UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 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 December 31, 2011

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

For the transition period from ______to______.

China New Greenfood Company Ltd.

(Exact name of registrant as specified in the Charter)

Nevada		000-53775		46-0522277
(State or other jurisdiction of incorporation or organization)		(Commission File No.)		(IRS Employee Identification No.)

c/o Hunan Xiangmei Food Co, Ltd.

200 Taozhu Road, Wuxi Town

Qiyang County, Yongzhou City

Hunan Province, China

(Address of Principal Executive Offices) (Zip Code)

(86) 746-3269-828

(Registrants 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 during the preceding 12 months (or for such shorter period that the issuer was required to file such reports), and (2)has been subject to such filing requirements for the past 90 days.

Yesx 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 x 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.

Large accelerated filer	o	Accelerated filer	o
Non-accelerated filer	o	Smaller reporting company	x
(Do not check if a smaller reporting company)

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

Yes o No x

State the number of shares outstanding of each of the issuer’s classes of common equity, as of February 14, 2012: 11,057,450 shares of common stock, par value $0.001 per share, issued and outstanding.

CHINA NEW GREENFOOD COMPANY LTD.

FORM 10-Q

December 31, 2011

TABLE OF CONTENTS

PART I— FINANCIAL INFORMATION

Item 1.	Financial Statements	1
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	17
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	29
Item 4.	Controls and Procedures	29

PART II— OTHER INFORMATION

Item 1.	Legal Proceedings	30
Item 1A.	Risk Factors	30
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	30
Item 3.	Defaults Upon Senior Securities	30
Item 4.	(Removed and Reserved)	30
Item 5.	Other Information	30
Item 6.	Exhibits	30

SIGNATURES		31

CAUTIONARY STATEMENT ON FORWARD-LOOKING INFORMATION

This Quarterly Report on Form 10-Q contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Forward-looking statements discuss matters that are not historical facts. Because they discuss future events or conditions, forward-looking statements may include words such as “anticipate,” “believe,” “estimate,” “intend,” “could,” “should,” “would,” “may,” “seek,” “plan,” “might,” “will,” “expect,” “anticipate,” “predict,” “project,” “forecast,” “potential,” “continue” negatives thereof or similar expressions. Forward-looking statements speak only as of the date they are made, are based on various underlying assumptions and current expectations about the future and are not guarantees. Such statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, level of activity, performance or achievement to be materially different from the results of operations or plans expressed or implied by such forward-looking statements.

We cannot predict all of the risks and uncertainties. Accordingly, such information should not be regarded as representations that the results or conditions described in such statements or that our objectives and plans will be achieved and we do not assume any responsibility for the accuracy or completeness of any of these forward-looking statements. These forward-looking statements are found at various places throughout this Quarterly Report on Form 10-Q and include information concerning possible or assumed future results of our operations, including statements about potential acquisition or merger targets; business strategies; future cash flows; financing plans; plans and objectives of management; any other statements regarding future acquisitions, future cash needs, future operations, business plans and future financial results, and any other statements that are not historical facts.

These forward-looking statements represent our intentions, plans, expectations, assumptions and beliefs about future events and are subject to risks, uncertainties and other factors. Many of those factors are outside of our control and could cause actual results to differ materially from the results expressed or implied by those forward-looking statements. In light of these risks, uncertainties and assumptions, the events described in the forward-looking statements might not occur or might occur to a different extent or at a different time than we have described. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of the Quarterly Report on Form 10-Q. All subsequent written and oral forward-looking statements concerning other matters addressed in this Quarterly Report on Form 10-Q and attributable to us or any person acting on our behalf are expressly qualified in their entirety by the cautionary statements contained or referred to in this Quarterly Report on Form 10-Q.

Except to the extent required by law, we undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events, a change in events, conditions, circumstances or assumptions underlying such statements, or otherwise.

PART 1 - FINANCIAL INFORMATION

Item 1.

Financial Statements

CHINA NEW GREENFOOD CO., LTD & SUBSIDIARIES

(FORMERLY NEWERA TECHNOOGY DEVELOPMENT CO., LTD)

INDEX TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

CONTENTS

Unaudited Condensed Consolidated Financial Statements:

Condensed Consolidated Balance Sheets - As of December 31, 2011 and June 30, 2011 (Unaudited)	2

Condensed Consolidated Statements of Income and Comprehensive Income - For the Six and Three Months ended December 31, 2011 and 2010 (Unaudited)	3

Condensed Consolidated Statements of Cash Flows - For the Six months ended December 31, 2011 and 2010 (Unaudited)	4

Notes to Condensed Consolidated Financial Statements (Unaudited)	5 to 16

CHINA NEW GREENFOOD CO., LTD AND SUBSIDIARIES
(FORMERLY NEWERA TECHNOLOGY DEVELOPMENT CO., LTD.)
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)

	December 31, 2011		June 30, 2011
ASSETS

CURRENT ASSETS:
Cash and cash equivalents	$	325,552	$	668,199
Restricted cash		77,703		459,978
Accounts receivable		4,743,351		968,680
Inventories		18,574,010		12,541,965
Advances to suppliers and other prepaid expense		781,793		780,971
Total Current Assets		24,502,409		15,419,793

Property, plant and equipment, net		17,909,776		17,511,399
Farm development cost, net		13,920,291		14,490,299
Land use rights under capital lease, net		196,261		195,467
Deposit on land use right		188,540		185,644

Total Assets	$	56,717,277	$	47,802,602

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
Short-term loans payable	$	6,190,394	$	3,094,059
Short-term obligation under capital lease from related parties		1,009		962
Accounts payable and accrued expenses		4,719,049		6,967,374
Advances from customers		1,361,853		-
Taxes payable		467,844		428,856
Due to related parties		447,939		436,543

Total Current Liabilities		13,188,088		10,927,794

Long-term loan payable		3,566,547		5,522,896
Long-term obligation under capital lease from related parties, less current portion		216,454		213,645
Warrant liability		368,853		321,432

Total Liabilities	$	17,339,942	$	16,985,767
Commitments
STOCKHOLDERS' EQUITY:
Common stock, $0.001 par value, 100,000,000 shares authorized; 11,057,450 shares issued and outstanding		11,057		11,057
Additional paid in capital		7,203,946		7,203,946
Retained earnings		29,187,382		21,151,336
Statutory reserve		704,289		704,289
Accumulated other comprehensive income -		2,270,661		1,746,207
Total Stockholders' Equity		39,377,335		30,816,835

Total Liabilities and Stockholders' Equity	$	56,717,277	$	47,802,602

The accompanying footnotes are an integral part of these condensed consolidated financial statements

CHINA NEW GREENFOOD COMPANY LTD
(FORMERLY NEWERA TECHNOLOGY DEVELOPMENT CO., LTD.)
CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
(Unaudited)

	For the three months Ended						For the six months Ended
	December 31,						December 31,
	2011			2010			2011			2010

NET REVENUES	$	18,239,196		$	11,107,329		$	26,265,049		$	18,630,762
COST OF REVENUES		11,203,906			7,721,704			16,307,201			13,169,669
GROSS PROFIT		7,035,290			3,385,625			9,957,848			5,461,093

OPERATING EXPENSES:
Selling and marketing expenses		825,080			521,183			1,241,462			766,843
General and administrative expenses		284,516			375,661			590,989			588,117
Total Operating Expenses		1,109,596			896,844			1,832,451			1,354,960

INCOME FROM OPERATIONS		5,925,694			2,488,781			8,125,397			4,106,133

OTHER (EXPENSE) INCOME:
Interest income		2,690			4,005			4,144			4,005
Interest expense		(169,565	)		(129,639	)		(311,181	)		(226,453	)
Government subsidy income		202,878			168			265,107			14,917
Change in fair value of warrants liability		(10,259	)		-			(47,421	)		-
Total Other (Expense) Income		25,744			(125,466	)		(89,351	)		(207,531	)

INCOME BEFORE INCOME TAXES		5,951,438			2,363,315			8,036,046			3,898,602
INCOME TAXES		-			-			-			-
NET INCOME	$	5,951,438		$	2,363,315		$	8,036,046		$	3,898,602

COMPREHENSIVE INCOME:
Net Income	$	5,951,438		$	2,363,315		$	8,036,046		$	3,898,602
Other Comprehensive Income:
Foreign currency translation gain		218,847			295,215			524,454			561,099
TOTAL COMPREHENSIVE INCOME	$	6,170,285		$	2,658,530		$	8,560,500		$	4,459,701

BASIC AND DILUTED INCOME PER COMMON SHARE	$	0.54		$	0.26		$	0.73		$	0.42

BASIC WEIGHTED AVERAGE COMMON SHARES OUTSTANDING		11,057,000			9,200,000			11,057,000			9,200,000
DILUTED WEIGHTED AVERAGE COMMON SHARES OUTSTANDING		11,057,000			9,200,000			11,057,000			9,200,000

The accompanying footnotes are an integral part of these condensed consolidated financial statements

CHINA NEW GREENFOOD CO., LTD AND SUBSIDIARIES
(FORMERLY NEWERA TECHNOLOGY DEVELOPMENT CO., LTD.)
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
	For the six months Ended
	December 31,
	2011			2010

CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	8,036,046		$	3,898,602
Adjustments to reconcile net income from operations to net cash
(used in) provided by operating activities:
Depreciation		370,264			325,737
Amortization-farmland development costs		791,684			309,981
Amortization-land use rights under capital lease		2,243			2,142
Change of fair value of warrant liability		47,421			-
Changes in assets and liabilities:
Restricted cash		387,301			(134,286	)
Accounts receivable		(3,724,103	)		(3,844,644	)
Inventories		(5,804,133	)		1,762,275
Advances to suppliers and other prepaid expense		(4,590	)		(991,383	)
Accounts payable and accrued expense		(2,342,925	)		906,556
Advance from customers		1,354,331			103,875
Taxes payable		32,118			131,695
Due to related party		4,070			6,639
NET CASH (USED IN) PROVIDED BY OPERATING ACTIVITIES		(850,273	)		2,477,189

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment		(494,743	)		(1,495,370	)

NET CASH USED IN INVESTING ACTIVITIES		(494,743	)		(1,495,370	)

CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from short-term loans payable		3,343,724			3,512,933
Payment of cash dividend		-			(469,883	)
Repayment of short-term loans		(2,343,732	)		-
Capital contribution by shareholder		-			12,763

NET CASH PROVIDED BY FINANCING ACTIVITIES		999,992			3,055,813

EFFECT OF EXCHANGE RATE ON CASH AND CASH EQUIVALENTS		2,377			130,684

NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS		(342,647	)		4,168,316

CASH AND CASH EQUILAVENTS - beginning of period		668,199			1,561,275

CASH AND CASH EQUIVALENTS - end of period	$	325,552		$	5,729,591

SUPPLEMENTAL DISCLOSURE OF CASH FLOWS INFORMATION:
Cash paid for:
Interest	$	322,530		$	219,814

NON-CASH FINANCING ACTIVITIES:
Accrual of capital lease payments to related party	$	490		$	436

The accompanying footnotes are an integral part of these condensed consolidated financial statements

CHINA NEW GREENFOOD CO. LTD. AND SUBSIDIARIES

(FORMERLY NEWERA TECHNOLOGY DEVELOPMENT CO., LTD)

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE 1 – ORGANIZATION AND BASIS OF PRESENTATION

Organization

China New Greenfood Co. Ltd. (the “Company”), formerly known as Newera Technology Development Co., Ltd was incorporated in Delaware on April 17, 2009 under the name of Newera Technology Development Co., Ltd.

On January 28, 2011, the Company entered into a Share Exchange Agreement with Grain Wealth Limited, a British Virgin Islands company (“Grain Wealth”) and acquired all of the outstanding capital stock of Grain Wealth.

In connection with the Share Exchange Agreement, the Company issued to Grain Wealth an aggregate of 9,200,000 shares of the common stock of the Company, at par value of $0.001 per share, so that upon completion of the Share Exchange, the shareholder of Grain Wealth own approximately 92% of the fully diluted outstanding shares of the Company prior to the issuance of the shares to the investors. Accordingly, Grain Wealth became the wholly owned subsidiary of the Company.

Immediately prior to the Share Exchange, the Company had 1,000,000 shares of our Common Stock issued and outstanding. On January 28, 2011, in connection with the closing of the Share Exchange, the Company’s then chief executive officer and principal accounting officer Zengxing Chen cancelled 700,000 shares of the Common Stock that he owned, and resigned from our board of directors (the “Board”) and all officer positions that he held. The Company appointed Taiping Zhou as the Chairman of the Board and Xiaohui Wu and Jiling Zhou as members of the Board, and the Company also appointed Taiping Zhou as their Chief Executive Officer and Jiling Zhou as President.

In connection with the Share Exchange Agreement. The Company issued an aggregate of 500,000 shares of the Common Stock as compensation for legal and consulting services rendered. The issuance of such securities was exempt from registration pursuant to Section 4(2) of, and Regulation D and/or Regulation S promulgated under the Securities Act of 1933, as amended (the “Securities Act”).

Immediately after the Share Exchange, the Company entered into a securities purchase agreement (the “Purchase Agreement”) with four investors (the “Investors”) for the issuance and sale in a private placement of shares of Common Stock, for aggregate gross proceeds of $3,782,393 (including sales commission of $264,663) at a per share purchase price of $3.5769 (the “Private Placement”).

In connection with the private placement and pursuant to the Securities Purchase Agreement, the placement agent and advisors received the following compensation: (i) 7% of the gross proceeds received from the sale of the Securities of $264,663 as a placement commission; (ii) warrants to purchase up to 105,745 shares of Common Stock with the same term of the warrants issued to investors.

Subsequently, on April 1, 2011, the Company’s name was changed from “Newera Technology Development Co., Ltd” to Chine New Greenfood Co., Ltd” in order to more effectively reflect the Company’s business and communicate the Company’s brand identity to customers.

The above mentioned merger transaction has been accounted for as a reverse merger under the purchase method of accounting since there was a change of control. Accordingly, Grain Wealth is treated as the continuing entity for accounting purposes.

Grain Wealth Limited is a limited liability company organized under the laws of the British Virgin Island (the “Grain Wealth”) on September 8, 2010. Grain Wealth owns 100% of the issued and outstanding capital stock of Qiyang County Xiangmei Food Technical Research and Development Co., Ltd. (“Xiangmei Food”), a wholly foreign-owned enterprise (“WFOE”) with limited liability, incorporated under the People’s Republic of China (the “PRC”) on December 23, 2010. Xiangmei Food has entered into a series of contractual agreements with the owner of Hunan Xiangmei Food Co., Ltd. (“Hunan Xiangmei”).

CHINA NEW GREENFOOD CO. LTD. AND SUBSIDIARIES

(FORMERLY NEWERA TECHNOLOGY DEVELOPMENT CO., LTD)

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE 1 – ORGANIZATION AND BASIS OF PRESENTATION (Continued)

Hunan Xiangmei is a limited liability company formed under laws of the PRC on March 27, 2006, with a total registered capital of RMB 10 million (approximate to $1.2 million), contributed by two individual shareholders, Mr. Wu YaoTian and Mr. Zhou Taiping. On December 24, 2009, Mr. Wu YaoTian transferred all of his ownership interest to Mr. Zhou Taiping, the Chairman of Hunan Xiangmei, and Mr. Zhou became the sole owner of Hunan Xiangmei, which is engaged in the business of growing, processing and distributing glutinous rice and other consumer food products such as frozen stuffed dumplings and ice cream products in the PRC.

On December 23, 2010, Xiangmei Food entered into a series of contractual arrangements with Hunan Xiangmei. These contractual agreements require the pledge of Mr. Zhou’s equity interests in Hunan Xiangmei to Xiangmei Food. At any time during the agreement period, Xiangmei Food has exclusive rights to acquire any portion of the equity interests of Hunan Xiangmei. In addition, Xiangmei Food has sole discretion to appoint directors of Hunan Xiangmei and is entitled to certain management fees from Hunan Xiangmei.

Under these contractual arrangements, which obligate Xiangmei Food to absorb a majority of the risk of loss from Hunan Xiangmei’s activities and entitle it to receive a majority of its residual returns, Xiangmei Food has gained effective control over Hunan Xiangmei. Through these contractual arrangements, Xiangmei Food now holds the variable interests of Hunan Xiangmei, and Xiangmei Food becomes the primary beneficiary of Hunan Xiangmei. Based on these contractual arrangements, Hunan Xiangmei is considered as a Variable Interest Entity (“VIE”) under ASC 810, "Consolidation ", because the equity investor in Hunan Xiangmei no longer has the characteristics of a controlling financial interest. Accordingly, Hunan Xiangmei is consolidated under ASC 810.

On March 23, 2011, Xiangmei Food entered into a Share Exchange Agreement with Qiyang Honghui Agricultural Technoloical and Development Co., Ltd. ("Honghui") to purchase 100% of shares of Honghui for a price of $15,225 (RMB100,000). As a result of the Share Exchange, Honghui is a 100% owned subsidiary of Xiangmei Food.

On June 30, 2011, Zhou Taiping entered into a Share Transfer Agreement to transfer 100% of his shares in Hunan Xiangmei to Honghui for free. As a result of the transfer agreement, Hunan Xiangmei became 100% owned by Honghui.

On August 1, 2011, Qiyang Honghui completed the registration of the equity change of Hunan Xiangmei with local administration for industry and commerce for the closing of the Transaction. As a result of the Transaction, Qiyang Honghui became a sole shareholder of Hunan Xiangmei, and therefore also a wholly owned subsidiary of the Company.

On September 27, 2011, Xiangmei Food (WFOE), Hunan Xiangmei and its shareholder agreed to terminate a series of contractual agreements dated December 23, 2010. Pursuant to these termination agreements, Hunan Xiangmei is no longer a variable interest entity. The termination agreements have no effect on the consolidated financial statements since Hunan Xiangmei became a wholly-owned subsidiary of Qiyang Honghui.

Basis of presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles of the United States (“US GAAP”). Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of the management, all adjustments (consisting only of normal recurring entries) considered necessary for a fair presentation have been included. These condensed consolidated financial statements and notes should be read in conjunction with the audited consolidated June 30, 2011 and 2010 financial statements and notes included in the Form 10-k and Form 8-K/A filed with the Securities and Exchange Commission (“SEC”) on September 28, 2011 and on April 28, 2011, respectively. Operating results for the Six months ended December 31, 2011 may not be necessarily indicative of the results that may be expected for the full year.

Principal of Consolidation

The unaudited condensed consolidated financial statements include the financial statements of China New Greenfood, Grain Wealth, Xiangmei Food and its 100% owned subsidiary Honghui and its 100% owned subsidiary Hunan Xiangmei (collectively, “the Company”). All significant inter-company balances and transactions are eliminated upon consolidation.

CHINA NEW GREENFOOD CO. LTD. AND SUBSIDIARIES

(FORMERLY NEWERA TECHNOLOGY DEVELOPMENT CO., LTD)

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE 2 –SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Use of estimates

The preparation of the financial statements in conformity with accounting principles generally accepted in the U.S. requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, expenses, and the related disclosures at the date of the financial statements and during the reporting period. Actual results could materially differ from these estimates. Significant estimates in the Six months ended December 31, 2011 and 2010 include the allowance for doubtful accounts, the reserve for slow moving or perishable inventory, the useful life of property and equipment and intangible assets, and assumptions used in assessing impairment of long-term assets.

Fair value of financial instruments

The Company adopted the guidance of Accounting Standards Codification (“ASC”) 820 for fair value measurements which clarifies the definition of fair value, prescribes methods for measuring fair value, and establishes a fair value hierarchy to classify the inputs used in measuring fair value as follows:

Level 1-Inputs are unadjusted quoted prices in active markets for identical assets or liabilities available at the measurement date.

Level 2-Inputs are unadjusted quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, inputs other then quoted prices that are observable, and inputs derived from or corroborated by observable market data.

Level 3-Inputs are unobservable inputs which reflect the reporting entity’s own assumptions on what assumptions the market participants would use in pricing the asset or liability based on the best available information.

The carrying amounts reported in the balance sheets for cash, accounts receivable, advances to suppliers, accounts payable, advance from customer accrued expenses and short-term loans, and due to related parties approximate their fair market value based on the short-term maturity of these instruments.

The fair value of the long-term loans as of December 31, 2011 and 2010 also approximated its recorded value because the interest rates are not substantially different than current interest rates.

The Company evaluated the fair value of the capital lease obligation – related parties, net of current portion at the balance sheet dates and determined that the book value of equipment loans payable approximated the fair market value based on level 3 inputs.

The Company estimated the fair value of the warrants liability based on the level 3 inputs (See Note 16.)

Cash and cash equivalents

For purposes of the statements of cash flows, the Company considers all highly liquid instruments purchased with an original maturity of Six months or less and money market accounts to be cash equivalents. The Company maintains cash and cash equivalents with various financial institutions in the PRC. Balances in banks in the PRC are uninsured.

Restricted cash

In order to secure its loan, banks in China often require certain deposits to be held as a percentage of loans in a separate bank’s account. Usually the Company is prohibited from using the deposit without authorization from the banks. The required deposit is reported as restricted cash in the accompanying balance sheets.

Concentrations of credit risk

The Company's operations are carried out 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's economy. The Company's operations in the PRC are subject to specific considerations and significant risks not typically associated with companies in North America. The Company's results may be adversely affected by changes in governmental policies with respect to laws and regulations, anti-inflationary measures, currency conversion and remittance abroad, and rates and methods of taxation, among other things.

Financial instruments which potentially subject the Company to concentrations of credit risk consist principally of cash and trade accounts receivable. All of the Company’s cash is maintained with state-owned banks within the People’s Republic of China of which no deposits are covered by insurance. The Company has not experienced any losses in such accounts and believes it is not exposed to any risks on its cash in bank accounts. A significant portion of the Company's sales are credit sales which are primarily to customers whose ability to pay is dependent upon the industry economics prevailing in these areas; however, concentrations of credit risk with respect to trade accounts receivables is limited due to generally short payment terms. The Company also performs ongoing credit evaluations of its customers to help further reduce credit risk.

CHINA NEW GREENFOOD CO. LTD. AND SUBSIDIARIES

(FORMERLY NEWERA TECHNOLOGY DEVELOPMENT CO., LTD)

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE 2 –SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Inventories

Inventories, consisting of raw materials, work in process and finished goods related to the Company’s products are stated at the lower of cost or market utilizing the weighted average method. An allowance is established when management determines that certain inventories may not be saleable. If inventory costs exceed expected market value due to obsolescence or quantities in excess of expected demand, the Company will record reserves for the difference between the cost and the market value. The Company maintains a reasonable balance of frozen foods inventory on hand throughout the year. The majority of the Company’s inventory as of December 31 and June 30, 2011 consisted of the crops or growing crops ready for or close to sale in the market.

Prepayments for growing crops, considered work in process, are mainly costs incurred to grow the crops. The costs included direct cost such as seed selection, fertilizer, labor costs and contract fee that are spent in growing glutinous rice, peanuts and sesame on the contracted farmland and indirect cost which includes amortization of farmland development cost. All the costs are accumulated until the time of harvest and then allocated to glutinous rice, peanuts and sesame based on usage of the farmland in July and October, the harvest seasons of glutinous rice, and August, the harvest season of peanuts and sesame. As of December 31, 2011, the Company received both harvest season crops and transferred work in process into finished goods..

Property, plant and equipment

Property and equipment is carried at cost and depreciated on a straight-line basis over the estimated useful lives of the assets. The cost of repairs and maintenance is expensed as incurred; major replacements and improvements are capitalized. When assets are retired or disposed of, the cost and accumulated depreciation are removed from the accounts, and any resulting gains or losses are included in income in the year of disposition. The Company evaluates property and equipment for impairment when events or changes in circumstances reflect the possibility that their recorded value may not be recoverable. No events or condition occurred during the period ended December 31, 2011 that required the Company to record an impairment.

Income taxes

The Company accounts for income taxes under the provisions of ASC740 “Income Taxes”, which requires recognition of deferred tax assets and liabilities for the expected future tax consequences of the events that have been included in the financial statements or tax returns. Deferred income taxes are recognized for all significant temporary differences between tax and financial statement basis of assets and liabilities. Valuation allowances are established against net deferred tax assets when it is more likely than not that some portion or all of the deferred tax asset will not be realized.

CHINA NEW GREENFOOD CO. LTD. AND SUBSIDIARIES

(FORMERLY NEWERA TECHNOLOGY DEVELOPMENT CO., LTD)

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE 2 –SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Advances from customers

Advances from customers consist of prepayments from customers for merchandise that had not yet been shipped. The Company recognizes the deposits as revenue as customers take delivery of the goods, in accordance with its revenue recognition policy.

Revenue recognition

The Company recognizes revenue when persuasive evidence of an arrangement exists, delivery has occurred or services have been rendered, the purchase price is fixed or determinable and collectability is reasonably assured. The Company recognizes revenues from the sale of glutinous rice and other consumer food upon shipment and transfer of title.

Shipping costs

Shipping costs are included in selling expenses and totaled $578,043 and $461,046 for the six months ended December 31, 2011 and 2010, respectively. Shipping costs are included in selling expenses and totaled $375,217 and $301,864 for the three months ended December 31, 2011 and 2010, respectively.

Advertising

Advertising is expensed as incurred and is included in selling expenses on the accompanying statement of operations. For the six months ended December 31, 2011 and 2010, advertising expense amounted to $128,485 and $60,613, respectively. For the three months ended December 31, 2011 and 2010, advertising expense amounted to $85,512 and $48,055, respectively.

Foreign currency translation

The reporting currency of the Company is the U.S. dollar. The functional currency of the Company is the local currency, the Chinese Renminbi (“RMB”). Results of operations and cash flows are translated at average exchange rates during the period, assets and liabilities are translated at the unified exchange rate at the end of the period, and equity is translated at historical exchange rates. Translation adjustments resulting from the process of translating the local currency financial statements into U.S. dollars are included in determining comprehensive income. Transactions denominated in foreign currencies are translated into the functional currency at the exchange rates prevailing on the transaction dates. Assets and liabilities denominated in foreign currencies are translated into the functional currency at the exchange rates prevailing at the balance sheet date with any transaction gains and losses, if any, that arise from exchange rate fluctuations on transactions denominated in a currency other than the functional currency are included in the results of operations as incurred. All of the Company’s revenue transactions are transacted in the functional currency.

Asset and liability accounts at December 31, 2011 and June 30, 2011 were translated at 6.3647RMB to $1.00 and at 6.4640RMB to $1.00, respectively. Equity accounts were stated at their historical rate. The average translation rates applied to the statements of income for the Six months ended December 31, 2011 and 2010 were 6.4001RMB and 6.7803RMB to $1.00, respectively. Cash flows from the Company’s operations are calculated based upon the local currencies using the average translation rate. As a result, amounts related to assets and liabilities reported on the statement of cash flows will not necessarily agree with changes in the corresponding balances on the balance sheets.

CHINA NEW GREENFOOD CO. LTD. AND SUBSIDIARIES

(FORMERLY NEWERA TECHNOLOGY DEVELOPMENT CO., LTD)

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE 2 –SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Earnings per share (EPS)

Earnings per share is calculated in accordance with the ASC 260. Basic net earnings per share is based upon the weighted average number of common shares outstanding. Diluted earnings per share is based on the assumption that all dilutive convertible shares and stock options were converted or exercised. Dilution is computed by applying the treasury stock method. Under this method, options and warrants are assumed to be exercised at the beginning of the period (or at the time of issuance, if later), and as if funds obtained thereby were used to purchase common stock at the average market price during the period.

NOTE 3 – INVENTORIES

Inventories consist of the following:

	December 31, 2011		June 30, 2011
Raw materials	$	1,185,584	$	1,199,350
Work in process *		-		11,176,341	*
Finished goods		17,388,426		166,274

Total	$	18,574,010	$	12,541,965

*all Work in process was growing crops such as glutinous rice, peanuts and sesame at June 30, 2011 and harvested in August and October and thus transferred to finished goods as of December 31, 2011.

NOTE 4 – PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment consist of the following:

	Useful Life	December 31, 2011			June 30, 2011
Office equipment and furniture	5 Years	$	45,773		$	45,069
Manufacturing equipments	5-10 Years		5,165,320			4,100,499
Vehicles	5 Years		288,746			145,584
Building and building improvements	5-30 Years		6,619,509			6,517,821
Less: accumulated depreciation			(2,850,760	)		(2,440,365	)
Construction-in-progress			8,641,188			9,142,791
Property and equipment, net		$	17,909,776		$	17,511,399

For the six months ended December 31, 2011 and 2010, depreciation expense amounted to $370,264 and $325,737, of which $225,187 and $167,915 is included in cost of sales, $14,417 and $16,314 included in selling expense, and $130,660 and $141,508 is included in general and administrative expenses, respectively. For the three months ended December 31, 2011 and 2010, depreciation expense amounted to $189,911 and $166,811, of which $118,024 and $85,179 is included in cost of sales, $8,040 and $8,382 included in selling expense, and $63,847 and $73,250 is included in general and administrative expenses, respectively.

CHINA NEW GREENFOOD CO. LTD. AND SUBSIDIARIES

(FORMERLY NEWERA TECHNOLOGY DEVELOPMENT CO., LTD)

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE 5 – FARMLAND DEVELOPMENT COSTS

Since 2006, the Company has entered into several land developing agreements with a number of farming cooperatives. The farmland development costs are the costs to develop the farmland, which include water distribution systems and drainage tile. The Company also hires labor to grow and harvest glutinous rice, peanuts and sesame on its leased farmland. The agreements have terms of 10 years expiring on various dates.

The Company uses the straight-line method to amortize the long-term prepayments over the life of the contracts. As of December 31, 2011 and June 30, 2011, the Company has unamortized farmland development costs in the amount of $13,920,291 and $14,490,299, respectively.

Farmland development costs as of December 31, 2011 and June 30, 2011 are as follows:

	December 31, 2011			June 30, 2011
Farmland development costs	$	15,921,614		$	15,677,027

Less: accumulated amortization		(2,001,323	)		(1,186,728	)

Farmland development costs, Net	$	13,920,291		$	14,490,299

Amortization of Farmland Development Costs attributable to future periods is as follows:

Twelve months ending December 31:
2012	$	1,583,367
2013		1,583,367
2014		1,583,367
2015		1,583,367
2016		1,583,367
Thereafter		6,003,456
	$	13,920,291

NOTE 6 – DEPOSIT ON LAND USE RIGHTS

There is no private ownership of land in China. Land is owned by the government and the government grants land use rights for specified terms. As of December 31, 2011, the Company paid deposits of 1,200,000 RMB ($188,540) for the land use right of 100 acres in the Hunan QiYang Industry Development Zone. The land use rights will have a 50 year terms upon delivery of certificate of land use rights title from the local government in the PRC. As of December 31, 2011, the Company has been constructing buildings on the land. However, the land use title has not been issued to the Company until the construction is completed. The Company records no amortization until the construction is complete.

CHINA NEW GREENFOOD CO. LTD. AND SUBSIDIARIES

(FORMERLY NEWERA TECHNOLOGY DEVELOPMENT CO., LTD)

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE 7 – SHORT-TERM LOANS

At December 31, 2011 and June 30, 2011, short-term loans payable consisted of the following:

	December 31, 2011		June 30, 2011
Loans payable to Agriculture Development Bank of China (“ADBC”), due on September 16, 2011 with annual interest of 5.31%.	$	-	$	1,547,029

Loan payable to Industrial and Commercial Bank of China, repaid on November 14, 2011 with annual interest of 5.31% and guaranteed by Yongzhou Small to Mid-size Company Credit Guarantee Co. Ltd.		-		773,515

Loan payable to Industrial and Commercial Bank of China, due on April 18, 2012 with annual interest of 6.66%		785,583		773,515

Loans payable to ADBC, due on August 31, 2012 with annual interest rates of 5.85%，		2,042,516		-

Loans payable to ADBC, due on August 31, 2012 with annual interest rates of 6.56%，secured by the frozen food production lines of the Company		691,313		-

Loans payable to ADBC, due on June 18, 2012 with annual interest rates of 6.56%		2,670,982		-

Total	$	6,190,394	$	3,094,059

The weighted average short term loan balance was $ 5,345,914 and $7,696,367 as of December 31, 2011 and June 30, 2011. The weighted average interest rate for short term loan was 6.36% and 5.44% for the six month ended December 31, 2011 and 2010 respectively. The weighted average interest rate for short term loan was 6.43% and 5.55% for the three month ended December 31, 2011 and 2010 respectively.

NOTE 8 – LONG-TERM LOANS

At December 31, 2011 and June 30, 2011, long-term loans consisted of the following:

	December 31, 2011		June 30, 2011
Loan payable to ADBC, due on April 28, 2013, with annual interest rate of 6.65%, and secured by commercial real estate owned by the Company.*	$	659,890		$	649,752

Loan payable to ADBC, due on August 31, 2012, with annual interest rate of 5.85%**		-			2,011,139

Loan payable to ADBC, due on April 23, 2013, with annual interest rate of 6.31%, and secured by the Company’s buildings and land use rights owned by Zhou Taiping and Zhou Jiling, ***		2,136,786			2,103,960

Loan payable to Village Bank of Qiyang County, due on March 31, 2013, with annual interest rate of 10.665%.****		769,871			758,045
Total	$	3,566,547		$	5,522,896

* At April 29, 2008, the Company borrowed $785,583 (RMB 5,000,000) from Agriculture Development Bank of China (ADBC).The loan was utilized in purchasing glutinous rice powder product line and constructing warehouses. On February 12, 2011, the Company repaid approximately $125,693 (RMB 800,000). ADBC has approved extension of all the remaining principle repayments, a total of $659,890 (RMB 4,200,000) to April 28, 2013.

**The loan borrowed on May 19, 2011 was utilized specifically for purchase of glutinous rice from local farmers. The principle amount of $781,030 (RMB 5,000,000) and $1,249,649 (RMB 8,000,000), are due on July 31, 2012 and August 31, 2012, respectively.

*** The loan borrowed on June 27, 2011 was utilized specifically for raw material purchases. The principal amounts of $785,583 (RMB 5,000,000), $785,583 (RMB 5,000,000) and $565,620 (RMB 3,600,000) are due on February 28, 2013, March 30, 2013 and April 20, 2013, respectively. ADBC requires the Company to collect at least 50% of its sales. Otherwise, ADBC is granted the right to demand early repayments of the loans.

**** On March 30, 2011, the Company borrowed $769,871 (RMB 4,900,000) from Village Bank of Qiyang County, due on March 30, 2013, with annual interest rate of 10.665%. The loan was used for working capital purpose.

CHINA NEW GREENFOOD CO. LTD. AND SUBSIDIARIES

(FORMERLY NEWERA TECHNOLOGY DEVELOPMENT CO., LTD)

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE 9 - OBLIGATIONS UNDER CAPITAL LEASES FROM RELATED PARTIES

The Company leases a total of 7,529 square meters of land at its manufacturing site from Mr. Zhou Jiling and Mr. Zhou Taiping CEO and Director of the Company respectively. The annual lease payment commenced in April 2006 for a total of RMB 94,861 (approximately $14,904). The lease expires on December 30, 2055. The present value of the total lease payments at inception was RMB 1,414,260 (approximately $222,204), which was calculated with a discount rate of 6.39%, a prevailing PRC long-term borrowing rate in April, 2006.

Future rental payments applicable to the above capital leases with remaining terms in excess of one year were as follows:

Twelve months ending December 31,	Capital lease payments
2012	$	14,904
2013		14,904
2014		14,904
2015		14,904
2016		14,904
Thereafter		568,284
Total minimum lease payments		642,805
Less amount representing interest		425,342
Present value of net minimum lease payments		217,463
Less current obligation		1,009
Long-term obligations	$	216,454

NOTE 10 – INCOME TAXES

As of December 31, 2011, the Company is governed by the Income Tax Law of the U.S., the PRC and British Virgin Islands. However, pretax earnings of a foreign subsidiary are only subject to U.S. taxation when effectively repatriated. Since the Company intends to indefinitely reinvest all pretax earnings from its foreign subsidiaries, no earnings are taxable for United States income tax purpose.

CHINA NEW GREENFOOD CO. LTD. AND SUBSIDIARIES

(FORMERLY NEWERA TECHNOLOGY DEVELOPMENT CO., LTD)

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE 10 – INCOME TAXES (continued)

The Company is incorporated in the United States. It had incurred a net operating loss for the six months ended December 31, 2011 for United States income tax purposes totaling $137,087 which may be available to reduce future years’ taxable income. These carryforwards will expire, if not utilized by 2031. Management believes that the realization of the benefits arising from this loss appears to be uncertain due to the Company’s limited operating history and continuing losses for U.S. income tax purposes. Accordingly, the Company has provided a 100% valuation allowance at December 31, 2011. The valuation allowance at December 31, 2011 was $46,610. The Company’s management reviews this valuation allowance periodically and makes adjustments as necessary.

According to China State Administration of Taxation in Qiyang County in Hunan Province, from September 1, 2006 to December 24, 2009, Hunan Xiangmei, the Company’s Chinese operating subsidiary was considered a foreign invested joint venture, which is entitled to a tax holiday of full (100%) income tax exemption for five years following by a 50% reduction in income tax for additional six years. In December 2009, Hunan Xiangmei was awarded as “a Leading Agricultural Enterprise in Hunan Province”, which entitles Hunan Xiangmei a full income tax exemption as long as the entity is in existence and the favorable tax policy to encourage agricultural-related business is in effect. As a result, Hunan Xiangmei had not incurred any income tax since its inception. All tax years since inception remain subject to examination by the tax authorities.

Xiangmei Food and Honghui, established on December 23, 2010 and October 13, 2010, respectively, also receives full income tax exemption from local tax authority of PRC as agricultural enterprise effectively on March 29, 2011 and will continue receive the income tax exemption as long as the favorable tax policy remains unchanged. Grain Wealth was incorporated in the British Virgin Islands. Under the current laws of the British Virgin Islands, this entity is not subject to income taxes.

NOTE 11 – DUE TO RELATED PARTIES

From time to time, Taiping Zhou, CEO of the Company provided advances to the Company for working capital purpose. The advances were usually short-term in nature and bore interest similar to popular bank interest rates in the same period. As of December 31 2011, the Company repaid principal of $346,528 (RMB 1,850,000) to Taiping Zhou and accrued interest of $346,528 which was recorded under due to related parties on the condensed consolidated balance sheets.

As discussed in Note 9, the Company leases a total of 7,529 square meter of land as its manufacturing site from Zhou Taiping Zhou and Jiling Zhou, CEO and President of the Company respectively. As of December 31 and June 30, 2011, the Company owed to Taiping Zhou and Jiling Zhou respectively, a current incurred capital lease obligation and interest expense of $85,700 and $77,045, respectively, and was inculded under due to related parties.

On March 23, 2011, Qiyang Xiangmei Food Technical and Development Co., Ltd ("Xiangmei Food") entered into a Share Exchange Agreement with Qiyang Honghui Agricultural Technoloical and Development Co., Ltd. ("Honghui") to purchase 100% of shares of Honghui for a price of RMB 100,000 from Mr. Taiping Zhou and Jiling Zhou. As of December 31, 2011, the Company has not paid the balance and therefore owed Taiping Zhou and Jiling Zhou a total of $15,712, which was included due to related parties.

The Company leased two houses located adjacent to the Company as staff dormitory from Taiping Zhou and Jiling Zhou, the lease is effective from March 1, 2008 to February 28. 2018. The annual rent is approximately $10,625 (RMB 67,626). The Company paid $2,632 and $0 rent expense to Taiping Zhou and Jiling Zhou for the six months and three months ended December 31, 2011, respectively.

As of December 31 and June 30, 2011, $427,487 and $410,298 accrued interest payable to Taiping Zhou and Jiling Zhou were included in the due to related parties balance respectively.

NOTE 12 – COMMITMENTS

On September 23, 2009, the Company signed a contract with the Management Committee of Qiyang Industrial Development Zone to purchase land use rights as discussed in Note 6. Based on the contract, the Company is required to make investments worth at least RMB 50,000,000 (approximately $7.7 million), including equipment and construction of a building on the land within two years of the contract date. If the Company’s total investments are below RMB 50,000,000, the Company is required make payments of additional RMB 80,000 per chinese acre, totaling approximately four million RMB (approximately $0.6 million). As of December 31, 2011, the Company has spent approximately RMB 61,342,000 (approximately $9.6 million) to construct the plant and install the equipment. The construction is expected to be completed by February 2012.

The Company entered into annual land lease agreements with farming cooperatives to cultivate various crops. As discussed in Note 5, the Company also entered in farmland development agreements with these farming cooperatives, which automatically extend the land lease term to 10 years. The annual land lease fee is RMB 150 yuan ($23) per Chinese acre for glutinous rice and peanut and RMB 140 yaun ($22) for Sesame. As of December 31, 2011, future lease payments related to the land lease agreement are as follows:

CHINA NEW GREENFOOD CO. LTD. AND SUBSIDIARIES

(FORMERLY NEWERA TECHNOLOGY DEVELOPMENT CO., LTD)

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE 12 – COMMITMENTS (continued)

Twelve months ending December 31,	Land lease payments
2012	$	2,381,983
2013		2,381,983
2014		2,381,983
2015		2,381,983
2016		2,381,983
Thereafter		9,527,932
Total future lease payments	$	21,437,847

In addition to self-cultivated farmland, the Company also signed contracts with local farmers to purchase crops including glutinous rice, peanuts and sesame planted in their farmland. These contracts are usually effective for one calendar year. The Company is obligated to purchase all the crops at the higher of fixed minimum prices or market price.

In the fiscal year 2011, the Company has signed contracts to purchase glutinous rice grain yielded from 13,730 Chinese acres of glutinous rice farmlands at the higher of a fixed price of $0.46 (RMB 3) per kg per Chinese acre or the market price. Expected yield per Chinese acre is approximately 400 kg per season and glutinous rice is harvested twice a year. As of December 31, 2011, the Company paid off $450,586 and is committed to pay remaining balance of at least $4,726,719 for the expected glutinous rice grain output.

In the fiscal year 2011, the Company has signed contract to purchase peanuts yielded from 1,456 Chinese acres of peanuts farmlands at the higher of a fixed price of $1.55 (RMB 10) per kg and the market price. Expected output per Chinese acre is approximately 140 kg and peanut is harvested once a year. As of December 31, 2011, the Company paid off $304,492 and is committed to pay remaining balance of at least $15,775 for the expected peanuts.

In the fiscal year 2011, the Company has signed contracts to purchase sesame yielded from 5,222 Chinese acres of sesames farmland at the higher of a fixed price of $2.01(RMB 13) per kg and the market price. Expected output per Chinese acre is approximately 70 kg and sesame is harvested twice a year. As of December 31, 2011, the Company paid off $ 320,062 and is committed to pay remaining balance of at least $426,502 for the expected sesame.

On February 3, 2011, the Company entered into a consulting agreement with its Chinese legal counsel. Pursuant to the agreement, the Company is obligated to pay a legal fee of approximately $62,847 (RMB 400,000) if listed in any major US Stock Exchange in the future.

As disclosed in Note 11, the Company leased two houses located adjacent to the Company as staff dormitory from Taiping Zhou and Jinling Zhou. As of December 31, 2011, the future lease payments are as follows:

Twelve months ending December 31,	House lease payments
2012	$	10,625
2013		10,625
2014		10,625
2015		10,625
2016		10,625
Thereafter		17,708
Total future payments	$	70,834

NOTE 13 – CONCENTRATION OF CREDIT RISKS

One customer accounted for approximately 10.8% and 8.3% of the total sales for the six months ended December 31, 2011 and 2010, respectively.

NOTE 14 – EARNINGS PER SHARE

The Company computes the weighted-average number of common shares outstanding in accordance with ASC 805. The pronouncement states that in calculating the weighted average shares when a reverse merger took place in the middle of the year, the number of common shares outstanding from the beginning of that period to the acquisition date shall be computed on the basis of the weighted-average number of common shares of the legal acquiree (the accounting acquirer) outstanding during the period multiplied by the exchange ratio established in the merger agreement. The number of common shares outstanding from the acquisition date to the end of that period will be the actual number of common shares of the legal acquirer (the accounting acquiree) outstanding during that period.

As of December 31, 2011, the Company had outstanding warrants to acquire 105,745 shares of common stock, with an exercise price of $4.29. As of December 31, 2011, all the outstanding warrants were considered anti-dilutive and were not included in the weighted average shares-diluted calculation using the treasury stock method.

CHINA NEW GREENFOOD CO. LTD. AND SUBSIDIARIES

(FORMERLY NEWERA TECHNOLOGY DEVELOPMENT CO., LTD)

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE 15 – STATUTORY RESERVES:

The Company’s Chinese subsidiaries are required to make appropriations to reserve funds, comprising the statutory surplus reserve, statutory public welfare fund and discretionary surplus reserve, based on after-tax net income determined in accordance with generally accepted accounting principles of the PRC (the “PRC GAAP”). Appropriation to the statutory surplus reserve should be at least 10% of the after tax net income determined in accordance with the PRC GAAP until the reserve is equal to 50% of the entities’ registered capital. Hunan Xiangmei’s registered capital is $1,207,729 (RMB10,000,000). Hunan Xiangmei had reserved more than 50% of the entities’ register capital (in RMB) as of December 31, 2011 and June 30, 2011. No further reserve was made in this period.

NOTE 16 – WARRANT LIABILITY

On January 28, 2011, in connection with the private placement and pursuant to the Securities Purchase Agreement, the Company issued warrants to the exclusive placement agent to purchase up to 105,745 shares of common stock, with an exercise price of $4.29 per share, exercisable within 5 years of the date of issue.

The Company has determined that the warrants do not meet the conditions for equity classification pursuant to ASC 815, “Derivatives and Hedging”. Therefore, these warrants were classified as a liability. The exercise price of the warrant is subject to adjustments under certain circumstances. The fair value of the warrants was calculated using the Black-Scholes options pricing model using the following assumptions: volatility 203.13%, risk free interest rate 0.83% and expected term of five years. The fair value of those warrants at the grant date was calculated at $313,005 which was recorded and reduced additional paid in capital. The change in fair value of these warrants was $47,421 for the six months ended December 31, 2011.

Following is a summary of the status of warrants activities as of December 31, 2011:

	Number		Weighted		Average
	of		Average		Remaining Life		Aggregate
	Warrants		Exercise Price		in Years		Intrinsic Value
Outstanding, July 1, 2011		105,745	$	4.29		4.00		-
Granted		-		-		-		-
Exercised		-		-		-		-
Outstanding, December 31, 2011		105,745	$	4.29		4.00		-
Exercisable, December 31, 2011		105,745	$	4.29		4.00		-

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operation

The following discussion of the financial condition and results of operation of China New Greenfood Co., Ltd for the six months ended December 31, 2011 and 2010 should be read in conjunction with the accompanying condensed consolidated financial statements and the notes thereto. Our discussion includes forward-looking statements based upon current expectations that involve risks and uncertainties, such as our plans, objectives, expectations and intentions. Actual results and the timing of events could differ materially from those anticipated in these forward-looking statements as a result of a number of factors, including those set forth under the Risk Factors, Cautionary Notice Regarding Forward-Looking Statements and Business sections. We use words such as “anticipate,” “estimate,” “plan,” “project,” “continuing,” “ongoing,” “expect,” “believe,” “intend,” “may,” “will,” “should,” “could,” and similar expressions to identify forward-looking statements.

COMPANY OVERVIEW

China New Greenfood Co. Ltd. (the “Company”), formerly known as Newera Technology Development Co., Ltd, was incorporated in Nevada on April 17, 2009 under the name of Newera Technology Development Co., Ltd.

In connection with the Share Exchange Agreement, the Company issued to Grain Wealth an aggregate of 9,200,000 shares of the common stock of the Company, at par value of $0.001 per share, so that upon completion of the Share Exchange, the shareholder of Grain Wealth owned approximately 92% of the fully diluted outstanding shares of the Company prior to the issuance of the shares to the investors. Accordingly, Grain Wealth became the wholly owned subsidiary of the Company.

Immediately prior to the Share Exchange, the Company had 1,000,000 shares of our Common Stock issued and outstanding. On January 28, 2011, In connection with the closing of the Share Exchange, the Company’s then Chief Executive Officer and Principal Accounting Officer Zengxing Chen cancelled 700,000 shares of the Common Stock that he owned, and resigned from our board of directors (the “Board”) and all officer positions that he held. Following such resignation, the Company appointed Taiping Zhou as the Chairman of the Board and Xiaohui Wu and Jiling Zhou as members of the Board, and the Company also appointed Taiping Zhou as their Chief Executive Officer.

In connection with the Share Exchange Agreement. The Company issued an aggregated of 500,000 shares of the their Common Stock as compensation for legal and consulting services rendered. The issuance of such securities was exempt from registration pursuant to Section 4(2) of, and Regulation D and/or Regulation S promulgated under the Securities Act of 1933, as amended (the “Securities Act”).

Immediately after the Share Exchange, the Company entered into a securities purchase agreement (the “Purchase Agreement”) with four investors (the “Investors”) for the issuance and sale in a private placement of shares of Common Stock, for aggregate gross proceeds of $3,782,393 at a per share purchase price of $3.5769 (the “Private Placement”).

In connection with the private placement and pursuant to the Securities Purchase Agreement, the placement agent and advisors received the following compensation: (i) 7% of the gross proceeds received from the sale of the Securities $264,663 as a placement commission; (ii) warrants to purchase up to 105,745 shares of Common Stock with the same term of the warrants issued to investors.

Subsequently, on April 1, 2011, the Company’s name was changed from “Newera Technology Development Co., Ltd” to China New Greenfood Co., Ltd” in order to more effectively reflect the Company’s business and communicate the Company’s brand identity to customers.

Grain Wealth Limited is a limited liability company organized under the laws of the British Virgin Islands (the “Grain Wealth”) on September 8, 2010. Grain Wealth owns 100% of the issued and outstanding capital stock of Qiyang County Xiangmei Food Technical Research and Development Co., Ltd. (“Xiangmei Food”), a wholly foreign-owned enterprise (“WFOE”) with limited liability, incorporated under the People’s Republic of China (the “PRC”) on December 23, 2010. Xiangmei Food has entered into a series of contractual agreements with the owner of Hunan Xiangmei Food Co., Ltd. (“Hunan Xiangmei”).

Under these contractual arrangements, which obligate Xiangmei Food to absorb a majority of the risk of loss from Hunan Xiangmei’s activities and entitle it to receive a majority of its residual returns, Xiangmei Food has gained effective control over Hunan Xiangmei. Through these contractual arrangements, Xiangmei Food now holds the variable interests of Hunan Xiangmei, and Xiangmei Food becomes the primary beneficiary of Hunan Xiangmei. Based on these contractual arrangements, Hunan Xiangmei is considered as a Variable Interest Entity (“VIE”) under ASC 810, "Consolidation of Variable Interest Entities, an Interpretation of ARB No.51", because the equity investor in Hunan Xiangmei no longer has the characteristics of a controlling financial interest. Accordingly, Hunan Xiangmei isconsolidated under ASC 810.

On March 23, 2011, Qiyang Xiangmei Food Technical and Development Co., Ltd ("Xiangmei Food") entered into a Share Exchange Agreement with Qiyang Honghui Agricultural Technoloical and Development Co., Ltd. ("Honghui") to purchase 100% of shares of Honghui for a price of $15,225(R MB100,000). As a result of the Share Exchange, Honghui is a 100% owned subsidiary of Xiangmei Food.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

There have been no material changes in our critical accounting policies and estimates from those disclosed in item 7 of our annual report on Form 10-K for the year ended June 30, 2011.

RESULTS OF OPERATIONS

Results of Operations for the six months ended December 31, 2011 Compared to the six months ended December 31, 2010

The following tables set forth key variances in our results of operations for the periods indicated, in dollars and percents, and key components of our revenue for the period indicated, in dollars.

Revenues. For the six months ended December 31, 2011, we had net revenues of $26,265,049, as compared to net revenues of $18,630,762 for the six months ended December 31, 2010, an increase of approximately 63.4.0%. The increase in net revenue was mainly attributable to rising sale prices, strong demand, increased yield and continuous marketing efforts as further explained below. In addition, as we harvest most of our cultivated crops from July to September, we usually sell most of our agricultural crops from Fall to next Spring. Although in Fiscal 2012, we tend to sell crops more proportionally over the year, as described below, we still anticipate a sales concentration of our cultivated crops between Fall to next Spring as compared to the rest of a year.

Revenues by product line are as follows:

Sales Revenue	For the Six months ended December 31, 2011		For the Six months ended December 31, 2010		Increase (Decrease)		Percentage Change
Frozen Rice Dumplings	$	6,244,382	$	3,821,495	$	2,422,887		63	%
Frozen Dumplings		2,717,424		2,080,100		637,324		30.6	%
Frozen Pasta		2,555,711		1,656,677		899,034		54.3	%
Ice Cream		1,669,483		1,834,632		(144,444)		-8.0	%
Sesame		1,452,270		851,778		600,492		70.5	%
Peanuts		3,064,054		1,926,150		1,137,904		59.1	%
Glutinous Rice		317,123		6,358,196		(6,041,073)		-95.0	%
Glutinous Rice Grain		8,244,602		101,734		8,122,868		7984.4	%
Total net revenues	$	26,265,049	$	18,630,762	$	7,634,287		41.0	%

The increase in revenues from the sale of frozen rice dumplings was mainly attributable to both our substantial increase in sales volume and increase in sales prices. For the six months ended December 31, 2011, the sales volume is approximately 4,571,522 kg, as compared to the sale volume of approximately 3,485,185 kg for the six months ended December 31, 2010, an increase of approximately 31.2%. The increase in sale volume was mainly attributable to increasing production capacity and consistent marketing efforts. We purchased glutinous rice directly from local farmers at prices based on the purchase contracts signed at the beginning of a year. The glutinous rice was usually processed to make glutinous rice flour, which was the major raw material used in producing rice dumpling. Being able to supply our own major raw material is a great advantage to other competitors in the market as glutinous rice flour prices and qualities vary from time to time. The Company made consistent efforts in marketing frozen rice dumplings. In order to meet increasing market demand, we hired more labor to work several shifts a day to keep the production up with the market demand. In addition, the increasing unit sales price also contributed to the sales increase. Starting from January 2011, we raised our sales prices in response to continuously increasing raw material cost. The unit sales price increased to approximately $1.37 per kg for the six months ended December 31, 2011 from $1.10 per kg for the six months ended December 31, 2010.

The increase in revenues from the sale of frozen dumplings was mainly attributable to our substantial increase in sales volume. For the six months ended December 31, 2011, the sales volume is approximately 2,116,178 kg, as compared to the sale volume of approximately 1,670,030 kg for the six months ended December 31, 2010, an increase of approximately 26.7%. The increase in sale volume was attributable to sustained marketing efforts. Starting from January 2011, we raised our sales prices in response to continuously growing raw material cost. However, due to the addition of a new line of low-priced dumplings, the average sale price only increased moderately. The unit sales price increased to approximately $1.28 per kg for the six months ended December 31, 2011 from $1.25 per kg for the six months ended December 31, 2010.

Frozen pasta mainly includes frozen steamed bread and noodles. The increase in revenues from the sale of frozen pasta was attributable to increase in sales prices. Starting from January 2011, we raised our sales prices in response to continuously growing raw material cost. The unit sales price increased 51.7% to approximately $1.61 per kg for the six months ended December 31, 2011 from $1.06 per kg for the six months ended December 31, 2010. For the six months ended December 31, 2011, the sales volume is approximately 1,582,701 kg, as compared to the sale volume of approximately 1,556,388 kg for the six months ended December 31, 2010, an increase of approximately 1.7%. As alternative of frozen pasta is widely available in the market, we expect a slow to moderate sale volume growth in the future.

The decrease in revenues from the sale of ice cream was mainly attributable to decrease in sales volume, offset by increase in average sales price. In preparation for potential cold weather, we stopped producing ice cream in late August, 2011. For the six months ended December 31, 2011, the sales volume is approximately 1,889,008 kg, as compared to the sale volume of approximately 3,049,603 kg for the six months ended December 31, 2010, a decrease of approximately 38.1%. Starting from January 2011, we began to implement stricter quality control on ice cream production and incurred higher cost. The raw material cost also continued to grow. In response to higher quality control cost and increasing raw material cost, we raised our sale price in the six months ended December 31, 2011. In addition, we introduced several upper-grade products that sell at higher unit price. As a result, the unit sales price increased 46.7% to approximately $0.88 per kg for the six months ended December 31, 2011 from 0.60 per kg for the six months ended December 31, 2010.

We cultivate glutinous rice, sesame and peanuts. Each year, we lease farmland by signing contracts with local farmers. We then select seeds, purchase fertilizers, make improvements on the farmland, hires labor, and harvests glutinous rice, sesame and peanuts by ourselves.

In the six months ended December 31, 2011, we sold mainly glutinous rice grain to meet customers’ demands as compared to the sale of mainly glutinous rice in the six months ended December 31, 2010. As a result, the sale revenue of glutinous rice decreased, while the sale revenue of glutinous rice grain increased dramatically. For the six months ended December 31, 2011, we sold glutinous rice of 344,000 kg, as compared to the sale volume of approximately 12,916,386 kg for the six months ended December 31, 2010. For the six months ended December 31, 2011, the sales volume of glutinous rice grain is approximately 15,281,614 kg, as compared to the sale volume of 341,002 kg for the six months ended December 31, 2010, an increase of 12,572,386 kg. Usually we are able to obtain approximately 0.65 kilogram of glutinous rice by threshing a kilogram of glutinous rice grain. On the other side, glutinous rice yield grew dramatically as a result of leasing more farmland from local farmers. In Calendar Year 2011, we leased glutinous rice farmland of approximately 78,845 Acres, as compared with approximately 32,864 Acres in Calendar Year 2010. In 2011, in order to maximize our profit in expectation with the continuous inflation of agricultural crops in China, instead of immediate sales after harvest, we started storing and selling glutinous rice proportionally throughout the year. As a result, the glutinous rice grain sold (if converted to grain rice by 1:0.65) in the six months ended December 31, 2011 is less than the total of the grain rice and grain rice grain sold (if converted to grain rice by 1:0.65) in the same period in 2010. This accounted for the large increase in finished goods inventory. In addition, although the glutinous rice market price may vary in the future, we were able to raise the sale price of glutinous rice and glutinous rice grain significantly as compared to the same period in 2010 due to favorable market in China. The glutinous rice grain and glutinous rice unit sales price increased 80.8% and 87.3% to approximately $0.54 and $0.92 per kg for the six months ended December 31, 2011 from $0.30 and $0.49 per kg respectively for the six months ended December 31, 2010.

The increase in revenues from the sale of sesame was mainly attributable to both our substantial increase in capacity and sale prices from the six months ended December 31, 2010 to the six months ended December 31, 2011. For the six months ended December 31, 2011, the sales volume is approximately 663,900 kg, as compared to the sale volume of approximately 478,245 kg for the six months ended December 31, 2010, an increase of approximately 38.8%. The increase in sale volume is mainly attributable to increasing yield as a result of leasing more sesame farmland from local farmers. In addition, in 2011, we were able to raise selling prices due to favorable market. The unit sales price increased 23.0% to approximately $2.19 per kg for the six months ended December 31, 2011 from $1.78 per kg for the six months ended December 31, 2010.

The increase in revenues from the sale of peanuts was mainly led by the decrease in sale volume and sale prices from the six months ended December 31, 2010 to the six months ended December 31, 2011. For the six months ended December 31, 2011, the sales volume is approximately 2,178,900 kg, as compared to the sale volume of approximately 1,719,136 kg for the six months ended December 31, 2010, an increase of approximately 26.7%. The increase in sale volume is mainly attributable to increasing yield as a result of leasing more sesame farmland from local farmers. In 2011, we were able to raise sale price due to favorable market. The unit sales price increased 25.9% to approximately $1.41 per kg for the six months ended December 31, 2011 from $1.12 per kg for the six months ended December 31, 2010.

Cost of sales. Cost of sales increased by $3,317,532, or 23.8%, from $13,169,669 for the six months ended December 31, 2010 to $16,307,201 for the six months ended December 31, 2011, mainly as a result of increase in sales quantity of frozen food products.

Gross profit and gross margin. Our gross profit was $ 9,957,848 for the six months ended December 31, 2011 as compared to $ 5,461,093 for the six months ended December 31, 2010 representing gross margins of 37.9% and 29.3%, respectively. The increase is mainly attributable to sesame, peanuts and glutinous rice, offset by decreases in frozen foods. The decrease in our gross profit margin percentage of our frozen food was mainly attributable to faster increase in raw material costs than sales prices. In contrast, the increase in our gross profit margin percentage of our crops such as glutinous rice was mainly attributable to favorable market.

Gross margin percentages by product line are as follows:

	For the Six months December 31, 2011			For the Six months December 31, 2010
Frozen Rice Dumplings		35.3	%		48.5	%
Frozen Dumplings		31.3	%		46.8	%
Frozen Pasta		47.5	%		46.3	%
Ice Cream		40.5	%		46.3	%
Sesame		30.9	%		18.9	%
Peanuts		30.3	%		16.5	%
Glutinous Rice		40.7	%		8.4	%
Glutinous Rice Grain		42.6	%		8.5	%

Overall gross profit %		37.9	%		29.3	%

The gross profit margin percentage of frozen rice dumplings decreased to 35.3% for the six months ended December 31, 2011 from 48.5% for the six months ended December 31, 2010. The price of raw material used in producing rice dumplings such as glutinous rice flour and sugar experienced continuous rise. Although we were able to pass some of our increasing cost to consumers, we could not raise our sales price as fast as our costs during the six months ended December 31, 2011.

The gross profit margin percentage of frozen dumplings decreased to 31.3% for the six months ended December 31, 2011 from 46.8% for the six months ended December 31, 2010. The price of raw material used in producing rice dumplings such as flour and pork experienced continuous rise. Although we were able to pass some of our increasing cost to consumers, we could not raise its sales price as fast as our costs during the six months ended December 31, 2011.

The gross profit margin percentage of frozen pasta increased to 47.5% for the six months ended December 31, 2011 from 46.3% for the six months ended December 31, 2010. Although the price of raw material used in producing pasta such as flour experienced rise, we raised our sale prices. In addition, we sold more high-end products that have higher profit margin during the six months ended December 31, 2011 as compared to the same period in 2010. As a result, the overall profit margin of frozen pasta increased slightly.

The gross profit margin percentage of ice cream decreased to 40.5% for the six months ended December 31, 2011 from 46.3% for the six months ended December 31, 2010. The price of raw material used in producing ice cream such as sugar and beans experienced continuous rise. Although we were able to pass some of our increasing cost to consumers, we could not raise its sales price as fast as our costs during the years ended June 30, 2011.

The gross profit margin percentage of glutinous rice and glutinous rice grain increased to 40.7% and 42.6% for the six months ended December 31, 2011 from 8.4% and 8.0% for the six months ended December 31, 2010. As described in the above, we were unable to raise glutinous rice sale price due to the fixed price one-year sale contracts in 2010. Starting from January 2011, we renewed our sales contracts and were able to raise sales prices of our glutinous rice and glutinous rice grain significantly based on favorable market.

The gross profit margin percentage of sesame increased to 30.9% the six months ended December 31, 2011 from 18.9% for the six months ended December 31, 2010. In Calendar Year 2010, we signed a sales contract of our self-cultivated agricultural crops such as sesame and peanuts early calendar year and delivered crops soon after being harvested. After signing the contract, we were not allowed to adjust our sales prices within a year notwithstanding the favorable market. In Calendar Year 2011, we resigned a new contract and were able to raise sales prices significantly based on favorable market.

The gross profit margin percentage of peanuts increased to 30.3% respectively for the six months ended December 31, 2011 from 16.5% for the six months ended December 31, 2010. In Calendar Year 2010, we signed a sales contract of our self-cultivated agricultural crops such as sesame and peanuts early calendar year and delivered crops soon after being harvested. After signing the contract, we were not allowed to adjust our sales prices within a year notwithstanding the favorable market. In Calendar Year 2011, we resigned a new contract and were able to raise sales prices significantly based on favorable market.

Selling expenses. Selling expenses were $1,241,462 and $766,843 for the six months ended December 31, 2011 and 2010, respectively. Selling expenses consisted of the following:

	For the Six months Ended December 31, 2011			For the Six months Ended December 31, 2010			Percentage Increase/(Decrease)
Shipping and handling	$	578,043		$	461,046			25.4	%
Compensations and related benefits		355,715			85,909			314.1	%
Advertising and promotion		128,485			60,613			112	%
Depreciation		14,417			16,314			(11.6)	%
Rent		55,073			10,088			445.9	%
Office expense		17,988			33,174			(45.8)	%
Others		91,741			99,699			(8.0)	%
Total	$	1,241,462		$	766,843			61.9	%

selling expense as % of revenues		4.7	%		4.1	%

	o	Shipping and handling increased by $116,997 or 25.4% due to the increase in our sales volume of our frozen products, which demands more shipping and handling services. As our shipping volume continued to rise, we tended to use larger trucks, which cost less per cubic. Hence, we were able to keep our shipping cost percentage increase less than the sales percentage increase.

	o	Compensation and related benefits increased by $269,806 or 314.1%, which was mainly attributed to the increase in the number of salespersons and change of salesperson compensation policy in November 2010. The total number of salespersons continued to increase from seven as of December 31, 2010 to sixty-two of December 31, 2011. In addition, starting from November 2010, in order to encourage salespersons to further explore the market, we awarded salespersons commission on top of their base salary based on their position and contribution to the Company.

	o	Advertising and promotion expense increased by $67,872 or 112%, which was attributed to the increased sales efforts in exploring the market and addition of a new two-year advertising contract with local personage.

	o	Depreciation expense decreased by $1,897 or 11.6% because certain fixed assets such as refrigerators have approached their expiration date and no longer need to record depreciation in the six months ended December 31, 2011.

	o	Rent expense increased by $44,985 or 445.9% as we started renting refrigerator warehouses in different cities in order to facilitate frozen food sales to our customers.

	o	Office expense decreased by $15,185 or 45.8% because we implemented a policy to award bonuses to staff who saved on office supplies in the year.

	o	Other includes entertainment, vehicles expense and utilities. These variable expenses usually vary from period to period.

General and administrative expenses. General and administrative expenses amounted to $590,989 for the six months ended December 31, 2011, as compared to $588,117 for the same period in 2010, an increase of $3,387 or 0.6%. General and administrative expenses consisted of the following:

	For the Six months Ended December 31, 2011			For the Six months Ended December 31, 2010			Percentage Increase/decrease
Compensation and related benefits	$	122,600		$	138,496		(11.5	%)
Depreciation		130,660			141,508		(7.7	%)
Office expense		52,754			53,020		(0.5	%)
Amortization of capital lease		2,243			2,142		4.7	%
Professional service		100,675			-		N/A
Others		182,057			252,951		(28.1	%)
Total	$	590,989		$	588,117		0.5	%

General and administrative expense as % of revenue		2.3	%		3.2	%

	o	Compensation and related benefits decreased by $15,896 or 11.5% as we reclassified salaries of certain warehouse mangers and equipment maintain and inspection managers to cost of goods in order to better reflect the nature of these expense.

	o	Depreciation expense decreased by $10,848 or 7.7% due to certain depreciation being reclassified into cost of goods sold in 2011 based on the usage of the equipments.

	o	Office expense decreased by $266 or 0.5% due to moderate expansion of our administration team. In addition, we implemented a policy to award bonuses to staff who saved on office supplies in the year.

	o	Professional service fee mainly included the audit and legal fees associated with US SEC filings because we acquired subsidiaries in China in February 2011.

	o	Other general and administrative expenses decreased by $70,894 or 28.0%. It mainly includes utilities, repairs, telecommunication, conference expense and certain low-value material. These expenses usually increased as we grew.

Income from operations. For the six months ended December 31, 2011, income from operations was $8,125,397, as compared to $4,106,133 for the six months ended December 31, 2010, an increase of $4,019,264 or 978.9%.

Other income (expenses). For the six months ended December 31, 2011, other expense amounted to $89,351 as compared to other expenses of $207,531 for the same period in 2010. For the six months ended December 31, 2011 and 2010, other income (expense) included:

	o	Interest expense increased by $84,728 or 37.4%. During the six months ended December 31, 2011, we incurred more interest mainly attributed to more bank loans and higher interest rates. As of December 31, 2011, the Company had bank loan balance of $9,756,941 as compared to approximately $8,616,955 at December 31, 2010.

	o	Government subsidy income increased by $250,190 or 1677.2%. These are funds paid to the Company to support to agricultural enterprise. The amount varies period by period at the local government’s discretion.

Income tax expense. The Company enjoyed an income tax exemption as an agricultural related business in China.

Net income. As a result of the factors described above, our net income for the six months ended December 31, 2011 was $8,036,046, or $ 0.73 per share (basic and diluted). For the six months ended December 31, 2010, we had net income of $3,898,602 or $0.42 per share (basic and diluted).

Foreign currency translation gain. The functional currency of our subsidiaries operating in the PRC is the Chinese Yuan or Renminbi (“RMB”). The financial statements of our subsidiaries are translated to U.S. dollars using period end rates of exchange for assets and liabilities, and average rates of exchange (for the period) for revenues, costs, and expenses. Net gains and losses resulting from foreign exchange transactions are included in the consolidated statements of operations. As a result of these translations, which are a non-cash adjustment, we reported a foreign currency translation gain of $524,454 for the six months ended December 31, 2011 as compared to $561,099 for the same period in 2010. The significant variance in foreign currency translation gain is caused by accelerating appreciation of RMB against US dollar during the six months ended December 31, 2011 as compared to the same period in 2010. This non-cash gain had the effect of increasing our reported comprehensive income.

Comprehensive income. For the six months ended December 31, 2011, comprehensive income of $8,560,500 is derived from the sum of our net income of $8,036,046 plus foreign currency translation gains of $524,454.

Results of Operations for the Three months ended December 31, 2011 Compared to the Three months ended December 31, 2010

The following tables set forth key variances in our results of operations for the periods indicated, in dollars and percents, and key components of our revenue for the period indicated, in dollars.

Revenues. For the three months ended December 31, 2011, we had net revenues of $18,239,196, as compared to net revenues of $11,107,329 for the three months ended December 31, 2010, an increase of approximately 64.2%. The increase in net revenue was mainly attributable to rising sale prices, strong demand, increased yield and continuous marketing efforts as further explained below. In addition, as we harvest most of our cultivated crops from July to September, we usually sell most of our agricultural crops from Fall to next Spring. Although in Fiscal 2012, we tend to sell crops more proportionally over the year, as described below, we still anticipate a sales concentration of our cultivated crops between Fall to next Spring as compared to the rest of a year.

Revenues by product line are as follows:

Sales Revenue	For the Three months ended December 31, 2011		For the Three months ended December 31, 2010		Increase (Decrease)		Percentage Change
Frozen Rice Dumplings	$	4,681,482	$	3,192,500	$	1,488,982		46.6	%
Frozen Dumplings		1,837,452		1,713,761		123,691		7.2	%
Frozen Pasta		2,115,715		1,402,236		713,479		50.9	%
Ice Cream		5,978		-		5,978			N/A
Sesame		266,050		-		266,050			N/A
Peanuts		1,768,361		-		1,768,361			N/A
Glutinous Rice		317,123		4,798,832		(4,481,709)		-93.4	%
Glutinous Rice Grain		7,247,035		-		7,247,035			N/A
Total net revenues	$	18,239,196	$	11,107,329	$	7,131,867		64.2	%

The increase in revenues from the sale of frozen rice dumplings was mainly attributable to both our substantial increase in sales volume and increase in sales prices. For the three months ended December 31, 2011, the sales volume is approximately 3,488,196 kg, as compared to the sale volume of approximately 2,850,300 kg for the three months ended December 31, 2010, an increase of approximately 22.4%. The increase in sale volume was mainly attributable to increasing production capacity and consistent marketing efforts. We purchased glutinous rice directly from local farmers at prices based on the purchase contracts signed at the beginning of a year. The glutinous rice was usually processed to make glutinous rice flour, which was the major raw material used in producing rice dumpling. Being able to supply our own major raw material is a great advantage to other competitors in the market as glutinous rice flour prices and qualities vary from time to time. The Company made consistent efforts in marketing frozen rice dumplings. In order to meet increasing market demand, we hired more labor to work several shifts a day to keep the production up with the market demand. In addition, the increasing unit sales price also contributed to the sales increase. Starting from January 2011, we raised our sales prices in response to continuously increasing raw material cost. The unit sales price increased to approximately $1.34 per kg for the three months ended December 31, 2011 from $1.12 per kg for the three months ended December 31, 2010.

The increase in revenues from the sale of frozen dumplings was attributable to our substantial increase both in sales volume and price. For the three months ended December 31, 2011, the sales volume is approximately 1,455,304 kg, as compared to the sale volume of approximately 1,390,527 kg for the three months ended December 31, 2010, an increase of approximately 4.7%. The increase in sale volume was attributable to sustained marketing efforts. However, in November 2011, frozen dumplings of certain large frozen food manufacturers were reported to carry Staphylococcus aureus in China. Although later on, it is proved that the bacteria can be killed in water over 80 Centigrade and will do no harm to health, the report itself has affected the sale of frozen dumplings in China. As a result, the sale of frozen dumplings only increased slightly during the three months ended December 31, 2011 as compared to the same period in 2010. Starting from January 2011, we raised our sales prices in response to continuously growing raw material cost. However, due to the addition of a new line of low-priced dumplings, the average sale price only increased moderately. The unit sales price increased to approximately $1.26 per kg for the three months ended December 31, 2011 from $1.23 per kg for the three months ended December 31, 2010.

Frozen pasta mainly includes frozen steamed bread and noodles. The increase in revenues from the sale of frozen pasta was attributable to increase in sales prices. Starting from January 2011, we raised our sales prices in response to continuously growing raw material cost. The unit sales price increased 50% to approximately $1.62 per kg for the three months ended December 31, 2011 from $1.08 per kg for the three months ended December 31, 2010. For the three months ended December 31, 2011, the sales volume is approximately 1,308,292 kg, as compared to the sale volume of approximately 1,299,186 kg for the three months ended December 31, 2010, an increase of approximately 0.7%. As alternative of frozen pasta is widely available in the market, we expect a slow to moderate sale volume growth in the future.

We had limited sale of ice cream during the three months ended December 31, 2011 as compared to no sale in the same period of 2010.

We cultivate glutinous rice, sesame and peanuts. Each year, we lease farmland by signing contracts with local farmers. We then selects seeds, purchases fertilizers, makes improvements on the farmland, hires labor, and harvests glutinous rice, sesame and peanuts by ourselves.

In the three months ended December 31, 2011, we sold mainly glutinous rice grain to meet customers’ demands as compared to the sale of only glutinous rice in the Three months ended December 31, 2010. As a result, the sale revenue of glutinous rice decreased, while the sale revenue of glutinous rice grain increased dramatically. For the three months ended December 31, 2011, we sold glutinous rice of 344,000 kg, as compared to the sale volume of approximately 9,710,091 kg for the three months ended December 31, 2010. For the three months ended December 31, 2011, the sales volume of glutinous rice grain is approximately 13,477,347 kg, as compared to the no sale for the three months ended December 31, 2010. Usually we are able to obtain approximately 0.65 kilogram of glutinous rice by threshing a kilogram of glutinous rice grain. On the other side, glutinous rice yield grew dramatically as a result of leasing more farmland from local farmers. In Calendar Year 2011, we leased glutinous rice farmland of approximately 78,845 Acres, as compared with approximately 32,864 Acres in Calendar Year 2010. In 2011, in order to maximize our profit in expectation with the continuous inflation of agricultural crops in China, instead of immediate sales after harvest, we started storing and selling glutinous rice proportionally throughout the year. As a result, the glutinous rice grain sold (if converted to grain rice by 1:0.65) in the three months ended December 31, 2011 is less than the total of the grain rice and grain rice grain sold (if converted to grain rice by 1:0.65) in the same period in 2010. This accounted for the large increase in finished goods inventory. In addition, although the glutinous rice market price may vary in the future, we were able to raise the sale price of glutinous rice and glutinous rice grain significantly as compared to the same period in 2010 due to favorable market in China. The glutinous rice unit sales price increased 80.8% to approximately $0.92 per kg for the three months ended December 31, 2011 from $0.49 per kg for the three months ended December 31, 2010.

We had sales of sesame and peanuts of 119,675 kg and 1,254,200 kg as compared to no sale in the same period of 2010, as a result of leasing more farmland in Calendar Year 2011 as compared to 2010.

Cost of sales. Cost of sales increased by $3,482,202 or 45.1%, from $7,721,704 for the three months ended December 31, 2010 to $11,203,906 for the three months ended December 31, 2011 mainly as a result of increase in sales quantity of frozen food products.

Gross profit and gross margin. Our gross profit was $7,035,290 for the three months ended December 31, 2011 as compared to $3,385,625 for the three months ended December 31, 2010 representing gross margins of 38.6% and 30.5%, respectively. The increase is mainly attributable to sesame, peanuts and glutinous rice, offset by decreases in frozen foods. The decrease in our gross profit margin percentage of our frozen food was mainly attributable to faster increase in raw material costs than sales prices. In contrast, the increase in our gross profit margin percentage of our crops such as glutinous rice was mainly attributable to favorable market.

Gross margin percentages by product line are as follows:

	For the Three months December 31, 2011			For the Three months December 31, 2010
Frozen Rice Dumplings		35.8	%		48.3	%
Frozen Dumplings		31.6	%		44.	%
Frozen Pasta		47.8	%		45.	%
Ice Cream		40.5	%		-
Sesame		30.9	%		-
Peanuts		30.3	%		-
Glutinous Rice		40.7	%		10	%
Glutinous Rice Grain		41.7	%		-

Overall gross profit %		38.6	%		30.5	%

The gross profit margin percentage of frozen rice dumplings decreased to 35.8% for the three months ended December 31, 2011 from 48.3% for the three months ended December 31, 2010. The price of raw material used in producing rice dumplings such as glutinous rice flour and sugar experienced continuous rise. Although we were able to pass some of our increasing cost to consumers, we could not raise our sales price as fast as our costs during the three months ended December 31, 2011.

The gross profit margin percentage of frozen dumplings decreased to 31.6% for the three months ended December 31, 2011 from 44% for the three months ended December 31, 2010. The price of raw material used in producing rice dumplings such as flour and pork experienced continuous rise. Although we were able to pass some of our increasing cost to consumers, we could not raise its sales price as fast as our costs during the three months ended December 31, 2011.

The gross profit margin percentage of frozen pasta increased to 47.8% for the three months ended December 31, 2011 from 45% for the three months ended December 31, 2010. Although the price of raw material used in producing pasta such as flour experienced rise, we raised our sale prices. In addition, we sold more high-end products that have higher profit margin during the three months ended December 31, 2011 as compared to the same period in 2010. As a result, the overall profit margin of frozen pasta increased slightly.

The gross profit margin percentage of glutinous rice increased to 40.7% for the three months ended December 31, 2011 from 10% for the three months ended December 31, 2010. As described in the above, we were unable to raise glutinous rice sale price due to the fixed price one-year sale contracts in 2010. Starting from January 2011, we renewed our sales contracts and were able to raise sales prices of our glutinous rice and glutinous rice grain significantly based on favorable market.

Selling expenses. Selling expenses were $825,080 and $521,183 for the three months ended December 31, 2011 and 2010, respectively. Selling expenses consisted of the following:

	For the Three months Ended December 31, 2011			For the Three months Ended December 31, 2010			Percentage Increase/(Decrease)
Shipping and handling	$	375,217		$	301,864			24.3	%
Compensations and related benefits		235,412			61,102			285.3	%
Advertising and promotion		85,512			48,055			77.9	%
Depreciation		8,040			8,382			(4.1)	%
Rent		33,123			7,524			340.2	%
Office expense		12,007			20,993			(42.8)	%
Others		75,769			73,263			3.4	%
Total	$	825,080		$	521,183			52.8	%

selling expense as % of revenues		4.5	%		4.7	%

	o	Shipping and handling increased by $73,353 or 24.3% due to the increase in our sales volume of our frozen products, which demands more shipping and handling services. As our shipping volume continued to rise, we tended to use larger trucks, which cost less per cubic. Hence, we were able to keep our shipping cost percentage increase less than the sales percentage increase.

	o	Compensation and related benefits increased by $174,310 or 285.3%, which was mainly attributed to the increase in the number of salespersons and change of salesperson compensation policy in November 2010. The total number of salespersons continued to increase from seven as of December 31, 2010 to sixty-two of December 31, 2011. In addition, starting from November 2010, in order to encourage salespersons to further explore the market, we awarded salespersons commission on top of their base salary based on their position and contribution to the Company.

	o	Advertising and promotion expense increased by $37,457 or 77.9%, which was attributed to the increased sales efforts in exploring the market and addition of a new two-year advertising contract with local personage.

	o	Depreciation expense decreased by $342 or 4.1% because certain fixed assets such as refrigerators have approached their expiration date and no longer need to record depreciation in the three months ended December 31, 2011.

	o	Rent expense increased by $25,598 or 340.2% as we started renting refrigerator warehouses in different cities in order to facilitate frozen food sales to our customers.

	o	Office expense decreased by $8,986 or 42.8% because we implemented a policy to award bonuses to staff who saved on office supplies in the year.

	o	Other includes entertainment, vehicles expense and utilities. These variable expenses usually vary from period to period.

General and administrative expenses. General and administrative expenses amounted to $284,516 for the three months ended December 31, 2011, as compared to $375,661 for the same period in 2010, a decrease of $91,145 or 24.3%. General and administrative expenses consisted of the following:

	For the Three months Ended December 31, 2011			For the Three months Ended December 31, 2010			Percentage Increase/decrease
Compensation and related benefits	$	74,490		$	84,250			(11.6	%)
Depreciation		63,847			73,250			(12.8	%)
Office expense		32,691			40,125			(18.5	%)
Amortization of capital lease		1,126			1,083			3.9	%
Professional service		18,555			-			N/A
Others		93,807			176,953			47.0	%
Total	$	284,516		$	375,661			24.3	%

General and administrative expense as % of revenue		2.3	%		3.2	%

	o	Compensation and related benefits decreased by $9,760 or 11.6% as we reclassified salaries of certain warehouse mangers and equipment maintain and inspection managers to cost of goods in order to better reflect the nature of these expense.

	o	Depreciation expense decreased by $9,403 or 12.8% due to certain depreciation being reclassified into cost of goods sold in 2011 based on the usage of the equipments.

	o	Office expense decreased by $7,434 or 18.5% due to moderate expansion of our administration team. In addition, we implemented a policy to award bonuses to staff who saved on office supplies in the year.

	o	Professional service fee mainly included the audit and legal fees associated with US SEC filings because we acquired subsidiaries in China in February 2011.

	o	Other general and administrative expenses decreased by $83,145 or 47.0%. It mainly includes utilities, repairs, telecommunication, conference expense and certain low-value material. These expenses usually increased as we grew.

Income from operations. For the three months ended December 31, 2011, income from operations was $5,925,694, as compared to $2,488,781 for the Three months ended December 31, 2010, an increase of $3,436,913 or 138%.

Other income (expenses). For the three months ended December 31, 2011, other income amounted to $25,744 as compared to other expenses of $125,466 for the same period in 2010. For the three months ended December 31, 2011 and 2010, other income (expense) included:

	o	Interest expense increased by $39,926 or 30.8%. During the three months ended December 31, 2011, we incurred more interest mainly attributed to more bank loans and higher interest rates. As of December 31, 2011, the Company had bank loan balance of $9,756,941 as compared to approximately $8,616,955 at December 31, 2010.

	o	Government subsidyl income increased by $ 202,710. These are funds paid to the Company to support to agricultural enterprise. The amount varies period by period at the local government’s discretion.

Income tax expense. The Company enjoyed an income tax exemption as an agricultural related business in China.

Net income. As a result of the factors described above, our net income for the three months ended December 31, 2011 was $5,951,438, or $ 0.54 per share (basic and diluted). For the three months ended December 31, 2010, we had net income of $2,363,315 or $0.26 per share (basic and diluted).

Foreign currency translation gain. The functional currency of our subsidiaries operating in the PRC is the Chinese Yuan or Renminbi (“RMB”). The financial statements of our subsidiaries are translated to U.S. dollars using period end rates of exchange for assets and liabilities, and average rates of exchange (for the period) for revenues, costs, and expenses. Net gains and losses resulting from foreign exchange transactions are included in the consolidated statements of operations. As a result of these translations, which are a non-cash adjustment, we reported a foreign currency translation gain of $218,847 for the three months ended December 31, 2011 as compared to $295,215 for the same period in 2010. The significant variance in foreign currency translation gain is caused by accelerating appreciation of RMB against US dollar during the three months ended December 31, 2011 as compared to the same period in 2010. This non-cash gain had the effect of increasing our reported comprehensive income.

Comprehensive income. For the three months ended December 31, 2011, comprehensive income of $6,170,285 is derived from the sum of our net income of $5,951,438 plus foreign currency translation gains of $218,847.

LIQUIDITY AND CAPITAL RESOURCES

As of December 31, 2011, our balance of cash and cash equivalents was $325,552. As of June 30, 2011, our balance of cash and cash equivalents was $668,199. This balance did not significantly change in spite of increased net income of $8,036,046 because we are paying off the labor and other farming-related fees owed to farmers in the first half year.

We currently generate our cash flow mainly through operations and financing which we believe will be sufficient to sustain our current level operations for at least the next twelve months.

In summary, our cash flows were:

Net cash used in operating activities increased in the six months ended December 31, 2011 by $3,327,462 to $850,273 from net cash provided by operating activities of $2,477,189 for the six months ended December 31, 2010. These changes were mainly brought about by changes as follows: an increase in cash used in inventory of $7,566,408, an increase in cash used in accounts payable of $3,249,481. This was off-set by an increase in net income of $4,137,444 or an increase of 106% over the prior period ended December 31, 2011and an increase in cash provided by advances from customers of $1,250,456.

Net cash used in investing activity decreased by $1,000,627 in the six months ended December 31, 2011 as compared to the same period ended in 2010 which is mainly due to decrease in cash used in acquisition of property and equipments.

Net cash provided by financing activities decreased by $2,055,821 to $999,992 in the six months ended December 31, 2011 compared to $3,055,813 provided by financing activities at the same period ended in 2010. This was mainly due to increase repayment of short-term loans.

Working capital at December 31, 2011 increased by $6,822,322 or 151.9% to $11, 314, 321 from $4,491,999 at June 30, 2011, primarily due to an increase in inventory and accounts receivable.

Item 3. Quantitative and Qualitative Disclosures about Market Risks

Not required for smaller reporting companies.

Item 4. Controls and Procedures

Disclosure Controls and Procedures

As required by Rule 13a-15 under the Exchange Act, our management evaluated the effectiveness of the design and operation of our disclosure controls and procedures as of December 31, 2011.

Disclosure controls and procedures refer to controls and other procedures designed to ensure that information required to be disclosed in the reports we file or submit under the Securities Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC 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. In designing and evaluating our disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management is required to apply its judgment in evaluating and implementing possible controls and procedures.

Management conducted its evaluation of disclosure controls and procedures under the supervision of our chief executive officer and our chief financial officer. Based on that evaluation, our management concluded that our disclosure controls and procedures were not effective as of December 31, 2011, due to the material weaknesses identified below:

●	We do not have accounting personnel with sufficient knowledge, experience and training in U.S. GAAP standards.
●	We do not have sufficient written policies and procedures for accounting and financial reporting with respect to the requirements and application of U.S.GAAP.

●	We do not have a functioning audit committee and lack of a majority of outside directors on the Company's board of directors, resulting in ineffective oversight in the establishment and monitoring of required internal controls and procedures.

The above material weaknesses could result in us being unable to fully identify and resolve certain accounting and disclosure issues that could lead to a failure to maintain effective controls over preparation, review, and approval of certain significant account reconciliation from Chinese GAAP to U.S. GAAP and disclosure requirements of the Securities and Exchange Commission

Management is in the process of evaluating the control deficiency identified above and will take the necessary remediation initiatives as early as possible.

Changes in Internal Controls over Financial Reporting

There were no changes in our internal control over financial reporting that occurred during the last fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II - OTHER INFORMATION

Item 1.

Legal Proceedings.

We are currently not involved in any litigation that we believe could have a material adverse effect on our financial condition or results of operations. There is no action, suit, proceeding, inquiry or investigation before or by any court, public board, government agency, self-regulatory organization or body pending or, to the knowledge of the executive officers of our company or any of our subsidiaries, threatened against or affecting our company, our common stock, any of our subsidiaries or of our companies or our subsidiaries’ officers or directors in their capacities as such, in which an adverse decision could have a material adverse effect.

Item 1A.

Risk Factors

Not applicable because we are a smaller reporting company.

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

None.

Item 3.

Defaults Upon Senior Securities.

None.

Item 4.

(Removed and Reserved)

Item 5.

Other Information.

None.

Item 6.	Exhibits.
(a)	Exhibits

31.1	Certification of the Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.1*	Certification of the Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

101.INS **	XBRL Instance Document
101.SCH **	XBRL Taxonomy Schema
101.CAL **	XBRL Taxonomy Calculation Linkbase
101.DEF **	XBRL Taxonomy Definition Linkbase
101.LAB **	XBRL Taxonomy Label Linkbase
101.PRE **	XBRL Taxonomy Presentation Linkbase

* The certification attached as Exhibit 32.1 accompanying this Quarterly Report on Form 10-Q is not deemed filed with the Securities and Exchange Commission and is not to be incorporated by reference into any filing of China New Greenfood Company Ltd. under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, whether made before or after the date of this Quarterly Report on Form 10-Q, irrespective of any general incorporation language contained in such filing.

** Furnished herewith. XBRL (Extensible Business Reporting Language) information is furnished and not filed or a part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections.

SIGNATURES

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

	CHINA NEW GREENFOOD COMPANY LTD.

Date: February 14, 2012	By:	/s/ Zhou Taiping
		Zhou Taiping Chief Executive Officer and Principal Accounting Officer

China New Greenfood Co., Ltd 10-Q