on the Companys consolidated financial position or results of operations.

In March 2013, the FASB issued ASU No. 2013-07, Liquidation Basis of Accounting (ASU 2013-07). The ASU requires an entity to prepare its financial statements using the liquidation basis of accounting when liquidation is
imminent. Liquidation would be considered imminent when the likelihood is remote that the reporting entity would return from liquidation and either: (a) a plan for liquidation has been approved by the person or persons with the authority to make
such a plan effective and the likelihood is remote that the execution of the plan will be blocked by other parties or the entity will return from liquidation, or (b) a plan for liquidation is imposed by other forces, and the likelihood is remote
that the entity will return from liquidation. If a plan for liquidation was specified in an entitys governing documents at its inception (for example, limited-life entities), then liquidation would be imminent only if the approved plan for
liquidation differs from the plan specified at the entitys inception. The amendments take effect for all entities reporting under U.S. GAAP, except investment companies that are regulated under the Investment Company Act of 1940. The standard
is effective for annual reporting periods beginning after December 31, 2013, and interim reporting periods therein. Early adoption is permitted. Management does not expect the adoption of this standard will have a significant effect on the
Companys consolidated financial position or results of operations.

In July 2013, the FASB issued ASU No. 2013-11, Income Taxes (Topic 740) - Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists, does not include
explicit guidance on the financial statement presentation of an unrecognized tax benefit when a net operating loss carryforward, a similar tax loss, or a tax credit carryforward exists. There is diversity in practice in the presentation of
unrecognized tax benefits in those instances. Some entities present unrecognized tax benefits as a liability unless the unrecognized tax benefit is directly associated with a tax position taken in a tax year that results in, or that resulted in, the
recognition of a net operating loss or tax credit carryforward for that year and the net operating loss or tax credit carryforward has not been utilized. Other entities present unrecognized tax benefits as a reduction of a deferred tax asset for a
net operating loss or tax credit carryforward in certain circumstances. The objective of the amendments in this Update is to eliminate that diversity in practice.

35

---

As of December 31, 2013, there are no other recently issued accounting standards not yet adopted that would have a material effect on the Companys consolidated financial statements

Off-Balance Sheet Arrangements

We do not have any off-balance arrangements.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

Not applicable.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY FINANCIAL DATA

The full text of our audited consolidated financial statements as of December 31, 2013 begins on page F-1 of this Annual Report on Form 10-K.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.

None.

ITEM 9A. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

We maintain disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities and Exchange Act of 1934 (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 December 31, 2013. Based on that
evaluation, our Chief Executive Officer and Chief Financial Officer concluded that as of December 31, 2013, our disclosure controls and procedures were not effective due to the material weakness in our internal control over financial reporting
described below.

Internal Controls Over Financial Reporting

Managements Annual Report on Internal Control over Financial Reporting.

Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Rule 13a-15(f) of the Exchange Act. Under the supervision and with the participation of our management,
including our Chief Executive Officer and Chief Financial Officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting based upon the framework in Internal ControlIntegrated Framework issued by the
Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on that evaluation, our management concluded that, as of December 31, 2013, our internal controls over financial reporting are not effective.

The material weakness and significant deficiency identified by our management as of December 31, 2013 relates to the ability of the Company to record transactions and provide disclosures in accordance with U.S. GAAP. We did not have sufficient and
skilled accounting personnel with an appropriate level of technical accounting knowledge
and experience in the application of U.S. GAAP commensurate with our financial reporting requirements. For example, our staff members do not hold licenses such as Certified Public Accountant or Certified Management Accountant in the U.S., have not
attended U.S. institutions for training as accountants, and have not attended extended educational programs that would provide sufficient relevant education relating to U.S. GAAP. Our staff will require substantial training to meet the demands of a
U.S. public company and our staffs understanding of the requirements of U.S. GAAP-based reporting are inadequate.

36

---

Remediation Initiative

We plan to provide U.S. GAAP training sessions to our accounting team. The training sessions will be organized to help our corporate accounting team gain experience in U.S. GAAP reporting and to enhance their awareness of new and emerging
pronouncements with potential impact over our financial reporting. In November 2013, we organized a corporate wide, three day training session for all finance and accounting staff. In October 2013, we participated in a speech in given by Mr. Robert
Khuzami, former Director of Enforcement at the U.S. Securities & Exchange Commission from 2009- 2013 who led a key reorganization of the Division of Enforcement. The speech covered the current SEC and DOJ enforcement environments, the
implications of increased local government enforcement activities, SEC compliance obligations for foreign issuers, among other things. In January 2014, we attended the training session featuring a COSO update from Mr. Robert B. Hirth, Chairman of
the COSO. We plan to continue to participate in such educational seminars, tutorials, and conferences in future.

Changes in Internal Controls over Financial Reporting.

During the fiscal year ended December 31, 2013, there were no material changes in our internal control over financial reporting identified in connection with the evaluation performed during the fiscal year covered by this Annual Report that has
materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Inherent Limitations Over Internal Controls.

Our internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. GAAP. Our internal
control over financial reporting includes those policies and procedures that:

(i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets;

(ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with U.S. GAAP, and that our receipts and expenditures are being made only in accordance with authorizations of
our management and directors; and

(iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of our assets that could have a material effect on the financial statements.

Management, including our Chief Executive Officer and Chief Financial Officer, does not expect that our internal controls will prevent or detect all misstatements. A control system, no matter how well designed and operated, can provide only
reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of such controls must be considered relative
to their costs. Because of the inherent limitations in all control systems, no evaluation of internal controls can provide absolute assurance that all control issues and instances of misstatements, if any, have been detected or prevented. Also,
projections of any evaluation of the effectiveness of controls in future periods are subject to the risk that those internal controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or
procedures may deteriorate.

37

---

ITEM 9B. OTHER INFORMATION.

None.

PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE
GOVERNANCE

The information required by this item will be contained in our
Proxy Statement related to our 2014 Annual Stockholders' Meeting and is
incorporated herein by reference.

ITEM 11. EXECUTIVE COMPENSATION

The information required by this item will be contained in our
Proxy Statement related to our 2014 Annual Stockholders' Meeting and is
incorporated herein by reference.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT AND RELATED STOCKHOLDER MATTERS

The information required by this item will be contained in our
Proxy Statement related to our 2014 Annual Stockholders' Meeting and is
incorporated herein by reference.

38

---

Equity Compensation Plan Information

Information for our equity compensation plans in effect as of
the end of fiscal year 2013 is as follows:

|                                                                 |  | (a)           |  |   | (b)               |  |  | (c)           | 
|---------------------------------------------------------------- |  | ------------- |  | - | ----------------- |  |  | ------------- | 
|                                                                 |  | Number of     |  |   | Weighted-         |  |  | Number of     | 
|                                                                 |  | securities to |  |   | average           |  |  | securities    | 
|                                                                 |  | be issued     |  |   | exercise price of |  |  | remaining     | 
|                                                                 |  | upon          |  |   | outstanding       |  |  | available for | 
|                                                                 |  | exercise of   |  |   | options,          |  |  | future        | 
|                                                                 |  | outstanding   |  |   | warrants          |  |  | issuance      | 
|                                                                 |  | options,      |  |   | and rights        |  |  | under equity  | 
|                                                                 |  | warrants      |  |   |                   |  |  | compensation  | 
|                                                                 |  | and rights    |  |   |                   |  |  | plans         | 
|                                                                 |  |               |  |   |                   |  |  | (excluding    | 
|                                                                 |  |               |  |   |                   |  |  | securities    | 
|                                                                 |  |               |  |   |                   |  |  | reflected in  | 
|Plan category                                                    |  |               |  |   |                   |  |  | column (a))   | 
|Equity compensation plans
      approved by security holders     |  | N/A           |  |   | N/A               |  |  | 0             | 
|Equity compensation plans not approved by
      security holders |  | 1,334,573*    |  | $ | 1.58              |  |  | 0             | 
|Total                                                            |  | 1,334,573*    |  | $ | 1.58              |  |  | 0             | 

* Consists of options granted under the 2009 Incentive Stock
Plan (2009 Plan) and assumed by the Company in a merger. No additional options
may be granted under the assumed 2009 Plan.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND
DIRECTOR INDEPENDENCE.

The information required by this item will be contained in our
Proxy Statement related to our 2014 Annual Stockholders' Meeting and is
incorporated herein by reference.

ITEM 14. PRINCIPAL ACCOUNTING FEES AND
SERVICES.

The information required by this item will be contained in our
Proxy Statement related to our 2014 Annual Stockholders' Meeting and is
incorporated herein by reference.

39

---

PART IV

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES

(a) (1 and 2) Financial Statement and Schedules

The financial statements contained in the Audited Financial
Statements beginning on page F-1 of this Annual Report on Form 10-K.

(b) Exhibits

|Exhibit | Description                                                                                                                                                                                                                                                                                                                             
|------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|No.     |                                                                                                                                                                                                                                                                                                                                         
|3.1     | Articles of Incorporation of the registrant, as filed
      with the Nevada Secretary of State on June 15, 2009, Incorporated by
      reference to Exhibit 3.1 to the registrants registration statement on
      Form S-3 filed on January 29, 2010.                                                                                 
|3.2     | Bylaws of the registrant, Incorporated by reference to
      Exhibit 3.2 to the registrants registration statement on Form S-3 filed
      on January 29, 2010.                                                                                                                                                                        
|4.1     | Certificate of Designation of Series A Voting Convertible
      Preferred Stock of the registrant as filed with the Secretary of State of
      Delaware on April 9, 2007. Incorporated by reference to Exhibit 4.1 to the
      registrants current report on Form 8- K filed on May 9, 2007 in
      commission file number 0- 31619.
|4.2     | Certificate of Designation of Series B Voting Convertible
      Preferred Stock of registrant as filed with the Secretary of State of
      Delaware on April 30, 2007. Incorporated by reference to Exhibit 4.2 to
      the registrants current report on Form 8-K filed on May 9, 2007.                                             
|4.3     | Form of Series A Warrant. Incorporated by reference to
      Exhibit 4.1 to the registrants current report on Form 8-K filed on
      October 29, 2009.                                                                                                                                                                                
|4.4     | Form of Series B Warrant. Incorporated by reference to
      Exhibit 4.2 to the registrants current report on Form 8-K filed on
      October 29, 2009.                                                                                                                                                                                
|4.5     | Registration Rights Agreement, dated as of October 28,
      2009. Incorporated by reference to Exhibit 4.3 to the registrants current
      report on Form 8-K filed on October 29, 2009.                                                                                                                                             
|4.6     | Registration Rights Agreement, dated as of September 9,
      2010, by and among American Lorain Corporation and the purchasers named
      therein. Incorporated by reference to Exhibit 99.3 to the registrants
      current report on Form 8-K filed on September 13, 2010.                                                        
|4.7     | Stockholder Agreement, dated as of September 9, 2010, by
      and among American Lorain Corporation, the purchasers named therein and Si
      Chen. Incorporated by reference to Exhibit 99.4 to the registrants
      current report on Form 8-K filed on September 13, 2010.                                                       
|10.1    | Securities Purchase Agreement dated as of October 28,
      2009, by and between American Loan Corporation and the purchasers named
      therein. Incorporated by reference to Exhibit 10.1 to the registrants
      current report on Form 8-K filed on October 29, 2009.                                                            
|10.2    | Securities Purchase Agreement dated as of September 9,
      2010, by and among American Loan Corporation, Si Chen and the purchasers
      named therein. Incorporated by reference to Exhibit 99.1 to the
      registrants current report on Form 8-K filed on September 13, 2010.                                                  
|10.3    | Make Good and Escrow Agreement, dated as of September 9,
      2010, by and among American Lorain Corporation, the purchasers named
      therein, Si Chen and the collateral agent named therein. Incorporated by
      reference to Exhibit 99.2 to the registrants current report on Form 8-K
      filed on September 13, 2010.    
|10.4    | Loan Agreement, dated May 31, 2010, between Junan Hongrun
      Foodstuff Co. Ltd. and DEG-Deutsche Investitions- Und
      Entwicklungsgesellschaft MBH. Incorporated by reference to Exhibit 10.12
      to the registrants quarterly report on Form 10-Q filed on August 11,
      2010.                                            
|10.5    | Share Purchase Agreement dated February 7, 2014 by and
      between Junan Hongrun Foodstuff Co., Ltd. and Intiraimi. Incorporated by
      reference to Exhibit 10.5 to the registrants current report on Form 8-K
      filed on February 13, 2014.                                                                                  
|10.6    | Reiterative Share Purchase Agreement dated February 7,
      2014 by and between Junan Hongrun Foodstuff Co., Ltd. and Biobranco II.
      Incorporated by reference to Exhibit 10.6 to the registrants current
      report on Form 8-K filed on February 13, 2014.                                                                   
|10.7    | Shareholders Agreement dated February 7, 2014 by and
      among Junan Hongrun Foodstuff Co., Ltd., Athena, and the other
      shareholders of Athena. Incorporated by reference to Exhibit 10.7 to the
      registrants current report on Form 8-K filed on February 13, 2014.                                                     

40

---

|10.8  | Small and
    Medium Size Enterprise Private Placement Notes Subscription Agreement of
    2013 between Beijing Lorain Co., Ltd. and Haitong Securities, Inc. dated
    August 28, 2013*                     
|----- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|10.9  | Small and Medium Size Enterprise Private Placement
    Notes Subscription Agreement of 2013 between Beijing Lorain Co., Ltd. and
    Everbright Securities Assets Management Co., Ltd. dated August 28, 2013*
|10.10 | Small and
    Medium Size Enterprise Private Placement Notes Subscription Agreement of
    2013 between Beijing Lorain Co., Ltd. and SWS MU Fund Management Co., Ltd.
    dated August 28, 2013*             
|10.11 | Small and Medium Size Enterprise Private
    Placement Notes Subscription Agreement of 2013 between Beijing Lorain Co.,
    Ltd. and Essence Securities, Inc. dated August 28, 2013*                         
|10.12 | Small and
    Medium Size Enterprise Private Placement Notes Subscription Agreement of
    2013 between Beijing Lorain Co., Ltd. and Guoyuan Securities, Inc. dated
    August 28, 2013*                     
|10.13 | Small and Medium Size Enterprise Private
    Placement Notes Subscription Agreement of 2013 between Junan Hongrun
    Foodstuff Co., Ltd. and Harfor Fund Management Co., Ltd. dated October 18,
    2013*   
|10.14 | Small and
    Medium Size Enterprise Private Placement Notes Subscription Agreement of
    2013 between Junan Hongrun Foodstuff Co., Ltd. and Opple Lighting
    Corporation. dated November 6, 2013*        
|14    | Business Ethics
      Policy and Code of Conduct, adopted on April 30, 2007. Incorporated by
      reference to Exhibit 14 to the registrants current report on Form 8-K
      filed on May 9, 2007.        
|21.1  | List of subsidiaries of the registrant Incorporated by reference from
    Exhibit 21.1 to the Company's Annual Report on Form 10-K filed on March 31,
    2014                                               
|23.1  | Consent of Independent Registered Public
    Accounting Firm*                                                                                                                                                
|31.1  | Certification of
      Chief Executive Officer, pursuant to Section 302 of the Sarbanes-Oxley Act
      of 2002 *                                                                                            
|31.2  | Certification of Chief Financial
      Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 *                                                                                                  
|32.1  | Certification of
      Chief 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 Chief Financial
      Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
      Section 906 of the Sarbanes-Oxley Act of 2002 *                                             

* Filed herewith

41

---

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) 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.

|                        | AMERICAN LORAIN CORPORATION           
|----------------------- | --------------------------------------
|                        |                                       
|                        |                                       
|                        |                                       
|Date: February 23, 2015 | By:/s/ Si Chen                        
|                        | Si Chen, Chief
      Executive Officer

Pursuant to the requirements of the Securities Exchange Act of
1934, this annual report has been signed by the following persons in the
capacities and on the dates indicated.

Each person whose signature appears below constitutes and
appoints Si Chen as his true and lawful attorney-in-fact and agent, acting
alone, with full power of substitution and resubstitution, for him and in his
name, place and stead, in any and all capacities, to sign any and all amendments
to this Annual Report on Form 10-K/A and to file the same, with all exhibits
thereto, and other documents in connection therewith, with the U.S. Securities
and Exchange Commission, granting unto said attorney-in-fact and agent, acting
alone, full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises, as fully to all
intents and purposes as he might or could do in person, hereby ratifying and
confirming all said attorney-in-fact and agent, acting alone, or his substitute,
may lawfully do or cause to be done by virtue thereof.

|Signature               | Title                                      | Date             
|----------------------- | ------------------------------------------ | -----------------
|                        |                                            |                  
|                        | President , Director and Chief             | February 23, 2015
|                        | Executive Officer                          |                  
|/s/ Si Chen             | (Principal Executive Officer)              |                  
|Si Chen                 |                                            |                  
|                        |                                            |                  
|                        | Interim Chief Financial Officer            |                  
|                        | (Principal Financial Officer and Principal |                  
|/s/ Xiang
    Zhou      | Accounting Officer)                        | February 23, 2015
|Xiang Zhou              |                                            |                  
|                        |                                            |                  
|/s/ Yundong Lu          | Chief Operating Officer and Director       | February 23, 2015
|Yundong Lu              |                                            |                  
|                        |                                            |                  
|/s/ Dekai Yin           | Director                                   | February 23, 2015
|Dekai Yin               |                                            |                  
|                        |                                            |                  
|/s/ Maoquan Wei         | Director                                   | February 23, 2015
|Maoquan Wei             |                                            |                  
|                        |                                            |                  
|/s/ William Jianxiao Wu | Director                                   | February 23, 2015
|William Jianxiao Wu     |                                            |                  

42

---

AMERICAN LORAIN CORPORATION

AUDITED CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2013 AND 2012

(Stated in US Dollars)

---

AMERICAN LORAIN CORPORATION

|CONTENTS                                                         | PAGES     
|---------------------------------------------------------------- | ----------
|REPORT OF INDEPENDENT
      REGISTERED PUBLIC ACCOUNTING FIRM    | F-1       
|CONSOLIDATED BALANCE SHEET                                       | F-2  F-3 
|CONSOLIDATED STATEMENTS OF
      INCOME AND COMPREHENSIVE INCOME | F-4       
|CONSOLIDATED STATEMENTS OF CASH FLOWS                            | F-5       
|CONSOLIDATED STATEMENTS OF
      STOCKHOLDERS EQUITY            | F-6       
|NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                       | F-7  F-32

---

REPORT OF REGISTERED INDEPENDENT PUBLIC ACCOUNTING FIRM

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

We have audited the accompanying consolidated balance sheets of
American Lorain Corporation of December 31, 2013 and 2012 and the related
consolidated statements of income and comprehensive income, stockholders' equity
and cash flows for the years then ended. These consolidated financial statements
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these consolidated financial statements based on our
audits.

We conducted our audits in accordance with the standards of the
Public Company Accounting Oversight Board (United States). Those standards
require that we plan and perform the audit to obtain reasonable assurance about
whether the consolidated financial statements are free of material misstatement.
An audit includes examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements. An audit also includes assessing
the accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred
to above present fairly, in all material respects, the financial position of
American Lorain Corporation as of December 31, 2013 and 2012 and the results of
its operations and its cash flows for the years then ended in conformity with
accounting principles generally accepted in the United States of America.

|                      | /s/ WWC, P.C.                     
|--------------------- | ----------------------------------
|San Mateo, California | WWC, P.C.                         
|March 31, 2014        | Certified Public
      Accountants

F-1

---

AMERICAN LORAIN CORPORATIONCONSOLIDATED BALANCE
SHEETSAT DECEMBER 31, 2013 AND 2012(Stated in US
Dollars)

|                                             |   | At December 31, |  |   | At December 31, | 
|-------------------------------------------- | - | --------------- |  | - | --------------- | 
|ASSETS                                       |   | 2013            |  |   | 2012            | 
|Current assets                               |   |                 |  |   |                 | 
|Cash and cash
      equivalents              | $ | 33,857,193      |  | $ | 32,345,603      | 
|Restricted cash                              |   | 1,842,989       |  |   | 3,998,956       | 
|Trade accounts
      receivable              |   | 54,071,475      |  |   | 48,734,017      | 
|Other receivables                            |   | 5,698,020       |  |   | 4,861,280       | 
|Inventory                                    |   | 41,950,253      |  |   | 38,072,704      | 
|Advance to suppliers                         |   | 42,400,517      |  |   | 22,295,529      | 
|Prepaid expenses
      and taxes             |   | 2,168,573       |  |   | 381,905         | 
|Deferred tax asset                           |   | 180,679         |  |   | 175,211         | 
|Security deposits and
      other assets     |   | 3,242,259       |  |   | 9,293,615       | 
|Total
      current assets                   | $ | 185,411,958     |  | $ | 160,158,820     | 
|                                             |   |                 |  |   |                 | 
|Non-current
      assets                     |   |                 |  |   |                 | 
|Investment                                   |   | -               |  |   | 270,019         | 
|Property,
      plant and equipment, net     |   | 87,561,341      |  |   | 84,639,726      | 
|Construction in Progress,
      net          |   | 13,665,470      |  |   | -               | 
|Land use
      rights, net                   |   | 16,407,543      |  |   | 5,296,668       | 
|TOTAL ASSETS                                 | $ | 303,046,312     |  | $ | 250,365,233     | 
|                                             |   |                 |  |   |                 | 
|LIABILITIES AND STOCKHOLDERS EQUITY         |   |                 |  |   |                 | 
|Current liabilities                          |   |                 |  |   |                 | 
|Short-term bank
      loans                  | $ | 29,400,694      |  | $ | 28,725,143      | 
|Long-term debt  current portion             |   | 5,713,865       |  |   | 4,226,107       | 
|Accounts payable                             |   | 4,015,502       |  |   | 3,646,560       | 
|Taxes payable                                |   | 4,422,133       |  |   | 5,005,346       | 
|Accrued
      liabilities and other payables |   | 2,315,815       |  |   | 979,797         | 
|Customers deposits                           |   | 166,450         |  |   | 1,428           | 
|Total current liabilities                    | $ | 46,034,459      |  | $ | 42,584,381      | 
|                                             |   |                 |  |   |                 | 
|Long-term liabilities                        |   |                 |  |   |                 | 
|Long-term bank loans                         |   | 8,079,831       |  |   | 14,382,306      | 
|Notes payable and
      debenture            |   | 45,823,514      |  |   | 12,696,196      | 
|                                             |   |                 |  |   |                 | 
|TOTAL LIABILITIES                            | $ | 99,937,804      |  | $ | 69,662,883      | 

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

F-2

---

AMERICAN LORAIN CORPORATIONCONSOLIDATED BALANCE
SHEETSAT DECEMBER 31, 2013 AND 2012(Stated in US
Dollars)

|                                                                                                                                                                             |   | At December 31, |  |   | At December 31, | 
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | - | --------------- |  | - | --------------- | 
|                                                                                                                                                                             |   | 2013            |  |   | 2012            | 
|                                                                                                                                                                             |   |                 |  |   |                 | 
|STOCKHOLDERS EQUITY                                                                                                                                                         |   |                 |  |   |                 | 
|Preferred Stock, $.001 par
      value, 5,000,000 
    shares authorized; 0 shares issued and outstanding at
      
    December 31, 2013 and 2012, respectively             |   | -               |  |   | -               | 
|Common
      Stock, $0.001 par value, 200,000,000 shares 
    authorized; 34,616,714 shares
      issued and outstanding as 
    of December 31, 2013 and 2012, respectively |   | 34,617          |  |   | 34,617          | 
|Additional paid-in capital                                                                                                                                                   |   | 53,487,389      |  |   | 53,487,389      | 
|Statutory reserves                                                                                                                                                           |   | 18,396,513      |  |   | 16,922,494      | 
|Retained earnings                                                                                                                                                            |   | 99,257,837      |  |   | 84,097,961      | 
|Accumulated other
      comprehensive income                                                                                                                                 |   | 20,928,244      |  |   | 16,210,661      | 
|Non-controlling interests                                                                                                                                                    |   | 11,003,908      |  |   | 9,949,228       | 
|TOTAL STOCKHOLDERS
      EQUITY                                                                                                                                             | $ | 203,108,508     |  | $ | 180,702,350     | 
|                                                                                                                                                                             |   |                 |  |   |                 | 
|TOTAL LIABILITIES AND
      STOCKHOLDERS EQUITY                                                                                                                             | $ | 303,046,312     |  | $ | 250,365,233     | 

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

F-3

---

AMERICAN LORAIN CORPORATIONCONSOLIDATED
STATEMENTS OF INCOME AND COMPREHENSIVE INCOMEFOR THE YEARS ENDED
DECEMBER 31, 2013 AND 2012(Stated in US Dollars)

|                                          |   | For the
      years ended December 31, |  
|----------------------------------------- | - | -------------------------------------- | -
|                                          |   | 2013                                   |  
|                                          |   |                                        |  
|Net revenues                              | $ | 215,279,785                            |  
|Cost of revenues                          |   | (172,107,742                           | )
|Gross profit                              | $ | 43,172,043                             |  
|                                          |   |                                        |  
|Operating expenses                        |   |                                        |  
|Selling and marketing expenses            |   | (10,507,616                            | )
|General and administrative
      expenses |   | (7,231,171                             | )
|                                          |   | (17,738,787                            | )
|                                          |   |                                        |  
|Operating income                          | $ | 25,433,256                             |  
|                                          |   |                                        |  
|Government subsidy income                 |   | 1,606,558                              |  
|Interest income                           |   | 79,615                                 |  
|Other income                              |   | 1,484,702                              |  
|Other expenses                            |   | (188,876                               | )
|Interest expense                          |   | (5,152,923                             | )
|                                          |   |                                        |  
|                                          |   |                                        |  
|Earnings before tax                       | $ | 23,262,332                             |  
|                                          |   |                                        |  
|Income tax                                |   | (5,573,757                             | )
|                                          |   |                                        |  
|Net income                                | $ | 17,688,575                             |  
|                                          |   |                                        |  
|Other comprehensive income:               |   |                                        |  
|Foreign currency
      translation gain   |   | 4,717,583                              |  
|Comprehensive Income                      |   | 22,406,158                             |  
|Net income attributable to:               |   |                                        |  
|-Common stockholders                      | $ | 16,633,895                             |  
|-Non-controlling interest                 |   | 1,054,680                              |  
|                                          | $ | 17,688,575                             |  
|                                          |   |                                        |  
|Earnings per share                        |   |                                        |  
|- Basic                                   | $ | 0.48                                   |  
|-
      Diluted                           | $ | 0.48                                   |  
|                                          |   |                                        |  
|Weighted average shares
      outstanding |   |                                        |  
|- Basic                                   |   | 34,616,714                             |  
|-
      Diluted                           |   | 34,616,714                             |  

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

F-4

---

AMERICAN LORAIN CORPORATIONCONSOLIDATED
STATEMENTS OF CASH FLOWFOR THE YEARS ENDED DECEMBER 31, 2013 AND
2012(Stated in US Dollars)

|                                                                          |   | For the
      years ended December 31, |  
|------------------------------------------------------------------------- | - | -------------------------------------- | -
|                                                                          |   | 2013                                   |  
|Cash flows from operating
      activities                                |   |                                        |  
|Net income                                                                | $ | 17,688,575                             |  
|Stock and share
      based compensation                                  |   | -                                      |  
|Depreciation of fixed assets                                              |   | 4,226,873                              |  
|Amortization of
      intangible assets                                   |   | 301,079                                |  
|Adjustment to statutory reserve                                           |   | -                                      |  
|(Increase)/decrease in accounts & other receivables                       |   | (26,114,165                            | )
|(Increase)/decrease in
      inventories                                  |   | (3,877,549                             | )
|Decrease/(increase) in prepayment                                         |   | (1,786,668                             | )
|Decrease/(increase) in deferred
      tax asset                           |   | (5,468                                 | )
|Increase/(decrease) in accounts and other payables                        |   | 1,121,747                              |  
|Net cash (used
      in)/provided by operating activities                 |   | (8,445,576                             | )
|                                                                          |   |                                        |  
|Cash flows from investing activities                                      |   |                                        |  
|Sale of
      Short-term investment                                       |   | 270,019                                |  
|Purchase of plant and equipment                                           |   | (18,034,288                            | )
|Payment for the
      purchase of land use rights                         |   | (11,411,953                            | )
|(Increase)/decrease in
      restricted cash                              |   | 2,155,968                              |  
|(Increase)/decrease in deposit                                            |   | 6,051,356                              |  
|Net cash used in investing
      activities                               |   | (20,968,898                            | )
|                                                                          |   |                                        |  
|Cash flows from financing activities                                      |   |                                        |  
|Repayment of
      bank borrowings                                        |   | (8,180,860                             | )
|Proceeds from bank borrowings                                             |   | -                                      |  
|Proceeds from
      long-term borrowings and notes payable                |   | 45,823,514                             |  
|Repayment of notes                                                        |   | (8,654,503                             | )
|Issuance of
      common stock                                            |   | -                                      |  
|Repayment of financing cost
      (APIC)                                  |   | -                                      |  
|Net cash
      provided by/(used in) financing activities                 | $ | 28,988,151                             |  
|                                                                          |   |                                        |  
|Net Increase/(decrease) of
      Cash and Cash Equivalents                |   | (426,323                               | )
|                                                                          |   |                                        |  
|Effect of foreign currency
      translation on cash and cash equivalents |   | 1,937,913                              |  
|                                                                          |   |                                        |  
|Cash and cash
      equivalentsbeginning of period                       |   | 32,345,603                             |  
|Cash and cash equivalentsend of period                                   | $ | 33,857,193                             |  
|                                                                          |   |                                        |  
|Supplementary cash flow
      information:                                |   |                                        |  
|Interest received                                                         | $ | 79,615                                 |  
|Interest
      paid                                                       | $ | 4,386,788                              |  
|Income taxes paid                                                         | $ | 6,364,077                              |  

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

F-5

---

AMERICANLORAINCORPORATIONCONSOLIDATEDSTATEMENTSOFSTOCKHOLDERSEQUITYFOR THEYEARSENDEDDECEMBER31, 2013 AND 2012(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, 2012                      |  | 34,507,874 |  |  | 34,508 |  |  | 53,015,636 |   |  | 13,976,899 |  |  | 65,939,713 |   |  | 15,353,885    |  |  | 8,628,127   |  |  | 156,948,768 |  
|Issuance of share based compensation          |  | 108,840    |  |  | 109    |  |  | 503,493    |   |  | -          |  |  | -          |   |  | -             |  |  | -           |  |  | 503,602     |  
|Repayment of financing cost                   |  | -          |  |  | -      |  |  | (31,740    | ) |  | -          |  |  | -          |   |  | -             |  |  | -           |  |  | (31,740     | )
|Net income                                    |  | -          |  |  | -      |  |  | -          |   |  | -          |  |  | 21,743,769 |   |  | -             |  |  | -           |  |  | 21,743,769  |  
|Allocation to non-controlling
      interests |  | -          |  |  | -      |  |  | -          |   |  | -          |  |  | (1,321,101 | ) |  | -             |  |  | 1,321,101   |  |  | -           |  
|Appropriations to statutory reserve           |  | -          |  |  | -      |  |  |            |   |  | 2,264,420  |  |  | (2,264,420 | ) |  | -             |  |  | -           |  |  | -           |  
|Adjustment to statutory
      reserve         |  | -          |  |  | -      |  |  | -          |   |  | 681,175    |  |  | -          |   |  | -             |  |  | -           |  |  | 681,175     |  
|Foreign currency translation adjustment       |  | -          |  |  | -      |  |  | -          |   |  | -          |  |  | -          |   |  | 856,776       |  |  | -           |  |  | 856,776     |  
|                                              |  |            |  |  |        |  |  |            |   |  |            |  |  |            |   |  |               |  |  |             |  |  |             |  
|Balance, December 31, 2012                    |  | 34,616,714 |  |  | 34,617 |  |  | 53,487,389 |   |  | 16,922,494 |  |  | 84,097,961 |   |  | 16,210,661    |  |  | 9,949,228   |  |  | 180,702,350 |  
|                                              |  |            |  |  |        |  |  |            |   |  |            |  |  |            |   |  |               |  |  |             |  |  |             |  
|Balance, January 1, 2013                      |  | 34,616,714 |  |  | 34,617 |  |  | 53,487,389 |   |  | 16,922,494 |  |  | 84,097,961 |   |  | 16,210,661    |  |  | 9,949,228   |  |  | 180,702,350 |  
|Net income                                    |  | -          |  |  | -      |  |  | -          |   |  | -          |  |  | 17,688,575 |   |  | -             |  |  | -           |  |  | 17,688,575  |  
|Allocation to non-controlling interests       |  | -          |  |  | -      |  |  | -          |   |  | -          |  |  | (1,054,680 | ) |  | -             |  |  | 1,054,680   |  |  | -           |  
|Appropriations to statutory
      reserve     |  | -          |  |  | -      |  |  | -          |   |  | 1,474,019  |  |  | (1,474,019 | ) |  | -             |  |  | -           |  |  | -           |  
|Foreign currency translation adjustment       |  | -          |  |  | -      |  |  | -          |   |  | -          |  |  | -          |   |  | 4,717,583     |  |  | -           |  |  | 4,717,583   |  
|                                              |  |            |  |  |        |  |  |            |   |  |            |  |  |            |   |  |               |  |  |             |  |  |             |  
|Balance, December 31, 2013                    |  | 34,616,714 |  |  | 34,617 |  |  | 53,487,389 |   |  | 18,396,513 |  |  | 99,257,837 |   |  | 20,928,244    |  |  | 11,003,908  |  |  | 203,108,508 |  

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

F-6

---

AMERICAN LORAIN CORPORATIONNOTES TO CONSOLIDATED
FINANCIAL STATEMENTSDECEMBER 31, 2013 AND 2012(Stated in
US Dollars)

|1. | ORGANIZATION, BASIS OF PRESENTATION, AND PRINCIPAL
      ACTIVITIES
|-- | -------------------------------------------------------------------
|   |                                                                    
|   | (a)                                                                
|   |                                                                    
|   |                                                                    
|   |                                                                    
|   | (b)                                                                
|   |                                                                    
|   |                                                                    
|   |                                                                    
|   |                                                                    
|   |                                                                    
|   |                                                                    
|   |                                                                    
|   |                                                                    
|   |                                                                    
|   | (c)                                                                
|   |                                                                    
|   |                                                                    
|   |                                                                    
|2. | SUMMARY OF SIGNIFICANT ACCOUNTING
  POLICIES                       
|   |                                                                    
|   | (a)                                                                
|   |                                                                    
|   |                                                                    
|   |                                                                    
|   |                                                                    

F-7

---

AMERICAN LORAIN CORPORATIONNOTES TO CONSOLIDATED
FINANCIAL STATEMENTSDECEMBER 31, 2013 AND 2012(Stated in
US Dollars)

| | (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 non-controlling investors are recorded as non-controlling interests.
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| |     | As of December 31, 2013, the detailed identities of the
      consolidating subsidiaries are as follows:                                                                                                                                                                                                                                                                                                                                                                                                      

| |                                             |  | Place of       |  |  | Attributable
      equity |  |   | Registered | 
| | ------------------------------------------- |  | -------------- |  |  | ------------------------- |  | - | ---------- | 
| | Name of Company                             |  | incorporation  |  |  | interest %                |  |   | capital    | 
| | Shandong Lorain Co., Ltd.                   |  | PRC            |  |  | 80.2                      |  | $ | 13,238,040 | 
| | Luotian Lorain Co., Ltd.                    |  | PRC            |  |  | 100                       |  |   | 4,145,195  | 
| | Junan Hongrun Foodstuff Co.,
      Ltd.     |  | PRC            |  |  | 100                       |  |   | 48,965,698 | 
| | Beijing Lorain Co., Ltd.                    |  | PRC            |  |  | 100                       |  |   | 1,636,554  | 
| | Shandong Greenpia Foodstuff
      Co., Ltd. |  | PRC            |  |  | 100                       |  |   | 2,513,747  | 
| | Dongguan Lorain Co., Ltd.                   |  | PRC            |  |  | 100                       |  |   | 163,655    | 
| | International Lorain Holding
      Inc.     |  | Cayman Islands |  |  | 100                       |  |   | 50,927,518 | 

| | (c) | Use of estimates                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| |     | The preparation of the financial statements in
      conformity with generally accepted accounting principles in the United
      States of America requires management to make estimates and assumptions
      that affect the reported amounts of assets and liabilities and disclosure
      of contingent assets and liabilities at the date of the financial
      statements and the reported amounts of revenues and expenses during the
      reporting periods. Management makes these estimates using the best
      information available at the time the estimates are made; however actual
      results could differ materially from those estimates.                                                                                                                                                                                                                                                    
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | (d) | Cash and cash equivalents                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| |     | The Company considers all highly liquid investments
      purchased with original maturities of three months or less to be cash
      equivalents.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | (e) | Investment securities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| |     | The Company classifies securities it holds for investment
      purposes into trading or available-for-sale. Trading securities are bought
      and held principally for the purpose of selling them in the near term. All
      securities not included in trading securities are classified as
      available-for-sale.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| |     | Trading and available-for-sale securities are recorded at
      fair value. Unrealized holding gains and losses on trading securities are
      included in the net income. Unrealized holding gains and losses, net of
      the related tax effect, on available for sale securities are excluded from
      net income and are reported as a separate component of other comprehensive
      income until realized. Realized gains and losses from the sale of
      available-for-sale securities are determined on a specific-identification
      basis.                                                                                                                                                                                                                                                                                                                                                         
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| |     | A decline in the market value of any available-for-sale
      security below cost that is deemed to be other-than- temporary results in
      a reduction in carrying amount to fair value. The impairment is charged as
      an expense to the statement of income and comprehensive income and a new
      cost basis for the security is established. To determine whether
      impairment is other-than-temporary, the Company considers whether it has
      the ability and intent to hold the investment until a market price
      recovery and considers whether evidence indicating the cost of the
      investment is recoverable outweighs evidence to the contrary. Evidence
      considered in this assessment includes the reasons for the impairment, the severity and
      duration of the impairment, changes in value subsequent to year end, and
      forecasted performance of the investee.

F-8

---

AMERICAN LORAIN CORPORATIONNOTES TO CONSOLIDATED
FINANCIAL STATEMENTSDECEMBER 31, 2013 AND 2012(Stated in
US Dollars)

| |     | Premiums and discounts are amortized or accreted over the
      life of the related available-for-sale security as an adjustment to yield
      using the effective-interest method. Dividend and interest income are
      recognized when earned.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | (f) | Trade 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) | Customer deposits and advances to
  suppliers                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |     | Customer deposits were received from customers in
      connection with orders of products to be delivered in future
    periods.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |     | Advance to suppliers is a good faith deposit paid to the
      supplier for the purpose of committing the supplier to provide product
      promptly upon delivery of the Companys purchase order for raw materials,
      supplies, equipment, building materials etc. Pursuant to the Companys
      arrangements with its suppliers, this deposit is generally 20% of the
      total amount contracted for. This type of transaction is classified as a
      prepayment category under the account name Advance to Suppliers until
      such time as the Companys purchase order is delivered, at which point
      this account is reduced by reclassification of the applicable amount to
      the appropriate asset account such as inventory or fixed assets or
      construction in progress.
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | (i) | Property, plant and equipment                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |     | Plant and equipment are carried at cost less accumulated
      depreciation. Depreciation is provided over their estimated useful lives,
      using the straight-line method with a salvage value of 10%. Estimated
      useful lives of the plant and equipment are as
follows:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             

| | Buildings                   | 40 years | 
| | --------------------------- | -------- | 
| | Landscaping, plant and tree | 30 years | 
| | Machinery and equipment     | 10 years | 
| | Motor vehicles              | 10 years | 
| | Office equipment            | 5 years  | 

| |     | The cost and related accumulated depreciation of assets
      sold or otherwise retired are eliminated from the accounts and any gain or
      loss is included in the statement of income. The cost of maintenance and
      repairs is charged to income as incurred, whereas significant renewals and
      betterments are capitalized.                                                 
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                             
| | (j) | Construction in progress                                                                                                                                                                                                                                                                                                                                                                    
| |     |                                                                                                                                                                                                                                                                                                                                                                                             
| |     | Construction in progress represents direct and indirect
      construction or acquisition costs. The construction in progress is
      transferred to plant and equipment when substantially all the activities
      necessary to prepare the assets for their intended use are completed. No
      depreciation is provided until the asset is completed and ready for
      intended use.

F-9

---

AMERICAN LORAIN CORPORATIONNOTES TO CONSOLIDATED
FINANCIAL STATEMENTSDECEMBER 31, 2013 AND 2012(Stated in
US Dollars)

| | (k) | Land Use Rights                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| |     | Land use rights are carried at cost and amortized on a
      straight-line basis over a specified period. Amortization is provided
      using the straight-line method over 40-50 years.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | (l) | Accounting for the Impairment of Long-Lived
      Assets                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| |     | The long-lived assets held by the Company are reviewed in
      accordance with Financial Accounting Standards Board (FASB) Accounting
      Standards Codification (ASC) Subtopic 360-10-35, Accounting for the
      Impairment or Disposal of Long-Lived Assets, 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.
      Impairment is present if carrying amount of an asset is less than its
      undiscounted cash flows to be generated.                                                                                                                                                                                                                                                                                                                                                                                                                        
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| |     | If an asset is considered impaired, a loss is recognized
      based on the amount by which the carrying amount exceeds the fair market
      value of the asset. Assets to be disposed of are reported at the lower of
      the carrying amount or fair value less costs to sell. The Company believes
      no impairment has occurred to its assets during 2013 and 2012.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | (m) | Advertising                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| |     | All advertising costs are expensed as incurred.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | (n) | Shipping and handling                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| |     | All shipping and handling are expensed as
  incurred.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | (o) | Research and development                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| |     | All research and development costs are expensed as
      incurred.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | (p) | Retirement benefits                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| |     | Retirement benefits in the form of contributions under
      defined contribution retirement plans to the relevant authorities are
      charged to the consolidated statement of income as incurred.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | (q) | Income taxes                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| |     | The Company accounts for income tax using an asset and
      liability approach and allows for recognition of deferred tax benefits in
      future years. Under the asset and liability approach, deferred taxes are
      provided for the net tax effects of temporary differences between the
      carrying amounts of assets and liabilities for financial reporting
      purposes and the amounts used for income tax purposes. A valuation
      allowance is provided for deferred tax assets if it is more likely than
      not these items will either expire before the Company is able to realize
      their benefits, or that future realization is uncertain.                                                                                                                                                                                                                                                                                                                                                                                                                     
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| |     | The Company has implemented ASC Topic 740, 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.

F-10

---

AMERICAN LORAIN CORPORATIONNOTES TO CONSOLIDATED
FINANCIAL STATEMENTSDECEMBER 31, 2013 AND 2012(Stated in
US Dollars)

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.

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 IncomeRate
    
    Over
    
    
    But Not Over
    
    
    Of Amount Over15%
    
    0
    
    
    50,000
    
    
    025%
    
    50,000
    
    
    75,000
    
    
    50,00034%
    
    75,000
    
    
    100,000
    
    
    75,00039%
    
    100,000
    
    
    335,000
    
    
    100,00034%
    
    335,000
    
    
    10,000,000
    
    
    335,00035%
    
    10,000,000
    
    
    15,000,000
    
    
    10,000,00038%
    
    15,000,000
    
    
    18,333,333
    
    
    15,000,00035%
    
    18,333,333
    
    
    -
    
    
    -


| | (r) | Statutory reserves                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |     | Statutory reserves are referring to the amount
      appropriated from the net income in accordance with laws or regulations,
      which can be used to recover losses and increase capital, as approved, and
      are to be used to expand production or operations. The Company transferred
      $0 and $2,264,420 from retained earnings to statutory reserves for the
      period ended December 31, 2013 and year ended December 31, 2012. PRC laws
      prescribe that an enterprise operating at a profit, must appropriate, on
      an annual basis, an amount equal to 10% of its profit. Such an
      appropriation is necessary until the reserve reaches a maximum that is
      equal to 50% of the enterprises PRC registered capital.
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | (s) | Foreign currency translation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |     | The accompanying financial statements are presented in
      United States dollars. The functional currency of the Company is the
      Renminbi (RMB). The financial statements are translated into United States
      dollars from RMB at year-end exchange rates as to assets and liabilities
      and average exchange rates as to revenues and expenses. Capital accounts
      are translated at their historical exchange rates when the capital
      transactions occurred.                                                                                                                                                                                                                                                                      

| |                                       |  | 12/31/2013 |  |  | 12/31/2012 | 
| | ------------------------------------- |  | ---------- |  |  | ---------- | 
| | Year end RMB: US$ exchange rate       |  | 6.1104     |  |  | 6.3011     | 
| | Average yearly RMB: US$ exchange rate |  | 6.1905     |  |  | 6.3034     | 

| |     | The RMB is not freely convertible into foreign currency
      and all foreign exchange transactions must take place through authorized
      institutions. No representation is made that the RMB amounts could have
      been, or could be, converted into US Dollars at the rates used in
      translation.                                                                                                                                                                                                                               
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | (t) | Revenue recognition                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| |     | The Company's revenue recognition policies are in
      compliance with Staff accounting bulletin (SAB) 104. Sales revenue is
      recognized at the date of shipment to customers when a formal arrangement
      exists, the price is fixed or determinable, the delivery is completed, no other
      significant obligations of the Company exist and collectability is
      reasonably assured. Payments received before all of the relevant criteria
      for revenue recognition are satisfied are recorded as unearned
    revenue.

F-11

---

AMERICAN LORAIN CORPORATIONNOTES TO CONSOLIDATED
FINANCIAL STATEMENTSDECEMBER 31, 2013 AND 2012(Stated in
US Dollars)

| |     | The Company's revenue consists of invoiced value of
      goods, net of a value-added tax (VAT). The Company allows its customers to
      return products if they are defective. However, this rarely happens and
      amounts returned have been de minimis.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| |     | The Company gradually switched its sales model from
      direct sales to third party distributor model and issues 1% sales
      incentive to distributors. The Company modified its accounting policy for
      the recognition of revenue accordingly. Given the circumstances of how the
      Company conducts its incentive program, the Company books the payments
      settled in cash as a contra account to Gross Revenue, and includes the
      amount in its reported net revenue. The Company has considered the
      guidance in FASB ASC 605-50 (EITF 01-9) and will account for its sales
      incentive program accordingly.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | (u) | Earnings per share                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| |     | Basic earnings per share is computed by dividing net
      income by the weighted average number of shares of common stock
      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 potential dilutive securities during the year.
      During the period ended December 31, 2013, no warrants were issued and no
      options were granted. For the year ended December 31, 2010, 81,155
      warrants were issued to certain service providers. For the year ended
      December 31, 2009, 1,334,573 stock options were granted to employees
      pursuant to the Companys equity incentive plan; 2,255,024 warrants were
      issued to investors in connection with a PIPE financing. These warrants
      and options could be potentially dilutive if the market price of the
      Companys common stock exceeds the exercise price for these
    securities.                                                                                                                                  
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| |     | The Company computes earnings per share (EPS) in
      accordance with Statement of Financial Accounting Standards No. 128,
      Earnings per share (SFAS No. 128), and SEC Staff Accounting Bulletin
      No. 98 (SAB 98). SFAS No. 128 requires companies with complex capital
      structures to present basic and diluted EPS. Basic EPS is measured as the
      income or loss available to common shareholders divided by the weighted
      average common shares outstanding for the period. Diluted EPS is similar
      to basic EPS but presents the dilutive effect on a per share basis of
      potential common shares (e.g., convertible securities, options, and
      warrants) as if they had been converted at the beginning of the periods
      presented, or issuance date, if later. Potential common shares that have
      an anti-dilutive effect (i.e., those that increase income per share or
      decrease loss per share) are excluded from the calculation of diluted
      EPS.                                                                                                                   
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | (v) | Financial Instruments                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| |     | The Companys financial instruments, including cash and
      equivalents, accounts and other receivables, accounts and other payables,
      accrued liabilities and short-term debt, the carrying amounts approximate
      their fair values due to their short maturities. ASC Topic 820, Fair
      Value Measurements and Disclosures, requires disclosure of the fair value
      of financial instruments held by the Company. ASC Topic 825, Financial
      Instruments, defines fair value, and establishes a three-level valuation
      hierarchy for disclosures of fair value measurement that enhances
      disclosure requirements for fair value measures. The carrying amounts
      reported in the consolidated balance sheets for receivables and current
      liabilities each qualify as financial instruments and are a reasonable
      estimate of their fair values because of the short period of time between
      the origination of such instruments and their expected realization and
      their current market rate of interest. The three levels of valuation
      hierarchy are defined as follows:

- Level 1 inputs to the valuation methodology are quoted prices for
  identical assets or liabilities in active markets.
- Level 2 inputs to the valuation methodology include quoted prices for
  similar assets and liabilities in active markets, and inputs that are
  observable for the asset or liability, either directly or indirectly, for
  substantially the full term of the financial instrument.

F-12

---

AMERICAN LORAIN CORPORATIONNOTES TO CONSOLIDATED
FINANCIAL STATEMENTSDECEMBER 31, 2013 AND 2012(Stated in
US Dollars)

- Level 3 inputs to the valuation methodology are unobservable and
  significant to the fair value measurement.

The Company analyzes all financial
instruments with features of both liabilities and equity under ASC 480,
Distinguishing Liabilities from Equity, and ASC 815.

As of December 31, 2013 and 2012, the
Company did not identify any assets and liabilities that were required to be
presented on the balance sheet at fair value.

The following tables present the
Companys financial assets and liabilities at fair value in accordance to ASC
820-10:

| | At December 31, 2013:       |   | Quoted in      |  |   | Significant |  |   |              |  |   |            | 
| | --------------------------- | - | -------------- |  | - | ----------- |  | - | ------------ |  | - | ---------- | 
| |                             |   | Active Markets |  |   | Other       |  |   | Significant  |  |   |            | 
| |                             |   | for Identical  |  |   | Observable  |  |   | Unobservable |  |   |            | 
| |                             |   | Assets         |  |   | Inputs      |  |   | Inputs       |  |   |            | 
| |                             |   | (Level 1)      |  |   | (Level 2)   |  |   | (Level 3)    |  |   | Total      | 
| | Financial assets:           |   |                |  |   |             |  |   |              |  |   |            | 
| | Cash                        | $ | 33,857,193     |  | $ | -           |  | $ | -            |  | $ | 33,857,193 | 
| | Restricted Cash             |   | 1,842,989      |  |   | -           |  |   | -            |  |   | 1,842,989  | 
| | Total financial assets      | $ | 35,700,182     |  | $ | -           |  | $ | -            |  | $ | 35,700,182 | 
| |                             |   |                |  |   |             |  |   |              |  |   |            | 
| | Financial liabilities:      |   |                |  |   |             |  |   |              |  |   |            | 
| | Notes payable               | $ | -              |  | $ | -           |  | $ | -            |  | $ | -          | 
| | Total financial liabilities | $ | -              |  | $ | -           |  | $ | -            |  | $ | -          | 

| | At December 31, 2012:       |   | Quoted in      |  |   | Significant |  |   |              |  |   |            | 
| | --------------------------- | - | -------------- |  | - | ----------- |  | - | ------------ |  | - | ---------- | 
| |                             |   | Active Markets |  |   | Other       |  |   | Significant  |  |   |            | 
| |                             |   | for Identical  |  |   | Observable  |  |   | Unobservable |  |   |            | 
| |                             |   | Assets         |  |   | Inputs      |  |   | Inputs       |  |   |            | 
| |                             |   | (Level 1)      |  |   | (Level 2)   |  |   | (Level 3)    |  |   | Total      | 
| | Financial assets:           |   |                |  |   |             |  |   |              |  |   |            | 
| | Cash                        | $ | 32,345,603     |  | $ | -           |  | $ | -            |  | $ | 32,345,603 | 
| | Restricted Cash             |   | 3,998,956      |  |   | -           |  |   | -            |  |   | 3,998,956  | 
| | Total financial assets      | $ | 36,344,559     |  | $ | -           |  | $ | -            |  | $ | 36,344,559 | 
| |                             |   |                |  |   |             |  |   |              |  |   |            | 
| | Financial liabilities:      |   |                |  |   |             |  |   |              |  |   |            | 
| | Notes payable               | $ | -              |  | $ | -           |  | $ | -            |  | $ | -          | 
| | Total financial liabilities | $ | -              |  | $ | -           |  | $ | -            |  | $ | -          | 

| | (w) | Commitments and contingencies                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| |     | Liabilities for loss contingencies arising from claims,
      assessments, litigation, fines and penalties and other sources are
      recorded when it is probable that a liability has been incurred and the
      amount of the assessment can be reasonably estimated.                                                                                                                                                                                                                                                                                                                                                   
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| | (x) | Comprehensive income                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| |     | Comprehensive income is defined to include all changes in
      equity except those resulting from investments by owners and distributions
      to owners. Among other disclosures, all items that are required to be
      recognized under current accounting standards as components of
      comprehensive income are required to be reported in a financial statement
      that is presented with the same prominence as other financial statements.
      The Companys current component of other comprehensive income includes
      the foreign currency translation adjustment and unrealized gain or
      loss.

F-13

---

AMERICAN LORAIN CORPORATIONNOTES TO CONSOLIDATED
FINANCIAL STATEMENTSDECEMBER 31, 2013 AND 2012(Stated in
US Dollars)

| |     | The Company uses FASB ASC Topic 220, Reporting
      Comprehensive Income. Comprehensive income is comprised of net income and
      all changes to the statements of stockholders equity, except the changes
      in paid- in capital and distributions to stockholders due to investments
      by stockholders. Comprehensive income for the periods ended December 31,
      2013 and 2012 included net income and foreign currency translation
      adjustments.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | (y) | Recent accounting pronouncements                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| |     | In January 2013, the FASB issued ASU No. 2013-01,
      Clarifying the Scope of Disclosures about Offsetting Assets and
      Liabilities (ASU 2013-01).The Update clarifies that ordinary trade
      receivables and receivables are not in the scope of Accounting Standards
      Update No. 2011-11, Balance Sheet (Topic 210): Disclosures about
      Offsetting Assets and Liabilities. Specifically, Update 2011-11 applies
      only to derivatives, repurchase agreements and reverse purchase
      agreements, and securities borrowing and securities lending transactions
      that are either offset in accordance with specific criteria contained in
      FASB Accounting Standards Codification®or subject to a master
      netting arrangement or similar agreement. The amendments in this Update
      are effective for fiscal years, and interim periods within those years,
      beginning on or after January 1, 2013. Management does not expect the
      adoption of this standard has a significant effect on the Companys
      consolidated financial position or results of operations.
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| |     | For public entities, the amendments that are subject to
      the transition guidance is effective for fiscal periods beginning after
      December 15, 2012. Management does not expect the adoption of this
      standard has a significant effect on the Companys consolidated financial
      position or results of operations.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| |     | In February 2013, the FASB issued ASU No. 2013-02,
      Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive
      Income (ASU 2013-02). The amendments require an organization
  to:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| |     | a.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| |     | b.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| |     | The amendments are effective for reporting periods
      beginning after December 15, 2012, for public companies. Management does
      not expect the adoption of this standard has a significant effect on the
      Companys consolidated financial position or results of
  operations.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| |     | In February 2013, the FASB issued ASU No. 2013-03,
      Clarifying the Scope and Applicability of a Particular Disclosure to
      Nonpublic Entities (ASU 2013-03). The amendment clarifies that the
      requirement to disclose the level of the fair value hierarchy within which
      the fair value measurements are categorized in their entirety (as Level 1,
      Level 2, or Level 3) does not apply to private companies and nonpublic
      not-for-profits for items that are not measured at fair value in the
      statement of financial position, but for which fair value is disclosed.
      The amendments are effective upon issuance. Management does not expect the
      adoption of this standard has a significant effect on the Companys
      consolidated financial position or results of operations.                                                                                                                                                                                                                                                                                     
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| |     | In March 2013, the FASB issued ASU No. 2013-04,
      Obligations Resulting from Joint and Several Liability Arrangements for
      Which the Total Amount of the Obligation Is Fixed at the Reporting Date
      (ASU 2013- 04). The update provides guidance for the recognition,
      measurement, and disclosure of obligations resulting from joint and
      several liability arrangements for which the total amount of the
      obligation within the scope of this ASU is fixed at the reporting date,
      except for obligations addressed within existing guidance in US
    GAAP.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            

F-14

---

AMERICAN LORAIN CORPORATIONNOTES TO CONSOLIDATED
FINANCIAL STATEMENTSDECEMBER 31, 2013 AND 2012(Stated in
US Dollars)

The guidance requires an entity to
measure those obligations as the sum of the amount the reporting entity agreed
to pay on the basis of its arrangement among its co-obligors and any additional
amount the reporting entity expects to pay on behalf of its co-obligors. The
guidance in this ASU also requires an entity to disclose the nature and amount
of the obligation as well as other information about those obligations. The
amendments in this ASU are effective for fiscal years, and interim periods
within those years, beginning after December 15, 2013. Management does not
expect the adoption of this standard will have a significant effect on the
Companys consolidated financial position or results of operations.

In March 2013, the FASB issued ASU No.
2013-05, Parents Accounting for the Cumulative Translation Adjustment upon
Derecognition of Certain Subsidiaries or Groups of Assets within a Foreign
Entity or of an Investment in a Foreign Entity (ASU 2013-05). The ASU
clarifies that when a parent entity ceases to have a controlling financial
interest in a subsidiary or group of assets that is a nonprofit activity or a
business (other than a sale of in substance real estate or conveyance of oil and
gas mineral rights) within a foreign entity, the parent is required to apply the
guidance in Accounting Standards Codification 830-30 to release any related
cumulative translation adjustment into net income. The ASU provides that the
cumulative translation adjustment should be released into net income only if the
sale or transfer results in the complete or substantially complete liquidation
of the foreign entity in which the subsidiary or group of assets had resided.
The amendments take effect prospectively for public companies for fiscal years
beginning after December 15, 2013, and interim reporting periods within those
years. Management does not expect the adoption of this standard will have a
significant effect on the Companys consolidated financial position or results
of operations.

In March 2013, the FASB issued ASU No.
2013-07, Liquidation Basis of Accounting (ASU 2013-07). The ASU requires an
entity to prepare its financial statements using the liquidation basis of
accounting when liquidation is imminent. Liquidation would be considered
imminent when the likelihood is remote that the reporting entity would return
from liquidation and either: (a) a plan for liquidation has been approved by the
person or persons with the authority to make such a plan effective and the
likelihood is remote that the execution of the plan will be blocked by other
parties or the entity will return from liquidation, or (b) a plan for
liquidation is imposed by other forces, and the likelihood is remote that the
entity will return from liquidation. If a plan for liquidation was specified in
an entity's governing documents at its inception (for example, limited-life
entities), then liquidation would be imminent only if the approved plan for
liquidation differs from the plan specified at the entitys inception. The
amendments take effect for all entities reporting under U.S. GAAP, except
investment companies that are regulated under the Investment Company Act of
1940. The standard is effective for annual reporting periods beginning after
December 31, 2013, and interim reporting periods therein. Early adoption is
permitted. Management does not expect the adoption of this standard will have a
significant effect on the Companys consolidated financial position or results
of operations.

In July 2013, the FASB issued ASU No.
2013-11, Income Taxes (Topic 740) - Presentation of an Unrecognized Tax Benefit
When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit
Carryforward Exists, does not include explicit guidance on the financial
statement presentation of an unrecognized tax benefit when a net operating loss
carryforward, a similar tax loss, or a tax credit carryforward exists. There is
diversity in practice in the presentation of unrecognized tax benefits in those
instances. Some entities present unrecognized tax benefits as a liability unless
the unrecognized tax benefit is directly associated with a tax position taken in
a tax year that results in, or that resulted in, the recognition of a net
operating loss or tax credit carryforward for that year and the net operating
loss or tax credit carryforward has not been utilized. Other entities present
unrecognized tax benefits as a reduction of a deferred tax asset for a net
operating loss or tax credit carryforward in certain circumstances. The
objective of the amendments in this Update is to eliminate that diversity in
practice.

As of December 31, 2013, there are no
other recently issued accounting standards not yet adopted that would have a
material effect on the Companys 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.

F-15

---

AMERICAN LORAIN CORPORATIONNOTES TO CONSOLIDATED
FINANCIAL STATEMENTSDECEMBER 31, 2013 AND 2012(Stated in
US Dollars)

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

| |                                            |   | 12/31/2013 |   |   | 12/31/2012 |  
| | ------------------------------------------ | - | ---------- | - | - | ---------- | -
| | Trade accounts receivable                  | $ | 54,511,350 |   | $ | 49,177,915 |  
| | Less:Allowance for
      doubtful accounts |   | (439,875   | ) |   | (443,898   | )
| |                                            | $ | 54,071,475 |   | $ | 48,734,017 |  
| |                                            |   |            |   |   |            |  
| | Allowance for bad debt:                    |   | 12/31/2013 |   |   | 12/31/2012 |  
| | Beginning balance                          | $ | (443,898   | ) | $ | (379,693   | )
| | Additions to allowance                     |   | -          |   |   | (64,205    | )
| | Bad debt written-off                       |   | 4,023      |   |   | -          |  
| | Ending balance                             | $ | (439,875   | ) | $ | (443,898   | )

The Company offers credit terms of
between 30 to 60 days to most of their domestic customers, including
supermarkets and wholesalers, around 90 days to most of their international
customers, and between 0 to 15 days for most of the third-party distributors the
Company works with.

|5. | OTHER RECEIVABLES                                                                   
|-- | ------------------------------------------------------------------------------------
|   |                                                                                     
|   | Other receivables consisted of the following as of
      December 31, 2013 and 2012:

| |                                                          |   | 12/31/2013 |  |   | 12/31/2012 | 
| | -------------------------------------------------------- | - | ---------- |  | - | ---------- | 
| | Advances to employees for
      job/travel disbursements |   | 637,808    |  |   | 79,367     | 
| | Amount due by a non-related enterprise                   |   | 163,656    |  |   | 326,270    | 
| | Other non-related receivables                            |   | 333,411    |  |   | 76,168     | 
| | Other related receivables                                |   | 149,350    |  |   | 99,263     | 
| | Short-term investment sale
      receivable              |   | 4,413,795  |  |   | 4,280,212  | 
| |                                                          | $ | 5,698,020  |  | $ | 4,861,280  | 

Advances to employees for job/travel
disbursements consisted of advances to employees for transportation, meals,
client entertainment, commissions, and procurement of certain raw materials. The
advances issued to employees may be carried for extended periods of time because
employees may spend several months out in the field working to procure new sales
contracts or fulfill existing contracts.

Specifically, the company uses every
available employee to arrange purchases with desirable chestnut or other raw
material growers. However, because many of these growers are in rural farming
areas of China where traditional banking and credit arrangements are difficult
to implement, the Company must utilize cash purchases and also must contract for
its future needs by placing a good faith deposit in cash with the growers.
However none of these advances to employees for delivery to the growers on
behalf of the Company are personal loans to the employees. Advances to
employees for purchase of materials in other receivables are adjusted to
advances to suppliers as of December 31, 2013.

Related party receivable consisted of
the following as of December 31, 2013 and 2012:

| |              |   | 12/31/2013 |  |   | 12/31/2012 | 
| | ------------ | - | ---------- |  | - | ---------- | 
| | Chen, Si     | $ | 67,523     |  | $ | 67,523     | 
| | You, Huadong |   | 81,827     |  |   | 31,740     | 
| |              | $ | 149,350    |  | $ | 99,263     | 

Related party receivable represented
advances issued by management for job or travel disbursement in the normal
course of business. The receivable had no impact on earnings. As with other
employees, officers sign notes when cash is issued to them as job or travel
disbursement.

F-16

---

AMERICAN LORAIN CORPORATIONNOTES TO CONSOLIDATED
FINANCIAL STATEMENTSDECEMBER 31, 2013 AND 2012(Stated in
US Dollars)

|   | In order to satisfy certain criteria for obtaining the
      long-term loan with DEG, as noted in footnote 12, Junan Hongrun lent money
      to Mr. You, Huadong to purchase life insurance.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   | Related party receivable amounts are disclosed as other
      related receivables in other receivables.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   | On March 13, 2011, the Company entered into an agreement
      with Jiangsu Heng An Industrial Investment Group Co., Ltd. to sell the
      Companys short-term investment in the amount of $ 7,764,577 (RMB
      49,604,000) of a parcel of land located in Junan Town, Shandong Province,
      to construct residential buildings. The land was sold to Jiangsu Heng An
      at a total sale price of RMB 69,604,000 and a guaranteed gross profit of
      RMB 20,000,000 without consideration of profit/(loss) of the residential
      building project. The gain on the sale of the short-term investment
      excluding taxes payable was recorded as other income on the statements of
      income and comprehensive income. Title of the land transferred from the
      Company to Jiangsu Heng An with receipt of an initial deposit of RMB
      15,000,000. As of December 31, 2013, a total of RMB 42,029,955 has been
      received and RMB 26,970,045 (USD 4,413,794) is classified as Other
      Receivable. According to the contract, the Company will be entitled to
      receive RMB 9,000,000 within 5 days after the title transfer and
      construction approval is complete, and RMB 27,000,000 within 5 days after
      the residential building main frame is completed.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|6. | INVENTORIES                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   | Inventories consisted of the following as of December 31,
      2013 and 2012:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  

| |                |   | 12/31/2013 |  |   | 12/31/2012 | 
| | -------------- | - | ---------- |  | - | ---------- | 
| | Raw materials  | $ | 26,262,278 |  | $ | 18,700,879 | 
| | Finished goods |   | 15,687,975 |  |   | 19,371,825 | 
| |                | $ | 41,950,253 |  | $ | 38,072,704 | 

|7. | PROPERTY, PLANT AND EQUIPMENT                                                                    
|-- | -------------------------------------------------------------------------------------------------
|   |                                                                                                  
|   | Property, plant, and equipment consisted of the following
      as of December 31, 2013 and 2012:

| |                                     |   | 12/31/2013  |   |   | 12/31/2012  |  
| | ----------------------------------- | - | ----------- | - | - | ----------- | -
| | At Cost:                            |   |             |   |   |             |  
| | Buildings                           | $ | 81,325,426  |   | $ | 78,730,172  |  
| | Landscaping, plant and tree         |   | 10,974,003  |   |   | 7,943,605   |  
| | Machinery and equipment             |   | 12,837,463  |   |   | 11,374,635  |  
| | Office
      equipment              |   | 681,060     |   |   | 363,306     |  
| | Motor vehicles                      |   | 582,128     |   |   | 839,874     |  
| |                                     | $ | 106,400,080 |   | $ | 99,251,592  |  
| | Less:Accumulated
      depreciation |   |             |   |   |             |  
| | Buildings                           |   | (7,975,238  | ) |   | (5,911,972  | )
| | Landscaping, plant and
      tree   |   | (3,081,369  | ) |   | (2,108,661  | )
| | Machinery
      and equipment       |   | (6,916,526  | ) |   | (5,842,946  | )
| | Office equipment                    |   | (524,931    | ) |   | (221,800    | )
| | Motor
      vehicles                |   | (340,675    | ) |   | (526,487    | )
| |                                     |   | (18,838,739 | ) |   | (14,611,866 | )
| |                                     |   |             |   |   |             |  
| |                                     | $ | 87,561,341  |   | $ | 84,639,726  |  

F-17

---

AMERICAN LORAIN CORPORATIONNOTES TO CONSOLIDATED
FINANCIAL STATEMENTSDECEMBER 31, 2013 AND 2012(Stated in
US Dollars)

Landscaping, plants, and trees accounts
for the orchards that the Company has developed for agricultural operations.
These orchards as well as the young trees which were purchased as nursery stock
are capitalized into fixed assets. The depreciation is then calculated on a
30-year straight-line method when production in commercial quantities begins.
The orchards have begun production in small quantities and the Company has
accounted for depreciation commencing July 1, 2010. During the year ended
December 31, 2013, the Company purchased three greenhouses to grow seasonal
crops in order to lower cost.

|8. | LAND USE RIGHTS, NET                                                              
|-- | ----------------------------------------------------------------------------------
|   |                                                                                   
|   | Land use rights consisted of the following as of December
      31, 2013 and 2012:

| |                                |   | 12/31/2013 |   |   | 12/31/2012 |  
| | ------------------------------ | - | ---------- | - | - | ---------- | -
| | Land use rights, at
      cost | $ | 17,600,945 |   | $ | 6,192,379  |  
| | Utilities rights, at cost      |   | 50,909     |   |   | 49,368     |  
| | Software, at cost              |   | 59,496     |   |   | 57,695     |  
| | Patent, at cost                |   | 1,543      |   |   | 1,497      |  
| |                                |   | 17,712,893 |   |   | 6,300,939  |  
| |                                |   |            |   |   |            |  
| | Less:Accumulated amortization  |   | (1,305,350 | ) |   | (1,004,271 | )
| |                                | $ | 16,407,543 |   | $ | 5,296,668  |  

All lands are owned by the government
in China. Land use rights represent the Companys purchase of usage rights for a
parcel of land for a specified duration of time, typically 50 years. The land
use rights are then amortized over the period of usage. Amortization expense for
the years ended December 31, 2013 and 2012 were $301,079 and $186,994,
respectively.

|9. | SHORT-TERM BANK LOANS                                                                   
|-- | ----------------------------------------------------------------------------------------
|   |                                                                                         
|   | Short-term bank loans consisted of the following as of
      December 31, 2013 and 2012:

| |                                                                       |  | Remark |  |  | 12/31/2013 |  |  | 12/31/2012 | 
| | --------------------------------------------------------------------- |  | ------ |  |  | ---------- |  |  | ---------- | 
| |                                                                       |  |        |  |  |            |  |  |            | 
| | Loan from Junan County Industrial and
      Commercial Bank of China, |  |        |  |  |            |  |  |            | 
| |  Interest rate at 6.44% per
      annum; due 1/8/2013                |  |        |  |  | -          |  |  | 1,031,567  | 
| |  Interest rate
      at 5.88% per annum; due 4/10/2013               |  |        |  |  | -          |  |  | 1,142,658  | 
| |  Interest rate at 5.88% per
      annum; due 4/19/2013               |  |        |  |  | -          |  |  | 999,825    | 
| |  Interest rate
      at 5.88% per annum; due 4/24/2013               |  | A      |  |  | -          |  |  | 634,810    | 
| |  Interest rate at 5.88% per
      annum; due 5/17/2013               |  |        |  |  | -          |  |  | 1,348,971  | 
| |  Interest rate
      at 6.3% per annum; due 2/21/2014                |  |        |  |  | 4,091,386  |  |  | -          | 
| |  Interest rate at 5.88% per
      annum; due 1/8/2014                |  |        |  |  | 1,145,588  |  |  | -          | 
| |  Interest
      rate at 5.88% per annum; due 4/15/2014               |  |        |  |  | 1,129,222  |  |  | -          | 
| |  Interest rate
      at 5.88% per annum; due 4/23/2014               |  |        |  |  | 1,088,308  |  |  | -          | 

F-18

---

AMERICAN LORAIN CORPORATIONNOTES TO CONSOLIDATED
FINANCIAL STATEMENTSDECEMBER 31, 2013 AND 2012(Stated in
US Dollars)

| | Loan from Linyi Commercial
      Bank,                        |  |  |  |  |           |  |  |           | 
| | ------------------------------------------------------------- |  |  |  |  | --------- |  |  | --------- | 
| |  Interest rate at
      12.136% per annum due 1/10/2013      |  |  |  |  | -         |  |  | 714,161   | 
| |  Interest rate
      at 1.512% per annum due 1/9/2014        |  |  |  |  | 1,636,554 |  |  | -         | 
| |  Interest rate at
      1.26% per annum due 1/10/2014        |  |  |  |  | 1,472,899 |  |  | -         | 
| |                                                               |  |  |  |  |           |  |  |           | 
| | Loan from China Minsheng Bank Corporation,
      Linyi Branch |  |  |  |  |           |  |  |           | 
| | 
      Interest rate at 7.8% per annum due 8/29/2013         |  |  |  |  | -         |  |  | 2,380,537 | 
| |  Interest rate at
      7.8% per annum due 2/26/2014         |  |  |  |  | 2,454,831 |  |  | -         | 
| |                                                               |  |  |  |  |           |  |  |           | 
| | Loan from China Agricultural Bank, Luotian
      Branch       |  |  |  |  |           |  |  |           | 
| | 
      Interest rate at 8.4% per annum due 3/3/2013          |  |  |  |  | -         |  |  | 158,702   | 
| |  Interest rate at
      8.4% per annum due 6/3/2013          |  |  |  |  | -         |  |  | 317,405   | 
| | 
      Interest rate at 8.4% per annum due 9/3/2013          |  |  |  |  | -         |  |  | 1,110,917 | 
| |  Interest rate at
      7.8% per annum due 8/20/2014         |  |  |  |  | 1,636,554 |  |  | -         | 
| | 
      Interest rate at 7.8% per annum due 9/3/2014          |  |  |  |  | 1,636,554 |  |  | -         | 
| |                                                               |  |  |  |  |           |  |  |           | 
| | China Agricultural
      Development Bank                     |  |  |  |  |           |  |  |           | 
| | Interest rate at
      6.0% per annum due 1/3/2014           |  |  |  |  | 654,622   |  |  | -         | 
| | Interest rate
      at 6.0% per annum due 8/19/2014          |  |  |  |  | 818,277   |  |  | -         | 
| |                                                               |  |  |  |  |           |  |  |           | 
| | Bank of Beijing,                                              |  |  |  |  |           |  |  |           | 
| |  Variable
      Interest rate, due 6/29/2013                 |  |  |  |  | -         |  |  | 1,269,620 | 
| | 
      Interest rate at 7.2% per annum due 6/19/2014         |  |  |  |  | 1,309,243 |  |  | -         | 
| |                                                               |  |  |  |  |           |  |  |           | 
| | Shenzhen Development
      Bank,                              |  |  |  |  |           |  |  |           | 
| |  Interest rate at
      6.16% per annum due 1/30/2013        |  |  |  |  | -         |  |  | 1,110,917 | 
| | 
      Interest rate at 6.04% per annum due 9/6/2013         |  |  |  |  | -         |  |  | 793,512   | 
| |  Interest rate at
      6.71% per annum due 10/23/2013       |  |  |  |  | -         |  |  | 634,810   | 
| |                                                               |  |  |  |  |           |  |  |           | 
| | Luotian Sanliqiao Credit Union,                               |  |  |  |  |           |  |  |           | 
| | 
      Interest rate at 9.360% per annum due 1/6/2013        |  |  |  |  | -         |  |  | 952,215   | 
| |                                                               |  |  |  |  |           |  |  |           | 
| | Beijing International
      Trust Co., Ltd.,                  |  |  |  |  |           |  |  |           | 
| |  Variable
      interest rate, due 9/16/2013                 |  |  |  |  | -         |  |  | 1,587,024 | 
| | 
      Interest rate at 6.00% per annum due 9/23/2014        |  |  |  |  | 1,636,554 |  |  | -         | 
| |                                                               |  |  |  |  |           |  |  |           | 
| | Weihai City Commercial
      Bank,                            |  |  |  |  |           |  |  |           | 
| | 
      Interest rate at 6.90% per annum due 3/7/2013         |  |  |  |  | -         |  |  | 3,174,049 | 

F-19

---

AMERICAN LORAIN CORPORATIONNOTES TO CONSOLIDATED
FINANCIAL STATEMENTSDECEMBER 31, 2013 AND 2012(Stated in
US Dollars)

| | Bank of Ningbo ,                                        |  |   |  |   |            |  |   |            | 
| | ------------------------------------------------------- |  | - |  | - | ---------- |  | - | ---------- | 
| |  Interest rate at
      6.71% per annum due 9/27/2013  |  |   |  |   | -          |  |   | 1,587,024  | 
| | 
      Interest rate at 7.20% per annum due 9/25/2014  |  |   |  |   | 1,636,554  |  |   | -          | 
| |                                                         |  |   |  |   |            |  |   |            | 
| | Hankou Bank, Guanshan
      Branch,                     |  |   |  |   |            |  |   |            | 
| |  Interest rate at
      6.00% per annum due 9/6/2013   |  |   |  |   | -          |  |   | 793,512    | 
| | 
      Interest rate at 6.60% per annum due 9/14/2013  |  |   |  |   | -          |  |   | 1,587,024  | 
| |  Interest rate at
      6.60% per annum due 9/12/2014  |  |   |  |   | 1,636,554  |  |   | -          | 
| |                                                         |  |   |  |   |            |  |   |            | 
| | China Agricultural Bank, Shandong
      Branch          |  |   |  |   |            |  |   |            | 
| | 
      Interest rate at 10.2% per annum due 7/16/2013  |  | C |  |   | -          |  |   | 3,174,049  | 
| |  Interest rate at
      7.2% per annum due 8/29/2013   |  | B |  |   | -          |  |   | 1,587,024  | 
| | 
      Interest rate at 7.2% per annum due 8/22/2014   |  |   |  |   | 1,636,554  |  |   | -          | 
| |                                                         |  |   |  |   |            |  |   |            | 
| | Ping An Bank, Jinan
      Branch                        |  |   |  |   |            |  |   |            | 
| |  Interest rate at
      6.72% per annum due 1/3/2014   |  |   |  |   | 1,145,588  |  |   | -          | 
| | 
      Interest rate at 6.72% per annum due 5/2/2014   |  |   |  |   | 818,277    |  |   | -          | 
| |                                                         |  |   |  |   |            |  |   |            | 
| | Luzhen Credit Union,                                    |  |   |  |   |            |  |   |            | 
| |  Interest rate at
      10.40% per annum due 2/27/2014 |  |   |  |   | 490,966    |  |   | -          | 
| |                                                         |  |   |  |   |            |  |   |            | 
| | Postal Savings Bank of China                            |  |   |  |   |            |  |   |            | 
| | 
      Interest rate at 6.60% per annum due 11/26/2013 |  |   |  |   | -          |  |   | 634,810    | 
| |                                                         |  |   |  |   |            |  |   |            | 
| | China Construction
      Bank                           |  |   |  |   |            |  |   |            | 
| |  Variable
      Interest rate, due 3/31/2014           |  |   |  |   | 801,912    |  |   | -          | 
| | 
      Variable Interest rate, due 4/30/2014           |  |   |  |   | 523,697    |  |   | -          | 
| |                                                         |  |   |  |   |            |  |   |            | 
| |                                                         |  |   |  | $ | 29,400,694 |  | $ | 28,725,143 | 

The short-term loans, which are
denominated in the functional currency Renminbi (RMB), were primarily obtained
for general working capital. If not otherwise indicated in the below remarks,
short-term loans are guaranteed by either companies within the group or
personnel who hold a management role within the group.

Remark: A: Accounts receivable in
the amount of was used as collateral for this loan. 
B: Junan Hongrun Foodstuff Co., Ltd.s
factory was used as collateral for this loan C: Personal guarantee from Mr.
Si Chen was used as collateral for this loan

F-20

---

AMERICAN LORAIN CORPORATIONNOTES TO CONSOLIDATED
FINANCIAL STATEMENTSDECEMBER 31, 2013 AND 2012(Stated in
US Dollars)

|10. | TAXES PAYABLES                                                                  
|--- | --------------------------------------------------------------------------------
|    |                                                                                 
|    | Taxes payable consisted of the following as of December
      31, 2013 and 2012:

| |                                        |   | 12/31/2013 |  |   | 12/31/2012 | 
| | -------------------------------------- | - | ---------- |  | - | ---------- | 
| | Value added tax payable                | $ | 592,341    |  | $ | 428,889    | 
| | Corporate income tax payable           |   | 2,572,663  |  |   | 3,370,655  | 
| | Employee payroll tax
      withholding |   | 6,344      |  |   | 4,936      | 
| | Property tax payable                   |   | 73,768     |  |   | 55,877     | 
| | Stamp tax payable                      |   | 1,485      |  |   | 1,440      | 
| | Business tax payable                   |   | 158,921    |  |   | 154,112    | 
| | Land use tax payable                   |   | 64,062     |  |   | 65,525     | 
| | Import tariffs                         |   | 271        |  |   | 454        | 
| | Capital gain tax payable               |   | 952,278    |  |   | 923,458    | 
| |                                        | $ | 4,422,133  |  | $ | 5,005,346  | 

|11. | ACCRUED EXPENSES AND OTHER PAYABLE                                                                    
|--- | ------------------------------------------------------------------------------------------------------
|    |                                                                                                       
|    | Accrued expenses and other payables consisted of the
      following as of December 31, 2013 and 2012:

| |                                 |   | 12/31/2013 |  |   | 12/31/2012 | 
| | ------------------------------- | - | ---------- |  | - | ---------- | 
| | Accrued salaries and wages      | $ | 32,731     |  | $ | 3,174      | 
| | Accrued utility expenses        |   | 39,765     |  |   | 55,639     | 
| | Accrued interest expenses       |   | 927,986    |  |   | 219,630    | 
| | Accrued transportation expenses |   | 144,061    |  |   | 290,228    | 
| | Other accruals                  |   | -          |  |   | 103,827    | 
| | Business and other taxes        |   | 885,972    |  |   | 182,378    | 
| | Disbursement payable            |   | -          |  |   | 87,078     | 
| | Accrued staff welfare           |   | 285,300    |  |   | 37,843     | 
| |                                 | $ | 2,315,815  |  | $ | 979,797    | 

|12. | LONG-TERM DEBT                                                                                       
|--- | -----------------------------------------------------------------------------------------------------
|    |                                                                                                      
|    | Current portions of long-term debt consisted of the
      following as of December 31, 2013 and 2012:

| |                                                         |   | 12/31/2013 |  |   | 12/31/2012 | 
| | ------------------------------------------------------- | - | ---------- |  | - | ---------- | 
| |                                                         |   |            |  |   |            | 
| | Loans from China
      Development Bank                 |   |            |  |   |            | 
| |  Interest rate at 7.07% per annum due
      5/20/2013  | $ | -          |  | $ | 158,702    | 
| |  Interest rate at 7.07% per
      annum due 11/20/2013 |   | -          |  |   | 317,405    | 
| |  Interest rate at 7.07% per annum due
      5/20/2014  |   | 981,933    |  |   | -          | 
| |  Interest rate at 7.07% per
      annum due 11/20/2014 |   | 981,932    |  |   | -          | 
| |                                                         |   |            |  |   |            | 
| | Loans from Deutsche
      Investitions-und              |   |            |  |   |            | 
| | Entwicklungsgesellschaft mbH (DEG)                    |   |            |  |   |            | 
| |  Interest rate at 5.510% per
      annum due 3/15/2013 |   | -          |  |   | 1,875,000  | 
| |  Interest rate at 5.510% per annum due
      9/15/2013 |   | -          |  |   | 1,875,000  | 
| |  Interest rate at 5.510% per
      annum due 3/15/2014 |   | 1,875,000  |  |   | -          | 
| |  Interest rate at 5.510% per annum due
      9/15/2014 |   | 1,875,000  |  |   | -          | 
| |                                                         | $ | 5,713,865  |  | $ | 4,226,107  | 

F-21

---

AMERICAN LORAIN CORPORATIONNOTES TO CONSOLIDATED
FINANCIAL STATEMENTSDECEMBER 31, 2013 AND 2012(Stated in
US Dollars)

Non-current portions of long-term debt
consisted of the following as of December 31, 2013 and 2012:

| |                                                         |   | 12/31/2013 |  |   | 12/31/2012 | 
| | ------------------------------------------------------- | - | ---------- |  | - | ---------- | 
| | Loans from Deutsche
      Investitions-und              |   |            |  |   |            | 
| | Entwicklungsgesellschaft mbH (DEG)                    |   |            |  |   |            | 
| |  Interest rate at
      5.510% per annum due 9/16/2016 |   | 5,625,000  |  |   | 10,097,340 | 
| |                                                         |   |            |  |   |            | 
| | Loans from China
      Development Bank                 |   |            |  |   |            | 
| |  Interest rate at 7.07% per annum due
      9/24/2015  |   | 2,454,831  |  |   | 4,284,966  | 
| |                                                         | $ | 8,079,831  |  | $ | 14,382,306 | 

The Companys loan with DEG began
repaying the loan in semi-annual installments on September 15, 2012. As of
December 31, 2013, the Company has repaid $5,625,000 in principal. The loan was
collateralized with the following terms:

| | (a.) | Create and register a first ranking
      mortgage in the amount of about USD 12,000,000 on its land and building in
      favor of DEG.                                                                                                        
| | ---- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (b.) | Undertake to provide a  pledge
      of Mr. Si Chen's shares in the sponsor in the amount of about USD 12,000,000
      and being the majority shareholder in the sponsor in form and substance
      satisfactory to DEG.                      
| | (c.) | The total amount of the first
      ranking mortgage as indicated in the Loan Agreement (Article 12(1)(a)) and
      the value of the pledged shares of Mr. Si Chen (Loan Agreement (Article
      12(1)(a))) should be at least USD 24,000,000.
| | (d.) | Undertake to provide a guarantee
      from the Shareholder in form and substance satisfactory to DEG.                                                                                                                                          

Non-current portions of notes payable
and debentures consisted of the following as of December 31, 2013 and 2012:

| |                                                               |   | 12/31/2013 |  |   | 12/31/2012 | 
| | ------------------------------------------------------------- | - | ---------- |  | - | ---------- | 
| | Note payable issued by
      Shanghai Pudong Development Bank |   |            |  |   |            | 
| |  Interest rate at 5.9% per annum due
      12/28/2015        |   | 13,092,432 |  |   | 12,696,196 | 
| |                                                               |   |            |  |   |            | 
| | Debenture issued by Guoyuan Securities
      Co., Ltd.        |   |            |  |   |            | 
| |  Interest rate at 10% per
      annum due 8/28/2016          |   | 16,365,541 |  |   | -          | 
| |                                                               |   |            |  |   |            | 
| | Debenture issued by
    Daiwa SSC Securities Co. Ltd.         |   |            |  |   |            | 
| |  Interest rate at 9.5% per annum due
      11/8/2015         |   | 16,365,541 |  |   | -          | 
| |                                                               |   |            |  |   |            | 
| |                                                               | $ | 45,823,514 |  | $ | 12,696,196 | 

|13. | CAPITALIZATION                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|    | Dating back to May 3, 2007, the Company underwent a
      reverse-merger and a concurrent financing transaction that resulted in
      24,923,178 shares of outstanding common stock that remained unchanged
      until through December 31, 2007. In connection with the financing, the
      Company also issued 1,037,858 and 489,330 warrants to the PIPE investors
      and placement agent, respectively. During 2008, several holders of
      warrants issued in connection with the financing transaction exercised
      their rights to purchase shares at the prescribed exercise price. The
      holders of the warrants exercised the right to purchase a total of 360,207
      shares; however, because the holders did not pay in cash for the warrants,
      110,752 of those shares were cancelled as consideration in lieu of the
      warrant holders paying in cash. Ultimately, 249,455 of new shares were
      issued to those who exercised their warrant. The
Company also made an adjustment to its outstanding share count for rounding
errors as result of the split and reverse splits made at the time of the reverse
merger. The number of shares in the adjustment was an addition of seven shares.
The Company believes the adjustment of seven shares is immaterial to both prior
and current earnings per share calculation. As detailed in the table below, the
total number of outstanding shares at December 31, 2013 was 34,616,714.

F-22

---

AMERICAN LORAIN CORPORATIONNOTES TO CONSOLIDATED
FINANCIAL STATEMENTSDECEMBER 31, 2013 AND 2012(Stated in
US Dollars)

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

During the year 2010, the Company
issued 2,000 shares to a service provider on February 10, 2010 and 81,155
warrants to various service providers on January 5, 2010. The Company issued to
investors 3,440,800 shares at an agreed price of $2.80 per share for a PIPE
financing on September 10, 2010. This financing brought $8,955,730 net proceeds
to the Company. The Company issued 5,000 shares to its employee on September 23,
2010. 731,707 shares of restricted stock were issued to the owner of Shandong
Greenpia, Mr. Ji Zhenwei on September 24, 2010 as part of acquisition cost.

For the year 2010, the Company
transferred $5,161,176 from retained earnings to additional paid up capital and
$2,445,262 from retained earnings to statutory reserve. These transfers are to be
used for future company development, recovery of losses and increase of capital,
as approved, to expand production or operations.

For the year 2011, the Company
transferred $2,636,160 from retained earnings to statutory reserve. These
transfers are to be used for future company development, recovery of losses and
increase of capital, as approved, to expand production or operations.

For the year 2012, the Company issued
108,840 shares to its employees as employee stock compensation. The Company
transferred 2,264,420 from retained earnings to statutory reserve. These
transfers are to be used for future company development, recovery of losses and
increase of capital, as approved, to expand production or operations.

American Lorain Corporation Capitalization Reconciliation
Table

Par value authorized
    Issuance date
    Shares outstandingCommon stock at 1/1/2009
    200,000,000
    
    25,172,640New shares issued to employees and vendors
      during 2009
    
    Various dates
    56,393New shares issued to PIPE
      investors
    
    10/28/2009
    5,011,169New shares issued to service provider during
      2010
    
    2/10/2010
    2,000New shares issued to PIPE
      investors
    
    9/10/2010
    3,440,800New shares issued to employee
    
    9/23/2010
    5,000New shares issued as
      acquisition consideration
    
    9/24/2010
    731,707New shares issued to service provider during
      2011
    
    5/5/2011
    25,000New shares issued to
      employees per stock incentive plan
    
    7/20/2011
    27,092New shares issued to employees per stock
      incentive plan
    
    11/21/2011
    36,073New shares issued to employees per stock
      incentive plan
    
    10/5/2012
    108,840Common stock at 12/31/2013
    
    
    34,616,714


F-23

---

AMERICAN LORAIN CORPORATIONNOTES TO CONSOLIDATED
FINANCIAL STATEMENTSDECEMBER 31, 2013 AND 2012(Stated in
US Dollars)

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


|14. | NON-CONTROLLING INTERESTS                                                                                                                                                                 
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                           
|    | The non-controlling interest represents the 19.8% equity
      of Shandong Lorain held by the Shandong Economic Development Investment
      Corporation, which is a state-owned interest.

F-24

---

AMERICAN LORAIN CORPORATIONNOTES TO CONSOLIDATED
FINANCIAL STATEMENTSDECEMBER 31, 2013 AND 2012(Stated in
US Dollars)

|15. | SALES BY PRODUCT TYPE                                                                            
|--- | -------------------------------------------------------------------------------------------------
|    |                                                                                                  
|    | Sales by categories of product consisted of the following
      as of December 31, 2013 and 2012:

| | Category         |   | 12/31/2013  |  |   | 12/31/2012  | 
| | ---------------- | - | ----------- |  | - | ----------- | 
| | Chestnut         | $ | 114,709,005 |  | $ | 125,101,585 | 
| | Convenience food |   | 62,213,432  |  |   | 79,575,069  | 
| | Frozen food      |   | 38,357,348  |  |   | 34,996,809  | 
| | Total            | $ | 215,279,785 |  | $ | 239,673,463 | 

Revenue by geography consisted of the
following as of December 31, 2013 and 2012:

| | Country        |   | 12/31/2013  |  |   | 12/31/2012  | 
| | -------------- | - | ----------- |  | - | ----------- | 
| | Australia      | $ | 59,317      |  | $ | 89,573      | 
| | Belgium        |   | 4,296,553   |  |   | 6,049,825   | 
| | Canada         |   | 142,620     |  |   | -           | 
| | China          |   | 158,785,053 |  |   | 170,818,669 | 
| | Denmark        |   | -           |  |   | 53,922      | 
| | France         |   | 2,282,220   |  |   | 2,344,824   | 
| | Germany        |   | 1,232,648   |  |   | 208,870     | 
| | Hong Kong      |   | 164,921     |  |   | 212,174     | 
| | Israel         |   | 566,651     |  |   | 277,028     | 
| | Japan          |   | 25,763,794  |  |   | 37,942,286  | 
| | Malaysia       |   | 1,663,077   |  |   | 2,221,990   | 
| | Netherlands    |   | 808,505     |  |   | 431,808     | 
| | Philippines    |   | 614,276     |  |   | 413,529     | 
| | Poland         |   | 115,672     |  |   | 213,943     | 
| | Portugal       |   | 3,557,232   |  |   | 711,006     | 
| | Russia         |   | 118,795     |  |   | 471,559     | 
| | Singapore      |   | 2,413,137   |  |   | 1,290,802   | 
| | South Korea    |   | 9,335,811   |  |   | 11,845,499  | 
| | Spain          |   | -           |  |   | 147,648     | 
| | Taiwan         |   | 108,946     |  |   | 742,669     | 
| | Thailand       |   | 604,268     |  |   | 177,529     | 
| | United Kingdom |   | 1,269,986   |  |   | 2,513,634   | 
| | United States  |   | 1,361,680   |  |   | 494,676     | 
| | Vietnam        |   | 14,623      |  |   | -           | 
| | Total          | $ | 215,279,785 |  | $ | 239,673,463 | 

|16. | INCOME TAXES                                                                                                                                                          
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                       
|    | All of the Companys operations are in the PRC, and in
      accordance with the relevant tax laws and regulations of PRC, the
      corporate income tax rate is 25%.

F-25

---

AMERICAN LORAIN CORPORATIONNOTES TO CONSOLIDATED
FINANCIAL STATEMENTSDECEMBER 31, 2013 AND 2012(Stated in
US Dollars)

The following tables provide the
reconciliation of the differences between the statutory and effective tax
expenses for the periods ended December 31, 2013 and 2012:

| |                                 |   | 12/31/2013 |   |   | 12/31/2012 |  
| | ------------------------------- | - | ---------- | - | - | ---------- | -
| | Income attributed to PRC        | $ | 23,547,394 |   | $ | 30,283,824 |  
| | Loss attributed to US           |   | (285,062   | ) |   | (802,412   | )
| | Income before tax               |   | 23,262,332 |   |   | 29,481,412 |  
| |                                 |   |            |   |   |            |  
| | PRC Statutory Tax at 25% Rate   |   | 5,573,756  |   |   | 7,737,643  |  
| | Effect of tax exemption granted |   | -          |   |   | -          |  
| |                                 |   |            |   |   |            |  
| | Income tax                      | $ | 5,573,756  |   | $ | 7,737,643  |  

Per Share Effect of Tax
Exemption

| |                                           |   | 12/31/2013 |  |   | 12/31/2012 | 
| | ----------------------------------------- | - | ---------- |  | - | ---------- | 
| | Effect of tax exemption
      granted     | $ | -          |  | $ | -          | 
| | Weighted-Average Shares Outstanding Basic |   | 34,616,714 |  |   | 34,533,817 | 
| | Per share effect                          | $ | -          |  | $ | -          | 

The difference between the U.S. federal
statutory income tax rate and the Companys effective tax rate was as follows
for the periods ended December 31, 2013 and 2012:

| |                                              |  | 12/31/2013 |  |  | 12/31/2012 | 
| | -------------------------------------------- |  | ---------- |  |  | ---------- | 
| | U.S. federal statutory income
      tax rate |  | 35%        |  |  | 35%        | 
| | Lower rates in PRC, net                      |  | -10%       |  |  | -10%       | 
| | Tax holiday for foreign
      investments    |  | -1.04%     |  |  | 1.25%      | 
| | The Companys effective tax rate             |  | 23.96%     |  |  | 26.25%     | 

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

The Company has accrued a deferred tax
asset as a result of its net operating loss in and before December 31, 2013
because the Company planned to setup operations in the United States. The
company anticipates that the operations within the United States will generate
income in the future so that it will be able to take full advantage of the
accrued asset. Accordingly the Company has not provided a valuation allowances
for the accrued tax asset.

The Companys has detailed the tax
rates for its subsidiaries for 2013 and 2012 in the following table.

China Income Tax RateSubsidiary
    
    2013
    
    
    2012International Lorain
    
    0%
    
    
    0%Junan Hongrun
    
    25%
    
    
    25%Luotian Lorain
    
    25%
    
    
    25%Beijing Lorain
    
    25%
    
    
    25%Shandong Lorain
    
    25%
    
    
    25%Shandong Greenpia
    
    25%
    
    
    25%Dongguan Lorain
    
    25%
    
    
    25%


F-26

---

AMERICAN LORAIN CORPORATIONNOTES TO CONSOLIDATED
FINANCIAL STATEMENTSDECEMBER 31, 2013 AND 2012(Stated in
US Dollars)

|17. | EARNINGS PER SHARE                                                       
|--- | -------------------------------------------------------------------------
|    |                                                                          
|    | Components of basic and diluted earnings per share were
      as follows:

| |                                                                  |   | 12/31/2013 |  |   | 12/31/2012 | 
| | ---------------------------------------------------------------- | - | ---------- |  | - | ---------- | 
| |                                                                  |   |            |  |   |            | 
| | Basic Earnings Per Share
      Numerator                         |   |            |  |   |            | 
| | Net Income                                                       | $ | 16,633,895 |  | $ | 20,422,668 | 
| | Income
      Available to Common Stockholders                    | $ | 16,633,895 |  | $ | 20,422,668 | 
| |                                                                  |   |            |  |   |            | 
| | Diluted Earnings Per Share
      Numerator                       |   |            |  |   |            | 
| | Income
      Available to Common Stockholders                    | $ | 16,633,895 |  | $ | 20,422,668 | 
| |                                                                  |   |            |  |   |            | 
| | Income Available to Common Stockholders on
      Converted Basis | $ | 16,633,895 |  | $ | 20,422,668 | 
| |                                                                  |   |            |  |   |            | 
| | Original Shares:                                                 |   |            |  |   |            | 
| | Additions from Actual
      Events                               |   |            |  |   |            | 
| | -Issuance of Common Stock                                        |   | 34,616,714 |  |   | 34,533,817 | 
| | Basic Weighted Average Shares
      Outstanding                  |   | 34,616,714 |  |   | 34,533,817 | 
| |                                                                  |   |            |  |   |            | 
| | Dilutive Shares:                                                 |   |            |  |   |            | 
| | Additions from Potential Events                                  |   |            |  |   |            | 
| | -Exercise of Investor
      Warrants & Placement Agent Warrants  |   | -          |  |   | -          | 
| | - Exercise of Employee & Director Stock
      Options            |   | -          |  |   | -          | 
| | Diluted Weighted Average
      Shares Outstanding:               |   | 34,616,714 |  |   | 34,533,817 | 
| |                                                                  |   |            |  |   |            | 
| | Earnings Per Share                                               |   |            |  |   |            | 
| | - Basic                                                          | $ | 0.48       |  | $ | 0.59       | 
| | - Diluted                                                        | $ | 0.48       |  | $ | 0.59       | 
| |                                                                  |   |            |  |   |            | 
| | Weighted Average Shares
      Outstanding                        |   |            |  |   |            | 
| | - Basic                                                          |   | 34,616,714 |  |   | 34,533,817 | 
| | - Diluted                                                        |   | 34,616,714 |  |   | 34,533,817 | 

|18. | SHARE BASED COMPENSATION                                                                                                                                                                                                                                                                                                                                                                        
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                 
|    | On July 27, 2009, the Companys Board of Directors
      adopted the American Lorain Corporation 2009 Incentive Stock Plan (the
      Plan). The Plan provides that the maximum number of shares of the
      Companys common stock that may be issued under the Plan
is 2,500,000 shares. The Companys employees, directors, and service providers
are eligible to participate in the Plan.

F-27

---

AMERICAN LORAIN CORPORATIONNOTES TO CONSOLIDATED
FINANCIAL STATEMENTSDECEMBER 31, 2013 AND 2012(Stated in
US Dollars)

For the year ended December 31, 2009,
the Company recorded a total of $166,346 of shared based compensation expense.
The Company issued warrants that upon exercise would result in the issuance of
1,334,573 common shares. These stock options vest over three years, where 33.33%
vest annually. The expense related to the stock options was $107,375. The
Company also recorded expense of $58,971 for the issuance of 56,393 common
shares to participants, respectively. The common shares vested immediately.
Given the materiality and nature of share based compensation, the entire expense
has been recorded as general and administrative expenses. For the year ended
December 31, 2010, the Company recorded a total of $890,209 stock option and its
related general and administrative expenses.

During the period ended December 31,
2012 and 2011, the Company recorded a total of $503,493 and $644,243 stock
option and its related general and administrative expenses.

During the period ended December 31,
2013, the Company did not grant any stock option.

The range of the exercise prices of the
stock options granted since inception of the plan are shown in the following
table:

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


No tax benefit has yet to be accrued or
realized. For the period ended December 31, 2013, the Company has yet to
repatriate its earnings. Accordingly it has not recognized any deferred tax
assets or liability in regards to benefits derived from the issuance of stock
options.

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

| |                                              |   | 2012   |  |   | 2011   | 
| | -------------------------------------------- | - | ------ |  | - | ------ | 
| | Weighted-average fair value
      of grants: | $ | 1.3629 |  | $ | 1.1909 | 
| | Risk-free interest rate:                     |   | 0.33%  |  |   | 0.96%  | 
| | Expected volatility:                         |   | 59.93% |  |   | 4.58%  | 
| | Expected life in months:                     |   | 36.00  |  |   | 36.00  | 

|19. | LEASE COMMITMENTS
|--- | -----------------
|    |                  
|    | (a.)             
|    |                  
|    |                  

From
    
    To
    
    
    Lease
      payment1/1/2014
    
    12/31/2014
    
    $
    92,6851/1/2015
    
    12/31/2015
    
    
    92,6851/1/2016
    
    12/31/2016
    
    
    92,6851/1/2017
    
    12/31/2017
    
    
    92,6851/1/2018
    
    8/9/2018
    
    
    56,641$
    427,381


F-28

---

AMERICAN LORAIN CORPORATIONNOTES TO CONSOLIDATED
FINANCIAL STATEMENTSDECEMBER 31, 2013 AND 2012(Stated in
US Dollars)

The outstanding lease commitment as of
December 31, 2013 was $427,381.

The minimum future lease payments for
this property at December 31, 2012 are shown in the following table:

From
    
    To
    
    
    Lease payment1/1/2013
    
    12/31/2013
    
    $
    87,5361/1/2014
    
    12/31/2014
    
    
    92,6851/1/2015
    
    12/31/2015
    
    
    92,6851/1/2016
    
    12/31/2016
    
    
    92,6851/1/2017
    
    12/31/2017
    
    
    92,6851/1/2018
    
    8/9/2018
    
    
    56,641$
    514,917


The outstanding lease commitment as of
December 31, 2012 was $514,917.

| | (b.) | During the year ended December 31, 2013, the Company
      entered into three operating lease agreement leasing three plots of land
      of where greenhouses are maintained to grow seasonal crops. The lease was
      signed by Junan Hongrun Foodstuff Co., Ltd. and expires on April 25, 2033,
      May 19, 2033, and June 19, 2033, respectively.
| | ---- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The minimum future lease payments for
this property at December 31, 2013 are shown in the following tables:

|From     |  | To         |  |   | Greenhouse 1 |  |  | From     |  |  | To         |  |   | Greenhouse 2 |  |  | From     |  |  | To         |  |   | Greenhouse 3 | 
|-------- |  | ---------- |  | - | ------------ |  |  | -------- |  |  | ---------- |  | - | ------------ |  |  | -------- |  |  | ---------- |  | - | ------------ | 
|1/1/2014 |  | 12/31/2014 |  | $ | 78,128       |  |  | 1/1/2014 |  |  | 12/31/2014 |  | $ | 95,114       |  |  | 1/1/2014 |  |  | 12/31/2014 |  | $ | 11,339       | 
|1/1/2015 |  | 12/31/2015 |  |   | 78,128       |  |  | 1/1/2015 |  |  | 12/31/2015 |  |   | 95,114       |  |  | 1/1/2015 |  |  | 12/31/2015 |  |   | 11,339       | 
|1/1/2016 |  | 12/31/2016 |  |   | 78,128       |  |  | 1/1/2016 |  |  | 12/31/2016 |  |   | 95,114       |  |  | 1/1/2016 |  |  | 12/31/2016 |  |   | 11,339       | 
|1/1/2017 |  | 12/31/2017 |  |   | 78,128       |  |  | 1/1/2017 |  |  | 12/31/2017 |  |   | 95,114       |  |  | 1/1/2017 |  |  | 12/31/2017 |  |   | 11,339       | 
|1/1/2018 |  | 12/31/2018 |  |   | 78,128       |  |  | 1/1/2018 |  |  | 12/31/2018 |  |   | 95,114       |  |  | 1/1/2018 |  |  | 12/31/2018 |  |   | 11,339       | 
|1/1/2019 |  | 12/31/2019 |  |   | 78,128       |  |  | 1/1/2019 |  |  | 12/31/2019 |  |   | 95,114       |  |  | 1/1/2019 |  |  | 12/31/2019 |  |   | 11,339       | 
|1/1/2020 |  | 12/31/2020 |  |   | 78,128       |  |  | 1/1/2020 |  |  | 12/31/2020 |  |   | 95,114       |  |  | 1/1/2020 |  |  | 12/31/2020 |  |   | 11,339       | 
|1/1/2021 |  | 12/31/2021 |  |   | 78,128       |  |  | 1/1/2021 |  |  | 12/31/2021 |  |   | 95,114       |  |  | 1/1/2021 |  |  | 12/31/2021 |  |   | 11,339       | 
|1/1/2022 |  | 12/31/2022 |  |   | 78,128       |  |  | 1/1/2022 |  |  | 12/31/2022 |  |   | 95,114       |  |  | 1/1/2022 |  |  | 12/31/2022 |  |   | 11,339       | 
|1/1/2023 |  | 12/31/2023 |  |   | 85,773       |  |  | 1/1/2023 |  |  | 12/31/2023 |  |   | 102,527      |  |  | 1/1/2023 |  |  | 12/31/2023 |  |   | 12,097       | 
|1/1/2024 |  | 12/31/2024 |  |   | 89,289       |  |  | 1/1/2024 |  |  | 12/31/2024 |  |   | 105,683      |  |  | 1/1/2024 |  |  | 12/31/2024 |  |   | 12,757       | 
|1/1/2025 |  | 12/31/2025 |  |   | 89,289       |  |  | 1/1/2025 |  |  | 12/31/2025 |  |   | 105,683      |  |  | 1/1/2025 |  |  | 12/31/2025 |  |   | 12,757       | 
|1/1/2026 |  | 12/31/2026 |  |   | 89,289       |  |  | 1/1/2026 |  |  | 12/31/2026 |  |   | 105,683      |  |  | 1/1/2026 |  |  | 12/31/2026 |  |   | 12,757       | 
|1/1/2027 |  | 12/31/2027 |  |   | 89,289       |  |  | 1/1/2027 |  |  | 12/31/2027 |  |   | 105,683      |  |  | 1/1/2027 |  |  | 12/31/2027 |  |   | 12,757       | 
|1/1/2028 |  | 12/31/2028 |  |   | 89,289       |  |  | 1/1/2028 |  |  | 12/31/2028 |  |   | 105,683      |  |  | 1/1/2028 |  |  | 12/31/2028 |  |   | 12,757       | 
|1/1/2029 |  | 12/31/2029 |  |   | 89,289       |  |  | 1/1/2029 |  |  | 12/31/2029 |  |   | 105,683      |  |  | 1/1/2029 |  |  | 12/31/2029 |  |   | 12,757       | 
|1/1/2030 |  | 12/31/2030 |  |   | 89,289       |  |  | 1/1/2030 |  |  | 12/31/2030 |  |   | 105,683      |  |  | 1/1/2030 |  |  | 12/31/2030 |  |   | 12,757       | 
|1/1/2031 |  | 12/31/2031 |  |   | 89,289       |  |  | 1/1/2031 |  |  | 12/31/2031 |  |   | 105,683      |  |  | 1/1/2031 |  |  | 12/31/2031 |  |   | 12,757       | 
|1/1/2032 |  | 12/31/2032 |  |   | 89,289       |  |  | 1/1/2032 |  |  | 12/31/2032 |  |   | 105,683      |  |  | 1/1/2032 |  |  | 12/31/2032 |  |   | 12,757       | 
|1/1/2033 |  | 4/25/2033  |  |   | 42,261       |  |  | 1/1/2033 |  |  | 5/19/2033  |  |   | 50,322       |  |  | 1/1/2033 |  |  | 6/19/2033  |  |   | 5,530        | 
|         |  |            |  | $ | 1,634,787    |  |  |          |  |  |            |  | $ | 1,960,022    |  |  |          |  |  |            |  | $ | 234,491      | 

F-29

---

AMERICAN LORAIN CORPORATIONNOTES TO CONSOLIDATED
FINANCIAL STATEMENTSDECEMBER 31, 2013 AND 2012(Stated in
US Dollars)

The outstanding lease commitment for
the three greenhouses as of December 31, 2013 was $3,829,300.

|20. | SUBSEQUENT EVENTS
|--- | -----------------
|    |                  
|    | A.               
|    |                  
|    |                  
|    |                  
|    |                  
|    |                  
|    |                  

- The settlement of certain claims the Current Shareholders have against
  Athena through the assignment of certain claims Athena, through its wholly
  owned subsidiary, Conserverie Minerve, has against Branco Group Companies for
  the benefit of the Current Shareholders;
- The handling of the commitment to install a Nunziata 4 burner chestnut
  shelling machine at the Cacovin facility, a company indirectly owned by
  Athena;
- The Junan Hongruns right to appoint Chief Executive Officer for Athena
  and its subsidiaries;
- The Junan Hongruns right, with the prior consent of the Current
  Shareholders, to appoint general manager for Athena and its subsidiaries;
- Protective provisions granted to Current Shareholders;
- Information rights;
- Certain restrictions on transfer of Athenas shares;
- Rights of pre-emption in connection with assignment; and
- Granting the Company a call option right to purchase 2,250 of the shares
  of Athena (or 9% of the share capital of Athena) for a purchase price of
  €900,000 (or approximately US$1,219,230), subject to
downward adjustment to 405,000 (or approximately US$548,654) if the Current Shareholders failed to fulfill certain obligations under the Shareholder Agreement. The call option is exercisable within six (6) months after February 7, 2015.

F-30

---

AMERICAN LORAIN CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTSDECEMBER 31, 2013 AND 2012(Stated in US Dollars)

The Shareholder Agreement expires ten (10) years from the date Junan Hongrun pays the initial purchase price under the Intiraimi Purchase Agreement and the purchase price under the Biobranco Purchase Agreement.

| | B. | 2014 Equity Incentive Plan                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| |    | On February 19, 2014 the Companys board of directors
approved the 2014 Equity Incentive Plan (2014 Plan). Subject to adjustment as
provided in the 2014 Plan, the total number of shares of Common Stock reserved
and available for delivery in connection with awards under the 2014 Plan is
3,000,000. Currently there are no shares or options granted under the 2014 Plan.
The Company will not grant any awards until the 2014 Plan has been approved by
the stockholders in compliance with the NYSE Amex Company Guide and favorable
federal income tax treatment for grants of incentive stock options under Section
422 of the Internal Revenue Code of 1986, as amended. This 2014 Plan replaces
the Companys 2009 Incentive Stock Plan (the Prior Plan) and no additional
stock awards shall be granted under the Prior Plan. All outstanding stock awards
granted under the Prior Plan shall remain subject to the terms of the Prior Plan
with respect to which they were originally granted.                                                                                                                          
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | C. | Issuance of Convertible Promissory Note                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| |    | In connection with the Athena acquisition, on March 13, 2014, the Company issued a Convertible Promissory Note (Note) in the principal amount of US$3.5 million (the Principal Amount) to an investor.
Under the terms of the Note, interest on the outstanding Principal Amount accrues at a rate of 4.5% per annum, and all accrued but unpaid interest is due and payable on June 30, 2014 and on the last day of each quarter thereafter. If the Note is not
converted pursuant to the terms of the Note, additional interest on the outstanding Principal Amount shall accrue at a rate of 4.5% per annum and payable at the maturity of the Note. Unless the Note is otherwise accelerated or converted, the unpaid
Principal Amount of the Note, together with all accrued but unpaid interest, is due and payable, at the election of the investor, on September 13, 2014 or March 13, 2015 (Maturity Date), provided, however, if the investor fails to notify
the Company in writing by August 13, 2014 that it elects the maturity date of September 13, 2014, then the Maturity Date will be extended to March 13, 2015.
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| |    | In addition, under the terms of the Note, at any time commencing on or after September 13, 2014 and before March 13, 2015, the investor may convert in whole or in part the outstanding Principal Amount into a number of shares of
our Common Stock of the Company on a per share conversion price of $1.15, as may be adjusted from time to time pursuant to the terms and conditions of the Note (Conversion Price); provided, however, the Company will not
effect any conversion of the Note, and the investor will not have the right to convert any portion of the Note, to the extent (but only to the extent) that the investor would beneficially own in excess of the Beneficial Ownership Limitation (as
defined below), which beneficial ownership will be calculated in accordance with Section 13(d) of the Securities Exchange Act of 1934, as amended. The Beneficial Ownership Limitation is 9.99% of the number of shares of Common Stock
outstanding immediately after giving effect to the issuance of shares of Common Stock issuable upon conversion of the Note.                                              
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| |    | The Note is secured by the personal guarantee of Si Chen, our chief executive officer and chairman.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       

|21. | RISKS
|--- | -----
|    |      
|    | A.   
|    |      
|    |      

F-31

---

AMERICAN LORAIN CORPORATIONNOTES TO CONSOLIDATED
FINANCIAL STATEMENTSDECEMBER 31, 2013 AND 2012(Stated in
US Dollars)

| | B. | Interest risk                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| |    | The company is subject to the interest rate risk when their
      short term loans become due and require refinancing.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | C. | 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 changes in the political, economic, and
      legal environments in the PRC.                                                                                                                                                                                                                                                                                                                                                                                                                                
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| |    | 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.
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | D. | Environmental risks                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| |    | The Company has procured environmental licenses required
      by the PRC government. The Company has both a water treatment facility for
      water used in its production process and secure transportation to remove
      waste off site. In the event of an accident, the Company has purchased
      insurance to cover potential damage to employees, equipment, and local
      environment.                                                                                                                                                                                                                                                                               
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | E. | Inflation Risk                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| |    | Management monitors changes in prices levels.
      Historically inflation has not materially impacted the companys financial
      statements; however, significant increases in the price of raw materials
      and labor that cannot be passed on the Companys customers could adversely
      impact the Companys results of operations.                                                                                                                                                                                                                                                                                                                                    

F-32

---