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

FORM 10−Q

(Mark One)

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

For the quarterly period ended: June 30, 2011

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

For the transition period from ____________to _____________

Commission File Number: 001-34440

CHINA NUTRIFRUIT GROUP LIMITED
(Exact Name of Registrant as Specified in Its Charter)

Nevada	87-0395695
(State or other jurisdiction of incorporation	(I.R.S. Employer Identification No.)
or organization)

5th Floor, Chuangye Building, Chuangye Plaza
Industrial Zone 3, Daqing Hi-Tech Industrial Development Zone
Daqing, Heilongjiang 163316
People’s Republic of China
(Address of principal executive offices, Zip Code)

(+86) 459-8972870
(Registrant’s telephone number, including area code)

_____________________________________________________
(Former name, former address and former fiscal year, if changed since last report)

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

Yes [X]      No [  ]

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

Yes [X]      No [  ]

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

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

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

Yes [  ]      No [X]

The number of shares outstanding of each of the issuer’s classes of common stock, as of August 15, 2011 is as follows:

	Class of Securities		Shares Outstanding
	Common Stock, $0.001 par value		36,915,762

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CHINA NUTRIFRUIT GROUP LIMITED

Quarterly Report on FORM 10-Q

For Three Months Ended June 30, 2011

TABLE OF CONTENTS

PART I
FINANCIAL INFORMATION

Item 1.	Financial Statements	3
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	4
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	9
Item 4.	Controls and Procedures	9

PART II
OTHER INFORMATION

Item 1.	Legal Proceedings	9
Item 1A.	Risk Factors	9
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	9
Item 3.	Defaults Upon Senior Securities	10
Item 4.	(Removed and Reserved)	10
Item 5.	Other Information	10
Item 6.	Exhibits	10

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PART I
FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS.

CHINA NUTRIFRUIT GROUP LIMITED AND SUBSIDIARIES
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS OF JUNE 30, 2011 AND FOR THE THREE MONTHS ENDED JUNE 20, 2011

Contents	Page
Condensed Consolidated Balance Sheets as of June 30, 2011 (unaudited) and March 31, 2011	F-1
Condensed Consolidated Statements of Income for the three months ended June 30, 2011 and 2010 (unaudited)	F-2
Condensed Consolidated Statements of Cash Flows for the three months ended June 30, 2011 and 2010 (unaudited)	F-3
Notes to the Condensed Consolidated Financial Statements (unaudited)	F-4 - F-23

3

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CHINA NUTRIFRUIT GROUP LIMITED AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Stated in US Dollars)

		June 30,			March 31,
		2011			2011
ASSETS		(unaudited)
Current assets:
Cash and cash equivalents	$	57,203,552		$	43,542,075
Trade receivables, net of allowance		4,935,306			12,476,652
Inventories, net		1,778,532			6,419,152
Prepayments and deposits		6,584			264,878
Other current assets		1,548			1,527
Total current assets		63,925,522			62,704,284
Property and equipment, net		20,074,827			20,312,005
Prepayments and deposits		14,788,791			10,983,404
Construction in progress		7,409,487			5,915,395
Deferred tax assets		868,538			909,879
Land use rights, net		189,222			188,199
TOTAL ASSETS	$	107,256,387		$	101,013,166
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Other payables and accrued expenses	$	2,220,488		$	3,312,525
Bank borrowings		7,739,938			-
Due to a director		-			946,550
Trade payables		3,406			130,276
Income taxes payable		868,501			3,351,631
Total current liabilities		10,832,333			7,740,982
TOTAL LIABILITIES		10,832,333			7,740,982
Commitments and Contingencies
Shareholders' equity
Preferred stock
Authorized: 5,000,000 shares, par value $0.001 Issued and outstanding: 330,860 shares as at June 30, 2011; (330,860 as at March 31, 2011)		331			331
Common stock
Authorized: 120,000,000 shares, par value $0.001 Issued and outstanding: 36,915,762 shares as at June 30, 2011; (36,915,762 shares as at March 31, 2011)		36,916			36,916
Additional paid-in-capital		36,492,566			36,492,566
Statutory reserves - restricted		6,850,422			6,850,422
Accumulated other comprehensive income		5,302,736			3,951,431
Retained earnings		47,741,083			45,940,518
TOTAL SHAREHOLDERS’ EQUITY		96,424,054			93,272,184
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	107,256,387		$	101,013,166

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

F-1

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CHINA NUTRIFRUIT GROUP LIMITED AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

(Stated in US Dollars)

		Three months ended
		June 30,
		2011			2010
Net sales	$	10,293,165		$	9,628,256
Cost of sales		(5,498,693	)		(5,509,124	)
Gross profit		4,794,472			4,119,132
Selling expenses		(410,321	)		(584,508	)
General and administrative expenses		(1,665,890	)		(1,105,724	)
Operating earnings		2,718,261			2,428,900
Other income (expenses)
Interest expense		(56,175	)		-
Other income		61,000			30,472
Total other income (expenses)		4,825			30,472
Earnings before income taxes		2,723,086			2,459,372
Provision for income taxes		(922,521	)		(665,866	)
Net earnings		1,800,565			1,793,506
Other comprehensive income (loss)
Foreign currency translation		1,351,305			(68,850	)
Comprehensive income	$	3,151,870		$	1,724,656
Earnings per share
Basic	$	0.04		$	0.04
Diluted	$	0.04		$	0.04
Weighted average  number of common stock outstanding
Basic		36,915,762			36,670,809
Diluted		36,915,762			36,774,433

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

F-2

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CHINA NUTRIFRUIT GROUP LIMITED AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

(Stated in US Dollars)

		Three months ended
		June 30,
		2011			2010
Operating activities:
Net earnings	$	1,800,565		$	1,793,506
Adjustments to reconcile net earnings to net cash used in operating activities
Depreciation and amortization		733,152			428,358
Benefit for deferred income taxes		41,341			39,027
Changes in operating assets and liabilities:
Trade receivables, net		7,679,698			3,972,796
Inventories		4,708,285			3,903,808
Prepayments and deposits		258,522			(13,699,845	)
Other current assets		-			45,527
Trade payables		(128,092	)		(29,557	)
Income taxes payable		(1,122,369	)		(1,795,453	)
Other payables and accrued expenses		(2,518,182	)		(451,846	)
Net cash provided by (used in) operating activities		11,452,920			(5,793,679	)
Investing activities:
Prepayment for property and equipment		(3,635,316	)		-
Addition to construction in progress		(1,405,063	)		(3,503,536	)
Net cash used in investing activities		(5,040,379	)		(3,503,536	)
Financing activities:
Proceeds from new bank borrowings		7,704,160			-
Amount due to a director		(955,316	)		-
Net cash provided by financing activities		6,748,844			-
Increase (decrease) in cash and cash equivalents		13,161,385			(9,297,215	)
Effect of exchange rate on cash and cash equivalents		500,092			(36,254	)
Cash and cash equivalents at beginning of the period		43,542,075			35,994,443
Cash and cash equivalents at end of the period	$	57,203,552		$	26,660,974
Supplemental disclosure of cash flows information:
Cash paid for:
Income taxes	$	3,405,651		$	2,422,292
Interest	$	56,175		$	-

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

F-3

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China Nutrifruit Group Limited and Subsidiaries
Notes to Condensed Consolidated Financial Statements
June 30, 2011 and 2010 (Unaudited)
(Stated in U.S. Dollars)

NOTE 1. NATURE OF BUSINESS AND SUMMARY OF PRINCIPAL ACCOUNTING POLICIES

Nature of Business

China Nutrifruit Group Limited (the “Company”) was originally incorporated in the state of Utah on April 22, 1983 and changed its domicile from Utah to Nevada in April 1999. The Company had no business activities or meaningful operations, income producing assets or significant operating capital since at least 1989 until it acquired Fezdale Investments Limited (“Fezdale”) on August 14, 2008.

On August 14, 2008, the Company acquired all of the equity interests of Fezdale, a British Virgin Islands (the “BVI”) corporation, through a share exchange transaction (the “Share Exchange Transaction”), with the result that the shareholders of Fezdale became the beneficial owners of 83.5% of the Company’s common stock. As a result of such Share Exchange Transaction, Fezdale became a wholly-owned subsidiary of the Company and the former shareholders of Fezdale became the Company’s controlling shareholders. Accordingly, all references to shares of Fezdale’s ordinary shares were restated to reflect the equivalent numbers of the common stock of China Nutrifruit Group Limited.

Accounting principles generally accepted in the United States of America (“US GAAP”) require that a company whose shareholders retain the majority interest in a combined business be treated as the acquirer for accounting purposes. As a result, in the Share Exchange Transaction, Fezdale is treated as the accounting acquirer and China Nutrifruit Group Limited is treated as the acquired party. Accordingly, the Share Exchange Transaction was accounted for a recapitalization of the Company. The equity section of the accompanying financial statements was restated to reflect the recapitalization of the Company due to the Share Exchange Transaction as of the first day of the first period presented. The assets and liabilities acquired that, for accounting purposes, were deemed to have been acquired by Fezdale were not significant.

Also, on August 14, 2008, the Company’s majority shareholder, Yiu Fai Kung (“Mr. Kung”), entered into escrow agreements with the private placement investors and HFG International, Limited (“HFG”). Mr. Kung will deliver a certain number of shares of the Company’s common stock owned by him to the investors and HFG pro-rata in accordance with their respective investment amount for no additional consideration if:

The after tax net income for the fiscal year ending on March 31, 2009 was less than $13,919,707 and fiscal year ending on March 31, 2010 was less than $18,495,315; and

The return to Mr. Kung of any of the make good shares placed in escrow by him is considered to be a separate compensatory arrangement because Mr. Kung is a director of the Company’s subsidiary Fezdale. Accordingly, if any of the required earnings targets are met and shares are returned to Mr. Kung, the Company will recognize a non-cash compensation cost at that time equal to the then fair value of the shares returned (up to a total of 5,599,598 shares). For the year ended March 31, 2009, the earnings target for 2009 of net income of $13,955,178 (before any charges related to the release of any shares from escrow) was met. Accordingly, the Company has recorded a non-cash charge to compensation cost of $9,519,316.6 in the fourth quarter of 2009 related to the release from escrow to Mr. Kung of 2,799,799 shares.

For the year ended March 31, 2010, the earnings target for 2009 of net income of $18,495,315 was met. Accordingly, 2,799,799 shares were released to Mr. Kung from escrow.

F-4

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China Nutrifruit Group Limited and Subsidiaries
Notes to Condensed Consolidated Financial Statements
June 30, 2011 and 2010 (Unaudited)
(Stated in U.S. Dollars)

NOTE 1. NATURE OF BUSINESS AND SUMMARY OF PRINCIPAL ACCOUNTING POLICIES (CONT’D)

On September 4, 2009, the Company’s common stock was approved by the NYSE Amex for listing and registration.

On September 30, 2009, the Company entered into a securities purchase agreement (the “Private Placement Transaction”) with certain accredited investors (“Investors”) and effected the initial closing of the purchase and sale of 359,502 units (the “Unit”) at $33.00 per Unit. Each Unit consisted of one share of the Company’s newly-designated Series A Convertible Preferred Stock, par value $0.001 per share (“Series A Preferred Stock”) and one warrant (the “Warrant”) to purchase 2.5 shares of the Company’s common stock, par value $.001 per share. The Series A Preferred Stock is convertible into ten shares of the Company’s common stock (subject to customary adjustments) and the Company is obligated to register the underlying shares of common stock within thirty days of the closing date. In connection with the initial closing of the offering, the Company raised $11.86 million.

On October 8, 2009, the Company effected the second and final closing of the Financing and issued 43,916 units (the “Unit”) for $33.00 per Unit for gross proceeds of $1,449,000.

On September 3, 2010, the Company paid dividends of $809,550 to the holders of Series A Preferred Stock.

Fezdale Investments Limited

Fezdale is a private limited liability company incorporated in BVI on August 22, 2007.

In November 2007, Solar Sun Holdings Limited (“Solar Sun”), a subsidiary of Fezdale, entered in a share purchase agreement with six owners of Daqing Longheda Food Company Limited (“Longheda”) under which the six owners of Longheda transferred 75% equity interests in Longheda to Solar Sun for RMB40,000,000 or $5.87 million. In May 2008, the six founders of Longheda transferred the remaining 25% equity interests in Longheda to Solar Sun. After the transfer, Longheda became a wholly owned subsidiary of Solar Sun.

Solar Sun Holdings Limited

Solar Sun is a private limited liability company (the “PLLC”) incorporated in Hong Kong on September 12, 2007. Solar Sun is a holding company and has no assets or operations other than its ownership of Longheda.

Daqing Longheda Food Company Limited

Longheda was incorporated in Heilongjiang province of Peoples’ Republic of China (the “PRC”) in June 2004. Longheda manufactures and sells a variety of food products processed from specialty premium fruits that grow in Northeast China. Currently, Longheda processes four types of premium specialty fruits, including golden berry, crab apple, blueberry and raspberry, and sells fresh fruits. Longheda currently has four types of fruit based products, including fruit concentrate, nectar, glazed fruits and concentrate pulp. Longheda sells its products through an extensive sales and distribution network. The fresh fruits are mainly sold to fruit supermarkets and stores while the processed fruit products are mainly sold to manufacturers for further processing into fruit juice and other fruit related products.

F-5

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China Nutrifruit Group Limited and Subsidiaries
Notes to Condensed Consolidated Financial Statements
June 30, 2011 and 2010 (Unaudited)
(Stated in U.S. Dollars)

Jumbo Gloss Limited

Jumbo Gloss Limited (“Jumbo Gloss”) is a PLLC incorporated in BVI on October 13, 2009. Jumbo Gloss is a holding company and has no assets or operations other than its ownership of Daqing Senyang Fruit and Vegetable Food Technology Co., Ltd.

Daqing Senyang Fruit and Vegetable Food Technology Co., Ltd

Daqing Senyang Fruit and Vegetable Food Technology Co., Ltd (“Senyang”) was incorporated in Heilongjiang province of the PRC in June 2010. Senyang is a dormant company and has no assets or operations.

Basis of presentation

The interim condensed consolidated financial statements include the accounts of China Nutrifruit Group Limited and its subsidiaries (the “Group”). The interim condensed consolidated financial statements were prepared in accordance with the US GAAP. All significant intercompany transactions and balances were eliminated.

The interim condensed consolidated financial statements are unaudited and, in our opinion, include all adjustments, consisting of normal recurring adjustments and accruals necessary for a fair representation of our condensed consolidated balance sheets, operating results, and cash flows for the periods presented. Operating results for the periods presented are not necessarily indicatives of the annual results for the year ending March 31, 2011. Certain information and footnote disclosures normally included in financial statements prepared in accordance with the US GAAP were condensed or omitted in accordance with the rules and regulations of the Securities and Exchange Commission (the “SEC”).

Segment information

The Group identifies and classifies its operating segments based on the nature of products with similar economic characteristics. No segment information is provided as the Group only has one business and geographical segment. The Group’s reportable segment is the manufacture and sale of food products, which operations are located in the PRC and sales were predominately made to customers located in the PRC.

Construction in progress

Construction in progress represents plant and properties under construction and is stated at cost less accumulated impairment losses. This includes cost of construction, plant and equipment and other direct costs plus borrowing costs which include interest charges and exchange differences arising from foreign currency borrowings used to finance these projects during the construction period, to the extent these are regarded as an adjustment to interest costs.

Construction in progress is not depreciated until such time as the assets are completed and ready for their intended use.

F-6

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China Nutrifruit Group Limited and Subsidiaries
Notes to Condensed Consolidated Financial Statements
June 30, 2011 and 2010 (Unaudited)
(Stated in U.S. Dollars)

Use of estimates

The preparation of the interim condensed consolidated financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from these estimates.

Economic and political risks

The Group’s operations are conducted in the PRC. According the Group’s business, financial position maybe influenced by the political, economic and legal environment in the PRC, and by the general state of the PRC’s economy.

The Group’s operations in the PRC are subject to special considerations and significant risk not typically associated with companies in North America. These include risks associated with, among others, the political, economic and legal environmental and foreign currency exchange. The Group’s results may be adversely affected by changes in the political and social conditions in the PRC, and in governmental policies with respect to laws and regulations, anti-inflationary measures, currency conversion, remittances abroad, and rates and methods of taxation, among other things.

Earnings per share

Basic earnings per share is computed by dividing net operating results for the reporting period attributable to common shareholders by the weighted average number of common stocks outstanding during the period. Diluted earnings per share is calculated by dividing net operating results for the reporting period attributable to common shareholders by the weighted average number of common stocks outstanding and the dilutive effect of common stock equivalents.

Cash and cash equivalents

The Group considers all highly liquid investments with an original maturity date of three months or less to be cash equivalents.

Trade accounts receivable

In the normal course of business, the Group extends credit to customers. Trade accounts receivable, less allowance for doubtful accounts, reflect the net realizable value of receivables, and approximate fair value. On a regular basis, the Group evaluates its trade accounts receivable and establishes an allowance for doubtful accounts based on a combination of specific customer circumstances, credit conditions, and payment history. A receivable is considered past due if payments have not been received within the agreed upon invoice terms. No allowance for doubtful accounts at June 30, 2011 was recorded.

Inventories

The cost of finished products inventories includes raw materials, direct labor and indirect production costs. Inventories are stated at the lower of cost or market. The Group uses first-in, first-out methods to value its inventories. During the idle production period, overhead costs include depreciation are treated as current-period charges, which are expensed to general and administrative expense instead of costs of inventories.

F-7

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China Nutrifruit Group Limited and Subsidiaries
Notes to Condensed Consolidated Financial Statements
June 30, 2011 and 2010 (Unaudited)
(Stated in U.S. Dollars)

Fair value of financial instruments

The carrying amount of certain of the Group’s financial instruments, including cash and cash equivalents, trade receivables, trade payables, other current assets, other payables and accrued expenses, approximates fair value due to the relatively short maturity.

Property and equipment, net

Property and equipment are recorded at cost and are depreciated on a straight-line basis over the estimated useful lives of the assets. Maintenance and repairs are expensed as incurred. The principal estimated useful lives generally are: buildings – 20 years; leasehold improvements – 10 years; machinery - 10 years, furniture, fixture and office equipment – 5 years; motor vehicles – 5 years. Depreciation of property and equipment was $732,445 and $427,689 for the three months ended June 30, 2011 and 2010 respectively.

Revenue recognition

The Group recognizes revenue from sales of products, where persuasive evidence of an arrangement exists, delivery has occurred, the seller’s price is fixed or determinable and collectibility is reasonably assured. This generally occurs when the customer receives the product or at the time title passes to the customer. Customers generally do not have the right to return product unless damaged or defective. Net sales are comprised of gross sales reduced by customer returns, trade promotions and discounts.

Shipping and handling costs

Shipping and handling costs are included in selling expenses. The shipping and handling costs for the three months ended June 30, 2011 and 2010 were $274,105 and $465,185 respectively.

Impairment of long-lived assets

Long-lived assets, except indefinite-lived intangible assets, are reviewed for impairment when circumstances indicate the carrying value of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of the assets to future net cash flows estimated by the Group to be generated by such assets. If such assets are considered to be impaired, the impairment to be recognized is the amount by which the carrying amount of the assets exceeds the fair value of the assets. Assets to be disposed of by sale are recorded as held for sale at the lower of carrying value or estimated net realizable value. During the periods, no impairment on long-lived assets was recorded by the Group.

All land in the PRC is owned by the PRC government. The government in the PRC, according to the relevant PRC law, may sell the right to use the land for a specific period of time. Thus, all of the Group’s land located in the PRC is considered leasehold land and is stated at cost less accumulated amortization and any recognized impairment loss. Amortization is provided over the term of the land use right agreements on a straight-line basis, which is 50 years and will expire in 2055.

F-8

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China Nutrifruit Group Limited and Subsidiaries
Notes to Condensed Consolidated Financial Statements
June 30, 2011 and 2010 (Unaudited)
(Stated in U.S. Dollars)

Negative goodwill

Negative goodwill represents the excess fair value of the net tangible and identifiable intangible assets acquired in a business combination over the purchase price. The negative goodwill is allocated as a pro rate reduction of the amounts assigned to the assets acquired excluding financial assets, deferred taxes and other current assets. If negative goodwill exceeds the amount of those assets, the remaining excess shall be recognized as an extraordinary gain in the period which the business combination is completed.

Other income recognition

Other income is comprised of interest income and others.

Interest income is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable, which is the rate that exactly discounts the estimated future cash receipts through the expected life of the loan to the loan’s net carrying amount.

Advertising costs

Advertising costs are expensed as incurred. The total advertising costs were $7,119 and $5,539 for the three months ended June 30, 2011 and 2010 respectively.

Foreign currency translation

The accompanying financial statements are presented in United States dollars. The functional currency of the Group is Renminbi, “RMB”. The financial statements are translated into United States dollars from RMB at year-end exchange rates as to assets and liabilities and average exchange rates as to revenues and expenses. Capital accounts are translated at their historical exchange rates when the capital transactions occurred.

Balance sheet
June 30, 2011		RMB6.46 to US$1.00
March 31, 2011		RMB6.55 to US$1.00

Statement of income and comprehensive income
For the three months ended June 30, 2011		RMB6.49 to US$1.00
For the three months ended June 30, 2010		RMB6.84 to US$1.00

As at June 30, 2011, RMB369,077,134 or $57,132,683 (March 31, 2011: RMB284,742,770 or $43,471,515) is not freely convertible into foreign currency and all foreign exchange transactions must take place through authorized institutions. No representation is made that the RMB amounts could have been, or could be, converted into $ at the rates used in translation.

F-9

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China Nutrifruit Group Limited and Subsidiaries
Notes to Condensed Consolidated Financial Statements
June 30, 2011 and 2010 (Unaudited)
(Stated in U.S. Dollars)

Statutory reserves

The laws and regulations of the PRC require before an enterprise distributes profits to its owners, it must first satisfy all tax liabilities, provide for losses in previous years, and make allocations. The statutory reserves include a surplus reserve fund and a common welfare fund. These statutory reserves represent restricted retained earnings. The details of surplus reserve fund and common welfare fund are as follows:

Surplus reserve fund

The Company’s subsidiary in PRC is required to transfer 10 percent of its net income, as determined in accordance with the PRC accounting rules and regulations, to a statutory surplus reserve fund until such reserve balance reaches 50 percent of that subsidiary’s paid-in capital.

The transfer to this reserve must be made before distribution of any dividends to owners. The surplus reserve fund is non-distributable other than during liquidation and can be used to fund previous years' losses, if any, and may be utilized for business expansion or converted into equity by raising equity from existing owners in proportion to their equity holdings.

Common welfare fund

The Company’s subsidiary in PRC is required to transfer 5 percent to 10 percent of its net income, as determined in accordance with the PRC accounting rules and regulations, to the statutory common welfare fund. This fund can only be utilized on capital items for the collective benefit of that subsidiary’s employees, such as construction of dormitories, cafeteria facilities, and other staff welfare facilities. This fund is non-distributable other than upon liquidation. The transfer to this fund must be made before distribution of any dividends to owners.

Related party transactions

A related party is generally defined as (i) any person that holds 10% or more of the Group’s securities and their immediate families, (ii) the Group’s management, (iii) someone that directly or indirectly controls, is controlled by or is under common control with the Group, or (iv) anyone who can significantly influence the management or operating decisions of the Group. A transaction is considered to be a related party transaction when there is a transfer of resources or obligations between related parties.

Income taxes

The Group accounts for income taxes under the provision of Accounting Standards Codification 740 (“ASC 740”), resulting in two components of income tax expense: current and deferred. Current income tax expense approximates taxes to be paid or refunded for the relevant periods. Deferred income tax expense results from changes in deferred tax assets and liabilities between periods. Deferred income tax assets and liabilities are computed for differences between the financial statement carrying amounts and the tax bases of existing assets and liabilities that will result in taxable or deductible amounts in the future, as well as from net operating loss and tax credit carryforwards, and are measured at the enacted tax laws and rates applicable in the years which the differences are expected to be recovered or settled. A deferred tax asset is recognized if it is more likely than not that a benefit will be realized. The Group’s operations are primarily located in PRC and subject to PRC profits tax.

F-10

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China Nutrifruit Group Limited and Subsidiaries
Notes to Condensed Consolidated Financial Statements
June 30, 2011 and 2010 (Unaudited)
(Stated in U.S. Dollars)

NOTE 2. RECENT ACCOUNTING PRONOUNCEMENTS

In June 2011, the FASB issued Accounting Standards Update (“ASU”) 2011-05, which is an update to Topic 220, “Comprehensive Income”. This update eliminates the option of presenting the components of other comprehensive income as part of the statement of changes in stockholders’ equity, requires consecutive presentation of the statement of net income and other comprehensive income and requires reclassification adjustments from other comprehensive income to net income to be shown on the financial statements. ASU 2011-05 is effective for all interim and annual reporting periods beginning after December 15, 2011. ASU 2011-05 is not expected to have a material impact on the Company’s financial position or results of operation.

Other recent accounting pronouncements issued by the FASB (including its Emerging Issues Task Force (“EITF”)) and the SEC did not or are not believed by management to have a material impact on the Company's present or future financial statements.

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China Nutrifruit Group Limited and Subsidiaries
Notes to Condensed Consolidated Financial Statements
June 30, 2011 and 2010 (Unaudited)
(Stated in U.S. Dollars)

NOTE 3. EARNINGS PER SHARE

The computations of basic and diluted earnings per share for the three months ended June 30 are as follows:

		Three months ended
		June 30,
		2011			2010
Numerator:
Net earnings	$	1,800,565		$	1,793,506
Less: dividends on preferred stock		(190,028	)		(202,846	)
Net earnings for basic earnings per share	$	1,610,537		$	1,590,660
Net earnings for basic earnings per share	$	1,610,537		$	1,590,660
Add: dividends on preferred stock		190,028			202,846
Net earnings for diluted earnings per share	$	1,800,565		$	1,793,506
Denominator:
Weighted average common stock outstanding		36,915,762			36,670,809
Effect of dilutive warrant		-			103,624
Weighted average common stock and dilutive potential common stock		36,915,762			36,774,433
Basic net earnings per share	$	0.04		$	0.04
Diluted net earnings per share	$	0.04		$	0.04

F-11

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China Nutrifruit Group Limited and Subsidiaries
Notes to Condensed Consolidated Financial Statements
June 30, 2011 and 2010 (Unaudited)
(Stated in U.S. Dollars)

NOTE 4. INVENTORY, NET

At June 30, 2011 and March 31, 2011, inventory is comprised of the following:

		June 30,			March 31,
		2011			2011
Finished goods	$	1,681,444		$	6,324,862
Raw material		97,088			94,290
	$	1,778,532		$	6,419,152

NOTE 5. PROPERTY AND EQUIPMENT, NET

Property and equipment, net, at June 30, 2011 and March 31, 2011 are summarized as follows:

		June 30,			March 31,
		2011			2011
Buildings	$	5,751,581		$	5,652,084
Leasehold improvement		1,417,532			1,398,033
Machinery		19,537,403			19,190,848
Furniture, fixtures and office equipment		15,923			15,378
Motor vehicles		42,552			41,556
Total		26,764,991			26,297,899
Less: accumulated depreciation		(6,690,164	)		(5,985,894	)
	$	20,074,827		$	20,312,005

As of June 30, 2011, buildings, leasehold improvement and machinery, of $4,280,208 (March 31, 2011: $4,289,330), $1,035,979 (March 31, 2011: $1,054,948) and $925,276 (March 31, 2011: $942,218) respectively, were pledged to secure the unused banking facilities obtained by the Group. (Note 14)

F-12

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China Nutrifruit Group Limited and Subsidiaries
Notes to Condensed Consolidated Financial Statements
June 30, 2011 and 2010 (Unaudited)
(Stated in U.S. Dollars)

NOTE 6. PREPAYMENTS AND DEPOSITS

Prepayments and deposits by major categories are summarized as follows at June 30, 2011 and March 31, 2011:

		June 30,			March 31,
		2011			2011
Classified as current assets:
Prepaid expenses	$	6,584		$	264,878
Classified as non-current assets:
Prepayment for property and equipment		14,000,495			10,205,951
Prepayment for land use rights		788,296			777,453
		14,788,791			10,983,404
	$	14,795,375		$	11,248,282

NOTE 7. OTHER PAYABLES AND ACCRUED EXPENSES

Other payables and accrued expenses by major categories at June 30, 2011 and March 31, 2011 are summarized as follows:

		June 30,			March 31,
		2011			2011
Accruals	$	875,588		$	968,822
Value added tax payables		437,848			1,545,707
Other payables		907,052			797,996
	$	2,220,488		$	3,312,525

The other payables mainly comprised amounts payable to the suppliers of property and equipment, amounting to $437,632 and $431,612 as of June 30, 2011 and March 31, 2011 respectively.

F-13

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China Nutrifruit Group Limited and Subsidiaries
Notes to Condensed Consolidated Financial Statements
June 30, 2011 and 2010 (Unaudited)
(Stated in U.S. Dollars)

NOTE 8. BORROWINGS

The Company's borrowings consist of the following:

		June 30,			March 31,
		2011			2011
Borrowings, due within one year	$	7,739,938		$	-

The interest rates are based on benchmark lending rate issued by People’s Bank of China (“Lending Rate”) plus a certain percentage and subject to the change of Lending Rate. The range of effective interest rates (which are also equal to contracted interest rates) on the Company’s borrowings for the period ended June 30, 2011 was 8.203% per annum. The borrowings are repayable within twelve months from the date of drawing.

F-14

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China Nutrifruit Group Limited and Subsidiaries
Notes to Condensed Consolidated Financial Statements
June 30, 2011 and 2010 (Unaudited)
(Stated in U.S. Dollars)

NOTE 9. PROVISION FOR INCOME TAXES

The provision for income tax is as follows:

		Three months ended
		June 30,
		2011			2010
Current:
PRC	$	881,180		$	626,839
Other jurisdictions		-			-
Deferred:
PRC		41,341			39,027
Other jurisdictions		-			-
	$	922,521		$	665,866

Deferred tax assets

The source of significant temporary difference that gives rise to the deferred tax asset is as follows:

		June 30,			March 31,
		2011			2011
Deferred tax assets:
Difference between book and tax basis of land use right and property and equipment	$	868,538		$	909,879
Tax losses carryforward		1,234,847			1,097,331
Less: valuation allowance		(1,234,847	)		(1,097,331	)
Net deferred tax assets	$	868,538		$	909,879

In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that all of the assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income in each tax jurisdiction during the periods in which temporary differences in those jurisdictions become deductible. Management considers the projected future taxable income and tax planning strategies in making this assessment.

The Company has provided valuation allowances of $1,234,847 and $1,097,331 in respect of federal net operating loss and foreign unused tax loss carryforwards, respectively, which it does not expect to utilize. As of June 30, 2011, the Company has net operating loss and foreign unused tax loss carryfowards of $3,001,264 (March 31, 2011: $2,699,300) and $1,066,330 (March 31, 2011: $912,879).

F-15

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China Nutrifruit Group Limited and Subsidiaries
Notes to Condensed Consolidated Financial Statements
June 30, 2011 and 2010 (Unaudited)
(Stated in U.S. Dollars)

NOTE 9. PROVISION FOR INCOME TAXES (CONT’D)

Deferred tax assets

The total valuation allowance between periods presented increased by $137,516 (March 31, 2011: $401,905) and such increase was attributable to the tax effect on foreign tax losses incurred for the three months ended June 30, 2011 of $31,828 (March 31, 2011: $52,734) at enacted foreign profit tax rates and the tax effect on federal net operating loss incurred for the three months ended June 30, 2011 of $105,688 (March 31, 2011: $349,171) at the federal tax rate of 35%.

Income taxes

A reconciliation of the provision for income tax calculated using the statutory federal income tax rate and state and local income tax rate to the Company’s provision for income taxes for the three months ended June 30 is as follows:

		Three months
		ended June 30,
		2011			2010
Provision for income taxes at statutory rate of 35%	$	953,080		$	860,780
Chinese tax rate difference		(279,577	)		(229,135	)
Non-deductible expenses and non- assessable profits		70,161			(42,748	)
Changes in valuation allowance		137,516			37,942
Tax effect of non-deductible temporary difference recognized		41,341			39,027
Income taxes	$	922,521		$	665,866

Pretax earnings of a foreign subsidiary are subject to U.S. taxation when effectively repatriated. U.S. income taxes and foreign withholding taxes were not provided on undistributed earnings of foreign subsidiaries. The Company intends to reinvest these earnings indefinitely in its foreign subsidiaries. It is not practical to determine the amount of undistributed earnings or income tax payable in the event the Company repatriated all undistributed foreign earnings. However, if these earnings were distributed to the U.S. in the form of dividends or otherwise, the Company would be subject to additional U.S. income taxes and foreign withholding taxes, offset by an adjustment for foreign tax credits.

F-16

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China Nutrifruit Group Limited and Subsidiaries
Notes to Condensed Consolidated Financial Statements
June 30, 2011 and 2010 (Unaudited)
(Stated in U.S. Dollars)

NOTE 10. SHAREHOLDERS’ EQUITY

General

The Company’s total authorized capital at June 30, 2011 and March 31, 2011, is 125,000,000 shares of which 120,000,000 shares are common stock of par value $0.001 and 5,000,000 shares are preferred stock of par value $0.001.

Series A Preferred Stock

In connection with the first closing of Private Placement Transaction on September 30, 2009, certain investors received 359,502 shares of Series A Preferred Stock.

In connection with the second and final closing of Private Placement Transaction on October 8, 2009, certain investors received 43,916 shares of Series A Preferred Stock. A summary of terms of Series A Preferred Stock as follows:

Ranking

With respect to rights upon liquidation, winding-up or dissolution, the Series A Preferred Stock ranks senior to the Company’s common stock and any other classes or series of stock of the Company not designated as ranking senior to or pari passu with the Series A Preferred Stock.

Voting

The holders of the Series A Preferred Stock will vote on an "as converted" basis, together with the common stock, as a single class, in connection with any proposal submitted to the Company’s shareholders, except as required by Nevada law.

Conversion

Shares of the Series A Preferred Stock are optionally convertible into fully paid and non-assessable shares of common stock at a conversion rate calculated by dividing (A) $33.00 per share (the "Liquidation Preference Amount") by (B) the conversion price, which is initially $3.30 per share, subject to adjustment as provided in the Certificate of Designation. Initially, each share of Series A Preferred Stock is convertible into 10 shares of common stock.

F-17

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China Nutrifruit Group Limited and Subsidiaries
Notes to Condensed Consolidated Financial Statements
June 30, 2011 and 2010 (Unaudited)
(Stated in U.S. Dollars)

NOTE 10. SHAREHOLDERS’ EQUITY (CONT’D)

Mandatory Conversion

The Company may convert outstanding Series A Preferred Stock into shares of common stock upon (i) the closing of a sale by the Company of shares of common stock in a registered public offering in which the Company sells shares of its stock for at least $10 million in gross proceeds and the holders of the Series A Convertible Preferred Stock are able to offer and sell at least 50% of the common stock that would be received upon such mandatory conversion ("Qualified Sale") or (ii) when the average of the daily closing price of the common stock for at least 30 consecutive trading days is not less than $4.25 and the daily trading volume during each of those 30 trading days exceeds 75,000 shares (a "Market Forced Conversion," and collectively with a Qualified Sale, a "Forced Conversion"). The conversion rate to be applied in effecting a Forced Conversion is calculated by dividing the Liquidation Preference Amount per share by $2.75 (in the event of a Qualified Sale) or $3.30 (in the event of a Market Forced Conversion), as the case may be, subject to adjustment as provided in the Certificate of Designation. In addition, in connection with a Qualified Sale Forced Conversion, the Company will pay to the holder for each share of Series A Preferred Stock so converted a per share amount equal to seven percent (7%) of the original issue price plus all accrued and unpaid dividends

Dividends

Each share of Series A Preferred Stock is entitled to receive cumulative dividends at the annual rate of 7% on the Liquidation Preference Amount thereof. Such dividends are payable annually on September 1 beginning with the first date after December 31, 2009 and any optional conversion date in cash.

Liquidation

In the event of the liquidation, dissolution or winding up of the affairs of the Company, whether voluntary or involuntary, the holders of the Series A Preferred Stock then outstanding will be entitled to receive, out of the assets of the Company available for distribution to its shareholders, $33.00 per share plus accrued but unpaid dividends, before any payment shall be made or any assets distributed to the holders of the Common Stock or any other class or series of stock issued by the Company not designated as ranking senior to or pari passu with the Series A Preferred Stock in respect of the right to participate in distributions or payments upon a liquidation event.

Redemption

At any time on or after less than 10% of the originally issued shares of Series A Preferred Stock shall remain outstanding and subject to the satisfaction of certain conditions, the Company may redeem all shares of Series A Preferred Stock then outstanding at one hundred and one percent (101%) of the Liquidation Preference Amount, plus any accrued and unpaid dividends. A holder of then outstanding Series A Preferred Stock may also, upon the satisfaction of the foregoing conditions and at the option of such holder, request the Company to redeem all or any of its shares of Series A Preferred Stock at the same price.

F-18

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China Nutrifruit Group Limited and Subsidiaries
Notes to Condensed Consolidated Financial Statements
June 30, 2011 and 2010 (Unaudited)
(Stated in U.S. Dollars)

NOTE 10. SHAREHOLDERS’ EQUITY (CONT’D)

Warrants

In connection with the private placement which closed on October 10, 2008, WLT Brothers Capital, Inc., Wentworth Securities, Inc. and Euro Pacific Capital, Inc., the Company’s placement agents, received, as partial compensation, warrants to purchase 66,171, 95,781 and 54,057 shares of the Company’s common stock, respectively. The warrants have a term of 3 years and are immediately exercisable at $2.78 per share, subject to the usual adjustments for certain corporate events.

The Company valued the warrants by Trinomial option pricing model at $331,357 which was recorded as cost of raising capital against additional paid-in capital. The Company estimated the fair value of each warrant award on the date of grant using the Trinomial option pricing model and the assumption noted in the following table. Expected volatility is based on the historical and implied volatility of a peer group of publicly traded entities. The expected term of options gave consideration to historical exercises, post-vesting cancellations and the options’ contractual term. The risk-free rate for the expected term of the option is based on the U.S. Treasury Constant Maturity at the time of grant. The assumptions used to value options granted during the year ended March 31, 2009 were as follows:

Risk free interest rate		3.479%
Expected volatility		59.92%
Expected dividend rate		-%
Expected life (years)		3

In connection with the first closing of Private Placement Transaction which closed on September 30, 2009, certain investors received 359,502 warrants to purchase 898,777 shares of the Company’s common stock. The warrants have a term of 4 years and are immediately exercisable at $3.30 per share, subject to customary adjustments.

The Company valued the warrants by Trinomial Option Pricing Model at $1,361,295 which was used to calculate the portion of proceeds from private placement transaction arising from warrants to record as additional paid-in capital. The Company estimated the fair value of each warrant award on the date of grant using the Trinomial Option Pricing Model and the assumption noted in the following table. Expected volatility is based on the historical and implied volatility of a peer group of publicly traded entities. The expected term of options gave consideration to historical exercises, post-vesting cancellations and the options’ contractual term. The risk-free rate for the expected term of the option is based on the U.S. Government Bond at the time of grant. The assumptions used to value options granted were as follows during fiscal 2010:

Risk free interest rate		2.264%
Expected volatility		56.03%
Expected dividend rate		-%
Expected life (years)		4

F-19

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China Nutrifruit Group Limited and Subsidiaries
Notes to Condensed Consolidated Financial Statements
June 30, 2011 and 2010 (Unaudited)
(Stated in U.S. Dollars)

NOTE 10. SHAREHOLDERS’ EQUITY (CONT’D)

In connection with the first closing of Private Placement Transaction on September 30, 2009, WLT Brothers Capital, Inc. and Euro Pacific Capital, Inc., the Company’s placement agents, received on October 8, 2009, as partial compensation, 86,281 warrants to purchase 215,703 shares of the Company’s common stock. The warrants have a term of 4 years and are immediately exercisable at $3.30 per share, subject to customary adjustments.

The Company valued the warrants by Trinomial Option Pricing Model at $326,705 which was recorded as cost of raising capital against additional paid-in capital. The Company estimated the fair value of each warrant award on the date of grant using the Trinomial Option Pricing Model and the assumption noted in the following table. Expected volatility is based on the historical and implied volatility of a peer group of publicly traded entities. The expected term of options gave consideration to historical exercises, post-vesting cancellations and the options’ contractual term. The risk-free rate for the expected term of the option is based on the U.S. Government Bond at the time of grant. The assumptions used to value options granted were as follows during fiscal 2010:

Risk free interest rate		2.264%
Expected volatility		56.03%
Expected dividend rate		-%
Expected life (years)		4

In connection with the second and final closing of Private Placement Transaction which closed on October 8, 2009, certain investors received 43,916 warrants to purchase 109,790 shares of the Company’s common stock. The warrants have a term of 4 years and are immediately exercisable at $3.30 per share, subject to customary adjustments.

The Company valued the warrants by Trinomial Option Pricing Model at $168,549 which was used to calculate the portion of proceeds from private placement transaction arising from warrants to record as additional paid-in capital. The Company estimated the fair value of each warrant award on the date of grant using the Trinomial Option Pricing Model and the assumption noted in the following table. Expected volatility is based on the historical and implied volatility of a peer group of publicly traded entities. The expected term of options gave consideration to historical exercises, post-vesting cancellations and the options’ contractual term. The risk-free rate for the expected term of the option is based on the U.S. Government Bond at the time of grant. The assumptions used to value options granted were as follows during fiscal 2010:

Risk free interest rate		2.324%
Expected volatility		51.62%
Expected dividend rate		-%
Expected life (years)		4

F-20

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China Nutrifruit Group Limited and Subsidiaries
Notes to Condensed Consolidated Financial Statements
June 30, 2011 and 2010 (Unaudited)
(Stated in U.S. Dollars)

NOTE 10. SHAREHOLDERS’ EQUITY (CONT’D)

In connection with the second and final closing of Private Placement Transaction which closed on October 8, 2009, certain placement agents received 10,540 warrants to purchase 26,349 shares of the Company’s common stock. The warrants have a term of 4 years and are immediately exercisable at $3.30 per share, subject to customary adjustments.

The Company valued the warrants by Trinomial Option Pricing Model at $40,450 which was recorded as cost of raising capital against additional paid-in capital. The Company estimated the fair value of each warrant award on the date of grant using the Trinomial Option Pricing Model and the assumption noted in the following table. Expected volatility is based on the historical and implied volatility of a peer group of publicly traded entities. The expected term of options gave consideration to historical exercises, post-vesting cancellations and the options’ contractual term. The risk-free rate for the expected term of the option is based on the U.S. Government Bond at the time of grant. The assumptions used to value options granted were as follows during fiscal 2010:

Risk free interest rate		2.324%
Expected volatility		51.62%
Expected dividend rate		-%
Expected life (years)		4

The following is the movement of warrants during the three months ended June 30, 2011:

F-21

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China Nutrifruit Group Limited and Subsidiaries
Notes to Condensed Consolidated Financial Statements
June 30, 2011 and 2010 (Unaudited)
(Stated in U.S. Dollars)

NOTE 10. SHAREHOLDERS’ EQUITY (CONT’D)

The following is the movement of warrants during the three months ended June 30, 2010:

NOTE 11. PRC CONTRIBUTION PLAN

Employees of the Group are entitled to retirement benefits calculated with reference to their salaries basis upon retirement and their length of service in accordance with a PRC government-managed retirement plan. The PRC government is directly responsible for the payments of the benefits to these retired employees. The Group is required to make contributions to the government-managed retirement plan based on certain percentages of the employees’ monthly salaries. The amounts contributed by the Group were $97,033 and $91,535 for the three months ended June 30, 2011 and 2010 respectively.

NOTE 12. CONCENTRATION OF RISK

Credit Risk

Financial instruments that potentially subject the Group to significant concentration of credit risk consist primarily of cash and cash equivalents. As of June 30, 2011, substantially all of the Group’s cash and cash equivalents were held by major financial institutions located in the PRC, which management believes are of high credit quality.

Group’s operations are in China

All of the Group’s products are produced in China. The Group’s operations are subject to various political, economic, and other risks and uncertainties inherent in China. Among other risks, the Group’s operations are subject to the risks of transfer of funds; domestic and international customs and tariffs; changing taxation policies; foreign exchange restrictions; and political conditions and governmental regulations.

F-22

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China Nutrifruit Group Limited and Subsidiaries
Notes to Condensed Consolidated Financial Statements
June 30, 2011 and 2010 (Unaudited)
(Stated in U.S. Dollars)

NOTE 13. COMMITMENTS AND CONTINGENT LIABILITIES

Operating Lease Commitments

As of June 30, 2011, the Group did not have any significant operating lease commitments.

Rent for the three months ended June 30, 2011 and 2010 was $7,923 and $2,923, respectively.

Capital Commitments

As of June 30, 2011, the Group had the followings outstanding capital expenditure commitments:

Authorized and contracted, but not provided for:
Construction in progress	$	1,100,596
Property and equipment		14,233,486
	$	15,334,082

NOTE 14. UNUSED SECURED CREDIT FACILITIES

As of June 30, 2011, the Group had $2,917,291 (March 31, 2011: $2,877,206) of unused credit facilities granted by banks. Those banking facilities were secured by land use rights, buildings, leasehold improvement and machinery, of $189,222 (March 31, 2011: $188,199), $4,280,208 (March 31, 2011: $4,289,330), $1,035,979 (March 31, 2011: $1,054,948) and $925,276 (March 31, 2011: $942,218) respectively.

NOTE 15. SUBSEQUENT EVENTS

The Company evaluated all events or transactions through the date of this filing, which is the date the financial statements were issued. During this period, other than those disclosed above, the Company did not have any material subsequent events that impacted the consolidated financial statements.

End of condensed consolidated financial statements.

F-23

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ITEM 2.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

Special Note Regarding Forward Looking Statements

In addition to historical information, this report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. We use words such as “believe,” “expect,” “anticipate,” “project,” “target,” “plan,” “optimistic,” “intend,” “aim,” “will” or similar expressions which are intended to identify forward-looking statements. Such statements include, among others, those concerning market and industry segment growth and demand and acceptance of new and existing products; any projections of sales, earnings, revenue, margins or other financial items; any statements of the plans, strategies and objectives of management for future operations; any statements regarding future economic conditions or performance; as well as all assumptions, expectations, predictions, intentions or beliefs about future events. You are cautioned that any such forward-looking statements are not guarantees of future performance and involve risks and uncertainties, including those identified in Item 1A “Risk Factors” included in our Annual Report on Form 10-K for the year ended March 31, 2011, as well as assumptions, which, if they were to ever materialize or prove incorrect, could cause the results of the Company to differ materially from those expressed or implied by such forward-looking statements.

Readers are urged to carefully review and consider the various disclosures made by us in this report and our other filings with the SEC. These reports attempt to advise interested parties of the risks and factors that may affect our business, financial condition and results of operations and prospects. The forward-looking statements made in this report speak only as of the date hereof and we disclaim any obligation, except as required by law, to provide updates, revisions or amendments to any forward-looking statements to reflect changes in our expectations or future events.

Use of Terms

Except as otherwise indicated by the context, all references in this report to: (i) “we,” “the Company,” “us,” “our company,” “our,” and “China Nutrifruit” are to the combined businesses of China Nutrifruit Group Limited and its consolidated subsidiaries; (ii) “SEC” are to the United States Securities and Exchange Commission; (iii) “Securities Act” are to the Securities Act of 1933, as amended; (iv) “Exchange Act” are to the Securities Exchange Act of 1934, as amended; (v) “RMB” are to Renminbi, the legal currency of China; (vi) “U.S. dollar,” “$” and “US$” are to the legal currency of the United States; and (vii) “China” and “PRC” are to the People’s Republic of China.

Overview

We are a leading producer of premium specialty fruit based products in China. We are primarily engaged, through our indirect Chinese subsidiaries, in developing, processing, marketing and distributing a variety of food products processed primarily from premium specialty fruits grown in Northeast China, mainly including golden berry, crab apple, blueberry, raspberry, blackcurrant and seabuckthorn. Our primary product offering includes concentrate juice, nectar, glazed fruits, concentrate pulp as well as fresh fruits.

We sell our products through an extensive nationwide sales and distribution network covering 18 provinces in China. As of June 30, 2011, this network was comprised of approximately 44 distributors. Our processed fruit products are mainly sold to food producers for further processing into fruit juice and other fruit related foods, and our fresh fruits are mainly sold to fruit supermarkets.

Our manufacturing facilities are located in Daqing City and Mudanjiang City, Heilongjiang Province, China where an abundant supply of various premium specialty fruits is readily available. We currently have five fruit processing lines with an aggregate capacity of 20,160 tons. We recently completed technological upgrades to our glazed fruit production lines in Daqing and installation of additional processing equipment to our concentrate juice production lines in Mudanjiang, thereby increasing our annual concentrate juice production capacity by 50% to reach 9,000 tons. Such upgrades is expect to contribute to our continuing effort to improve operational efficiency and productivity, and expand our product portfolio as we begin production of our new cherry tomato glazed fruit products and golden berry dried fruit products. Our new fruit and vegetable power production line also started trial production in July 2011. In addition, we are constructing a new multi-purpose concentrate paste production line in Zhaoyuan, Helongjiang province with a production capacity of approximately 9,600 tons which is expected to begin trail production in third calendar quarter of 2011.

4

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First Fiscal Quarter Highlights

We experienced modest growth in net sales, gross margin and net income during the first fiscal quarter. Historically, first fiscal quarter has generally been our weakest quarter. In fiscal years 2010 and 2011, approximately 12.8% and 11.1% of the total annual revenue was generated from the first fiscal quarter, respectively. All products sold in this quarter were produced in the fiscal year 2011 production season. Most of our inventories was sold out as of June 30, 2011 and our new production season started on July 25, 2011.

The following sets forth certain key financial information for the first fiscal quarter.

• Net Sales: Net sales increased $664,909, or 6.9%, to $10.3 million for the three months ended June 30, 2011 from $9.6 million for the same period last year.
• Gross Margin: Gross margin was 46.6% for the three months ended June 30, 2011, as compared to 42.8% for the same period last year.
• Net Income: Net income increased $7,059, or 0.4%, to $1.8 million for the three months ended June 30, 2011 from $1.8 million for the same period last year.
• Fully diluted earnings per share: Fully diluted earnings per share remained the same at $0.04 for the three months ended June 30, 2011.

Results of Operations

Comparison of Three Months Ended June 30, 2011 and June 30, 2010

The following table sets forth key components of our results of operations for the periods indicated, in dollars and as a percentage of sales revenue.

(All amounts, other than percentages and per share number, in thousands of U.S. dollars)

		Three Months Ended						Three Months Ended
		June 30, 2011						June 30, 2010
					As a						As a
		In			Percentage			In			Percentage
		Thousands			of Net Sales			Thousands			of Net Sales
Net Sales	$	10,293			100.0%		$	9,628			100.0%
Costs of Sales		5,498			53.4%			5,509			57.2%
Gross profit		4,795			46.6%			4,119			42.8%
Selling expenses		410			4.0%			584			6.1%
General and administrative expenses		1,666			16.2%			1,106			11.5%
Other income		61			0.6%			31			0.3%
Interest expenses		56			0.5%			-			-
Income before noncontrolling interests and income taxes		2,723			26.5%			2,460			25.5%
Income taxes		922			9.0%			666			6.9%
Net income		1,801			17.5%			1,794			18.6%
Earnings per share:
Basic	$	0.04					$	0.04
Diluted	$	0.04					$	0.04

The functional currency of the Company is RMB, however, our financial information is expressed in USD. The results of operations reported in the table above is based on the exchange rate of RMB 6.49 to $1 for the three months ended June 30, 2011 and the rate of RMB 6.84 to $1 for the three months ended June 30, 2010.

Net Sales

Net sales consist of revenue from the sale of our fruit and fruit based products. We experienced modest growth in net sales during the first fiscal quarter. Historically, first fiscal quarter has generally been our weakest quarter in sales. Net sales increased $664,909, or 6.9%, to $10.3 million for the three months ended June 30, 2011 from $9.6 million for the three months ended June 30, 2010. Net sales of our glazed fruit products grew from $1.7 million for the three months ended June 30, 2010 to $3.8 million in this quarter, mainly driven by the strong sale of our new glazed fruit products, including Seabuckthorn and Blackcurrant glazed fruit. Net sales of our concentrate juice product increased slightly to $5.2 million for the three months ended June 30, 2011 from $5.0 million for the same period last year. Net sales of concentrate pulp decreased significantly in this quarter because we ceased cooperation with one of the two OEM factories in this quarter due to changes in it business operation.

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The following table sets forth percentage of net sales generated by each product for the three months ended June 30, 2011 and 2010:

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

Cost of Sales

Cost of sales is primarily comprised of the costs of our raw materials, labor, overhead and sales tax. Cost of sales decreased $10,431, or 0.2%, to $5.5 million for the three months ended June 30, 2011 from $5.5 million for the three months ended June 30, 2010. Cost of sales as a percentage of net sales was 53.4% for the three months ended June 30, 2011, as compared to 57.2% for the same period last year.

Gross Profit

Gross profit is equal to net sales less cost of sales. Gross profit increased by $675,340 to $4.8 million for the three months ended June 30, 2011 from $4.1 million for the three months ended June 30, 2010. Gross profit as a percentage of net sales increased to 46.6% for the three months ended June 30, 2011, as compared to 42.8% for the same period last year. The increase in gross margin was mainly driven by a significant increase in sales volume of higher margin glazed fruit products in the three months ended June 30, 2011. The gross margins for our glazed fruit, nectar, concentrate juice and concentrate pulp products for the three months ended June 30, 2011 were 54.9%, 67.3%, 43.8% and 23.7%, as compared to 49.8%, 69.3%, 45.3% and 25.5% for the same period last year, respectively. The decrease in gross margin of nectar products was primarily driven by an approximately 4.1% decrease in its average sales price in this quarter as compared to the same quarter last year. The increase in raw material cost of concentrate pulp products led to the decrease in their gross margin for the three months ended June 30, 2011.

Selling and General and Administrative Expenses

Selling and general and administrative expenses increased $385,979, or 22.8%, to $2.1 million for the three months ended June 30, 2011 from $1.7 million for the three months ended June 30, 2010.

Selling expenses include sales commissions, the cost of advertising and promotional materials, salaries and fringe benefits of sales personnel and other sales related costs. Selling expenses decreased $174,187, or 29.8%, to $410,321 for the three months ended June 30, 2011 from $584,508 for the three months ended June 30, 2010. As a percentage of net sales, selling expenses decreased to 4.0% for the three months ended June 30, 2011 from 6.1% for same period last year. Due to well established relationships with our existing customers, we received repeat orders with higher volume from our existing clients, which led to lower sales related expenses in this quarter. We plan to indentify  new distributors in regions where we have no or limited sales to further expand our customer base and market share.

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General and administrative expenses include the costs associated with staff and support personnel who manage our business activities, depreciation charge for fixed assets, including idle production line, and professional fees paid to third parties. Our general and administrative expenses increased $560,166, or 50.7%, to $1.7 million for the three months ended June 30, 2011 from $1.1 million for the three months ended June 30, 2010. As a percentage of net sales, general and administrative expenses for the three months ended June 30, 2011 increased by 4.7% to 16.2%, as compared to 11.5% for the three months ended June 30, 2010. The increase in general and administrative expenses in this quarter was mainly attributable to the recognition of professional expenses related to our proposed Taiwan Deposit Receipt offering in Taiwan which was withdrawn in June 2011. In addition, the increase in salary and wages of staff also contributes to the increase in general and administrative expenses in this quarter.

Income before Noncontrolling Interests and Income Taxes

Income before noncontrolling interests and income taxes increased $263,714, or 10.7%, to $2.7 million for the three months ended June 30, 2011 from $2.5 million for the three months ended June 30, 2010. Income before noncontrolling interests and income taxes as a percentage of net sales increased from 25.5% for the three months ended June 30, 2010 to 26.5% for the three months ended June 30, 2011. The percentage increase was primarily attributable to the increase in gross margin as discussed above.

Provision for Income Taxes

The provision for income taxes increased $256,655, or 38.5%, to $922,521 for the three months ended June 30, 2011 from $665,866 for the three months ended June 30, 2010. The increase in the provision for income taxes was mainly attributed to the increase in taxable income.

We file separate tax returns in the United States and China. Income taxes of our PRC subsidiaries are calculated in accordance with taxation principles currently effective in the PRC. For China Nutrifruit Group Limited, applicable U.S. tax laws are followed. The applicable tax rate for our PRC operating subsidiaries Daqing Longheda Food Company Limited and Daqing Senyang Fruit and Vegetable Food Technology Company Limited (“Daqing Sengyang”) are 25% in 2011.

Net Income

Net income increased $7,059, or 0.4%, to $1.8 million for the three months ended June 30, 2011 from $1.8 million for the three months ended June 30, 2010, mainly as a result of the cumulative effect of factors discussed above.

Liquidity and Capital Resources

As of June 30, 2011, we had cash and cash equivalents of $57.2 million. The following table sets forth a summary of our cash flows for the periods indicated.

Cash Flow
(All amounts in thousands of U.S. dollars)

		Three Months Ended June 30,
		2011			2010
Net cash provided by (used in) operating activities	$	11,453		$	(5,794	)
Net cash used in investing activities		(5,040	)		(3,503	)
Net provided by financing activities		6,749			-
Effect of exchange rates on cash and cash equivalents		500			(36	)
Cash and cash equivalents at beginning of the period		43,542			35,994
Cash and cash equivalents at end of period		57,204			26,661

Operating Activities

Net cash provided by operating activities was $11.5 million for the three months ended June 30, 2011 as compared to $5.8 million net cash used in operating activities for the three months ended June 30, 2010. Net cash provided by operating activities for the three months ended June 30, 2011 was mainly attributable to collection of trade receivables and sales of inventories for approximately $7.7 million and $4.7 million in this quarter, respectively.

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Investing Activities

During the three months ended June 30, 2011, we used approximately $0.6 million to upgrade glazed fruit and concentrate juice production lines in our Daqing and Mudanjiang facilities and approximately $4.1 million to construct a new concentrate paste production line in Zhaoyuan city. In addition, we spent approximately $0.4 million on the completion of the fruit and vegetable powder factory. Our cash used in investing activities during the three months ended June 30, 2010 was primarily for the upgrade of concentrate juice production lines in our Daqing and Mudanjiang facilities.

Financing Activities

Net cash provided by financing activities was $6.7 million for the three months ended June 30, 2011, mainly attributable to the short term bank loan of $7.7 million (RMB 50 million) drawdown by Daqing Senyang on May 20, 2011, which more than offset the repayment of advance from director of $1.0 million (RMB 6.2 million). We had no financing activities for the three months ended June 30, 2010.

On February 23, 2010, our subsidiary Daqing Longheda entered into a $1.2 million (RMB 8.0 million) revolving credit facility with the Heilongjiang Rural Credit Union with a term of three years. This facility is secured by our land and buildings located in Daqing City. On February 25, 2010, we entered into another $1.7 million (RMB 10.8 million) revolving credit facility with the Longjiang Bank with a term of two years. This facility is secured by our land and buildings in Mudanjiang City. Both facilities are for our working capital needs during our production season. As of the date of this report, we did not draw down on either facility. On May 20, 2011, our subsidiary Daqing Senyang entered into and drawdown a $7.7 million (RMB 50.0 million) short term loan with the Longjiang Bank with a term of 1 year. This short term loan is for the working capital of Daqing Senyang and guaranteed by Daqing Commercial Guaranty Company Limited, an unaffiliated third party.

Capital Expenditures

Our capital expenditures were $5.0 million and $3.5 million for the three months ended June 30, 2011 and 2010, respectively. Our capital expenditures were mainly used to upgrade and expand our production capacity. Our planned capital expenditures for the fiscal year ending March 31, 2012 will be mainly for upgrading existing production lines and expanding production capacity by adding new production line. However, our actual capital expenditure may differ depending on our cash flow status.

We believe that our currently available working capital, after receiving the aggregate proceeds of our capital raising activities and credit facilities referred to above, should be adequate to sustain our operations at our current levels through at least the next twelve months. We may require additional cash resources due to changing business conditions, implementation of our strategy to expand our production capacity or other investments or acquisitions we may decide to pursue. If our own financial resources are insufficient to satisfy our capital requirements, we may seek to sell additional equity or debt securities or obtain additional credit facilities. The sale of additional equity securities could result in dilution to our stockholders. The incurrence of indebtedness would result in increased debt service obligations and could require us to agree to operating and financial covenants that would restrict our operations. Financing may not be available in amounts or on terms acceptable to us, if at all. Any failure by us to raise additional funds on terms favorable to us, or at all, could limit our ability to expand our business operations and could harm our overall business prospects.

Critical Accounting Policies

Critical accounting policies are those we believe are most important to portraying our financial conditions and results of operations and also require the greatest amount of subjective or complex judgments by management. Judgments and uncertainties regarding the application of these policies may result in materially different amounts being reported under various conditions or using different assumptions. There have been no material changes to the critical accounting policies previously disclosed in our Annual Report on Form 10-K for the fiscal year ended March 31, 2011.

Recently Issued Accounting Pronouncements

See Note 2 to our unaudited condensed consolidated financial statements included elsewhere in this report.

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Off-Balance Sheet Arrangements

We do not have any off balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity or capital expenditures or capital resources that is material to an investor in our securities.

Seasonality

The harvest season for our source fruits is generally from mid July to mid November every year. As fruits cannot be stored at room temperature for a long time, they must be processed as soon as they are harvested. Our fruit processing production is generally busiest from mid-July to mid-November every year. In this fiscal year, our production season started July 25, 2011.

We generally experience higher sales in the second, third and fourth fiscal quarters mainly due to distributors’ (i) efforts to obtain adequate supply of our fruit processing products before the fruit supply diminishes after production ceases in November; and (ii) anticipation of higher demand for processed fruit products as a result of festive seasons, such as Middle Autumn festival, Christmas and the Chinese New Year which are in the second, third and fourth quarter of our fiscal year.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

Not Applicable.

ITEM 4. CONTROLS AND PROCEDURES.

Evaluation of Disclosure Controls and Procedures

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

As required by Rule 13a-15 under the Exchange Act, our management, including our Chief Executive Officer, Mr. Changjun Yu, and Chief Financial Officer, Mr. Colman Cheng, evaluated the effectiveness of the design and operation of our disclosure controls and procedures as of June 30, 2011. Based on our assessment, Mr. Yu and Mr. Cheng determined that, as of June 30, 2011, and as of the date that the evaluation of the effectiveness of our disclosure controls and procedures was completed, our disclosure controls and procedures were effective to satisfy the objectives for which they are intended.

Changes in Internal Control Over Financial Reporting

During the quarter ended June 30, 2011, there were no changes in our internal control over financial reporting identified in connection with the evaluation performed during the period covered by this report that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II
OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS.

From time to time, we may become involved in various lawsuits and legal proceedings, which arise, in the ordinary course of business. However, litigation is subject to inherent uncertainties, and an adverse result in these, or other matters, may arise from time to time that may harm our business. We are currently not aware of any such legal proceedings or claims that we believe will have a material adverse affect on our business, financial condition or operating results.

ITEM 1A. RISK FACTORS.

Not Applicable.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

None.

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ITEM 3. DEFAULTS UPON SENIOR SECURITIES.

None.

ITEM 4. (REMOVED AND RESERVED).

ITEM 5. OTHER INFORMATION.

We have no information to disclose that was required to be in a report on Form 8-K during the period covered by this report, but was not reported. There have been no material changes to the procedures by which security holders may recommend nominees to our board of directors.

ITEM 6. EXHIBITS.

The following exhibits are filed as part of this report or incorporated by reference:

Exhibit No.		Description
31.1		Certifications of Principal Executive Officer filed pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2		Certifications of Principal Financial Officer filed pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1		Certifications of Principal Executive Officer furnished pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2		Certifications of Principal Financial Officer furnished pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101		Interactive data files pursuant to Rule 405 of Regulation S-T*

* Furnished herewith

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SIGNATURES

In accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Date: August 15, 2011	CHINA NUTRIFRUIT GROUP LIMITED
	By:	/s/ Changjun Yu
		Changjun Yu, Chief Executive Officer
		(Principal Executive Officer)
	By:	/s/ Colman Cheng
		Colman Cheng, Chief Financial Officer
		(Principal Financial Officer and Principal
		Accounting Officer)

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EXHIBIT INDEX

Exhibit No.		Description
31.1		Certifications of Principal Executive Officer filed pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2		Certifications of Principal Financial Officer filed pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1		Certifications of Principal Executive Officer furnished pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2		Certifications of Principal Financial Officer furnished pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101		Interactive data files pursuant to Rule 405 of Regulation S-T*

* Furnished herewith

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