---

UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, DC 20549

FORM 10-Q

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

For the quarterly period ended October 31,
2011

[   ] 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: 333-145897

URBAN BARNS FOODS
INC.(Exact name of registrant as specified in its
charter)

|Nevada                                           | N/A                                 
|------------------------------------------------ | ------------------------------------
|(State or other jurisdiction of incorporation or | (I.R.S. Employer Identification No.)
|organization)                                    |                                     

|7170 Glover Road                                    |                                                           
|--------------------------------------------------- | ----------------------------------------------------------
|Milner, B.C., Canada V0X 1T0                        | 604-888-0420                                              
|(Address of principal executive offices) (Zip Code) | (Registrants telephone number, including
      area code)

Indicate by check mark whether the registrant (1) filed all
reports required to be filed by Section 13 or 15(d) of the Exchange Act during
the past 12 months (or for such shorter period that the registrant was require
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 is a large
accelerated filer, an accelerated filer, or a non-accelerated filer. See the
definitions of large accelerated filer, accelerated filer and smaller
reporting company in Rule 12b-2 of the Exchange Act.

|Large accelerated filer [   ] | Accelerated filer [   ] | Non-accelerated filer [   ] | Smaller reporting company[ x ]
|----------------------------- | ----------------------- | --------------------------- | ------------------------------

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

APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS
DURING THE PRECEDING FIVE YEARS:

Indicate by check mark whether the registrant has filed all
documents and reports required to be filed by Sections 12, 13 or 15(d) of the
Securities Exchange Act of 1934 subsequent to the distribution of securities
under a plan confirmed by a court. 
[   ] Yes [   ] No

APPLICABLE ONLY TO CORPORATE ISSUERS

As of December 14, 2011 the registrants outstanding common
stock consisted of 56,761,700 shares.

---

Table of Contents

|PART
      I - FINANCIAL INFORMATION | 3            
|------------------------------------ | -------------
|                                     | Item
      1.
|Results
      of Operations          | 4            
|Balance
      Sheet Data: 10/31/11   | 4            
|Plan
      of Operation              | 5            
|                                     | ITEM
      1.
|                                     | ITEM
      2.
|                                     | ITEM
      3.
|                                     | ITEM
      4.
|                                     | ITEM
      5.

---

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

The unaudited interim financial statements of Urban Barns Foods
Inc. (the Company, Urban Barns, we, our, us) follow. All currency
references in this report are to U.S. dollars unless otherwise noted.

Urban Barns Foods Inc.(A Development Stage Company)
October 31, 2011 (Unaudited)

Financial Statement Index

|Consolidated Balance Sheets                    | F1
|---------------------------------------------- | ---
|Consolidated Statements of Operations          | F2
|Consolidated Statements of Cash Flows          | F3
|Notes to the Consolidated Financial Statements | F4

---

|URBAN BARNS FOODS INC.       
|-----------------------------
|(A Development Stage Company)
|Consolidated Balance Sheets  
|(expressed in U.S. dollars)  

|                                                                                                                                                                                                        |  | October 31, |   |  | July 31, |  
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ----------- | - |  | -------- | -
|                                                                                                                                                                                                        |  | 2011        |   |  | 2011     |  
|                                                                                                                                                                                                        |  | $           |   |  | $        |  
|ASSETS                                                                                                                                                                                                  |  |             |   |  |          |  
|Current assets                                                                                                                                                                                          |  |             |   |  |          |  
|Cash                                                                                                                                                                                                    |  | 14,440      |   |  | 32,907   |  
|Prepaid expenses and deposits                                                                                                                                                                           |  | 10,033      |   |  | 13,606   |  
|Total current assets                                                                                                                                                                                    |  | 24,473      |   |  | 46,513   |  
|Property and
      equipment (Note 4)                                                                                                                                                                   |  | 64,099      |   |  | 66,351   |  
|Total assets                                                                                                                                                                                            |  | 88,572      |   |  | 112,864  |  
|                                                                                                                                                                                                        |  |             |   |  |          |  
|LIABILITIES AND STOCKHOLDERS DEFICIT                                                                                                                                                                   |  |             |   |  |          |  
|Current liabilities                                                                                                                                                                                     |  |             |   |  |          |  
|Accounts payable                                                                                                                                                                                        |  | 128,081     |   |  | 100,825  |  
|Due to
      related parties (Note 5)                                                                                                                                                                   |  | 76,712      |   |  | 79,837   |  
|Total liabilities                                                                                                                                                                                       |  | 204,793     |   |  | 180,662  |  
|Stockholders deficit                                                                                                                                                                                   |  |             |   |  |          |  
|Preferred stock   
      Authorized: 100,000,000 common shares, with a par value of $0.001 per
      share    Issued and outstanding: nil shares                                                        |  |            |   |  |         |  
|Common stock, Class A    Authorized:
      500,000,000 common shares, with a par value of $0.001 per share
         Issued and outstanding: 56,761,700 and 50,261,700 common
      shares, respectively |  | 56,762      |   |  | 50,262   |  
|Common stock, Class B   
      Authorized: 25,000,000 common shares, with a par value of $0.001 per share
         Issued and outstanding: nil                                                          |  |            |   |  |         |  
|Additional paid-in capital                                                                                                                                                                              |  | 640,494     |   |  | 54,919   |  
|Share subscription received                                                                                                                                                                             |  | (506,496    | ) |  |         |  
|Accumulated
      deficit during the development stage                                                                                                                                                  |  | (306,981    | ) |  | (172,979 | )
|Total stockholders deficit                                                                                                                                                                             |  | (116,221    | ) |  | (67,798  | )
|Total liabilities
      and stockholders deficit                                                                                                                                                       |  | 88,572      |   |  | 112,864  |  

Nature of Operations and Continuance of Business (Note 1)

(The accompanying notes are an integral part of these
consolidated financial statements)

F-1

---

|URBAN BARNS FOODS INC.               
|-------------------------------------
|(A Development Stage Company)        
|Consolidated Statements of Operations
|(expressed in U.S. dollars)          

|                                    |  |               |   |  |               |   |  | Accumulated   |  
|----------------------------------- |  | ------------- | - |  | ------------- | - |  | ------------- | -
|                                    |  |               |   |  |               |   |  | from          |  
|                                    |  |               |   |  |               |   |  | February 10,  |  
|                                    |  | For the Three |   |  | For the Three |   |  | 2010 (Date of |  
|                                    |  | Months Ended  |   |  | Months Ended  |   |  | Inception) to |  
|                                    |  | October 31,   |   |  | October 31,   |   |  | October 31,   |  
|                                    |  | 2011          |   |  | 2010          |   |  | 2011          |  
|                                    |  | $             |   |  | $             |   |  | $             |  
|                                    |  |               |   |  |               |   |  |               |  
|                                    |  |               |   |  |               |   |  |               |  
|Revenue                             |  |              |   |  |              |   |  |              |  
|                                    |  |               |   |  |               |   |  |               |  
|Expenses                            |  |               |   |  |               |   |  |               |  
|Depreciation                        |  | 2,252         |   |  |              |   |  | 8,581         |  
|Foreign exchange loss (gain)        |  | (4,110        | ) |  | 18            |   |  | (21,151       | )
|General and administrative          |  | 73,818        |   |  |              |   |  | 103,989       |  
|Professional fees                   |  | 60,020        |   |  |              |   |  | 78,365        |  
|Research and development            |  | 2,022         |   |  |              |   |  | 2,212         |  
|                                    |  |               |   |  |               |   |  |               |  
|Total expenses                      |  | 134,002       |   |  | 18            |   |  | 171,996       |  
|Net loss                            |  | (134,002      | ) |  | (18           | ) |  | (171,996      | )
|                                    |  |               |   |  |               |   |  |               |  
|Loss per share  basic and diluted  |  |              |   |  |              |   |  |               |  
|                                    |  |               |   |  |               |   |  |               |  
|Weighted average shares outstanding |  | 56,181,236    |   |  | 3,000,000     |   |  |               |  

(The accompanying notes are an integral part of these
consolidated financial statements)

F-2

---

|URBAN BARNS FOODS INC.               
|-------------------------------------
|(A Development Stage Company)        
|Consolidated Statements of Cash Flows
|(expressed in U.S. dollars)          

|                                                                                  |  |               |   |  |               |   |  | Accumulated   |  
|--------------------------------------------------------------------------------- |  | ------------- | - |  | ------------- | - |  | ------------- | -
|                                                                                  |  |               |   |  |               |   |  | from          |  
|                                                                                  |  |               |   |  |               |   |  | February 10,  |  
|                                                                                  |  | For the Three |   |  | For the Three |   |  | 2010 (Date of |  
|                                                                                  |  | Months Ended  |   |  | Months Ended  |   |  | Inception) to |  
|                                                                                  |  | October 31,   |   |  | October 31,   |   |  | October 31,   |  
|                                                                                  |  | 2011          |   |  | 2010          |   |  | 2011          |  
|                                                                                  |  | $             |   |  | $             |   |  | $             |  
|                                                                                  |  |               |   |  |               |   |  |               |  
|Operating Activities                                                              |  |               |   |  |               |   |  |               |  
|Net loss for the period                                                           |  | (134,002      | ) |  | (18           | ) |  | (171,996      | )
|Adjustments to reconcile net loss to net
      cash used in operating activities: |  |               |   |  |               |   |  |               |  
|Depreciation                                                                      |  | 2,252         |   |  |              |   |  | 8,581         |  
|Shares issued for consulting
      fees                                           |  | 28,000        |   |  |              |   |  | 28,000        |  
|Stock based compensation                                                          |  | 11,575        |   |  |              |   |  | 11,575        |  
|Changes in operating assets and
      liabilities:                                |  |               |   |  |               |   |  |               |  
|Prepaid expenses and deposits                                                     |  | 3,573         |   |  |              |   |  | 217           |  
|Accounts payable                                                                  |  | 27,256        |   |  |              |   |  | 34,841        |  
|Due
      to related parties                                                      |  | (3,125        | ) |  |              |   |  | 11,084        |  
|Net cash used in operating activities                                             |  | (64,471       | ) |  | (18           | ) |  | (77,698       | )
|Investing Activities                                                              |  |               |   |  |               |   |  |               |  
|Purchase of property and
      equipment                                          |  |              |   |  |              |   |  | (60,821       | )
|Cash
      acquired on recapitalization                                           |  |              |   |  |              |   |  | 1,774         |  
|Net cash used in investing activities                                             |  |              |   |  |              |   |  | (59,047       | )
|Financing Activities                                                              |  |               |   |  |               |   |  |               |  
|Proceeds from issuance of common shares                                           |  | 46,004        |   |  |              |   |  | 151,185       |  
|Net cash provided
      by financing activities                                   |  | 46,004        |   |  |              |   |  | 151,185       |  
|Increase (decrease) in cash                                                       |  | (18,467       | ) |  | (18           | ) |  | 14,440        |  
|Cash  beginning
      of period                                                  |  | 32,907        |   |  | 40            |   |  |              |  
|Cash  end of period                                                              |  | 14,440        |   |  | 22            |   |  | 14,440        |  
|Non-cash investing and financing activities                                       |  |               |   |  |               |   |  |               |  
|Conversion of Class B shares to Class A
      shares                              |  |              |   |  |              |   |  | 50,000        |  
|Supplemental disclosures                                                          |  |               |   |  |               |   |  |               |  
|Interest paid                                                                     |  |              |   |  |              |   |  |              |  
|Income tax paid                                                                   |  |              |   |  |              |   |  |              |  

(The accompanying notes are an integral part of these
consolidated financial statements)

F-3

---

|Urban Barns Foods Inc.                        
|----------------------------------------------
|(A Development Stage Company)                 
|Notes to the Consolidated Financial Statements
|(expressed in U.S. dollars)                   
|(unaudited)                                   

|1. | Nature of Operations and Continuance of
      Business                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   | Urban Barns Foods Inc. (the Company) was incorporated
      under the laws of the State of Nevada on May 21, 2007 as HL Ventures
      Inc.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   | On December 4, 2009, the Company closed a reverse
      takeover transaction with Urban Barns Foods Inc., a privately-held company
      incorporated on July 3, 2009 under the laws of the province of Alberta. In
      accordance with the transaction, the Company issued 125,000 shares of
      common stock to the shareholders of Urban Barns in exchange for 100% of
      the issued and outstanding shares of common stock of Urban Barns. As part
      of the acquisition, the Company also cancelled 102,500 shares of common
      stock held by management.                                                                                                                                                                                                                                                                                                                  
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   | On June 2, 2011, the Company closed a reverse takeover
      transaction with Non Industrial Manufacture Inc. (Non Industrial), a
      privately-held company incorporated on February 10, 2010, under the laws
      of the province of Alberta. In accordance with the transaction, the
      Company issued 2,500,000 shares of Class B common stock to the
      shareholders of Non Industrial in exchange for 100% of the issued and
      outstanding shares of common stock of Non Industrial.                                                                                                                                                                                                                                                                                                                                                                                    
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   | The Company is a development stage company and is an
      urban produce production company that aims to be the supplier of choice
      for fresh and high-quality organic and conventional fruits and vegetables
      for urban consumers.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   | These financial statements have been prepared on the
      going concern basis, which assumes that the Company will be able to
      realize its assets and discharge its liabilities in the normal course of
      business. As at October 31, 2011, the Company has not realized any
      revenues, has a working capital deficit of $180,320 and has an accumulated
      deficit of $306,981. The continued operations of the Company are dependent
      on its ability to generate future cash flows from operations or obtain
      additional financing. These factors raise substantial doubt about the
      Companys ability to continue as a going concern. These consolidated
      financial statements do not include any adjustments to the recorded assets
      or liabilities that might be necessary should the Company be unable to
      continue as a going concern.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|2. | Significant Accounting Policies                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   | (a)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   | (b)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              

F-4

---

|Urban Barns Foods Inc.                        
|----------------------------------------------
|(A Development Stage Company)                 
|Notes to the Consolidated Financial Statements
|(expressed in U.S. dollars)                   
|(unaudited)                                   

|2. | Significant Accounting Policies(continued)
|-- | ------------------------------------------
|   |                                           
|   | (c)                                       
|   |                                           
|   |                                           
|   |                                           
|   | (d)                                       
|   |                                           
|   |                                           
|   |                                           
|   | (e)                                       
|   |                                           
|   |                                           
|   |                                           
|   | (f)                                       
|   |                                           
|   |                                           
|   |                                           
|   | (g)                                       
|   |                                           
|   |                                           
|   |                                           
|   | (h)                                       
|   |                                           
|   |                                           

F-5

---

|Urban Barns Foods Inc.                        
|----------------------------------------------
|(A Development Stage Company)                 
|Notes to the Consolidated Financial Statements
|(expressed in U.S. dollars)                   
|(unaudited)                                   

|2. | Significant Accounting Policies
  (continued)
|-- | ---------------------------------------------
|   |                                              
|   | (i)                                          
|   |                                              
|   |                                              
|   |                                              
|   | (j)                                          
|   |                                              
|   |                                              

Level 1Level 1 applies to
assets or liabilities for which there are quoted prices in active markets for
identical assets or liabilities.

Level 2Level 2 applies to
assets or liabilities for which there are inputs other than quoted prices that
are observable for the asset or liability such as quoted prices for similar
assets or liabilities in active markets; quoted prices for identical assets or
liabilities in markets with insufficient volume or infrequent transactions (less
active markets); or model-derived valuations in which significant inputs are
observable or can be derived principally from, or corroborated by, observable
market data.

Level 3Level 3 applies to
assets or liabilities for which there are unobservable inputs to the valuation
methodology that are significant to the measurement of the fair value of the
assets or liabilities.

| |     | The Companys financial instruments consist principally
      of cash, accounts payable and accrued liabilities, and amounts due to
      related parties. Pursuant to ASC 820, the fair value of cash is determined
      based on Level 1 inputs, which consist of quoted prices in active
      markets for identical assets. The recorded values of all other financial
      instruments approximate their current fair values because of their nature
      and respective maturity dates or durations.                                                                                                                                                  
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | (k) | Stock-based Compensation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| |     | The Company records stock-based compensation in
      accordance with ASC 718, Compensation  Stock Compensation,using
      the fair value method. All transactions in which goods or services are the
      consideration received for the issuance of equity instruments are
      accounted for based on the fair value of the consideration received or the
      fair value of the equity instrument issued, whichever is more reliably
      measurable. Equity instruments issued to employees and the cost of the
      services received as consideration are measured and recognized based on
      the fair value of the equity instruments issued.

F-6

---

|Urban Barns Foods Inc.                        
|----------------------------------------------
|(A Development Stage Company)                 
|Notes to the Consolidated Financial Statements
|(expressed in U.S. dollars)                   
|(unaudited)                                   

|2. | Significant Accounting Policies(continued)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   | (l)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|3. | Acquisition of Non Industrial Manufacture Inc. and
      Recapitalization                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   | On June 2, 2011, the Company acquired 100% of the issued
      and outstanding shares of common stock of Non Industrial Manufacture Inc.
      (NIM) in exchange for 2,500,000 shares of Class B common stock. The
      acquisition was a capital transaction in substance and therefore was
      accounted for as a recapitalization of the business of NIM. Under
      recapitalization accounting, NIM is considered the acquirer for accounting
      and financial reporting purposes, and acquired the assets and assumed the
      liabilities of the Company. These financial statements include the
      accounts of the Company since the effective date of the recapitalization
      being June 2, 2011, and the historical accounts of the business of NIM
      since inception being February 10, 2010.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   | The assets acquired and liabilities assumed are as
      follows:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           

| |                               |  | $        |  
| | ----------------------------- |  | -------- | -
| | Cash                          |  | 1,774    |  
| | Prepaid expenses              |  | 10,250   |  
| | Property and equipment        |  | 11,859   |  
| | Accounts payable              |  | (89,718  | )
| | Due to related parties        |  | (69,150  | )
| | Net liabilities
      assumed |  | (134,985 | )

|4. | Property and Equipment
|-- | ----------------------

| |                      |  |        |  |  |              |  |  | October 31,  |  |  | July 31,     | 
| | -------------------- |  | ------ |  |  | ------------ |  |  | ------------ |  |  | ------------ | 
| |                      |  |        |  |  |              |  |  | 2011         |  |  | 2011         | 
| |                      |  |        |  |  | Accumulated  |  |  | Net Carrying |  |  | Net Carrying | 
| |                      |  | Cost   |  |  | Amortization |  |  | Value        |  |  | Value        | 
| |                      |  | $      |  |  | $            |  |  | $            |  |  | $            | 
| | Production equipment |  | 76,752 |  |  | 12,653       |  |  | 64,099       |  |  | 66,351       | 

|5. | Related Party
Transactions
|-- | --------------------------

| | (a) | As at October 31, 2011, the Company owed $73,341 (July
      31, 2011 - $76,320) to directors and officers of the Company. The amounts
      owing are unsecured, non-interest bearing, and due on demand.                                                           
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                      
| | (b) | As at October 31, 2011, the Company owed $3,371 (July 31,
      2011 - $3,517) to a company controlled by an officer of the Company. The
      amounts owing are unsecured, non-interest bearing, and due on demand.                                                 
| |     |                                                                                                                                                                                                                                                                      
| | (c) | As at October 31, 2011, the Company had $10,800 (July 31,
      2011 - $5,400) recorded in accounts payable for amounts owing to the
      spouse of the CFO/Director of the Company. The amounts owing are
      unsecured, non-interest bearing, and due on demand.

F-7

---

|Urban Barns Foods Inc.                        
|----------------------------------------------
|(A Development Stage Company)                 
|Notes to the Consolidated Financial Statements
|(expressed in U.S. dollars)                   
|(unaudited)                                   

|5. | Related Party Transactions(continued)                                          
|-- | -------------------------------------------------------------------------------
|   |                                                                                
|   | (d)                                                                            
|   |                                                                                
|   | (e)                                                                            
|   |                                                                                
|   | (f)                                                                            
|   |                                                                                
|   | (g)                                                                            
|   |                                                                                
|   | (h)                                                                            
|   |                                                                                
|6. | Common Stock                                                                   
|   |                                                                                
|   | (a)                                                                            
|   |                                                                                
|   | (b)                                                                            
|   |                                                                                
|   | (c)                                                                            
|   |                                                                                
|   | (d)                                                                            
|   |                                                                                
|7. | Share Purchase Warrants                                                        
|   |                                                                                
|   | The following table summarizes the continuity of share
      purchase warrants:

| |                                             |  |           |   |  | Weighted       | 
| | ------------------------------------------- |  | --------- | - |  | -------------- | 
| |                                             |  |           |   |  | Average        | 
| |                                             |  | Number of |   |  | Exercise Price | 
| |                                             |  | Warrants  |   |  | $              | 
| | Balance, July 31, 2010                      |  | 1,858     |   |  | 236            | 
| | Expired                                     |  | (358      | ) |  | 300            | 
| | Balance, July 31, 2011 and October 31, 2011 |  | 1,500     |   |  | 222            | 

As at October 31, 2011, the following
share purchase warrants were outstanding:

| |           | Exercise |                  
| | --------- | -------- | -----------------
| | Number of | Price    |                  
| | Warrants  | $        | Expiry
      Date
| | 250       | 250      | December 17, 2011
| | 1,250     | 216      | February 10, 2012
| | 1,500     |          |                  

F-8

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|Urban Barns Foods Inc.                        
|----------------------------------------------
|(A Development Stage Company)                 
|Notes to the Consolidated Financial Statements
|(expressed in U.S. dollars)                   
|(unaudited)                                   

|8. | Stock Options                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   | On August 8, 2011, the Company granted 1,700,000 stock
      options at an exercise price of $0.025 per share expiring on November 15,
      2011 and granted 3,400,000 stock options at an exercise price of $0.15 per
      share expiring on November 15, 2011. All 5,100,000 stock options were
      vested immediately. The fair value for these stock options was estimated
      at the date of grant using the Black-Scholes option-pricing model assuming
      a weighted average expected life of 0.25 years, a risk-free rate of 0.03%,
      an expected volatility of 195%, and a 0% dividend yield. The weighted
      average fair value of stock options granted was $0.11 per share. During
      the three months ended October 31, 2011, the Company recorded stock-based
      compensation of $10,575 (2010 - $nil) as general and administrative
      expense.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   | The following table summarizes the continuity of stock
      options:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  

| |                                 |  |            |   |  | Weighted       | 
| | ------------------------------- |  | ---------- | - |  | -------------- | 
| |                                 |  |            |   |  | Average        | 
| |                                 |  | Number of  |   |  | Exercise Price | 
| |                                 |  | options    |   |  | $              | 
| | Balance, July 31, 2010 and 2011 |  |           |   |  |               | 
| | Granted                         |  | 5,100,000  |   |  | 0.11           | 
| | Exercised                       |  | (5,100,000 | ) |  | 0.11           | 
| | Balance, October
      31, 2011 |  |           |   |  |               | 

F-9

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|ITEM 2. | MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN
      OF OPERATION.
|------- | ----------------------------------------------------------------

Forward Looking Statements

This report on Form 10-Q contains certain forward-looking
statements. All statements other than statements of historical fact are
forward-looking statements for purposes of these provisions, including any
projections of earnings, revenues, or other financial items; any statements of
the plans, strategies, and objectives of management for future operation; any
statements concerning proposed new products, services, or developments; any
statements regarding future economic conditions or performance; statements of
belief; and any statement of assumptions underlying any of the foregoing. Such
forward-looking statements are subject to inherent risks and uncertainties, and
actual results could differ materially from those anticipated by the
forward-looking statements.

These forward-looking statements involve significant risks and
uncertainties, including, but not limited to, the following: competition,
promotional costs and the risk of declining revenues. Our actual results could
differ materially from those anticipated in such forward-looking statements as a
result of a number of factors. These forward-looking statements are made as of
the date of this filing, and we assume no obligation to update such
forward-looking statements. The following discusses our financial condition and
results of operations based upon our consolidated financial statements which
have been prepared in conformity with accounting principles generally accepted
in the United States. It should be read in conjunction with our financial
statements and the notes thereto included elsewhere herein.

Results of Operations

We are still in our development stage and have generated no
revenues to date.

We incurred operating expenses of $134,002 for the three months
ended October 31, 2011. These expenses consisted of $73,818 in general operating
expenses, $2,022 in research and development expenses, and $60,020 in
professional fees. For the same period ended October 31, 2010 we incurred
operating expenses of $18. These expenses are higher due to the fact that we had
more operating activity in the current period compared to the prior period.

Our net loss from inception (February 10, 2010) through October
31, 2011 was $171,996.

The following table provides selected financial data about our
company for the quarter ended October 31, 2011.

Balance Sheet
      Data:
    
    10/31/11Cash
    $
    14,440Fixed assets
    $
    64,099Total assets
    $
    88,572Total liabilities
    $
    204,793Shareholders' equity (deficit)
    $
    (116,221
    )


Liquidity and Capital Resources

As of October 31, 2011 we had cash of $14,440, total current
assets of $24,473, total current liabilities of $204,793 and working capital
deficit of $180,320 compared to cash of $32,907, total current assets of
$46,513, total current liabilities of $180,662, and working capital deficit of
$134,149 as of July 31, 2011. The increase in liabilities is due primarily to as
increase in account payable and due to related parties due to a lack of
sufficient cashflows to pay our outstanding obligations.

During the period ended October 31, 2011, we received net cash
of $46,004 from financing activities, compared to net cash received of $nil from
financing activities during the period ended October 31, 2010. The increase is
due to proceeds received from the exercise of stock options.

During the period ended October 31, 2011, we used net cash of
$64,471 on operating activities, compared to $18 net cash used on operating
activities during the period ended October 31, 2010. The increase in cash used
was due to increase in operating activity during the current period.

During the period ended October 31, 2011 and 2010, we did not
have any investing activities.

4

---

Since February 10, 2010 (inception) to October 31, 2011, our
accumulated deficit was $306,981. We are dependent on the funds raised through
our equity or debt financing, investing activities, and revenue generated
through the sales of our products to fund our operations.

We anticipate that we will meet our ongoing cash requirements
by retaining income as well as through equity or debt financing. We plan to
cooperate with various individuals and institutions to acquire the financing
required to produce and distribute our products and anticipate this will
continue until we accrue sufficient capital reserves to finance all of our
productions independently.

Plan of Operation

Our management has focused on acquiring or merging with one or
more operating businesses. Our efforts to identify a target business resulted in
the Share Exchange Agreement with Non Industrial Manufacture Inc. (NIM), a
private company. On June 2, 2011 the share exchange with NIM closed. We are now
an urban produce production company with patents pending that aims to be the
supplier of choice of fresh, locally grown, high-quality organic and
conventional fruits and vegetables for urban consumers.

We estimate that our expenses over the next 12 months will be
approximately $2,301,800 as summarized in the table below. These estimates may
change significantly depending on the nature of our future business activities
and our ability to raise capital from investors or other sources.

Description
    Potential
      Completion Date
    Estimated
      Expenses ($)Seedling purchases
    12 months
    96,000Packaging
    12 months
    76,800Direct cost of sales (including
      research and development)
    12 months
    979,200Shipping
    12 months
    225,000Payroll
    12 months
    350,000Advertising and marketing
    12 months
    370,000General and administrative
      expenses
    12 months
    204,800Total
    
    2,301,800


Our general and administrative expenses for the year will
consist of professional fees, office maintenance, communication expenses
(cellular, internet, fax and telephone), bank charges, courier and postage
costs, office supply costs and fees related to our website. Our professional
fees will include legal, accounting and auditing fees related to our regulatory
filings throughout the year.

Based on our planned expenditures, we require additional funds
of $2,301,800 to proceed with our business plan over the next 12 months. If we
are not able to obtain additional financing on a timely basis, we will be unable
to conduct our operations as planned, and we will not be able to meet our
obligations as they become due. In such event, we will be forced to scale down
or perhaps even cease our operations.

Inflation

The amounts presented in the financial statements do not
provide for the effect of inflation on our operations or financial position. The
net operating losses shown would be greater than reported if the effects of
inflation were reflected either by charging operations with amounts that
represent replacement costs or by using other inflation adjustments.

5

---

Off-Balance Sheet Arrangements

As of October 31, 2011 we had no off balance sheet transactions
that have or are reasonably likely to have a current or future effect on our
financial condition, changes in our financial condition, revenues or expenses,
results of operations, liquidity, capital expenditures or capital resources.

Critical Accounting Policies

Our financial statements are impacted by the accounting
policies used and the estimates and assumptions made by management during their
preparation. A complete summary of these policies are included in note 2 of the
Notes to our Financial Statements. We have identified below the accounting
policies that are of particular importance in the presentation of our financial
position, results of operations and cash flows, and which require the
application of significant judgment by our management.

| | a. | Basis of Accounting
| | -- | -------------------

The Companys financial statements are prepared using the
accrual method of accounting. The Company has elected a July 31 year-end.

| | b. | Loss Per Share
| | -- | --------------

The Company computes net loss per share in accordance with ASC
260 Earnings Per Sharewhich requires presentation of both basic and
diluted earnings per share (EPS) on the face of the income statement. Basic EPS
is computed by dividing net income (loss) available to common shareholders
(numerator) by the weighted average number of shares outstanding (denominator)
during the period. Diluted EPS gives effect to all dilutive potential common
shares outstanding during the period using the treasury stock method and
convertible preferred stock using the if-converted method. In computing diluted
EPS, the average stock price for the period is used in determining the number of
shares assumed to be purchased from the exercise of stock options or warrants.
Diluted EPS excludes all dilutive potential shares if their effect is anti
dilutive.

| | c. | Use of Estimates and
  Assumptions
| | -- | ----------------------------------

The preparation of these consolidated financial statements in
conformity with generally accepted accounting principles in the United States
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the consolidated financial statements and the
reported amounts of revenues and expenses during the reporting period. The
Company regularly evaluates estimates and assumptions related to the useful life
and recoverability of long-lived assets, fair value of convertible debt and
share-based payments, and deferred income tax valuation allowances. The Company
bases its estimates and assumptions on current facts, historical experience and
various other factors that it believes to be reasonable under the circumstances,
the results of which form the basis for making judgments about the carrying
values of assets and liabilities and the accrual of costs and expenses that are
not readily apparent from other sources. The actual results experienced by the
Company may differ materially and adversely from the Companys estimates. To the
extent there are material differences between the estimates and the actual
results, future results of operations will be affected.

| | d. | Foreign Currency
  Translation
| | -- | ------------------------------

Transactions in foreign currencies are translated into the
currency of measurement at the exchange rates in effect on the transaction date.
Monetary balance sheet items expressed in foreign currencies are translated into
U.S. dollars at the exchange rates in effect at the balance sheet date. The
resulting exchange gains and losses are recognized in income.

The Companys integrated foreign subsidiary is financially or
operationally dependent on the Company. The Company uses the temporal method to
translate the accounts of its integrated operations into U.S. dollars. Monetary
assets and liabilities are translated at the exchange rates in effect at the
balance sheet date. Non-monetary assets and liabilities are translated at
historical rates. Revenues and expenses are translated at average rates for the
period, except for amortization, which is translated on the same basis as the
related asset. The resulting exchange gains or losses are recognized in
income.

6

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|ITEM 4. | CONTROLS AND PROCEDURES.
|------- | ------------------------

Evaluation of Disclosure Controls and
Procedures

We maintain disclosure controls and procedures, as defined in
Rule 13a-15(e) promulgated under the Securities Exchange Act of 1934 (the
"Exchange Act"), that are designed to ensure that information required to be
disclosed by us in the reports that we file or submit under the Exchange Act is
recorded, processed, summarized and reported within the time periods specified
in the Securities and Exchange Commission's rules and forms and that such
information is accumulated and communicated to our management, including our
Chief Executive Officer and Chief Financial Officer, as appropriate to allow
timely decisions regarding required disclosure. We carried out an evaluation,
under the supervision and with the participation of our management, including
our Chief Executive Officer and Chief Financial Officer, of the effectiveness of
the design and operation of our disclosure controls and procedures as of October
31, 2011. Based on the evaluation of these disclosure controls and procedures
the Chief Executive Officer and Chief Financial Officer concluded that our
disclosure controls and procedures were not effective.

Changes in Internal Controls

During the quarter covered by this report there were no changes
in our internal control over financial reporting (as defined in Rule 13a-15(e)
and Rule 15d-15(e) under the Exchange Act) that materially affected, or are
reasonably likely to materially affect, our internal control over financial
reporting.

7

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PART II. OTHER INFORMATION

|**ITEM 1.** | LEGAL PROCEEDINGS
|----------- | -----------------

None.

|**ITEM 2.** | UNREGISTERED SALES OF EQUITY SECURITIES AND
      USE OF PROCCEDS
|----------- | -----------------------------------------------------------------

None.

|**ITEM 3.** | DEFAULTS UPON SENIOR SECURITIES
|----------- | -------------------------------

None.

|**ITEM 4.** | REMOVED AND
RESERVED
|----------- | --------------------

|**ITEM 5.** | OTHER INFORMATION
|----------- | -----------------

None.

|ITEM 6. | EXHIBITS.
|------- | ---------

The following exhibits are included with this quarterly
filing:

|Exhibit No. | Description                                                                     
|----------- | --------------------------------------------------------------------------------
|            |                                                                                 
|10.1        | Directors Consulting Agreements
      as filed on Form 8-K filed August 24, 2011
|10.2        | 2011 Stock and Option Plan as filed on Form S-8
      filed August 12, 2011     
|31.1        | Sec. 302 Certification of Principal Executive Officer                           
|31.2        | Sec. 302 Certification of Principal Financial Officer                           
|32.1        | Sec. 906 Certification of Principal Executive Officer                           
|32.2        | Sec. 906 Certification of Principal Financial Officer                           

8

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SIGNATURES

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

|December 15, 2011 | Urban Barns Foods Inc.                                                  
|----------------- | ------------------------------------------------------------------------
|                  |                                                                         
|                  |                                                                         
|                  |                                                                         
|                  | /s/
      Jacob Benne                                                   
|                  | By: Jacob Benne                                                         
|                  | (Chief Executive Officer, President, &
      Director)                  
|                  |                                                                         
|                  |                                                                         
|                  |                                                                         
|                  |                                                                         
|                  | /s/
      Daniel Meikleham                                              
|                  | By: Daniel Meikleham                                                    
|                  | (Chief Financial Officer, Principal Accounting
      Officer & Director)

9

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