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

FORM 10-Q

(Mark One)

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

For the quarterly period ended: September 30, 2009

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

Commission File No. 001-34449

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

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

Beihuan Road
Junan County
Shandong, China 276600
(Address, including zip code, of principal executive offices)

(86) 539-7318818
(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

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 o No o

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

Large accelerated filer o

Accelerated filer o

Non-accelerated filer o

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 o No x

The numbers of shares outstanding of the issuer's class of common stock as of November 9, 2009 was 33,239,985.

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Table of Contents

		Page
	Part I - Financial Information
Item 1	Financial Statements and Accountant’s Report	3
Item 2	Management's Discussion and Analysis of Financial Condition and Results of Operations	24
Item 3	Quantitative and Qualitative Disclosures about Market Risk	32
Item 4	Controls and Procedures	32
	Part II - Other Information
Item 6	Exhibits	32
Signatures		33

2

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PART I FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS AND ACCOUNTANT’S REPORT.

AMERICAN LORAIN CORPORATION

CONTENTS	PAGE
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM	4
CONSOLIDATED BALANCE SHEETS	5 – 6
CONSOLIDATED STATEMENTS OF INCOME	7
CONSOLIDATED STATEMENTS OF CASH FLOWS	8
CONSOLIDATED STATEMENTS OF STOCKHOLDER’S EQUITY	9
NOTES TO FINANCIAL STATEMENTS	10 – 23

3

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REPORT OF REGISTERED INDEPENDENT PUBLIC ACCOUNTING FIRM

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

We have reviewed the accompanying interim consolidated balance sheets of American Lorain Corporation (the “Company”) as of September 30, 2009 and December 31, 2008, and the related statements of income, stockholders’ equity, and cash flows for the three-month and nine-month periods ended September 30, 2009 and 2008. These interim consolidated financial statements are the responsibility of the Company's management.

We conducted our review in accordance with the standards of the Public Company Accounting Oversight Board (United States). A review of interim financial information consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with the standards of the Public Company Accounting Oversight Board, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.

Based on our review, we are not aware of any material modifications that should be made to the accompanying interim consolidated financial statements for them to be in conformity with U.S. generally accepted accounting principles.

South San Francisco, California	Samuel H. Wong & Co., LLP
November 2, 2009	Certified Public Accountants

4

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

								(Audited)
		Note			9/30/2009			12/31/2008
ASSETS
Current Assets
Cash and cash equivalents				$	4,161,802		$	2,841,339
Restricted cash		3			1,008,007			3,715,998
Short-term investment					51,919			113,069
Trade accounts receivable		4			17,745,011			25,293,326
Other receivables		5			4,402,879			5,107,719
Inventory		6			35,606,922			24,827,922
Advance to suppliers		7			12,528,032			415,009
Prepaid expenses and taxes					1,077,904			1,228,648
Total current assets				$	76,582,476		$	63,543,030
Property, plant and equipment, net		8			40,667,653			40,201,686
Land use rights, net		9			3,918,315			3,950,927
Other assets & goodwill					2,047			-
TOTAL ASSETS				$	121,170,491		$	107,695,643
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Short-term bank loans		10		$	34,588,160		$	14,414,996
Long-term bank loans current portion					83,000			-
Notes payable		11			-			5,208,485
Accounts payable					2,417,468			6,072,883
Taxes payable					1,413,194			2,682,658
Accrued liabilities and other payables		12			4,788,869			10,291,237
Customers deposits					78,836			748,732
Total Current Liabilities				$	43,369,527		$	39,418,991
Long Term Liabilities
Long term bank loans		13			321,544			576,975
TOTAL LIABILITIES				$	43,691,071		$	39,995,966

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

5

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

								(Audited)
		Note			9/30/2009			12/31/2008
STOCKHOLDERS’ EQUITY
Common stock, $0.001 par value, 200,000,000 shares         authorized; 25,177,640 and 25,172,640 shares issued and         outstanding as of September 30, 2009 and December 31,         2008, respectively		15			25,177			25,172
Additional paid-in capital					24,273,650			24,187,019
Statutory reserves					5,680,512			5,438,723
Retained earnings					35,615,406			27,748,126
Accumulated other comprehensive income					6,212,145			5,178,616
Non-controlling interests		14			5,672,530			5,122,021
				$	77,479,420		$	67,699,677
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY				$	121,170,491		$	107,695,643

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

6

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AMERICAN LORAIN CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2009 AND 2008
(Stated in US Dollars)

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

7

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AMERICAN LORAIN CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOW
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2009 AND 2008
(Stated in US Dollars)

		Three months ended						Nine months ended
		September 30,						September 30,
		2009			2008			2009			2008
Cash flows from operating activities
Net income	$	4,497,364		$	4,458,659		$	8,109,069		$	8,307,737
Minority interest		300,316			294,741			550,509			595,212
Share based compensation		80,484			0			86,636			0
Depreciation		276,693			461,968			942,173			975,125
Amortization		22,217			11,332			158,209			209,102
(Increase)/decrease in accounts & other receivables		1,776,531			10,487,405			7,583,260			23,939,692
(Increase)/decrease in inventories		(8,751,246	)		(12,644,355	)		(10,778,999	)		(14,099,060	)
Increase/(decrease) in accounts & other payables		(961,609	)		(1,722,767	)		(22,389,528	)		(15,296,367	)
Net cash (used in)/provided by operating activities		(2,759,250	)		1,346,983			(15,738,671	)		4,631,441
Cash flows from investing activities
Purchase of plant and equipment		(881,610	)		(82,023	)		(1,408,140	)		(5,739,946	)
Payment of construction in progress		0			(1,294,028	)		0			0
(Increase)/decrease in restricted cash		(14,642	)		(242,639	)		2,707,991			(2,472,807	)
Payments for land use rights		(4,590	)		(174,839	)		(125,600	)		(1,123,069	)
Proceeds from sale of investment securities		58,384			0			61,151			0
Purchase of investment securities		0			(31,539	)		0			(1,620,924	)
Payments for deposits		0			(2,751,740	)		(2,045	)		(2,751,740	)
Net cash used in investing activities		(842,458	)		(4,576,808	)		1,233,357			(13,708,486	)
Cash flows from financing activities
Bank borrowings		2,465,431			3,405,635			20,000,733			4,738,607
Notes payable		(1,614,364	)		(2,070,085	)		(5,208,485	)		1,743,973
Net cash provided by/(used in) financing activities	$	851,067		$	1,335,550		$	14,792,248		$	6,482,580
Net Increase/(decrease) of cash and cash equivalents		(2,750,641	)		(1,894,275	)		286,934			(2,594,465	)
Effect of foreign currency translation		80,722			1,960,246			1,033,529			4,384,819
Cash and cash equivalents–beginning of year		6,831,721			8,494,356			2,841,339			6,769,973
Cash and cash equivalents–end of year	$	4,161,802		$	8,560,327		$	4,161,802		$	8,560,327
Supplementary cash flow information:
Interest received	$	3,892		$	34,200		$	70,502		$	68,612
Interest paid	$	857,089		$	627,148		$	2,205,740		$	1,900,846
Taxes paid	$	1,396,694		$	904,827		$	2,580,172		$	1,788,402

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

8

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AMERICAN LORAIN CORPORATION
STATEMENT OF STOCKHOLDERS’ EQUITY
FOR THE YEARS ENDED SEPTEMBER 30, 2009 AND DECEMBER 31, 2008
(STATED IN US DOLLARS)

		Comprehensive			Comprehensive
		Income			Income
		9/30/2009			12/31/2008			Total
Net Income	$	8,109,069		$	14,703,378		$	22,812,447
Foreign Currency Translation Adjustment		1,033,542			3,331,908			4,365,450
	$	9,142,611		$	18,035,286		$	27,177,897

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

9

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AMERICAN LORAIN CORPORATION
NOTES TO FINANCIAL STATEMENTS - SEPTEMBER 30, 2009 AND DECEMBER 31, 2008
(STATED IN US DOLLARS)

1.	PRINCIPAL ACTIVITIES
	The Company develops, manufactures, and sells convenience foods (such as cut fruit and premixed salads, which are known as lightly processed; ready-to-cook (or “RTC”) meals; ready-to-eat (or “RTE”) meals and meals ready-to-eat (or “MRE”); chestnut products; and frozen, canned, and bulk foods, in hundreds of varieties. The Company operates through indirect Chinese subsidiaries. The products are sold in 26 provinces and administrative regions in China and 42 foreign countries. Food products are categorized into three types: (1) chestnut products, (2) convenience food, and (3) frozen, canned, and bulk food (“FCB food”).
2.	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
	(a)	Method of Accounting
		The Company maintains its general ledger and journals with the accrual method accounting for financial reporting purposes. The financial statements and notes are representations of management. Accounting policies adopted by the Company conform to generally accepted accounting principles in the United States of America and have been consistently applied in the presentation of financial statements, which are compiled on the accrual basis of accounting.
	(b)	Principles of consolidation
		The consolidated financial statements, which include the Company and its subsidiaries, are compiled in accordance with generally accepted accounting principles in the United States of America. All significant inter-company accounts and transactions have been eliminated. The consolidated financial statements include 100% of assets, liabilities, and net income or loss of those wholly-owned subsidiaries; ownership interests of minority investors are recorded as minority interests.
		As of September 30, 2009, the detailed identities of the consolidating subsidiaries are as follows: -

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

	(c)	Use of estimates
		The preparation of the financial statements in conformity with generally accepted accounting principles in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Management makes these estimates using the best information available at the time the estimates are made; however actual results could differ materially from those estimates.
	(d)	Economic and political risks
		The Company’s operations are conducted in the PRC. Accordingly, the Company’s business, financial condition and results of operations may be influenced by the political, economic and legal environment in the PRC, and by the general state of the PRC economy.
		The Company’s operations in the PRC are subject to special considerations and significant risks not typically associated with companies in North America and Western Europe. These include risks associated with, among others, the political, economic and legal environment and foreign currency exchange. The Company’s results may be adversely affected by changes in the political and social conditions in the PRC, and by changes in governmental policies with respect to laws and regulations, anti-inflationary measures, currency conversion, remittances abroad, and rates and methods of taxation, among other things.

10

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AMERICAN LORAIN CORPORATION
NOTES TO FINANCIAL STATEMENTS - SEPTEMBER 30, 2009 AND DECEMBER 31, 2008
(STATED IN US DOLLARS)

	(e)	Lease prepayments
		Lease prepayments represent the cost of land use rights in the PRC. Land use rights are carried at cost and amortized on a straight-line basis over the period of rights of 50 years.
	(f)	Property, plant and equipment
		Plant and equipment are carried at cost less accumulated depreciation. Depreciation is provided over their estimated useful lives, using the straight-line method. Estimated useful lives of the plant and equipment are as follows:

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

		The cost and related accumulated depreciation of assets sold or otherwise retired are eliminated from the accounts and any gain or loss is included in the statement of income. The cost of maintenance and repairs is charged to income as incurred, whereas significant renewals and betterments are capitalized.
	(g)	Accounting for the Impairment of Long-Lived Assets
		The long-lived assets held and used by the Company are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of assets may not be recoverable. It is reasonably possible that these assets could become impaired as a result of technology or other industry changes. Determination of recoverability of assets to be held and used is by comparing the carrying amount of an asset to future net undiscounted cash flows to be generated by the assets.
		If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. Assets to be disposed of are reported at the lower of the carrying amount or fair value less costs to sell. During the reporting years, there was no impairment loss.
	(h)	Construction in progress
		Construction in progress represents direct costs of construction or acquisition and design fees incurred. Capitalization of these costs ceases and the construction in progress is transferred to plant and equipment when substantially all the activities necessary to prepare the assets for their intended use are completed. No depreciation is provided until it is completed and ready for intended use.
	(i)	Investment securities
		The Company classifies its equity securities into trading or available-for-sale. Trading securities are bought and held principally for the purpose of selling them in the near term. All securities not included in trading securities are classified as available-for-sale.
		Trading and available-for-sale securities are recorded at fair value. Unrealized holding gains and losses on trading securities are included in the net income. Unrealized holding gains and losses, net of the related tax effect, on available for sale securities are excluded from net income and are reported as a separate component of other comprehensive income until realized. Realized gains and losses from the sale of available-for-sale securities are determined on a specific-identification basis.
		A decline in the market value of any available-for-sale security below cost that is deemed to be other-than-temporary results in a reduction in carrying amount to fair value. The impairment is charged as an expense to the statement of income and comprehensive income and a new cost basis for the security is established. To determine whether impairment is other-than-temporary, the Company considers whether it has the ability and intent to hold the investment until a market price recovery and considers whether evidence indicating the cost of the investment is recoverable outweighs evidence to the contrary. Evidence considered in this assessment includes the reasons for the impairment, the severity and duration of the impairment, changes in value subsequent to year end, and forecasted performance of the investee.

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AMERICAN LORAIN CORPORATION
NOTES TO FINANCIAL STATEMENTS - SEPTEMBER 30, 2009 AND DECEMBER 31, 2008
(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.
	(j)	Inventories
		Inventories consisting of finished goods and raw materials are stated at the lower of cost or market value. Finished goods are comprised of direct materials, direct labor and an appropriate proportion of overhead.
	(k)	Trade receivables
		Trade receivables are recognized and carried at the original invoice amount less allowance for any uncollectible amounts. An estimate for doubtful accounts is made when collection of the full amount is no longer probable. Bad debts are written off as incurred.
	(l)	Customer deposits
		Customer deposits were cash received from customers in connection with orders of products to be delivered in future periods.
	(m)	Cash and cash equivalents
		The Company considers all highly liquid investments purchased with original maturities of three months or less to be cash equivalents.
	(n)	Advertising
		All advertising costs are expensed as incurred.
	(o)	Shipping and handling
		All shipping and handling are expensed as incurred.
	(p)	Research and development
		All research and development costs are expensed as incurred.
	(q)	Retirement benefits
		Retirement benefits in the form of contributions under defined contribution retirement plans to the relevant authorities are charged to the consolidated statement of income as incurred.
	(r)	Income taxes
		The Company uses the accrual method of accounting to determine and report its taxable reduction of income taxes for the year in which they are available. The Company has implemented Statement of Financial Accounting Standards (SFAS) No. 109, Accounting for Income Taxes. Income tax liabilities computed according to the United States and People’s Republic of China (PRC) tax laws are provided for the tax effects of transactions reported in the financial statements and consists of taxes currently due plus deferred taxes related primarily to differences between the basis of fixed assets and intangible assets for financial and tax reporting. The deferred tax assets and liabilities represent the future tax return consequences of those differences, which will be either taxable or deductible when the assets and liabilities are recovered or settled. Deferred taxes also are recognized for operating losses that are available to offset future income taxes. A valuation allowance is created to evaluate deferred tax assets if it is more likely than not that these items will either expire before the Company is able to realize that tax benefit, or that future realization is uncertain.

12

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AMERICAN LORAIN CORPORATION
NOTES TO FINANCIAL STATEMENTS - SEPTEMBER 30, 2009 AND DECEMBER 31, 2008
(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: -

		Based on the consolidated net income for the period ended September 30, 2009 and the year ended December 31, 2008, the Company shall not be subject to income tax.
	(s)	Statutory reserves
		Statutory reserves are referring to the amount appropriated from the net income in accordance with laws or regulations, which can be used to recover losses and increase capital, as approved, and are to be used to expand production or operations.
	(t)	Foreign currency translation
		The accompanying financial statements are presented in United States dollars. The functional currency of the Company is the Renminbi (RMB). The financial statements are translated into United States dollars from RMB at year-end exchange rates as to assets and liabilities and average exchange rates as to revenues and expenses. Capital accounts are translated at their historical exchange rates when the capital transactions occurred.

			9/30/2009			12/31/2008			9/30/2008
	Period end RMB : US$ exchange rate		6.8376			6.8542			6.8551
	Average period RMB : US$ exchange rate		6.8425			6.9622			6.9989

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

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AMERICAN LORAIN CORPORATION
NOTES TO FINANCIAL STATEMENTS - SEPTEMBER 30, 2009 AND DECEMBER 31, 2008
(STATED IN US DOLLARS)

		The Company's revenue consists of invoiced value of goods, net of a value-added tax (VAT). No product return or sales discount allowance is made as products delivered and accepted by customers are normally not returnable and sales discount is normally not granted after products are delivered.
	(v)	Earnings per share
		Basic earnings per share is computed by dividing net income by the weighted average number of ordinary shares outstanding during the period. Diluted earnings per share is computed by dividing net income by the sum of the weighted average number of ordinary shares outstanding and dilutive potential ordinary shares during the years. During the nine months ended September 30, 2009 and the year ended December 31, 2008, no dilutive potential ordinary shares were issued.
		The Company computes earnings per share (“EPS”) in accordance with Statement of Financial Accounting Standards No. 128, “Earnings per share” (“SFAS No. 128”), and SEC Staff Accounting Bulletin No. 98 (“SAB 98”). SFAS No. 128 requires companies with complex capital structures to present basic and diluted EPS. Basic EPS is measured as the income or loss available to common shareholders divided by the weighted average common shares outstanding for the period. Diluted EPS is similar to basic EPS, but presents the dilutive effect on a per share basis of potential common shares (e.g., convertible securities, options, and warrants) as if they had been converted at the beginning of the periods presented, or issuance date, if later. Potential common shares that have an anti-dilutive effect (i.e., those that increase income per share or decrease loss per share) are excluded from the calculation of diluted EPS.
	(w)	Commitments and contingencies
		Liabilities for loss contingencies arising from claims, assessments, litigation, fines and penalties and other sources are recorded when it is probable that a liability has been incurred and the amount of the assessment can be reasonably estimated.
	(x)	Comprehensive income
		Comprehensive income is defined to include all changes in equity except those resulting from investments by owners and distributions to owners. Among other disclosures, all items that are required to be recognized under current accounting standards as components of comprehensive income are required to be reported in a financial statement that is presented with the same prominence as other financial statements. The Company’s current component of other comprehensive income is the foreign currency translation adjustment.
	(y)	Recent accounting pronouncements
		In May 2009, the FASB issued SFAS No. 165, "Subsequent Events" ("SFAS 165"). SFAS 165 is intended to establish general standards of accounting for and disclosure of events that occur after the balance sheet date but before financial statements are issued or are available to be issued. It requires the disclosure of the date through which an entity has evaluated subsequent events and the basis for that date, that is, whether that date represents the date the financial statements were issued or were available to be issued. SFAS 165 is effective for interim or annual financial periods ending after June 15, 2009.
		In June 2009, FASB issued FASB Statement No. 166, Accounting for Transfers for Financial Assets and FASB Statement No. 167, a revision to FASB Interpretation No. 46 (Revised December 2003), Consolidation of Variable Interest Entities.
		Statement 166 is a revision to FASB Statement No. 140, Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities, and will require more information about transfers of financial assets, including securitization transactions, and where entities have continuing exposure to the risks related to transferred financial assets. It eliminates the concept of a "qualifying special-purpose entity," changes the requirements for derecognizing financial assets, and requires additional disclosures.

14

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AMERICAN LORAIN CORPORATION
NOTES TO FINANCIAL STATEMENTS - SEPTEMBER 30, 2009 AND DECEMBER 31, 2008
(STATED IN US DOLLARS)

		Statement 167 is a revision to FASB Interpretation No. 46 (Revised December 2003), Consolidation of Variable Interest Entities, and changes how a reporting entity determines when an entity that is insufficiently capitalized or is not controlled through voting (or similar rights) should be consolidated. The determination of whether a reporting entity is required to consolidate another entity is based on, among other things, the other entity’s purpose and design and the reporting entity’s ability to direct the activities of the other entity that most significantly impact the other entity’s economic performance.
		On July 1, 2009, FASB issued FASB Statement No. 168, The "FASB Accounting Standards Codification" and the Hierarchy of Generally Accepted Accounting Principles. The ASC has become the source of authoritative US GAAP recognized by the FASB to be applied by nongovernmental entities and provides that all such guidance carries an equal level of authority. The ASC is not intended to change or alter existing GAAP. The ASC is effective for interim and annual periods ending after September 15, 2009.
		The Company is currently evaluating the potential impact, if any, of the adoption of the above recent accounting pronouncements on its consolidated results of operations and financial condition.
3.	RESTRICTED CASH
	Restricted Cash represents interest bearing deposits placed with banks to secure banking facilities in the form of loans and notes payable. The restriction of funds is based upon the duration of the related borrowing facility. The funds that collateralize loans are held for 60 days in savings account that pay interest at the prescribed national daily savings account rate. For funds that underline notes payable, the cash is deposited in nine month time deposits that pay interest at the national time deposit rate.
4.	TRADE ACCOUNTS RECEIVABLE

			9/30/2009			12/31/2008
	Trade accounts receivable	$	17,970,577		$	25,421,293
	Less: Allowance for doubtful accounts		(225,566	)		(127,967	)
		$	17,745,011		$	25,293,326
	Allowance for bad debt:		9/30/2009			12/31/2008
	Beginning balance	$	(127,967	)	$	(172,309	)
	Additions to allowance		(97,599	)		-
	Bad debt written-off		-			44,342
		$	(225,566	)	$	(127,967	)

The Company offers credit terms of between 30 to 60 days to most of their international distributors as well as domestic supermarkets and wholesalers, and between 0 to 15 days for most of their agents.

15

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AMERICAN LORAIN CORPORATION
NOTES TO FINANCIAL STATEMENTS - SEPTEMBER 30, 2009 AND DECEMBER 31, 2008
(STATED IN US DOLLARS)

5.	OTHER RECEIVABLES
	Other receivables consisted of the following as of September 30, 2009 and December 31, 2008:

			9/30/2009			12/312008
	Advances to employees for job/travel disbursements	$	2,180,628		$	3,160,886
	Amount due by a non-related enterprise		1,991,252			1,278,501
	Tender deposit		36,563			-
	Other		194,436			668,332
		$	4,402,879		$	5,107,719

	Advances to employees for job/travel disbursements consisted of advances to employees for transportation, meals, client entertainment, commissions, and procurement of certain raw materials. The advances issued to employees may be carried for extended periods of time because employees may spend several months out in the field working to procure new sales contracts or fulfill existing contracts.
6.	INVENTORY
	Inventories consisted of the following as of September 30, 2009 and December 31, 2008:

			9/30/2009			12/312008
	Raw materials	$	17,607,376		$	9,636,050
	Work in progress		-			1,143,766
	Finished goods		17,999,546			14,048,106
		$	35,606,922		$	24,827,922

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

			9/30/2009
	Raw materials	$	3,647,645
	Packaging materials		675,073
	Shipping		55,900
	Equipment		136,525
	Construction materials		7,843,049
	Other		169,840
		$	12,528,032

16

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AMERICAN LORAIN CORPORATION
NOTES TO FINANCIAL STATEMENTS - SEPTEMBER 30, 2009 AND DECEMBER 31, 2008
(STATED IN US DOLLARS)

8.	PROPERTY, PLANT, AND EQUIPMENT
	Property, plant, and equipment consisted of the following as of September 30, 2009 and December 31, 2008:

			9/30/2009			12/31/2008
	At Cost:
	Buildings	$	27,866,338 $			27,798,849
	Landscaping, plant, and tree		2,758,782			2,752,101
	Machinery and equipment		7,494,138			7,229,512
	Office equipment		796,557			859,818
	Motor vehicles		25,926			39,824
		$	38,941,741 $			38,680,104
	Less: Accumulated depreciation
	Buildings		(1,657,426	)		(1,192,855	)
	Landscaping, plant, and tree		-			-
			(3,072,410	)
	Machinery and equipment					(2,628,710	)
	Office equipment		(455,071	)		(414,478	)
	Motor vehicles		(18,302	)		(24,992	)
			(5,203,209	)		(4,261,035	)
	Construction in Progress		6,929,121			5,782,617
		$	40,667,653 $			40,201,686

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

			9/30/2009			12/31/2008
	Land use rights, at cost	$	4,361,862		$	4,236,266
	Less: Accumulated amortization		(443,547	)		(285,339	)
		$	3,918,315		$	3,950,927

Land use rights represent the Company’s purchase of usage rights for a parcel of land for a specified duration of time. The PRC government owns the land on which the Company’s corporate campus is being constructed.

17

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AMERICAN LORAIN CORPORATION
NOTES TO FINANCIAL STATEMENTS - SEPTEMBER 30, 2009 AND DECEMBER 31, 2008
(STATED IN US DOLLARS)

10.	SHORT-TERM BANK LOANS
	Short-term bank loans consisted of the following as of September 30, 2009 and December 31, 2008:

			9/30/2009			12/31/2008
	Loans from Junan County Construction Bank,
	● Interest rate at 5.3460% per annum due1/07/2010	$	1,462,501		$	-
	● Interest rate at 5.3460% per annum due 9/1/2010		1,170,001			-
	● Interest rate at 5.3460% per annum due 12/15/2010		394,875			-
	● Interest rate at 5.3460% per annum due12/19/2009		1,170,001			-
	● Interest rate at 7.452% per annum due 2/24/2009		-			102,127
	● Interest rate at 10.452% per annum due 1/22/2009		-			1,575,676
	● Interest rate at 7.236% per annum due 2/3/2009		-			116,717
	Loan from Junan County Agriculture Bank,
	● Interest rate at 7.9650% per annum due 8/23/2010		1,608,752			-
	● Interest rate at 7.2900% per annum due 12/01/2009		1,901,252			-
	● Interest rate at 7.027% per annum due 11/21/2009		643,501			-
	● Interest rate at 7.9650% per annum due 3/17/2010		3,363,753			-
	● Interest rate at 8.2620% per annum due12/17/2009		1,755,002			-
	● Interest rate at 8.2620% per annum due 12/17/2009		2,193,752			-
	● Interest rate at 7.290% per annum due 9/23/2010		1,447,877
	● Interest rate at 12.699% per annum due 8/6/2009					583,584
	● Interest rate at 12.699% per annum due 8/18/2009					656,532
	● Interest rate at 12.699% per annum due 8/1/2009					364,740
	● Interest rate at 10.577% per annum due 3/27/2009		-			1,458,959
	Loan from Junan County Industrial and Commercial Banks,
	● Interest rate at 5.3460% per annum due10/9/2009		438,750			-
	● Interest rate at 5.3460% per annum due10/13/2009		541,126			-
	● Interest rate at 5.3460% per annum due11/19/2009		694,688			-
	● Interest rate at 5.3460% per annum due 10/25/2009		614,251			-
	● Interest rate at 5.3460% per annum due 11/23/2009		497,251			-
	● Interest rate at 5.3460% per annum due 12/22/2009		463,613
	● Interest rate at 6.120% per annum due 1/10/2009		-			145,896
	● Interest rate at 8.541% per annum due 3/4/2009		-			393,919
	● Interest rate at 3.1725% per annum due 2/19/2009		-			240,035
	● Interest rate at 3.1725% per annum due 2/19/2009		-			118,161
	● Interest rate at 10.1825% per annum due 2/26/2009		-			120,762
	● Interest rate at 10.1825% per annum due 3/5/2009		-			173,670
	Loan from Junan County Agricultural Financial Institution,
	● Interest rate at 9.1155% per annum due 1/22/2010		1,170,001			-
	● Interest rate at 9.1155% per annum due 12/23/2009		438,750			-
	● Interest rate at 9.1155% per annum due 12/23/2009		146,250			-
	● Interest rate at 9.1155% per annum due 12/23/2009		438,750			-

18

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AMERICAN LORAIN CORPORATION
NOTES TO FINANCIAL STATEMENTS - SEPTEMBER 30, 2009 AND DECEMBER 31, 2008
(STATED IN US DOLLARS)

			9/30/2009			12/31/2008
	Loan from Linyi Commercial Bank,
	● Interest rate at 9.293% per annum due 6/15/2010	$	1,462,501 $			-
	● Interest rate at 9.293% per annum due 1/19/2010		658,126			-
	● Interest rate at 9.293%per annum due 12/14/2009		687,376			-
	● Interest rate at 9.293% per annum due 6/16/2010		1,462,501			-
	● Interest rate at 13.073% per annum due 1/5/2009		-			685,711
	● Interest rate at 13.073% per annum due 1/5/2009		-			656,532
	● Interest rate at 8.539% per annum due 3/27/2009		-			1,458,959
	● Interest rate at 8.539% per annum due 3/27/2009		-			141,885
	Loan from Beijing Miyun County Shilipu Rural Financial Institution,
	● Interest rates at 7.434% per annum due 1/20/2010		1,462,502			-
	● Interest rates at 8.539% per annum due 9/30/2009		-			2,772,023
	Loan from China Merchants Bank, Beijing
	● Interest rate at 5.310% per annum due 3/29/2010		731,251			-
	Loan from China Agricultural Bank, Luotian Branch
	● Interest rate at 6.372% per annum due 8/25/2010		1,901,252			-
	● Interest rate at 7.47% per annum due 9/7/2009		-			817,017
	● Interest rate at 7.47% per annum due 9/7/2009		-			291,792
	Bank of Beijing
	● Interest rate at 6.903% per annum due 7/29/2010		292,500			-
	● Interest rate at 7.722% per annum due 7/28/2009		-			291,792
	Bank of China, Junan Branch,
	● Interest rate at 7.500% per annum due 5/19/2009		-			4,014
	United Commercial Bank, China Branch
	● Interest rate at 5.494% per annum due 1/14/2010		1,050,077			-
	● Interest rate at 5.494% per annum due 1/14/2009		-			1,156,955
	HSBC Miyun Branch
	● Interest rate at 6.804% per annum due 11/13/2009		351,000			-
	Credit Union, Junan
	● Interest rate at 8.5837% per annum due 1/7/2009		-			43,769
	● Interest rate at 8.5837% per annum due 1/12/2009		-			43,769
	LinYi Yizhou Limited Company
	● Interest rate at 0.9% per month due 11/13/2009		1,257,751			-
	● Interest rate at 0.9% per month due 10/08/2009		716,626			-
		$	34,588,160 $			14,414,996

The short-term loans are revolving lines of credit, which are denominated in the functional currency Renminbi (RMB), were primarily obtained for general working capital.

All overdue loans were extended by the financial institution.

19

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AMERICAN LORAIN CORPORATION
NOTES TO FINANCIAL STATEMENTS - SEPTEMBER 30, 2009 AND DECEMBER 31, 2008
(STATED IN US DOLLARS)

11.	NOTES PAYABLE
	Notes payable consisted of the following as of September 30, 2009 and December 31, 2008:

			9/30/2009			12/31/2008
	Notes to Junan County Construction Bank,
	●  Bank commission charge at 4%, due 1/12/2009	$	-		$	554,405
	●  Bank commission charge at 5.8320%, due 8/13/2009		-			-
	●  Bank commission charge at 5.8320%, due 8/25/2009		-			-
	Notes to Junan County Agriculture Bank,
	●  Bank commission charge at 4%, due 1/16/2009		-			277,202
	Loan to Jinan Branch, Shenzhen Development Bank,
	●  Bank charge commission charge at 3.96%, due 2/6/2009		-			4,376,878
		$	-		$	5,208,485

12.	ACCRUED EXPENSES AND OTHER PAYABLE
	Accrued expenses and other payables consisted of the following as of September 30, 2009 and December 31, 2008:

			9/30/2009			12/31/2008
	Business and other taxes	$	960,758		$	1,979,650
	Accrued staff welfare		556,316			103,269
	Accrued salaries and wages		109,123			605,471
	Accrued utility expenses		289,246			481,678
	Accrued interest expenses		-			-
	Accrued transportation expenses		314,075			1,103,112
	Other accruals		1,337,486			-
	Purchases disbursements payables		1,221,865			6,018,057
		$	4,788,869		$	10,291,237

13.	LONG-TERM DEBTS
	Long-term debts consisted of the following as of September 30, 2009 and December 31, 2008:

			9/30/2009			12/31/2008
	Loan from Agricultural Development Luotian Government,
	● Interest rates at 0.67% per annum due 12/11/2010	$	109,688		$	-
	● Interest rates at 2.10% per annum due 12/11/2011		25,594			25,532
	Loan from United Commercial Bank, China Branch
	● Interest rates at 5.494% per annum due 1/14/2011		186,262			551,443
		$	321,544		$	576,975

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

20

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AMERICAN LORAIN CORPORATION
NOTES TO FINANCIAL STATEMENTS - SEPTEMBER 30, 2009 AND DECEMBER 31, 2008
(STATED IN US DOLLARS)

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

			9/30/2009			9/30/2008
	Income before tax	$	11,439,761		$	10,691,351
	Tax at the income tax rate		2,859,940			2,672,838
	Effect of tax exemption granted		(279,768	)		(884,436	)
	Income tax	$	2,580,172		$	1,788,402

Per Share Effect of Tax Exemption

			9/30/2009			12/31/2008
	Effect of tax exemption granted	$	279,768		$	884,436
	Weighted-Average Shares Outstanding		25,177,640			24,923,178
	Per share effect	$	0.01		$	0.04

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

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

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

21

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AMERICAN LORAIN CORPORATION
NOTES TO FINANCIAL STATEMENTS - SEPTEMBER 30, 2009 AND DECEMBER 31, 2008
(STATED IN US DOLLARS)

17.	SALES BY PRODUCT TYPE
	Sales by categories of product at September 30, 2009 and 2008 was as follows: -

	Category		9/30/2009			9/30/2008
	Chestnut	$	44,852,695		$	39,609,810
	Convenience Food		18,099,093			16,364,820
	FCB Food		20,858,242			19,705,490
	Others		31,082			-
	Total	$	83,841,112		$	75,680,120

Revenue by geography at September 30, 2009 and 2008 was as follows: -

	Country		9/30/2009			9/30/2008
	Belgium	$	1,203,354		$	1,797,772
	Italy		-			177,153
	Chile		-			426,507
	China		68,980,929			59,321,493
	France		723,383			868,028
	Germany		395,209			722,394
	Holland		142,385			-
	Hong Kong		342,428			-
	Japan		4,245,059			4,374,448
	India		-			519,401
	Malaysia		422,013			144,469
	Netherlands		-			508,340
	Saudi Arabia		993,350			110,292
	Kuwait		76,989			-
	Singapore		725,402			207,396
	South Korea		4,206,399			3,833,565
	Sweden		-			83,606
	Taiwan		399,103			523,231
	United Arab Emirates		-			174,323
	United Kingdom		289,426			1,457,012
	United States of America		541,028			207,711
	Spain		154,655			222,979
	Total	$	83,841,112		$	75,680,120

18.	SUBSEQUENT EVENT
	On October 13, 2009, the Company filed a Definitive Information Statement on Schedule 14C with the US Securities and Exchange Commission and mailed it to shareholders disclosing that a written consent in lieu of an annual meeting had been signed and delivered to the Company by the majority shareholder authorizing the following actions: To elect six directors to hold office until 2010; to ratify the Company’s independent registered public accounting firm for fiscal year 2009; and to reincorporate the Company in the State of Nevada through a redomicile merger. On November 9, 2009, the waiting period pursuant to Exchange Act Rule 14c-2 expired, and the first two actions became effective. In addition, the Company anticipates closing the redomicile merger as promptly as practicable.

22

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AMERICAN LORAIN CORPORATION
NOTES TO FINANCIAL STATEMENTS - SEPTEMBER 30, 2009 AND DECEMBER 31, 2008
(STATED IN US DOLLARS)

	On October 28, 2009, the Company filed a Form 8-K with the US Securities and Exchange Commission disclosing that the Company entered into a Securities Purchase Agreement dated on the same date by and between the Company and the accredited investors signatories thereto. Pursuant to the agreement the Company agreed to issue to the Investors (i) 5,011,169 shares (the "Shares") of common stock, par value $0.001 per share (the "Common Stock"), (ii) Series A Warrants to purchase 1,753,909 shares of Common Stock (the "Series A Warrant Shares") and (iii) Series B Warrants to purchase 501,115 shares of Common Stock (the "Series B Warrant Shares" and, collectively with the Series A Warrant Shares, the "Warrant Shares"). The aggregate purchase price is approximately $12 million. Pursuant to the Purchase Agreement, Investors have a right to participate in up to 25%, in the aggregate, of certain future financing transactions conducted by the Company within the next eighteen (18) months.
	The Company entered into a registration rights agreement: the Company agreed to prepare and file a registration statement covering the resale of the Shares and the Warrant Shares with the SEC.
	The Company is obligated to pay Rodman & Renshaw, LLC, as lead placement agent, and FT Global Inc., as co-lead placement agent, in the aggregate, a commission equal to 6% of the aggregate purchase price.
19.	SHARE BASED COMPENSATION
	On July 27, 2009, the Company’s Board of Directors adopted the American Lorain Corporation 2009 Incentive Stock Plan (the “Plan”). The Plan provides that the maximum number of shares of the Company’s common stock that may be issued under the Plan is 2,500,000 shares. The Company’s employees, directors, and service providers are eligible to participate in the Plan.
	For the nine months ended September 30, 2009, the Company recorded a total of $86,636 of shared based compensation expense. The Company issued warrants that upon exercise would result in the issuance of 1,321,385 common shares. These warrants vest over three years, where 33.33% vest annually. The expense related to the warrants was $31,677. The Company also recorded expenses of $48,808 and $6,152 for the expected issuance of 30,891 common shares and the already issued 5,000 common shares to participants, respectively. The common shares to be and already issued to participants vest immediately. The entire stock option compensation expenses were recorded as general and administrative expenses given the nature of the work contribution of the grantees.
	The range of the exercise prices of the stock options granted since inception of the plan are shown in the following table:

No tax benefit has yet to be accrued or realized. For the nine months ended September 30, 2009 the Company has yet to repatriate its earnings, accordingly it has not recognized any deferred tax assets or liability in regards to benefits derived from the issuance of stock options.

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

	Weighted-average fair value of grants:	$	0.2877
	Risk-free interest rate:		2.51%
	Expected volatility:		7.15%
	Expected life in months:		60.00

23

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ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Caution Regarding Forward-Looking Statements

This quarterly report on Form 10-Q contains forward-looking statements. These statements involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements to be materially different from any future results, performances or achievements expressed or implied by the forward-looking statements. These risks and uncertainties include, but are not limited to, the factors described in the section captioned “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2008 filed with the Securities and Exchange Commission.

In some cases, you can identify forward-looking statements by terms such as “anticipates,” “believes,” “could,” “estimates,” “expects,” “intends,” “may,” “plans,” “potential,” “predicts,” “projects,” “should,” “would” and similar expressions intended to identify forward-looking statements. Forward-looking statements reflect our current views with respect to future events and are based on assumptions and are subject to risks and uncertainties. Given these uncertainties, you should not place undue reliance on these forward-looking statements.

Also, forward-looking statements represent our estimates and assumptions only as of the date of this report. You should read this report completely and with the understanding that our actual future results may be materially different from what we expect.

Except as required by law, we assume no obligation to update any forward-looking statements publicly, or to update the reasons actual results could differ materially from those anticipated in any forward-looking statements, even if new information becomes available in the future.

Overview

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

• chestnut products,
• convenience foods (including ready-to-cook foods, ready-to-eat foods, and meals ready-to-eat); and
• frozen, canned, and bulk food.

We conduct our production activities in China. Our products are sold in 26 provinces and administrative regions in China and 42 foreign countries. We believe that we are the largest processed chestnut foods manufacturer in China. We have developed brand equity for our chestnut products in China, Japan and South Korea over the past 10 to 15 years. We produced over 50 high value-added processed chestnut products in the third quarter of 2009. We derive most of our revenues from sales in China, Japan and South Korea. Our primary strategy for 2009 is to expand our brand equity in the Chinese market for our chestnut and convenience foods products. In addition, we are working to expand our marketing efforts in Asia, North America, Europe and the Middle East. We currently have limited sales and marketing activity in the United States, although our long-term plan is to significantly expand our activities there.

Production Factors that Affect our Financial and Operational Condition

Our business depends on obtaining a reliable supply of various agricultural products, including chestnuts, vegetables, fruits, red meat, fish, eggs, rice, flour and packaging products. During the third quarter of 2009, the cost of our raw materials increased from $27.1 million to $27.2 million, as compared to the third quarter of 2008, for an increase of approximately 0.4% . 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.

Uncertainties that Affect our Financial Condition

We spend a significant amount of cash on our operations, principally to procure raw materials for our products. Many of our suppliers, including chestnut, vegetable and fruit farmers, and suppliers of packaging materials, require us to prepay for their supplies in cash or pay on the same day that such supplies are delivered to us. However, some of the suppliers with whom we have a long-standing business relationship allow us to pay on credit. In the third quarter of 2009, we paid for approximately 10% of our raw materials on credit. We fund the majority of our working capital requirements out of cash flow generated from operations. If we fail to generate sufficient sales, or if our suppliers stop offering us credit terms, we may not have sufficient liquidity to fund our operating costs and our business could be adversely affected.

24

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We also fund approximately 31% of our working capital requirements from the proceeds of short-term loans from Chinese banks. We expect to continue to do so in the future. Such loans are generally secured by our fixed assets, receivables and/or guarantees by third parties. Our loan balance from short-term bank loans as of September 30, 2009 was approximately $34.6 million. The term of almost all such loans is one year or less. Historically, we have rolled over such loans on an annual basis. However, we may not have sufficient funds available to pay all of our borrowings upon maturity. Failure to roll over our short-term borrowings at maturity or to service our debt could result in the imposition of penalties, including increases in rates of interest, legal actions against us by our creditors, or even insolvency.

We anticipate that our existing capital resources and cash flows from operations and current and expected short-term bank loans will be adequate to satisfy our liquidity requirements for the next 12 months. However, if available liquidity is not sufficient to meet our operating and loan obligations as they come due, our plans include considering pursuing alternative financing arrangements or further reducing expenditures as necessary to meet our cash requirements. However, there is no assurance that, if required, we will be able to raise additional capital or reduce discretionary spending to provide the required liquidity. Currently, the capital markets for small capitalization companies are extremely difficult and banking institutions have become stringent in their lending requirements. Accordingly, we cannot be sure of the availability or terms of any third party financing. However, we are pleased to disclose that we did successfully consummate a private placement financing of approximately $12.0 million through the sale of common stock and warrants to several accredited investors on November 3, 2009. We intend to use the proceeds to support a planned nationwide commercial campaign to promote our convenience food products in the Chinese market and to increase brand awareness for our Ready-to-Cook foods, Ready-to-Eat foods, and Meals Ready-to-Eat, as well as our chestnut products

The crisis of the financial and credit markets worldwide in the second half of 2008 has led to a severe economic recession worldwide, and the outlook for the remainder of 2009 is uncertain. A continuation or worsening of unfavorable economic conditions, including the ongoing credit and capital markets disruptions, could have an adverse impact on our business, operating results or financial condition in a number of ways. For example, we may experience declines in revenues, profitability and cash flows as a result of reduced orders, delays in receiving orders, delays or defaults in payment or other factors caused by the economic problems of our customers and prospective customers. We may experience supply chain delays, disruptions or other problems associated with financial constraints faced by our suppliers and subcontractors. In addition, changes and volatility in the equity, credit and foreign exchange markets and in the competitive landscape make it increasingly difficult for us to predict our revenues and earnings into the future.

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

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

Results of Operations

Three Months Ended September 30, 2009 Compared to Three Months Ended September 30, 2008

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

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

		Three months ended									Percentage
		September 30,						Dollar($)			(%)
								Increase			Increase
		2009			2008			(Decrease)			(Decrease)
		(In Thousands)			(In Thousands)
Net revenues	$	38,675		$	36,727		$	1,948			5.3%
Cost of revenues		29,567			29,001			566			2.0%
Gross profit		9,108			7,727			1,381			17.9%
Operating expenses
Selling and marketing expenses		1,165			831			334			40.2%
General and administrative expenses		907			848			59			7.0%
Operating Income		7,036			6,048			988			16.3%
Government subsidy income		44			0			44
Interest and other income		24			181			(157	)		(86.7%	)
Other expenses		53			(57	)		110			193%
Interest expense		857			627			230			36.7%
Earnings before tax		6,194			5,658			536			9.5%
Income tax		1,397			905			492			54.4%
Income before minority interests		4,798			4,753			45			0.9%
Minority interests		300			295			5			1.7%
Net income	$	4,497		$	4,459		$	38			0.9%

Revenue

Net Revenues. Our net revenue for the three months ended September, 2009 amounted to $38.7 million, which represents an increase of approximately $1.9 million, or 5.3%, from the three-month period ended on September 30, 2008, in which our net revenue was $36.7 million. The increased revenues were attributable to increased revenues from sales of our chestnut and convenience food products as a result of 16.3% and 12.0% increase in sales respectively of such products thanks to our effective marketing efforts and well established domestic and international distribution network.

Cost of Revenues. During the three months ended September 30, 2009, we experienced an increase in cost of revenue of $.566 million, in comparison to the three months ended September 30, 2008, from $29.0 million to $29.6 million, reflecting an increase of approximately 2%. Approximately 21%, or $0.12 million, of this increase was attributable to an increase in raw material costs, which increased from $27.1 million during the three months ended September 30, 2008 to $27.2 million, or approximately 0.4%, during the three months ended September 30, 2009.

The factors that contributed to the remaining 79% increase in cost of revenues were: an increase in wage expense for factory workers, an increase in depreciation expenses for capital equipment and an increase in the cost of consumables used in conjunction with capital equipment.

Gross Profit. Our gross profit increased $1.4 million, or 17.9%, to $9.1 million for the three months ended September 30, 2009 from $7.7 million for the same period in 2008 as a result of higher net revenues, offset by higher costs of revenues, for the reasons indicated immediately above.

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Operating Expenses

Selling and Marketing Expenses. Our selling and marketing expenses increased approximately $0.33 million, or 40.2%, to $1.16 million in the third quarter of 2009 from $.831 million in the third quarter of 2008. The following table reflects the main factors that contributed to this increase as well as the dollar amount that each factor contributed to this increase:

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

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

General and Administrative Expenses. We experienced an increase in general and administrative expense of approximately $0.06 million from approximately $0.847 million to approximately $0.907 million for the three months ended September 30, 2009, compared to the same period in 2008. The following table reflects the main factors that contributed to this increase as well as the dollar amount that each factor contributed to this increase:

Income Before Taxation and Minority Interest

Income before taxation and minority interest increased $0.536 million, or 9.5%, to $6.19 million for the three months ended September 30, 2009 from $5.66 million for the same period of 2008. The increase was mainly attributable to the increase of our sales revenue as described above in the three months ended September 30, 2009 as compared to the three months ended September 30, 2008.

Income Taxes

Income taxes increased $0.492 million, or 54.4%, to $1.396 million in the third quarter of 2009, as compared to $0.904 million in the third quarter of 2008. This increase was attributable to the higher income tax rate in 2009 as compared to 2008.

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

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

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Net Income

Net income increased $.039 million, or 0.9%, to $4.497 million for the three months ended September 30, 2009 from $4.458 million for the same period of 2008. The increase was attributable to increased sales revenue and lower cost of goods sold and partially offset by increased selling and marketing expenses and higher income tax in the three months ended September 30, 2009 as compared to the three months ended September 30, 2008.

Nine Months Ended September 30, 2009 Compared to Nine Months Ended September 30, 2008

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

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

		Nine months ended									Percentage
		September 30,						Dollar($)			(%)
								Increase			Increase
		2009			2008			(Decrease)			(Decrease)
		(In Thousands)			(In Thousands)
Net revenues	$	83,841		$	75,680		$	8,161			10.8%
Cost of revenues		64,280			58,819			5,461			9.3%
Gross profit		19,561			16,861			2,700			16.0%
Operating expenses
Selling and marketing expenses		3,556			2,066			1,490			72.1%
General and Administrative expenses		2,798			2,480			318			12.8%
Operating Income		13,207			12,314			892			7.2%
Government subsidy income		240			38			202			538.0%
Interest and other income		233			288			(56	)		(19.3%	)
Other expenses		234			48			186			385.3%
Interest expense		2,206			1,901			305			16.0%
Earnings before tax		11,240			10,691			548			5.1%
Income tax		2,580			1,788			792			44.3%
Income before minority interests		8,660			8,903			(243	)		(2.7%	)
Minority interests		551			595			(45	)		(7.5%	)
Net income	$	8,109		$	8,308		$	(199	)		(2.4%	)

Revenue

Net Revenues. Our net revenue for the nine months ended September 30, 2009 amounted to $83.8 million, which is approximately $8.1 million or 10.8% more than that of the same period ended on September 30, 2008 where we had revenue of $75.7 million. The increased revenues were attributable to the success of the Company's marketing strategies, operational enhancements and expansion of sales markets, primarily in China. In addition, through third party agents that we contracted with, our products were sold to a total of over 3,000 supermarkets in China as of September 30, 2009.

During the nine months ended September 30, 2009, revenues from sales of chestnut products increased by $5.2 million, or 13.2%, and revenues from sales of convenience food products increased by $1.7 million, or 10.6%, and sales of frozen, canned and bulk food products increased $1.2 million, or 5.8%, compared to the same period in 2008 .

Cost of Revenues. Our cost of goods sold, which consists of raw materials, direct labor and manufacturing overhead expenses, was $64.3 million for the nine month period ended September 30, 2009, an increase of $5.5 million or 9.3%, as compared to $58.8 million for the nine month period ended September 30, 2008. The cost of goods sold increased because the sales in the first nine months of 2009 increased as compared to the same period ended September 30, 2008.

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Gross Profit. Our gross profit increased $2.7 million, or 16% to $19.6 million for the nine months ended September 30, 2009 from $16.9 million for the same period in 2008. This increase was attributable to increased sales revenue.

Operating Expenses

Selling and Marketing Expenses. Selling and marketing expenses increased $1.5 million, or 72.1% to $3.6 million for the nine months ended September 30, 2009 from $2.1 million for the same period in 2008. This increase mainly resulted from increased efforts to market our products in our domestic market.

General and Administrative Expenses. General and administrative expenses increased $0.32 million, or 12.8% to $2.8 million for the nine months ended September 30, 2009 from $2.5 million for the same period of 2008. The increase of general and administrative expenses was primarily attributable to increased office expenses relative to our expanded business, the increased compensation for managerial personnel and expansion of our distribution channels.

Income Before Taxation and Minority Interest

Income before taxation and minority interest increased $0.55 million or 5.1% to $11.2 million for the nine months ended September 30, 2009 from $10.7 million for the same period of 2008. The increase was primarily a result of the higher revenue during the nine month period ended on September 30, 2009 as compared to 2008.

Income Taxes

Income taxes increased $0.79 million or 44.3% to $2.6 million for the nine months ended September 30, 2009 from $1.8 million for the same period of 2008. The increase of tax paid was primarily a result of the increase of income in the first nine months ended September 30, 2009 as well as increased income tax rate, as compared to the same period in 2008.

Net Income

Net income decreased $0.2 million, or 2.4% to $8.1 million for the nine months ended September 30, 2009 from $8.3 million for the same period of 2008. The decrease was primarily a result of higher selling and marketing expenses and increased income tax.

Liquidity and Capital Resources

As of September 30, 2009, we had cash and cash equivalents (including restricted cash) of $5.2 million. The following table provides detailed information about our net cash flow for all financial statements periods presented in this report.

		Cash Flow (in thousands)
		Nine Months Ended September
		30,
		2009			2008
Net cash provided by (used in) operating activities	$	(15,739	)	$	4,631
Net cash provided by (used in) investing activities	$	1,233		$	(13,708	)
Net cash provided by (used in) financing activities	$	14,792		$	6,482
Net cash flow (outflow)	$	286		$	(2,594	)

Operating Activities

Net cash provided by operating activities was ($15.7) million for the nine months period ended September 30, 2009, which is a decrease of $20.3 million from $4.6 million for the same period of 2008. The decrease of net cash provided by operating activities in the first nine months of fiscal 2009 was primarily a result of additional decrease in accounts and other payables of approximately $7.1 million and less decrease in accounts and other receivables of approximately $16.4 million as compared to the same period in 2008.

Investing Activities

Our main uses of cash for investment activities are payments for the acquisition of property, plants and equipment.

Net cash provided by investing activities for the nine months period ended September 30, 2009 was $1.2 million, which is an increase of $14.9 million from net cash used in investing activities of $13.7 million for the same period of 2008. The increase was primarily due to reduced investment in fixed assets and decrease in restricted cash in 2009.

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Financing Activities

Net cash provided by financing activities for the nine months period ended September 30, 2009 was $14.8 million, which is an increase of $8.3 million from $6.5 million net cash provided by financing activities during the same period in 2008. The increase of the net cash provided by financing activities was primarily a result of increased short term bank borrowing in 2009.

Loan Facilities

As of September 30, 2009, the amounts and maturity dates for our short-term bank loans are as set forth in the Notes to the Financial Statements. The total amounts outstanding were $34.6 million as of September 30, 2009, compared with $14.4 million as of December 31, 2008. We believe that our currently available working capital, after receiving the aggregate proceeds of the credit facilities referred to above, should be adequate to sustain our operations at our current levels through at least the next twelve months.

Obligations under Material Contracts

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

Listing on the NYSE Amex Exchange

On September 3, 2009, we announced that we received authorization to list our common stock on the NYSE Amex Exchange and we began trading on that exchange on September 8, 2009. We are hoping our move to a senior exchange will improve liquidity and transparency for our shareholders.

Critical Accounting Policies

The preparation of financial statements in conformity with United States generally accepted accounting principles requires our management to make assumptions, estimates and judgments that affect the amounts reported in our financial statements, including the notes thereto, and related disclosures of commitments and contingencies, if any. We consider our critical accounting policies to be those that require significant judgments and estimates in the preparation of financial statements, including the following:

Method of Accounting -- We maintain our general ledger and journals with the accrual method accounting for financial reporting purposes. Accounting policies adopted by us conform to generally accepted accounting principles in the United States and have been consistently applied in the presentation of our financial statements, which are compiled on the accrual basis of accounting.

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

Principles of consolidation -- Our consolidated financial statements, which include information about our company and our subsidiaries, are compiled in accordance with generally accepted accounting principles in the United States. All significant inter-company accounts and transactions have been eliminated. Our consolidated financial statements include 100% of assets, liabilities, and net income or loss of our wholly-owned subsidiaries. Ownership interests of minority investors are recorded as minority interests.

As of September 30, 2009, the details pertaining to our subsidiaries were as follows:

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

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

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

Revenue recognition -- Our revenue recognition policies are in compliance with Staff Accounting Bulletin (SAB) 104. Sales revenue is recognized at the date of shipment to customers when a formal arrangement exists, the price is fixed or determinable, the delivery is completed, no other significant obligations of ours exist and collectability is reasonably assured. Payments received before all of the relevant criteria for revenue recognition are satisfied are recorded as unearned revenue.

Our revenue consists of invoiced value of goods, net of a value-added tax. No product return or sales discount allowance is made as products delivered and accepted by customers are normally not returnable and sales discount is normally not granted after products are delivered.

Recent Accounting Pronouncements

In May 2009, the FASB issued SFAS No. 165, "Subsequent Events" ("SFAS 165"). SFAS 165 is intended to establish general standards of accounting for and disclosure of events that occur after the balance sheet date but before financial statements are issued or are available to be issued. It requires the disclosure of the date through which an entity has evaluated subsequent events and the basis for that date, that is, whether that date represents the date the financial statements were issued or were available to be issued. SFAS 165 is effective for interim or annual financial periods ending after June 15, 2009.

In June 2009, FASB issued FASB Statement No. 166, Accounting for Transfers for Financial Assets and FASB Statement No. 167, a revision to FASB Interpretation No. 46 (Revised December 2003), Consolidation of Variable Interest Entities.

Statement 166 is a revision to FASB Statement No. 140, Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities, and will require more information about transfers of financial assets, including securitization transactions, and where entities have continuing exposure to the risks related to transferred financial assets. It eliminates the concept of a "qualifying special-purpose entity," changes the requirements for derecognizing financial assets, and requires additional disclosures.

Statement 167 is a revision to FASB Interpretation No. 46 (Revised December 2003), Consolidation of Variable Interest Entities, and changes how a reporting entity determines when an entity that is insufficiently capitalized or is not controlled through voting (or similar rights) should be consolidated. The determination of whether a reporting entity is required to consolidate another entity is based on, among other things, the other entity’s purpose and design and the reporting entity’s ability to direct the activities of the other entity that most significantly impact the other entity’s economic performance.

On July 1, 2009, FASB issued FASB Statement No. 168, The "FASB Accounting Standards Codification" and the Hierarchy of Generally Accepted Accounting Principles. The ASC has become the source of authoritative US GAAP recognized by the FASB to be applied by nongovernmental entities and provides that all such guidance carries an equal level of authority. The ASC is not intended to change or alter existing GAAP. The ASC is effective for interim and annual periods ending after September 15, 2009.

The Company is currently evaluating the potential impact, if any, of the adoption of the above recent accounting pronouncements on its consolidated results of operations and financial condition.

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Off-Balance Sheet Arrangements

We do not have any off-balance arrangements.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not required.

ITEM 4. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

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

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

Changes in Internal Controls over Financial Reporting.

During the fiscal quarter ended September 30, 2009, there were no changes in our internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II. OTHER INFORMATION

ITEM 6. EXHIBITS

31.1	Certification of Principal Executive Officer filed pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification of Principal Financial Officer filed pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2	Certification of Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

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SIGNATURES

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

Date: November 12, 2009

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EXHIBIT INDEX

31.1	Certification of Principal Executive Officer filed pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification of Principal Financial Officer filed pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2	Certification of Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

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