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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

OR

[ ] 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 000-53343

ASIA GREEN AGRICULTURE CORPORATION
(Exact name of registrant as specified in its charter)

Nevada	26-2809270
(State or other jurisdiction of	(I.R.S. Employer
incorporation or organization)	Identification No.)
Shuinan Industrial Area, Songxi County
Fujian Province, China	353500
(Address of principal executive offices)	(Zip Code)

(86) 0599-2335520
(Issuer's telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the 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 during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
Yes [   ]  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. (Check one):

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

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

State the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date:

Class	Outstanding at June 30, 2011
Common Stock, $0.001 per share	36,823,626 shares

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ASIA GREEN AGRICULTURE CORPORATION
Quarterly Report on Form 10-Q
For the Quarterly Period Ended June 30, 2011
TABLE OF CONTENTS
		Page
SPECIAL NOTE REGARDING FORWARD LOOKING STATEMENTS		ii
PART I —FINANCIAL INFORMATION		1
Item 1.	FINANCIAL STATEMENTS	1
Item 2.	MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	27
Item 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	39
Item 4.	CONTROLS AND PROCEDURES	39
PART II —OTHER INFORMATION		40
Item 1.	LEGAL PROCEEDINGS	40
Item 1A.	RISK FACTORS	40
Item 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	40
Item 3.	DEFAULTS UPON SENIOR SECURITIES	40
Item 4.	(REMOVED AND RESERVED)	40
Item 5.	OTHER INFORMATION	40
Item 6.	EXHIBITS	40
SIGNATURES		41
EXHIBIT INDEX		42

 -i- 

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EXPLANATORY NOTE

In this report, unless the context otherwise requires, the terms “AGAC,” “Company,” “we,” “us,” and “our” refer to Asia Green Agriculture Corporation (formerly known as SMSA Palestine Acquisition Corp.), a Nevada corporation and/or its subsidiaries, as the case may be. We are a Nevada holding company and conduct substantially all of our business through our operating subsidiary Fujian Yada Group Co., Ltd. in China.

On August 20, 2010, we entered into an Exchange Agreement (the "Exchange Agreement") with Sino Oriental Agriculture Group Ltd. ("Sino Oriental") and the shareholders of Sino Oriental. In connection the Exchange Agreement we issued 29,214,043 shares of our common stock to the shareholders of Sino Oriental, in exchange for all of the issued and outstanding capital stock of Sino Oriental. Prior to the Exchange Agreement, we were a shell company with nominal operations. Sino Oriental, through its wholly owned subsidiaries operates a green and organic food production and manufacturing business in the People's Republic of China. The acquisition of Sino Oriental has been accounted for as a "reverse merger". Accordingly, the historical financial statements contained in this report reflect the operations of the business of Sino Oriental and its subsidiaries.

On January 18, 2011, we filed amended and restated Articles of Incorporation with the Nevada Secretary of State to give effect to (i) a 2.5 for 1 forward stock split and (ii) an increase in our authorized common stock from 100 million shares to 200 million shares and (iii) a name change from SMSA Palestine Acquisition Corporation to Asia Green Agriculture Corporation. The information in this report reflects the stock split, increase in authorized capital and name change.

SPECIAL NOTE REGARDING FORWARD LOOKING STATEMENTS

This document contains forward-looking statements, which reflect our views with respect to future events and financial performance. These forward-looking statements are subject to certain uncertainties and other factors that could cause actual results to differ materially from such statements. These forward-looking statements are identified by, among other things, the words "anticipates", "believes", "estimates", "expects", "plans", "projects", "targets" and similar expressions. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date the statement was made. Except to the extent required by applicable securities laws, we undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Important factors that may cause actual results to differ from those projected include the risk factors specified below.

The forward-looking statements in this report speak only as of the date of this report and caution should be taken not to place undue reliance on any such forward-looking statements. Forward-looking statements are subject to certain events, risks, and uncertainties that may be outside of our control. When considering forward-looking statements, you should carefully review the risks, uncertainties and other cautionary statements in this report as they identify certain important factors that could cause actual results to differ materially from those expressed in or implied by the forward-looking statements. These factors include, among others, the risks described under Item 1A and elsewhere in this report, as well as in the other reports and documents we file with the SEC.

-ii-

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PART I—FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS.
Asia Green Agriculture Corporation Condensed Consolidated Statements of Income and Comprehensive Income For the six months ended June 30, 2011 and 2010 (Stated in US Dollars)
		Three months ended						Six months ended
		June 30,						June 30,
		(unaudited)						(unaudited)
		2011			2010			2011			2010
Sales revenue	$	20,554,823		$	9,996,162		$	46,493,819		$	32,651,068
Cost of sales		(13,224,347	)		(7,134,882	)		(31,274,574	)		(22,924,662	)
Gross profit		7,330,476			2,861,280			15,219,245			9,726,406
Operating expenses
Administrative expenses		1,646,698			343,027			3,141,042			618,470
Selling expenses		563,203			393,192			1,024,498			586,443
		2,209,901			736,219			4,165,540			1,204,913
Income from operations		5,120,575			2,125,061			11,053,705			8,521,493
Government grant income		-			14,189			81,615			30,739
Other (loss) income - net		(144,208	)		(84,060	)		48,103			150,862
Net finance costs - Note 9		(161,357	)		(125,964	)		(190,367	)		(362,949	)
Income before income taxes		4,815,010			1,929,226			10,993,056			8,340,145
Income taxes - Note 8		8,183			191,672			(168,374	)		(167,530	)
Net income	$	4,823,193		$	2,120,898		$	10,824,682		$	8,172,615
Other comprehensive income
Foreign currency translation adjustments		1,113,518			123,536			1,488,601			125,595
Total comprehensive income	$	5,936,711		$	2,244,434		$	12,313,283		$	8,298,210
Earnings per share: basic and diluted - Note 10	$	0.131		$	0.073		$	0.294		$	0.280
Weighted average number of shares Outstanding: basic and diluted		36,823,626			29,214,043			36,823,626			29,214,043

See the accompanying notes to condensed consolidated financial statements

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Asia Green Agriculture Corporation Condensed Consolidated Balance Sheets As of June 30, 2011 and December 31, 2010 (Stated in US Dollars)
		June 30,			December 31,
		2011			2010
		(Unaudited)			(Audited)
ASSETS
Current assets
Cash and cash equivalents	$	8,783,036		$	9,988,422
Restricted cash - Note 4		890,763			941,923
Trade receivables, net - Note 5		20,270,189			20,872,620
Other receivables, prepayments and deposits - Note 6		4,887,813			4,015,880
Inventories - Note 7		26,510,634			15,109,102
Income tax recoverable		37,881			24,754
Deferred tax assets		301,761			364,674
Total current assets		61,682,077			51,317,375
Property, plant and equipment, net - Note 11		12,363,220			11,834,344
Deposit for acquisition of plant and equipment		247,520			241,984
Land use rights - Note 12		16,692,321			17,207,149
TOTAL ASSETS	$	90,985,138		$	80,600,852
LIABILITIES AND STOCKHOLDERS’ EQUITY
LIABILITIES
Current liabilities
Trade payables – Note 4	$	3,937,532		$	4,996,069
Bills payable - Note 4		-			877,192
Receipts in advance		324,514			169,344
Loans from third parties - Note 16		154,700			151,240
Other payables and accrued expenses - Note 13		4,704,401			8,081,576
Amounts due to related parties - Note 14		412,742			794,199
Secured short-term borrowings - Note 15		8,446,541			6,232,600
Current maturities of secured long-term borrowings - Note 15		-			22,686
Total current liabilities		17,980,430			21,324,906
Deferred tax liabilities		28,214			28,051
TOTAL LIABILITIES		18,008,644			21,352,957
COMMITMENTS AND CONTINGENCIES - Note 20
STOCKHOLDERS’ EQUITY
Preferred stock: par value $0.001 per share; authorized 10,000,000 shares
in 2011 and 2010; none issued and outstanding
Common stock: par value $0.001 per share; authorized
200,000,000 shares as of June 30, 2011 and December 31, 2010;
36,823,626 shares issued and outstanding in 2011 and 2010		36,824			36,824
Additional paid-in capital		19,001,132			17,585,816
Statutory reserve		6,071,495			4,572,033
Accumulated other comprehensive income		3,853,229			2,364,628
Retained earnings		44,013,814			34,688,594
TOTAL STOCKHOLDERS’ EQUITY		72,976,494			59,247,895
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	90,985,138		$	80,600,852

See the accompanying notes to condensed consolidated financial statements

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Asia Green Agriculture Corporation Condensed Consolidated Statements of Stockholders' Equity (Unaudited) (Stated in US Dollars)
														Accumulated
		Common stock						Additional						other
		No. of						paid-in			Statutory			comprehensive			Retained
		shares			Amount			capital			reserve			income			earnings			Total
Balance, December 31, 2010		36,823,626		$	36,824		$	17,585,816		$	4,572,033		$	2,364,628		$	34,688,594		$	59,247,895
Foreign currency translation adjustments		-			-			-			-			1,488,601			-			1,488,601
Net income		-			-			-			-			-			10,824,682			10,824,682
Appropriation to statutory reserve		-			-						1,499,462			-			(1,499,462	)		-
Share-based compensation		-			-			1,415,316			-			-			-			1,415,316
Balance, June 30, 2011		36,823,626		$	36,824		$	19,001,132		$	6,071,495		$	3,853,229		$	44,013,814		$	72,976,494

See the accompanying notes to condensed consolidated financial statements

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Asia Green Agriculture Corporation Condensed Consolidated Statement of Cash Flows For the six months ended June 30, 2011 and 2010 (Stated in US Dollars)
		Six months ended June 30,
		(Unaudited)
		2011			2010
Cash flows from operating activities
Net income	$	10,824,682		$	8,172,615
Adjustments to reconcile net income to net cash provided by operating activities :-
Depreciation and amortization		593,065			257,880
Gain on disposal of property, plant and equipment		-			(50,210	)
Deferred taxes		68,542			4,624
Unrealized (gain) loss of forward exchange contracts		(27,577	)		176,593
Provision for (reversal of) obsolete inventories		23,555			(178,766	)
Provision for (reversal of) doubtful debts		76,721			(163,760	)
Share-based compensation		1,415,316			-
Changes in operating assets and liabilities :-
Trade receivables		1,050,615			(93,287	)
Other receivables, prepayments and deposits		(797,788	)		(600,199	)
Inventories		(10,917,640	)		(1,442,723	)
Trade payables		(1,208,294	)		1,341,593
Restricted cash held as collateral for forward exchange contracts		(193,397	)		-
Receipts in advance		150,109			(1,021,859	)
Other payables and accrued expenses		(127,701	)		482,297
Income tax recoverable		(11,682	)		-
Income tax payable		-			64,328
Net cash flows provided by operating activities		918,526			6,949,126
Cash flows from investing activities
Payments to acquire and for deposit for acquisition of property, plant and equipment		(529,138	)		(861,747	)
Proceeds from disposal of property, plant and equipment		-			236,171
Payments to acquire land use right		(2,766,368	)		-
Net cash flows used in investing activities		(3,295,506	)		(625,576	)
Cash flows from financing activities
Proceeds from secured borrowings		7,913,285			5,383,523
Repayments of secured borrowings		(5,885,382	)		(5,104,812	)
Increase in loans from third parties		-			15,696
Decrease in restricted cash held as collateral for bills payable		264,793			70,411
Decrease in bills payable		(882,644	)		(234,704	)
Repayments to related parties		(388,040	)		(3,383,201	)
Net cash flows provided by (used in) financing activities		1,022,012			(3,253,087	)
Effect of foreign currency translation on cash and cash equivalents		149,582			14,487
Net (decrease) increase in cash and cash equivalents		(1,205,386	)		3,084,950
Cash and cash equivalents - beginning of period		9,988,422			420,801
Cash and cash equivalents - end of period	$	8,783,036		$	3,505,751
Supplemental disclosures for cash flow information
Cash paid for :-
Interest, net of capitalized interest	$	117,487		$	237,044
Income taxes	$	112,049		$	98,579

See the accompanying notes to condensed consolidated financial statements

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Asia Green Agriculture Corporation
Notes to Condensed Consolidated Financial Statements
(Stated in US Dollars)

1.	Corporate information and general
	(i)	Asia Green Agriculture Corporation (formerly known as SMSA Palestine Acquisition Corp.)(the “Company”) was organized on May 21, 2008 as a Nevada corporation to effect the reincorporation of Senior Management Services of Palestine, Inc., a Texas corporation, mandated by the plan of reorganization discussed below.
		The Company’s emergence from Chapter 11 of Title 11 of the United States Code on August 1, 2007 created the combination of a change in majority ownership and voting control - that is, loss of control by the then-existing stockholders, a court-approved reorganization, and a reliable measure of the entity’s fair value - resulting in a fresh start, creating, in substance, a new reporting entity. Accordingly, the Company, post bankruptcy, has no significant assets, liabilities or operating activities. Therefore, the Company, as a new reporting entity, qualifies as a “development stage enterprise” as defined in Development Stage Entities topic of the FASB Accounting Standards Codification and as a shell company as defined in Rule 405 under the Securities Act of 1933, (Securities Act), and Rule 12b-2 under the Securities Exchange Act of 1934, (Exchange Act).
		On November 4, 2009, the Company entered into a share purchase agreement with Yang Yongjie (“Mr. Yang”), a resident of the People’s Republic of China (the “PRC”), pursuant to which he acquired 11.25 million shares of our common stock for $4,500 cash or $0.001 per share (as adjusted for a 2.5 for 1 forward stock split on January 18, 2011 (the “Forward Stock Split”)).
		Prior to the completion of reverse takeover transaction (“RTO”) on August 20, 2010 as mentioned in Note 2(vi), the Company was a development stage company for development of the Chinese restaurant concept. Following the completion of RTO on August 20, 2010, the Company commenced to be engaged in the production and marketing of fresh and processed produce, including bamboos, bamboo shoots, cucumber, corn, mushrooms and other agricultural products.
	(ii)	Misaky Industrial Limited (“Misaky”) was incorporated in Hong Kong on December 10, 2004 as a limited liability company with authorized capital of HK$10,000, divided into 10,000 common shares of HK$1 par value each, of which 3,001 common shares were issued and paid up. Before the acquisition by Sino Oriental Agriculture Group Limited (“Sino Oriental”) as described in note 2(v), Misaky was wholly owned by Mr. Youdai Zhan (“Mr. Zhan”) through a trust agreement with Mr. Yangbo Cai, (“Mr. Cai”). The sole director of Misaky is Mr. Zhan. The principal business of Misaky is an investment holding and only holds 100% equity interest in Fujian Yada Group Co., Ltd. (“Fujian Yada”).
	(iii)	Sino Oriental Agriculture Group Limited (“Sino Oriental”) was incorporated in the British Virgin Islands (the “BVI”) on January 4, 2010 as a limited liability company with authorized, issued and paid up capital of $50,000, divided into 50,000 common shares of $1 par value each. Prior to the completion of RTO on August 20, 2010, the 50,000 common shares were held by Mr. Zhan through a trust agreement with Mr. Cai and other noncontrolling shareholders. The sole director of Sino Oriental is Mr. Zhan. The principal business of Sino Oriental is an investment holding and only holds 100% equity interest in the Misaky.
	(iv)	Fujian Yada was established in the PRC on February 6, 2001 as a limited liability company. The then paid up capital of Renminbi (“RMB”) 30,000,000 was held as to 97% by Mr, Zhan and 3% by Madam Liufeng Zhou, Mr. Zhan’s spouse respectively and was transferred to Misaky on May 26, 2010 as stated in Note 2(iv). On August 26, 2010, Fujian Yada increased its paid up capital to RMB118,000,000. The principal activities of Fujian Yada are production and marketing of fresh and processed produce, including bamboos, bamboo shoots, cucumber, corn, mushrooms and other agricultural products.
	(v)	Fujian Yaxin Food Co., Ltd. (“Yaxin”) was established in the PRC on April 2, 2007 as a limited liability company. Before the acquisition by the Fujian Yada as stated in Note 2(i), the paid up capital of RMB10,000,000 was wholly held by Mr. Zhan. The principal activities of Yaxin are production and marketing of fresh and processed produce, including bamboos, bamboo shoots, cucumber, corn, mushrooms and other agricultural products.
	(vi)	Fujian Shengda Import & Export Trading Co., Ltd. (“Shengda”) was established in the PRC on June 5, 2007 as a limited liability company. Before the acquisition by the Fujian Yada as stated in Note 2(ii), the paid up capital of RMB5,000,000 was held as to 90% by Mr. Zhan and 10% by Madam Liufeng Zhou, Mr. Zhan’s spouse. The principal activity of Shengda is trading of the Company’s agricultural products to oversea customers.
	(vii)	Fujian Xinda Food Co., Ltd. (“Xinda”) was established in the PRC on February 5, 2005 as a limited liability company. Before the acquisition by the Company as stated in Note 2(iii), the paid up capital of RMB5,000,000 was held as to 30% by Mr. Zhan and 70% by Madam Liufeng Zhou, Mr. Zhan’s spouse. The principal activities of Xinda are production and marketing of bamboo shoots.

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	(viii)	Shanghai Yada Green Food Co., Ltd. (“Shanghai Yada”) was established in the PRC on September 15, 2010 as a limited liability company with registered and paid up capital of RMB2,000,000 and is a wholly owned subsidiary of Fujian Yada. The principal activities of Shanghai Yada are trading and marketing of food products.
	(ix)	Fuzhou Yada Green Food Co., Ltd. (“Fuzhou Yada”) was established in the PRC on October 15, 2010 as a limited liability company with registered and paid up capital of RMB1,000,000 and is a wholly owned subsidiary of Fujian Yada. The principal activities of Fuzhou Yada are trading and marketing of food products.
	(x)	Shixing Yada Forestry Development Co., Ltd. (“Shixing Yada”) was established in the PRC on November 26, 2010 as a limited liability company with registered and paid up capital of RMB3,000,000 and is wholly owned subsidiary of Fujian Yada. The principal activities of Shixing Yada are production and marketing of bamboo related products.
	(xi)	Yudu Yada Forestry Co., Ltd. (“Yudu Yada”) was established in the PRC on November 10, 2010 as a limited liability company with registered and paid up capital of RMB3,000,000 and is wholly owned subsidiary of Fujian Yada. The principal activities of Yudu Yada are production and marketing of bamboo related products.
	(xii)	Jianyang Yaxin Agriculture and Forestry Development Co., Ltd. (“Jianyang Yaxin”) was established in the PRC on October 12, 2010 as a limited liability company with registered and paid up capital of RMB2,000,000 and is wholly owned subsidiary of Fujian Yaxin. The principal activities of Jiantyang Yaxin are production and marketing of fresh and processed produce, including bamboos, bamboo shoots, cucumber, corn, mushrooms and other agricultural products.

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2.	Reorganization
	To rationalize the group structure, the Company, Fujian Yada, Yaxin, Shengda and Xinda reorganized their group structure (the “Reorganization”) as follows :-
	(i)	Fujian Yada entered into two separate agreements with Mr. Zhan to acquire Mr. Zhan’s 90% and 10% equity interest in Yaxin on April 10, 2008 and October 26, 2009 respectively at cash considerations of RMB9,000,000 (equivalent to $1,320,300) and RMB1,000,000 (equivalent to $146,700) respectively, equivalent to the paid up capital of Yaxin.
	(ii)	Fujian Yada entered into two separate agreements with Mr. Zhan and his spouse, Madam Liufeng Zhou to acquire their 100% equity interest in Shengda on April 8, 2008 and October 26, 2009 respectively at cash considerations of RMB4,500,000 (equivalent to $660,150) and RMB500,000 (equivalent to $73,350), equivalent to the paid up capital of Shengda.
	(iii)	On March 23, 2008, Fujian Yada entered into an agreement with Mr. Zhan and his spouse, Madam Liufeng Zhou to acquire their 95% equity interest of Xinda at a cash consideration of RMB475,000 (equivalent to $69,683), equivalent to the then Xinda’s 95% paid up capital of RMB500,000. On October 26, 2009, the Company acquired their remaining 5% equity interest of Xinda at a cash consideration of RMB250,000 (equivalent to $36,675), equivalent to the then Xinda’s 5% paid up capital of RMB5,000,000.
	(iv)	On April 13, 2010, Mr. Zhan and Madam Liufeng Zhou, Mr. Zhan’s spouse, entered into an agreement with Misaky, a limited liability company incorporated in Hong Kong, pursuant to which Misaky agreed to acquire their 100% equity interest in the Fujian Yada at a cash consideration of RMB31,157,000.
	(v)	On July 2, 2010, the shareholder of Misaky, Mr. Cai, entered into an agreement with Sino Oriental, pursuant to which Sino Oriental agreed to acquire 100% equity interest in Misaky at a cash consideration of HK$3,001, equivalent to the issued and paid up share capital of Misaky.
	(vi)	On August 20, 2010, the Company entered into a share exchange agreement with the shareholders of Sino Oriental to acquire their 100% of the issued and outstanding common shares in Sino Oriental by issuance of 29,214,043 shares of the Company’s common stock with par value of $0.001 each (as adjusted for the Forward Stock Split). On the same date, the Company entered into a share cancellation agreement with Mr. Yang, the shareholder of the Company, pursuant to which Mr. Yang agreed to surrender for cancellation of 9,738,180 shares (as adjusted for the Forward Stock Split) of the Company’s outstanding common stock. On the same date, Mr. Zhan was appointed as a director of the Company and entered into an option agreement with Mr. Cai pursuant to which Mr. Zhan has an option to purchase all the equity interest in the Company held by Mr. Cai at a consideration of $84,981,327 at any time during the two years period commencing on the 180th day following the signing day of this option agreement.
	The aggregate cash consideration of $2,306,858 paid to Mr. Zhan and his spouse, Madam Liufeng Zhou stated in Notes 2 (i), (ii) and (iii) was recorded as deemed distributions of $2,050,133 in 2008 and $256,725 in 2009 in connection of the transactions. Upon the completion of Reorganization on August 20, 2010, Fujian Yada, Yaxin, Shengda and Xinda became the wholly owned subsidiaries of the Company.

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3.	Summary of significant accounting policies

Basis of consolidation and presentation

Before and immediately after the completion of Reorganization, the Company, Misaky, Sino Oriental, Fujian Yada, Yaxin, Shengda and Xinda are under the common control of Mr. Zhan and his spouse, Madam Liufeng Zhou. Accordingly, accounting for recapitalization is adopted for the preparation of condensed consolidated financial statements to present the combined results of operations and financial position of the Company, Misaky, Sino Oriental, Fujian Yada, Yaxin, Shengda and Xinda as if the current group structure, which means that Misaky, Sino Oriental, Fujian Yada, Yaxin, Shengda and Xinda are wholly owned subsidiaries of the Company, had been in existence at the beginning of the reporting period. The 29,214,043 shares (as adjusted for the Forward Stock Split) of the Company’s common stock issued for RTO are deemed the opening common stock since January 1, 2009 to reflect the recapitalization.

The accompanying unaudited condensed consolidated financial statements of the Company and its subsidiaries have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission (the “SEC”) including the instructions to Form 10-Q and Regulation S-X. Certain information and note disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted from these statements pursuant to such rules and regulation and, accordingly, they do not include all the information and notes necessary for comprehensive consolidated financial statements and should be read in conjunction with the audited consolidated financial statements for the year ended December 31, 2010.

The condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”).

The condensed consolidated financial statements include the financial statements of the Company and its subsidiaries. All significant inter-company balances and transactions have been eliminated in consolidation.

Concentration of credit risk

Financial instruments that potentially subject the Company to significant concentration of credit risk consist principally of cash and cash equivalents, restricted cash, trade receivables and other receivables, prepayment and deposits. As of June 30, 2011 and December 31, 2010, substantially all of the Company’s cash and cash equivalents and restricted cash were held by major financial institutions located in the PRC, which the management believes are of high credit quality. With respect to trade receivables, the Company extends credit based on an evaluation of the customer’s financial condition. The Company generally does not require collateral for trade receivables and maintains an allowance for doubtful accounts of trade receivables.

As of June 30, 2011 and December 31, 2010, the Company did not have any balance of gross trade receivables due from individual customer that represented 10% or more of the Company’s gross trade receivables.

During the six months period ended June 30, 2011 and 2010, the Company did not have sales to any individual customer that represented 10% or more of the Company’s consolidated sales.

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Fair value of financial instruments

The Company adopted ASC 820 (previously Statement of Financial Accounting Standards (“SFAS”) No. 157) on January 1, 2008. The adoption of ASC 820 did not materially impact the Company’s financial position, results of operations or cash flows.

ASC 820 requires the disclosure of the estimated fair value of financial instruments including those financial instruments for which fair value option was not elected. The carrying amounts of the financial assets and liabilities approximate to their fair values due to short maturities or the applicable interest rates approximate the current market rates.

The fair values of secured borrowings are estimated using discounted cash flow analyses, based on the Company’s current incremental borrowing rates for similar types of borrowing arrangements.

Derivative financial instruments

The Company accounts for derivative financial instruments in accordance with the Topic ASC 815 “Derivatives and Hedging”. The topic requires the Company to recognize the value of derivative instruments as either assets or liabilities in the condensed consolidated balance sheets at fair value. The accounting for changes in the fair value (i.e., gains or losses) of a derivative instrument depends on whether it has been designated as a hedge and qualifies as part of a hedging relationship.

The Company enters into foreign currency forward exchange contracts (“forward exchange contracts”) to manage its exposure to the foreign currency exchange risk related to the trade receivable denominated in Japanese Yen (“JPY”). The Company does not enter into forward exchange contracts for trading or speculative purposes. In accordance with US GAAP, the forward exchange contracts are considered as “derivatives not designated as hedging instruments”. Therefore, the foreign exchange contracts are recorded at fair value, with the gain or loss on these transactions recorded in the condensed consolidated statements of income and comprehensive income within “other (loss) income - net” in the period in which they occur. As of June 30, 2011 and December 31, 2010, the Company had outstanding forward exchange contracts to sell totaling JPY687,126,090 and JPY667,000,000 respectively with maturities of less than one year.

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Fair value measurements

When determining the fair value measurements for assets and liabilities required or permitted to be recorded at fair value, the Company considers the principal or most advantageous market in which it would transact and considers assumptions that market participants would use when pricing the asset or liability, such as inherent risk, transfer restrictions, and risk of nonperformance. The Company uses the following three levels of inputs in determining the fair value of the Company’s assets and liabilities, focusing on the most observable inputs when available :-

	Level 1	- Quoted prices in active markets for identical assets or liabilities.
	Level 2	- Observable inputs other than quoted prices in active markets for identical assets or liabilities.
	Level 3	- Unobservable inputs to the valuation methodology that are significant to the measurement of fair value of assets or liabilities.

To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the level in the fair value hierarchy within which the fair value measurement is disclosed is determined based on the lowest level input that is significant to the fair value measurement.

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The following items recorded or measured at fair value on a recurring basis in the accompanying condensed consolidated financial statements were based on the use of Level 2 inputs as of June 30, 2011 and December 31, 2010 :-

The Company estimates the fair value of forward exchange contracts on a quarterly basis by obtaining market quotes of spot and forward rates for contracts with similar terms, adjusted where necessary for maturity differences. There were no changes in valuation techniques during the six months period ended June 30, 2011 and 2010.

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Recently issued accounting pronouncements

In July 2010, the FASB issued ASU 2010-20 “Receivables (Topic 310): Disclosures about the Credit Quality of Financing Receivables and the Allowance for Credit Losses”. The objective of ASU 2010-20 is to provide financial statement users with greater transparency about an entity’s allowance for credit losses and the credit quality of its financing receivables. Under ASU 2010-20, an entity is required to provide disclosures so that financial statement users can evaluate the nature of the credit risk inherent in the entity’s portfolio of financing receivables, how that risk is analyzed and assessed to arrive at the allowance for credit losses, and the changes and reasons for those changes in the allowance for credit losses. ASU 2010-20 is applicable to all entities, both public and non-public and is effective for interim and annual reporting periods ending on or after December 15, 2010. Comparative disclosure for earlier reporting periods that ended before initial adoption is encouraged but not required. However, comparative disclosures are required to be disclosed for those reporting periods ending after initial adoption. The adoption of this ASU update has no material impact on the Company’s financial statements.

The FASB issued Accounting Standards Update (ASU) No. 2011-01, “Receivables (Topic 310): Deferral of the Effective Date of Disclosures about Troubled Debt Restructurings in Update No. 2010-20”. The amendments in this Update temporarily delay the effective date of the disclosure about troubled debt restructurings in ASU 2010-20 for public entities. The delay is intended to allow the Board time to complete its deliberations on what constitutes a troubled debt restructuring. The effective date of the new disclosures about troubled debt restructuring for public entities and the guidance for determining what constitutes a troubled debt restructuring will then be coordinated. Currently, that guidance is anticipated to be effective for interim and annual periods ending after June 15, 2011. The adoption of this ASU update has no material impact on the Company’s financial statements.

The FASB issued ASU 2011-02, “Receivables (Topic 310): A Creditor’s Determination of Whether a Restructuring is a Troubled Debt Restructuring”. The amendments to Topic 310 clarify the guidance on a creditor’s evaluation of whether a debtor is experiencing financial difficulties. A creditor should evaluate whether it is probable that the debtor would be in payment default on any of its debts in foreseeable future without the modification. In addition, the amendments to Topic 310 clarify that a creditor is precluded from using the effective interest rate test in the debtor’s guidance on restructuring of payables (paragraph 470-60-55-10) when evaluating whether a restructuring constitutes a troubled debt restructuring. An entity should disclose the total amount of receivables and the allowance for credit losses as of the end of the period of adoption related to those receivables that are newly considered impaired under Section 310-10-35 for which impairment was previously measured under Subtopic 450-20, Contingencies – Loss Contingencies. The adoption of this ASU update has no material impact on the Company’s financial statements.

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Recently issued accounting pronouncements (cont’d)

In April 2011, the FASB issued ASU 2011-03, “Transfers and Servicing (Topic 860): Reconsideration of Effective Control for Repurchase Agreements”. The amendments in this ASU update remove from the assessment of effective control (1) the criterion requiring the transferor to have the ability to repurchase or redeem the financial assets on substantially the agreed terms, even in the event of default by the transferee, and (2) the collateral maintance implementation guidance related to that criterion. The guidance in this ASU update is effective for the first interim or annual period beginning on or after December 15, 2011. The guidance should be applied prospectively to transactions or modifications of existing transactions that occur on or after the effective date. Early adoption is not permitted. The adoption of this ASU update has no material impact on the Company’s financial statements.

In May 2011, the FASB issued ASU 2011-04, “Fair Value Measurement (Topic 820): Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs”. The FASB and the International Accounting Standard Board (IASB) works together to ensure that fair value has the same meaning in U.S. GAAP and IFRSs and that their respective fair value measurement and disclosure requirements are the same (except for minor differences in wording and style). The Boards concluded that the amendments in this ASU update will improve the comparability of fair value measurements presented and disclosed in financial statements prepared in accordance with U.S. GAAP and IFRSs. The amendments in this ASU update explain how to measure fair value. They do not require additional fair value measurements and are not intended to establish valuation standards or affect valuation practices outside of financial reporting. The amendments in this ASU update are to be applied prospectively. For public entities, the amendments are effective during interim and annual periods beginning after December 15, 2011. Early application by public entities is not permitted. The management is assessing the impact of this ASU update on the Company’s financial statements.

In June 2011, the FASB issued ASU 2011-05, “Comprehensive Income (Topic 220): Presentation of Comprehensive Income”. In this ASU updated, the entity has the option to present the total of comprehensive income, the components of net income, and the components of other comprehensive income either in a single continuous statement of comprehensive income or in two separate but consecutive statements. In both choices, an entity is required to present each component of net income along with total net income, each component of other comprehensive income along with a total for other comprehensive income, and a total amount for comprehensive income. This Update eliminates the option to present the components of other comprehensive income as part of the statement of changes in stockholders' equity. The amendments in this ASU update do not change the items that must be reported in other comprehensive income or when an item of other comprehensive income must be reclassified to net income. The amendments in this ASU update are to be applied retrospectively. For public entities, the amendments are effective for fiscal years, and interim periods within those years, beginning after December 15, 2011. Early application by public entities is permitted. The management is assessing the impact of this ASU update on the Company’s financial statements.

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4.	Restricted cash, bills payable and trade payables
	Restricted cash as of June 30, 2011 and December 31, 2010 consist of the following :-
				June 30,			December 31,
				2011			2010
				(Unaudited)			(Audited)
	Bank deposits held as collateral for forward exchange contracts - Note (a)		$	890,763		$	678,765
	Bank deposits held as collateral for bills payable - Note (b)			-			263,158
			$	890,763		$	941,923

	(a)	When the Company enters into forward exchange contracts with the bank, it is required to place deposits with reference to the nominal amount. These deposits will be used to settle loss on the forward exchange contracts or return to the Company at the earlier of maturity date or exercise date.
	(b)	When the Company intends or is requested to settle its suppliers by issuance of bills, it is required to place deposits with banks equal to 30% - 40% of the bills amount at the time of issuance. The bills payable was guaranteed by third parties and secured by certain property, plant and equipment of the Company included in Note 15 (c) (i). These deposits will be used to settle the bills at maturity.
	(c)	Trade payables represent trade creditors on open account. They are interest-free and unsecured. The normal credit term given by these suppliers to the Company ranges from one to three months.

5.	Trade receivables, net
				June 30,			December 31,
				2011			2010
				(Unaudited)			(Audited)
	Trade receivables		$	20,409,027		$	20,932,240
	Less : Allowance for doubtful accounts			(138,838	)		(59,620	)
			$	20,270,189		$	20,872,620

Trade receivables with carrying value of $2,315,834 and $719,318 as of June 30, 2011 and December 31, 2010 was pledged as collateral under certain loan agreements (see Note 15) respectively.

Provision for (reversal of) doubtful debts of $76,721 and $(163,760) were charged to operations during the six months ended June 30, 2011 and 2010 respectively. During the three months ended June 30, 2011 and 2010, provision for (reversal of) doubtful debts amounted to $14,311 and $(12,958) respectively.

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6.	Other receivables, prepayments and deposits

			June 30,			December 31,
			2011			2010
			(Unaudited)			(Audited)
	Prepayments*	$	3,544,609		$	2,536,078
	Deposits		864,155			896,657
	Derivative financial assets - forward exchange contracts  - Note 3		2,338			1,089
	Other receivables		476,711			582,056
		$	4,887,813		$	4,015,880

* Represents primarily prepayment for the production of fresh produce which are expected to be recorded as cost of sales upon harvest within one year.

7.	Inventories

			June 30,			December 31,
			2011			2010
			(Unaudited)			(Audited)
	Raw materials and packaging materials	$	366,942		$	38,027
	Bamboo and other growing crops		20,497,658			11,695,082
	Finished goods		5,680,272			3,386,417
			26,544,872			15,119,526
	Less: Provision for obsolete inventories		(34,238	)		(10,424	)
		$	26,510,634		$	15,109,102

As of June 30, 2011 and December 31, 2010, the inventories with carrying amount of $888,389 and $746,728 were pledged as collateral under certain loan agreements (see Note 15).

Provision for (Reversal of) obsolete inventories of $23,555 and $(178,766) were charged to operations during the six months ended June 30, 2011 and 2010 respectively. During the three months ended June 30, 2011 and 2010, provision for obsolete inventories amounted to $16,643 and $37,552 respectively.

8.	Income taxes

United States

Asia Green Agriculture Corporation is subject to the United States of America Tax law at tax rate of 34%. No provision for the US federal income taxes has been made as the Company had no taxable income in this jurisdiction for the reporting period.

BVI

Sino Oriental is incorporated in the BVI and, under the current laws of the BVI, are not subject to income taxes.

Hong Kong

Misaky is incorporated in Hong Kong and subject to profit tax rate of 16.5% on the assessable profits during the years. No provision for Hong Kong profit tax has been made on Misaky as Misaky had no taxable income in this jurisdiction for the reporting period.

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8.	Income taxes (Cont'd)

PRC

Pursuant to the new PRC’s enterprise income tax (“EIT”) law, Fujian Yada, Yaxin, Xinda, Shengda, Shanghai Yada, Fuzhou Yada, Shixing Yada, Yudu Yada and Jiangyang Yaxin are subject to EIT at the statutory rate of 25%. In addition, the Company’s profits generated from its fresh produce and certain processed produce, which have been qualified as agriculture product under the EIT law, are exempted from EIT.

In July 2006, the FASB issued ASC 740-10-25 (previously Interpretation No. 48, “Accounting for Uncertainty in Income Taxes”). This interpretation requires recognition and measurement of uncertain income tax positions using a “more-likely-than-not” approach. The Company adopted this ASC 740-10-25 on January 1, 2007. Under the new CIT Law which became effective on January 1, 2008, the Company may be deemed to be a resident enterprise by the PRC tax authorities. If the Company was deemed to be resident enterprise, the Company may be subject to the CIT at 25% on the worldwide taxable income and dividends paid from PRC subsidiaries to their overseas holding companies may be exempted from 10% PRC withholding tax. Except for certain immaterial interest income from bank deposits placed with financial institutions outside the PRC, all of the Company’s income is generated from the PRC operation. Given the immaterial amount of income generated from outside the PRC and the PRC subsidiaries do not intend to pay dividends for the foreseeable future, the management considers that the impact arising from resident enterprise on the Company’s financial position is not significant. The management evaluated the Company’s overall tax positions and considered that no provision for uncertainty in income taxes is necessary as of June 30, 2011.

9.	Net finance costs

Details of finance costs are summarized as follows :-

10.	Earnings per share

During the reporting periods, potential dilutive shares are excluded from the computation of earnings per share if their effect is anti-dilutive. 1,359,113 anti-dilutive warrants and 3,093,258 share options (as adjusted for the Forward Stock Split) were excluded from the calculation of earnings per share for three and six months period ended June 30, 2011. Accordingly, the basic and diluted earnings per share are the same.

The per share data reflects the reorganization of stockholders’ equity as if the Reorganization occurred as of the beginning of the first period presented and has been adjusted to reflect the Forward Stock Split effected on January 18, 2011.

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11.	Property, plant and equipment, net

(i) During the reporting periods, depreciation charge is included in :-

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As of June 30, 2011 and December 31, 2010, buildings and plant and machinery with carrying amount of $8,416,977 and $8,521,316 were pledged as collateral under certain loan and bills payable arrangements, respectively (Note 15).

During the six months ended June 30, 2011, there was no disposal of fixed assets. During the six months ended June 30, 2010, property, plant and equipment with net book value of $185,961 were disposed of at a consideration of $236,171, resulting in a gain of $50,210.

For the six months ended June 30, 2011 and 2010, the Company capitalized interest of Nil and $74,191 to the cost of property, plant and equipment. For the three months ended June 30, 2011 and 2010, the Company capitalized interest of Nil and $34,658 to the cost of property, plant and equipment, respectively.

(ii) Construction in progress :-

Construction in progress mainly comprises capital expenditure for construction of the Company’s new offices and factories.

12.	Land use rights
			June 30,			December 31,
			2011			2010
			(Unaudited)			(Audited)
	Land use rights
	- for office premises, production facilities and warehouse	$	2,147,491		$	2,099,461
	- for growing and plantation		15,092,402			15,329,432
	Accumulated amortization		(547,572	)		(221,744	)
		$	16,692,321		$	17,207,149

The Company obtained the land use rights from the relevant PRC land authorities for a period of fifty years to use the lands on which the office premises, production facilities and warehouse of the Company are situated. As of June 30, 2011 and December 2010, land use rights with carrying amounts of $723,134 and $714,963 were pledged as collateral under certain loan arrangements (Note 15).

On the other hand, the Company obtained several land use rights from the relevant PRC local rural village cooperatives for period ranged from twenty to thirty years to use the lands for growing and plantation purpose for producing the Company’s fresh produce.

During the six months ended June 30, 2011 and 2010, amortization amounted to $317,366 and $7,849 respectively. During the three months ended June 30, 2011 and 2010, amortization amounted to $153,756 and $3,933 respectively. The estimated amortization expense for each of the five succeeding years is approximately $223,000 each year.

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13.	Other payables and accrued expenses
				June 30,			December 31,
				2011			2010
				(Unaudited)			(Audited)
	Payables for acquisition of land use rights for growing and plantation purpose		$	-		$	4,048,813
	Withholding tax payable - Note 13(b)			618,800			604,960
	Pension payable - Note 13(a)			682,037			538,427
	Derivative financial liabilities - forward exchange contracts - Note 3			683,655			696,530
	VAT payable			1,255,061			1,127,599
	Salaries payable			182,976			191,434
	Accrued audit fee			107,517			128,554
	Liquidated damage payable - Note 20			443,686			177,507
	Other payables			730,669			567,752
			$	4,704,401		$	8,081,576

	(a)	Pension payable represents accrued staff medical, industry injury claims, labor and unemployment insurances, all of which are third parties insurance and the insurance premiums are based on certain percentage of salaries. The obligations of the Company are limited to those premiums contributed by the Company.
	(b)	On March 21, 2009, Yada declared a dividend of RMB20,000,000, of which RMB16,000,000 (equivalent to $2,347,200 as of March 21, 2009) was transferred to amounts due to related parties in accordance with a loan agreement entered into between Mr. Zhan, Madam Liufeng Zhou, Mr. Zhan’s spouse, and the Company. The remaining balance of RMB4,000,000 (equivalent to $618,800 as of June 30, 2011), representing withholding tax payable on dividend declared in accordance with PRC Tax Law, was included in other payables and accrued expenses.

14.	Amounts due to related parties

The amounts represent amounts due to Mr. Zhan and Liufeng Zhou, Mr. Zhan’s spouse, and are interest-free, unsecured and repayable on demand.

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15.	Secured borrowings

Notes :-

(a) The weighted-average interest rate on short-term borrowings as of June 30, 2011 and December 31, 2010, were 6.74% and 5.41%, respectively.

(b) Long-term borrowings were repayable as follows :-

(c) The amount represents a loan from Financial Bureau, Songxi County of the PRC through an entrusted loan arrangement with a bank.

As of June 30, 2011, the Company’s banking facilities were composed of the following :-

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	The secured borrowings were secured by the following :-
	(i)	The Company’s assets with following carrying values :-
				June 30,			December 31,
				2011			2010
				(Unaudited)			(Audited)
		Property, plant and equipment (Note 11)	$	8,416,977		$	8,521,316
		Trade receivable (Note 5)		2,315,834			719,318
		Land use rights (Note 12)		723,134			714,963
		Inventories (Note 7)		888,389			746,728
			$	12,344,334		$	10,702,325

	(ii)	Guarantees executed by third parties;
	(iii)	Guarantees executed by Mr. Zhan and Liufeng Zhou, Mr. Zhan’s spouse; and
	(iv)	Guarantees executed by certain staff of the Company.

During the reporting periods, there was no covenant requirement under the banking facilities granted to the Company.

16.	Loans from third parties
				June 30,			December 31,
				2011			2010
				(Unaudited)			(Audited)
	Non-interest bearing		$	154,700		$	151,240
	All the loans from third parties are unsecured and repayable on demand or within one year.
17.	Defined contribution plan
	The Company has a defined contribution plan for all qualified employees in the PRC. The employer and its employees are each required to make contributions to the plan at the rates specified in the plan. The only obligation of the Company with respect to retirement scheme is to make the required contributions under the plan. No forfeited contribution is available to reduce the contribution payable in the future years. The defined contribution plan contributions were charged to the condensed consolidated statements of income and comprehensive income. The Company recorded defined contribution plan expenses of $158,569 and $104,870 for the six months ended June 30, 2011 and 2010 respectively.

18.	Statutory reserve
	In accordance with the relevant laws and regulations of PRC, it is required that not less than 10% of its net income (the percentage is upon approval from the board of directors’ meeting), after offsetting any prior years’ losses, for PRC tax reporting purpose to the statutory reserve.
	When the balance of such reserve reaches 50% of the registered capital, any further appropriation is optional. Upon approval from the board of directors of the Company, the statutory reserve can mainly be used to offset accumulated losses or increase capital.
19.	Make good escrow agreement

In connection with a private placement completed on August 20, 2010, Mr. Cai, the major shareholder of the Company, entered into a make good escrow agreement (the "Escrow Arrangement") with the investors under the private placement pursuant to which he agreed to place 4,848,525 shares (as adjusted for the Forward Stock Split) of our common stock (the “Make Good Share”) owned by him in an escrow account administrated by an escrow agent. In the event of the Company fail to achieve the earnings per share targets of 2010 and 2011, the escrow agent shall distribute the Make Good Share to the investors on a pro rate basis for any shortfall.

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For the purpose of the Escrow Arrangement, the earnings per share targets of 2010 and 2011 shall be determined by $18,176,145 and $27,264,218 divided by the total number of shares of common stock outstanding (as adjusted for the Forward Stock Split) immediately following the closing of the private placement respectively. As of December 31, 2010, the Company achieved the earnings per share target of 2010 and the Make Good Share will be released to Mr. Cai when the Company achieves earnings per share target of 2011.

Since Mr. Cai is only a major stockholder without taking any management position of the Company and the release or cancellation of Make Good Share is not contingent on continued employment of any management shareholders, in accordance with ASC 718-10-S99-2, the Company considered that the presumption of compensation in this Escrow Arrangement should be overcome and that no compensation charge should be recognized. The Escrow Arrangement should be recorded as an inducement to facilitate the private placement on behalf of the Company. Accordingly, the transaction shall be recorded as a reduction of proceeds from the private placement in an amount equal to the estimated fair value of the Make Good Share of $1,160,114 on August 20, 2010, the date of the Make Good Escrow Agreement and completion of the private placement, with corresponding credit to additional paid-in capital. The fair value of the Make Good Share was estimated, at the date of Make Good Escrow Agreement, by reference to the estimated placing price per share of the Company’s common stock in the private placement completed on August 20, 2010 and the probability of any shortfall in earnings per share targets of 2010 and 2011 estimated by the management.

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20.	Commitments and contingencies

Capital commitment

As of June 30, 2011, and December 31, 2010, the Company had capital commitments of $4,167,335 and 4,545,236, respectively, in relation to the construction of new building facility and cold storage facility.

Operating lease commitment

The Company leases certain land lease contracts under operating leases. The future minimum lease payments under non-cancelable operating leases are as follows at June 30, 2011 :-

Rental expense for operating leases amounted to $1,659,347 and $1,169,276 for the six months ended June 30, 2011 and 2010, respectively, have been recorded in cost of sales and inventories.

Rental expense for operating leases amounted to $829,785 and $591,303 for the three months ended June 30, 2011 and 2010, respectively, have been recorded in cost of sales and inventories.

Registration payment arrangement

On August 20, 2010, the Company completed a private placement of 4,848,525 shares (as adjusted for the Forward Stock Split) of common stock and warrants in order to purchase up to 969,717 shares (as adjusted for the Forward Stock Split) of common stock at an exercise price of $3.78 per share (as adjusted for the Forward Stock Split). In connection with the private placement, warrants to purchase up to 339,396 shares (as adjusted for the Forward Stock Split) of common stock at an exercise price of $3.78 per share (as adjusted for the Forward Stock Split) were issued to the Placement Agent.

Pursuant to the subscription agreement, the Company was required to file a registration statement (the “Registration Statement”) under the Securities Act of 1933, as amended, (i) registering for resale by the investors 4,848,525 shares (as adjustment for the Forward Stock Split) of common stock and warrants in order to purchase up to 969,717 shares (as adjustment for the Forward Stock Split) of common stock issued to the investors; and (ii) registering for resale for the Placement Agents for the warrants to purchase up to 339,396 shares (as adjustment for the Forward Stock Split) of common stock (all of the foregoing securities being collectively referred herein as the “Registrable Securities”). The Company agreed to use its best efforts to file the Registration Statement within 30 days from the closing date, dated August 20, 2010 (the “Closing Date”), (the “Registration Filing Date”) and to have the Registration Statement declared effective prior to the 150th day following the Closing Date (the “Registration Effective Date”).

In the event that (i) the Registration Statement has not been filed on or prior to the Registration Filing Date or declared effective by the SEC on or before the Registration Effective Date; and (ii) the Registrable Securities included in such Registration Statement are not saleable under Rule 144, the Company shall pay to each investor as liquidated damages, a cash payment equal to 0.5% per month of the aggregated amount invested by such investors in the private placement until the registration statement has been filed and/or declared effective, but the maximum amount of liquidated damages is capped at 6% on aggregated amount invested by such investors. In accordance with ASC 450 “Contingencies”, the Company records a liability in the condensed consolidated financial statements for these contingencies when a loss is known or considered probable and the amount can be reasonably estimated. In accordance with FASB ASC 825-20, if the Company determines a registration payment arrangement is probable and can be reasonably estimated, a liability should be recorded. The Registration Statement was declared effective on July 15, 2011 and the provision of liquidated damages was made in an amount of $443,651 as of June 30, 2011 with reference to the effective date of Registration Statement. Liquidated damage of $152,825 and $266,179 was recognized and allocated to administrative expenses for the three and six months ended June 30, 2011, respectively.

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21.	Share based compensation

The Company granted share options and warrants to employees, directors and consultants to reward for services.

Stock option plan

Under the stock option plan adopted by the Company in 2010, 3,093,258 share options with exercisable period of 10 years were granted to the management and employees of the Company on February 14, 2011 of which, 184,123 share options are vesting on March 18, 2011 with an exercise price of $3.94, 184,122 share options are vesting on March 18, 2012 with an exercise price equal to 125% of the market price of the Company’s common stock on that vesting date, 908,338 share options are vesting on February 14, 2012 and 1,816,675 share options are vesting in equal amounts on the first day of each quarter during a four years period commencing from February 15, 2012 with an exercise price of $4. All the share options granted are subject to the option holders continuing to be the management or employee of the Company before the respective vesting dates.

A summary of share option plan activity for the six months ended June 30, 2011 is presented as below:

(1)

No aggregate intrinsic value as the weighted average exercise price of options $4.13 is in excess of the estimate value of the Company’s common stock as of June 30, 2011.

The weighted average grant-date fair value of options granted during 2011 was $1.78 per share. Compensation expense of $1,313,409 arising from abovementioned share options granted was recognized and allocated $1,065,866 to administrative expenses and $247,543 to selling expenses for six months ended June 30, 2011.

The fair value of the above option awards was estimated on the date of grant using the Binomial Option Valuation Model together with the following assumptions.

As of June 30, 2011, there was unrecognized compensation cost of $4,183,411 related to the above non-vested share options which expected to be recognized over approximately 5 years.

Warrant

On February 10, 2011, the Company issued warrants to a service provider the warrant holder is entitled to purchase up to 50,000 shares of the Company’s common stock at a price of $4.00 per share in exchange for investor relation services provided to the Company. These warrants have exercisable period of 5 years commencing from February 10, 2011.

At the grant date, the fair value of warrants issued was approximately $2.04 each. Compensation expense of $101,907 arising from abovementioned warrants issued was recognized and allocated to administrative expenses for the six months ended June 30, 2011.

The fair value of the above warrants issued was estimated on the date of grant using the Binomial Option Valuation Model together with the following assumptions.

As of June 30, 2011, there was no unrecognized compensation cost related to the above warrants.

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22.	Segment information

The Company uses the “management approach” in determining reportable operating segments. The management approach considers the internal organization and reporting used by the Company’s chief operating decision maker for making operating decisions and assessing performance as the source for determining the Company’s reportable segments. Management, including the chief operating decision maker, reviews operating results solely by monthly fresh produce and processed produce and operating results of the Company and, as such, the Company has determined that the Company has two operating segments as defined by ASC 280, “Segments Reporting” (previously SFAS 131): Fresh produce and processed produce.

The accounting policies of the operating segments are the same as those described in the summary of significant accounting policies. The Company evaluates performance based on reportable operating segments’ gross profit. There is no inter-segment sales or transfers during the three and six months ended June 30, 2011 and 2010. Management does not track segment assets and, therefore, segment assets information is not presented.

A reconciliation is provided for unallocated amounts relating to corporate operations which is not included in the segment information.

All of the Company’s long-live assets are located in the PRC. Geographic information about the revenues, which are classified based on the customers, is set out as follows :-

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	During the reporting periods, no individual customer represented 10% or more of the Company’s consolidated revenue.
23.	Related party transactions
	Apart from the transactions as disclosed in notes 14 and 15 to the condensed consolidated financial statements, the Company had no other material transactions with its related parties during the six months ended June 30, 2011 and 2010.
24.	Subsequent events
	The Company evaluated all events or transactions that occurred after June 30, 2011 through the date the financial statements were issued and has determined that there is no material recognizable nor subsequent events or transactions which would require recognition or disclosure in the condensed consolidated financial statements.

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Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

FORWARD-LOOKING STATEMENTS

Statements in the following discussion and throughout this report that are not historical in nature are “forward-looking statements”. You can identify forward-looking statements by the use of words such as “expect,” “anticipate,” “estimate,” “may,” “should,” “intend,” “believe,” and similar expressions. Although we believe the expectations reflected in these forward-looking statements are reasonable, such statements are inherently subject to risk and we can give no assurances that our expectations will prove to be correct. Actual results could differ from those described in this report because of numerous factors, many of which are beyond our control. These factors include, without limitation, those described under Item 1A “Risk Factors.” We undertake no obligation to update these forward-looking statements to reflect events or circumstances after the date of this report or to reflect actual outcomes. Please see “Special Note Regarding Forward Looking Statements” at the beginning of this report.

The following discussion of our financial condition and results of operations should be read in conjunction with our consolidated financial statements and the related notes and other financial information appearing elsewhere in this report.

OVERVIEW

We are a green and organic food company with headquarters in Fujian Province, China. We currently provide over 100 kinds of fresh and processed products in three principal categories, bamboo shoot products, fresh vegetables and fruit, and processed vegetables. Bamboo shoot products accounted for approximately 52% of our revenue in 2010 and 68% of our revenue in the first six months of 2011, while fresh vegetables and fruit accounted for approximately 28% and 17% of revenue, processed vegetables for 7% and 8% of revenue, and bamboo wood for 13% and 7% of revenue, respectively.

We have a vertically integrated operation consisting of planting, manufacturing and sales of final products. We can supply most of the fresh raw material for our products from our own land. We view our integrated operations as key to the quality of our products, as we monitor substantially all of our products from seed to ultimate sale. Accordingly, our ability to grow is dependent in part on the size of lands we control under lease, and our processing and storage capacity. We are currently experiencing rapid growth in our business and continually seek to procure additional lands for planting. We anticipate making capital expenditures over the next nine to twenty-one months to increase our cold storage capacity, increase production resources and establish new corporate offices.

We conduct our operations in China and sell products in 10 provinces and administrative regions in China as well as the Japanese market. We derived approximately 94% of our revenue in 2010 and in the first six months of 2011 in China and approximately 6% in Japan.

Agricultural products are naturally subject to seasonality tied to their local growing season. For example, our fresh bamboo shoots, an important revenue driver, are only available for sale from approximately December through April. As a result, our fourth and first quarter revenues tend to be significantly higher than our second and third quarter revenues. We seek to offset the impact of seasonality on our revenues by managing a diversified portfolio of products. In addition to product diversification, we use cold storage facilities to preserve some of our fresh products to extend their season and time market sales to improve gross margin. We also maintain research and development facilities which focus on the development of unique products which either have unique size or flavor characteristics or which have the potential to expand the market for products, such as our high PH bamboo shoots.

We believe that investments we made in physical facilities and planting bases in 2010 establish a strong foundation for growth during the remainder of 2011 and beyond. Our current growth strategy is currently centered on the following five initiatives:

• Expand our planting base.
• Improve our profitability by continuously introducing new high value added products.
• Further expand our domestic sales and distribution network and enter new markets.
• Increase our cold storage capacity.
• Further enhance our brand recognition.

The table below summarizes our planting bases as of December 31, 2010 and June 30, 2011.

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Overall, our gross margins for the six months ended June 30, 2011 were 33%, as compared to our gross margins of 30% for the six months ended June 30, 2010. Our gross margin increased because of sales of our higher gross margin bamboo wood made in the six months ended June 30, 2011 as compared to no sales of bamboo wood made in the six months ended June 30, 2010, and increased sales of our higher gross margin high PH bamboo shoots made in the six months ended June 30, 2011 when compared to the corresponding year ago period. Our high PH bamboo shoots maintain freshness and are generally sold in the "off season," when fresh bamboo shoots are not available. The season of fresh bamboo shoots is from December to April. Historically, we have generally sold bamboo wood in the second half of the year, and consistent with this practice made no sales of bamboo wood in the first quarter. Through our research and development initiatives we plan to introduce at least one or two new products per year with the potential capture higher gross margins and improve profitability.

We currently sell through distributors and members of our own sales force to farmers' markets, supermarkets, food manufacturers, restaurants and retailers in China. The following table shows the number of internal sales team members, outside sales agents and markets served at December 31, 2010 and June 30, 2011.

During the remainder of 2011, we plan to expand our sales network domestically, with our focus on the cities of Jinan, Nanjing, Beijing, Tianjin and Harbin. We have no immediate plans to expand our international sales presence beyond Japan.

We had a 6,000 metric ton cold storage facility as at June 30, 2011 for storing fresh and semi-finished products. We are adding an additional 5,500 metric ton cold storage facility in order to meet the requirements of our existing products and the anticipated need for storage as a result of our recent new product launches. As of June 30, 2011, the construction work was underway.

We have been gaining brand recognition in China, especially in Fujian Province. At June 30, 2011 we had expanded our sales to approximately 1,200 supermarket stores. We plan to further enhance our name recognition through establishing branded counters at supermarkets. We are also opening Yada-branded distribution locations. We have opened five locations and plan to continue opening additional centers in select locations in China.

RECENT DEVELOPMENTS

On August 20, 2010, we entered into an exchange agreement with Sino Oriental Agriculture Group Ltd. and the shareholders of Sino Oriental Agriculture Group Ltd, pursuant to which all of the shareholders of Sino Oriental Agriculture Group Ltd. transferred all of the issued and outstanding stock of Sino Oriental Agriculture Group Ltd. to us, and in exchange we issued to such shareholders 29,214,043 newly issued shares of our common stock. In connection with this exchange we acquired the business of Fujian Yada, our current operating subsidiary. The transaction was accounted for as a reverse merger.

Also on August 20, 2010 we closed the transactions under a securities purchase agreement dated July 23, 2010 with certain institutional investors, pursuant to which we sold 1,939,407 units of common stock and warrants for an aggregate purchase price of approximately $15.3 million. We used the proceeds of that offering to expand our physical facilities and to increase our planting bases.

Net sales for the first six months of 2011 were $46.5 million, an increase of approximately 42% over net sales in the first six months of 2010. Net income for the first six months of 2011 was $10.8 million, an increase of approximately 32%, compared to the six months ended June 30, 2010.

CRITICAL ACCOUNTING POLICIES

Cash and cash equivalents

Cash and cash equivalents include all cash, deposits in banks and other highly liquid investments with initial maturities of three months or less. As of June 30, 2011, almost all the cash and cash equivalents were denominated in RMB and were placed with banks in the PRC. They are not freely convertible into foreign currencies and the remittance of these funds out of the PRC is subject to exchange control restrictions imposed by the PRC government. The remaining insignificant balance of cash and cash equivalents were denominated in United States Dollars and Japanese Yen.

Restricted cash

Deposits in banks pledged as securities for bills payable and forward foreign currency exchange contracts are restricted cash. (See Note 4 to the Consolidated Financial Statements for a discussion of deposits that are classified as restricted cash under current assets).

Allowance for doubtful debts

We extend unsecured credit to certain customers ranging from one to three months in the normal course of business. We do not accrue interest on trade accounts receivable.

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We establish an allowance for doubtful accounts based on management's assessment of the collectibility of trade receivables. A considerable amount of judgment is required in assessing the amount of the allowance; we consider the historical level of credit losses and apply percentages to aged receivable categories. We make judgments about the creditworthiness of each customer based on ongoing credit evaluations, and monitor current economic trends that might impact the level of credit losses in the future. If the financial condition of our customers were to deteriorate, resulting in their inability to make payments, a larger allowance may be required.

Based on the above assessment, during the reporting periods, we established the general provisioning policy to make an allowance equivalent to 30% of gross amount of trade receivables due between one and two years and 100% of gross amount of accounts receivable due over 2 years. Additional specific provision is made against trade receivables whenever they are considered to be doubtful. Bad debts are written off when identified.

Historically, losses from uncollectible accounts have not significantly deviated from the general allowance estimated by us and no significant additional bad debts have been expensed. This general provisioning policy has not changed in the past since its establishment and the management considers the general provisioning policy adequate and does not expect to change this established policy in the near future.

Inventories

Inventories are stated at the lower of cost or market. Cost is computed using the weighted average cost method for finished goods, raw materials and packaging materials. Finished goods include fresh and processed produce while raw materials and packaging materials consist primarily of purchased fresh and processed produce and containers.

Expenditures on bamboo and other growing crops are valued at the lower of cost or market and are deferred and charged to cost of sales when the related produce is harvested and sold. The deferred growing costs included in inventories in the consolidated balance sheets consist primarily of land rental cost and service costs.

In assessing the ultimate realization of inventories, management makes judgments as to future demand requirements compared to current or committed inventory levels. Our reserve requirements generally increase or decrease with our projected demand requirements and market conditions. We estimate the demand requirements based on market conditions, forecasts prepared by our customers, sales contracts and orders in hand.

In addition, we estimate net realizable value based on intended use, current market value and inventory ageing analyses. We write down the inventories for estimated obsolescence or unmarketable inventory equal to the difference between the cost of inventories and the estimated market value based upon assumptions about future demand and market conditions.

Based on the above assessment, we established a general provision to make a 20% provision for inventories aged between one and two years and 100% provision for inventories aged over 2 years.

Property, plant and equipment

Property, plant and equipment are stated at cost less accumulated depreciation. Cost represents the purchase price of the asset and other costs incurred to bring the asset into its existing use.

Depreciation is provided on the straight-line basis (after taking into account the respective estimated residual values) over the estimated useful lives of property, plant and equipment. The principal useful lives and residual value are as follows:

Maintenance or repairs are charged to expense as incurred. Upon sale or disposition, the applicable amounts of asset cost and accumulated depreciation are removed from the accounts and the net amount less proceeds from disposal is charged or credited to income.

Construction in progress mainly represents expenditures in respect of our offices and factories under construction. All direct costs relating to the acquisition or construction of our offices and factories are capitalized as construction in progress. No depreciation is provided in respect of construction in progress.

Land use rights

Land use rights are stated at cost less accumulated amortization. Amortization is calculated using the straight-line method over the terms of the lease obtained from the relevant PRC land authority.

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Impairment of long-lived assets

Long-lived assets are tested for impairment in accordance with ASC 360-10-45 "Impairment or Disposal of Long-Lived Assets" (previously Statement of Financial Accounting Standards ("SFAS") No. 144). We periodically evaluate potential impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable. We recognize impairment of long-lived assets in the event that the net book values of such assets exceed the future undiscounted cash flows attributable to such assets. During the reporting periods, we have not identified any indicators that would require testing for impairment.

Capitalized interest

The interest cost associated with the major development and construction projects is capitalized and included in the cost of the project. When no debt is incurred specifically for a project, interest is capitalized on amounts expended on the project using weighted-average cost of our outstanding borrowings. Capitalization of interest ceases when the project is substantially complete or development activity is suspended for more than a brief period.

Revenue recognition

Revenue from sales of the Company’s products, including fresh produce and processed produce, is recognized upon customer acceptance, which occurs at the time of delivery to customer, provided persuasive evidence of an arrangement exists, such as signed sales contract, the significant risks and rewards of ownership have been transferred to the buyer at the time when the products are delivered to its customers with no significant post-delivery obligation on our part, the sales price is fixed or determinable and collection is reasonably assured. We do not provide our customers with contractual rights of return and post-delivery discount for any of our products, including fresh produce and processed produce. When any significant post-delivery performance obligation exists, revenue is recognized only after such obligation is fulfilled. We evaluate the terms of sales agreement with our customer for fresh produce and processed produce in order to determine whether any significant post-delivery performance obligations exist. Currently, the sales under fresh produce and processed produce segments do not include any terms which may impose any significant post-delivery performance obligations.

Revenue from sales of our product represents the invoiced value of goods, net of the value-added tax (“VAT”). Our processed produce products that are sold in the PRC are subject to VAT at a rate of 17 percent of the gross sales price. This VAT may be offset by VAT paid on raw materials, other materials or costs included in the cost of producing our processed produce products.

Government grants

Government grants are received for compensation of finance costs already incurred or for good performance and are recognized when the approval documents are obtained from the relevant government authorities.

For compensation of finance costs, we match and offset the government grants with the finance costs as specified in the grant approval document in the corresponding period when such expenses are incurred. Government grants received for good performance are recognized as income in the period they become recognizable.

Cost of sales

Cost of sales consists primarily of land rental cost and service costs, materials costs, purchasing and receiving costs, inspection costs, wages, employee compensation, depreciation and related costs, which are directly attributable to the cost of fresh and processed produce and production of products. Write-down of inventories to lower of cost or market is also recorded in cost of sales.

Administrative expenses

Administrative expenses consist primarily of office expenses, entertainment, traveling expenses, depreciation, audit fee, salaries and staff pension which are incurred at the administrative level and exchange difference.

Selling expenses

Selling expenses consist primarily of advertising, salaries and transportation costs incurred during the selling activities.

Income taxes

We use the asset and liability method of accounting for income taxes pursuant to ASC 740 "Income Taxes" (previously SFAS No. 109). Under the asset and liability method of ASC 740, deferred tax assets and liabilities are recognized for the future tax consequences attributable to temporary differences between the financial statements carrying amounts of existing assets and liabilities and loss carry forwards and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.

We file separate tax returns in the United States and China. Income taxes of our PRC operating subsidiaries are calculated in accordance with taxation principles currently effective in the PRC. For Asia Green Agriculture Corporation, applicable U.S. tax laws are followed. We expect that the tax rate of 25% currently applicable to our Fujian Yada operating subsidiary will remain unchanged in the remainder of 2011.

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In 2007, China passed the New EIT Law and its implementing rules, both of which became effective on January 1, 2008. The New EIT Law significantly curtails tax incentives granted to foreign-invested enterprises under the previous law. The New EIT Law, however, (i) reduces the statutory rate of enterprise income tax from 33% to 25%, (ii) permits companies to continue to enjoy their existing tax incentives, adjusted by certain transitional phase-out rules, and (iii) introduces new tax incentives, subject to various qualification criteria.

Substantially all of our income may be derived from dividends we receive from our PRC operating subsidiaries. The New EIT Law and its implementing rules generally provide that a 10% withholding tax applies to China-sourced income derived by non-resident enterprises for PRC enterprise income tax purposes. We expect that such 10% withholding tax will apply to dividends paid to us by our PRC subsidiaries but this treatment will depend on our status as a non-resident enterprise. For detailed discussion of PRC tax issues related to resident enterprise status, see "Risk Factors — Risks Associated with Doing Business in China — Under the New EIT Law, we may be classified as a 'resident enterprise' of China." Such classification will likely result in unfavorable tax consequences to us and our non-PRC stockholders.

Advertising, transportation, research and development expenses

Advertising, transportation, research and development expenses are charged to expense as incurred.

Dividends

Dividends are recorded in our financial statements in the period in which they are declared.

Comprehensive income

We have adopted ASC 220, "Comprehensive Income" (previously SFAS No. 130), which establishes standards for reporting and display of comprehensive income, its components and accumulated balances. Components of comprehensive income include net income and foreign currency translation adjustments.

Foreign currency translation

Our functional currency is the RMB and RMB is not freely convertible into foreign currencies. We maintain our financial statements in our functional currency. Monetary assets and liabilities denominated in currencies other than the functional currency are translated into the functional currency at rates of exchange prevailing at the balance sheet date. Transactions denominated in currencies other than the functional currency are translated into the functional currency at the exchanges rates prevailing at the dates of the transaction. Exchange gains or losses arising from foreign currency transactions are included in the determination of net income for the respective periods.

For financial reporting purposes, our financial statements that are prepared using the functional currency have been translated into United States dollars. Assets and liabilities are translated at the exchange rates at the balance sheet dates and revenue and expenses are translated at the average exchange rates and stockholder's equity is translated at historical exchange rates. Any translation adjustments resulting are not included in determining net income but are included in foreign exchange adjustment to other comprehensive income, a component of stockholders' equity.

Derivative financial instruments

We account for derivative financial instruments in accordance with the Topic ASC 815 "Derivatives and Hedging". The topic requires us to recognize the value of derivative instruments as either assets or liabilities in the consolidated balance sheets at fair value. The accounting for changes in the fair value (i.e., gains or losses) of a derivative instrument depends on whether it has been designated as a hedge and qualifies as part of a hedging relationship.

We enter into foreign currency forward exchange contracts ("forward exchange contracts") to manage its exposure to the foreign currency exchange risk related to the trade receivables denominated in Japanese Yen. We do not enter into forward exchange contracts for trading or speculative purposes. In accordance with US GAAP, the forward exchange contracts are considered as "derivatives not designated as hedging instruments". Therefore, the forward exchange contracts are recorded at fair value, with the gain or loss on these transactions recorded in the consolidated statements of income within "other net income (loss)" in the period in which they occur.

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RESULTS OF OPERATIONS

Three Months Ended June 30, 2011 Compared to Three Months Ended June 30, 2010

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

(All amounts, other than percentage, in thousands of US dollars)
		For the three months						For the three months
Item		ended						ended
		June 30, 2011						June 30, 2010
(Unaudited)		(As reported)						(As reported)
		In			As a			In			As a
		Thousands			Percentage			Thousands			Percentage
					of						of
					Net Sales						Net Sales
Net sales	$	20,554			100	%	$	9,996			100	%
Cost of sales		(13,224	)		(64	)%		(7,135	)		(71	)%
Gross profit		7,330			36	%		2,861			29	%
Selling and administrative expenses		(2,210	)		(11	)%		(736	)		(7	)%
Operating income		5,120			25	%		2,125			21	%
Government grant income		-			-			14			-
Other income (loss) - net		(144	)		(1	)%		(84	)		(1	)%
Net finance costs		(161	)		(1	)%		(126	)		(1	)%
Income before income taxes		4,815			23	%		1,929			19	%
Income taxes		8			-			192			2	%
Net income		4,823			23	%		2,121			21	%

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 6.4927 to $1 for the three months ended June 30, 2011 and the rate of RMB 6.8152 to $1 for the three months ended June 30, 2010.

Net Sales. Our net sales consist of revenue derived from the sale of our food products, less discounts and returns. For the three months ended June 30, 2011, our net sales were $20.6 million compared to $10.0 million for the same period last year, an increase of $10.6 million or approximately 106%. The increase was primarily due to increased sales volume resulting from higher production capacity from our expanded planting bases. Of such increase, approximately $9.7 million was attributable to increased sales volume of our products and approximately $0.9 million due to higher average selling prices of our products.

Cost of Sales. Our cost of sales is primarily comprised of the costs of our raw materials, labor, overhead and sales tax. For the three months ended June 30, 2011 our cost of sales were $13.2 million compared to $7.1 million for the same period last year, an increase of $6.1 million or approximately 85%. This increase was primarily due to higher sales volume. As a percentage of net sales, our cost of sales decreased to approximately 64% for the three months ended June 30, 2011 from approximately 71% for the three months ended June 30, 2010.

Gross Profit and Gross Margin. Our gross profit is equal to our net revenues less our cost of sales. Our gross profit was $7.3 million for the three months ended June 30, 2011 compared to $2.9 million for the same period last year, an increase of $4.4 million or approximately 156 percent. Gross profit as a percentage of net sales was approximately 36% and 29% for the three months ended June 30, 2011 and 2010, respectively. Our gross margin increased primarily due to an increase in sales of higher margin products such as bamboo wood and high PH bamboo shoots. The gross margin of our high PH bamboo shoots was approximately 83% and 82% for the three months ended June 30, 2011 and 2010, respectively. The gross margins of our bamboo wood were approximately 76% in the second quarter of 2011, while no sales of bamboo wood were made in the corresponding period in 2010.

Selling and Administrative Expenses. Our selling and administrative expenses increased $1.5 million, or approximately 200%, to $2.2 million for the three months ended June 30, 2011 from $0.7 million for the three months ended June 30, 2010.

Our selling expenses include sales commissions, the cost of promotional materials, salaries and fringe benefits of sales personnel, transportation costs and other sales related costs. Our selling expenses increased to $0.6 million for the three months ended June 30, 2011, from $0.4 million for the three months ended June 30, 2010. As a percentage of net sales, selling expenses for the three months ended June 30, 2011 were approximately 3% of net sales, as compared to 4% for the three months ended June 30, 2010. The dollar increase of our selling expenses is primarily attributable to employee share options granted, and to a lesser extent to the increase in expenses associated with our sales expansion in Chinese domestic market.

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Our administrative expenses primarily include the costs associated with staff and support personnel who manage our business activities, office expense, professional fees paid to third parties, foreign exchange expense, and depreciation of non-production facilities. Our administrative expenses increased $1.3 million, or approximately 380%, to $1.6 million for the three months ended June 30, 2011 from $0.3 million for the three months ended June 30, 2011. The increase is mainly attributed to compensation expense of approximately $0.6 million arising from the grant of employee share options; an increase in salaries of approximately $0.3 million and bad debts expenses of approximately $0.3 million. As a percentage of net sales, administrative expenses increased to approximately 8% for the three months ended June 30, 2011 from 3% for the three months ended June 30, 2010.

Net Finance Costs. Our net finance costs increased to approximately $0.2 million for the three months ended June 30, 2011 from approximately $0.1 million for the three months ended June 30, 2010. The increase is mainly due to an increase in average bank loan balances.

Income Taxes. We had income tax credit of approximately $0 million for the three months ended June 30, 2011, as compared to approximately $0.2 million for the three months ended June 30, 2010. This slight decrease was primarily attributable to our decreased taxable loss for the three months ended June 30, 2011 as compared to the three months ended June 30, 2010.

Net Income. Our net income increased by $2.7 million or approximately 127%, to $4.8 million for the three months ended June 30, 2011. The main reasons for the growth of our net income were due to the changes in our other key components of our results of operations discussed above.

Six months Ended June 30, 2011 Compared to Six months Ended June 30, 2010

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

(All amounts, other than percentage, in thousands of US dollars)
		For the six months						For the six months
Item		ended						ended
		June 30, 2011						June 30, 2010
(Unaudited)		(As reported)						(As reported)
		In			As a			In			As a
		Thousands			Percentage			Thousands			Percentage
					of						of
					Net Sales						Net Sales
Net Sales	$	46,493			100%		$	32,651			100%
Cost of Sales		(31,274	)		(67%	)		(22,925	)		(70%	)
Gross profit		15,219			33%			9,726			30%
Selling and administrative expenses		(4,166	)		(9%	)		(1,205	)		(4%	)
Operating income		11,053			24%			8,521			26%
Government Grant Income		82			-			31			-
Other net income / (loss)		48			-			151			-
Net finance costs		(190	)		(1%	)		(363	)		(1%	)
Income before income taxes		10,993			23%			8,340			26%
Income tax (provision) credit		(169	)		-			(167	)		-
Net income		10,824			23%			8,173			25%

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 6.5313 to $1 for the six months ended June 30, 2011 and the rate of RMB 6.8171 to $1 for the six months ended June 30, 2010.

Net Sales. Our net sales consist of revenue derived from the sale of our food products, less discounts and returns. For the six months ended June 30, 2011, our net sales were $46.5 million compared to $32.7 million for the same period last year, an increase of $13.8 million or approximately 42%. The increase was primarily due to increased sales volume resulting from higher production capacity from our expanded planting bases. Of such increase, approximately $11.9 million was attributable to increased sales volume of our products, while approximately $1.9 million was due to higher average selling prices of our products.

Cost of Sales. Our cost of sales is primarily comprised of the costs of our raw materials, labor, overhead and sales tax. For the six months ended June 30, 2011 our cost of sales were $31.3 million compared to $22.9 million for the same period last year, an increase of $8.4 million or approximately 36%. This increase was primarily due to higher sales volume. As a percentage of net sales, our cost of sales decreased to approximately 67% for the six months ended June 30, 2011 from approximately 70% for the six months ended June 30, 2010.

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Gross Profit and Gross Margin. Our gross profit is equal to our net revenues less our cost of sales. Our gross profit was $15.2 million for the six months ended June 30, 2011 compared to $9.7 million for the same period last year, an increase of $5.5 million or approximately 56%. Gross profit as a percentage of net sales was approximately 33% and 30% for the six months ended June 30, 2011 and 2010, respectively. Our gross margin increased primarily due to an increase in sales of higher margin products such as bamboo wood and high PH bamboo shoots. The gross margin of our high PH bamboo shoots was approximately 82% and 82% for the six months ended June 30, 2011 and 2010, respectively. The gross margin of our bamboo wood was approximately 76% in the six months ended June 30, 2011, while no sales of bamboo wood were made in the corresponding period in 2010.

Selling and Administrative Expenses. Our selling and administrative expenses increased $3.0 million, or approximately 246%, to $4.2 million for the six months ended June 30, 2011 from $1.2 million for the six months ended June 30, 2010.

Our selling expenses include sales commissions, the cost of promotional materials, salaries and fringe benefits of sales personnel, transportation costs and other sales related costs. Our selling expenses increased to $1.0 million for the six months ended June 30, 2011, from $0.6 million for the six months ended June 30, 2010. As a percentage of net sales, selling expenses for the six months ended June 30, 2011 were approximately 2.2% of net sales, as compared to 1.8% for the six months ended June 30, 2010. Both the dollar and percentage increase of our selling expenses is primarily attributable to the increase in the expenses associated with our sales expansion in Chinese domestic market, and to a lesser extent to employee share options granted.

Our administrative expenses primarily include the costs associated with staff and support personnel who manage our business activities, office expense, professional fees paid to third parties, foreign exchange expense, and depreciation of non-production facilities. Our administrative expenses increased $2.5 million, or approximately 407%, to $3.1 million for the six months ended June 30, 2011 from $0.6 million for the six months ended June 30, 2011. The increase is mainly attributed to compensation expense of approximately $1.1 million arising from the grant of employee share options; an increase in salaries of approximately $0.5 million; bad debts expense of approximately $0.3 million; provision for liquidated damages of approximately $0.3 million to certain investors as discussed in Note 20 to our condensed consolidated financial statements filed herewith; professional fees of approximately $0.1 million paid to third-party service providers, including counsel, our investor relations firm and an independent appraisal firm; and compensation expense of approximately $0.1 million arising from the grant of warrants to an investor relations firm that we did not incur during the six months ended June 30, 2010. As a percentage of net sales, administrative expenses increased to approximately 6.8% for the six months ended June 30, 2011 from 1.9% for the six months ended June 30, 2010.

Net Finance Costs. Our net finance costs decreased to approximately $0.2 million for the six months ended June 30, 2011 from approximately $0.4 million for the six months ended June 30, 2010. The decrease is mainly due to government subsidies for agricultural producers for interest expenses set off in the amount of approximately $0.1 million. If such government subsidies decrease in the future, interest expense set off will also decrease and the results of our operations and cash flow may be adversely affected; however, we do not expect any such adverse effect to be significant.

Income Taxes. We had income taxes of $0.2 million for the six months ended June 30, 2011, as compared to $0.2 million for the six months ended June 30, 2010. This was primarily attributable to our similar level of taxable profit for the six months ended June 30, 2011 as compared to the six months ended June 30, 2010.

Net Income. Our net income increased by $2.6 million or approximately 32%, to $10.8 million for the six months ended June 30, 2011. The main reasons for the growth of our net income were due to the changes in our other key components of our results of operations discussed above.

Liquidity and Capital Resources

As of June 30, 2011, we had cash and cash equivalents of approximately $8.8 million, compared to approximately $10.0 million for December 31, 2010. Our accounts receivable at June 30, 2011 were $20.3 million, compared to $20.9 million at December 31, 2010. Our days’ sales outstanding decreased to 79 days as at June 30, 2011 from 106 days as at December 31, 2010. The decrease was primarily due to a higher proportion of our total revenue being derived from sales of fresh products, which generally have a shorter payment cycle during the three months ended June 30 2011 as compared to the three months ended 31 December 2010. We finished the second quarter with working capital of $61.7 million, compared to $51.3 million at December 31, 2010.

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

Cash Flow
(All amounts in thousands of U.S. dollars)
		Six months Ended						Year Ended
		June 30,						December 31
		(Unaudited)						(Audited)
		2011			2010			2010			2009
Net cash provided by (used in) operating activities	$	919		$	6,949		$	15,409		$	1,235
Net cash provided by (used in) investing activities		(3,296	)		(626	)		(15,299	)		(2,026	)
Net cash provided by (used in) financing activities		1,022			(3,253	)		9,043			1,129
Effect of exchange rate on cash and cash equivalents		150			14			414			--
Cash and cash equivalents at the beginning of the period		9,988			421			421			83
Cash and cash equivalents at the end of the period		8,783			3,506			9,988			421

Cash Flows from Operating Activities.

Net cash provided by operating activities was $0.9 million for six months ended June 30, 2011, compared to $6.9 million provided by operating activities for six months ended June 30, 2010. The change was primarily attributable to increase in inventories.

Our days' sales outstanding decreased to 79 days as at June 30, 2011 from 106 days as at December 31, 2010. The decrease was due to a higher proportion of our total revenue being derived from sales of fresh products, which generally have a shorter payment cycle than processed products.

Cash Flows from Investing Activities.

Net cash used in investing activities for the six months ended June 30, 2011 was $3.3 million compared to $0.6 million for the six months ended June 30, 2010. The increase of net cash used in investing activities was primarily attributable to payments on the outstanding balance due in relation to prior expansion of planting bases and production facilities. During the six months ended June 30, 2011 we invested $0.5 million to acquire property, plant and equipment and an additional $2.8 million in payments on the outstanding balance due in relation to previously acquired land use rights.

Cash Flows from Financing Activities.

Net cash provided by financing activities was $1.0 million in the six months ended June 30, 2011 compared to $3.3 million used in financing activities for the six months ended June 30, 2010. The increase in net cash provided by financing activities was mainly attributable to lower repayments to third parties and increased net proceeds from secured borrowings.

As of June 30, 2011 and December 31, 2010, the Company's banking facilities were composed of the following:

(All amounts, other than percentages, in thousands of U.S. dollars)
		June 30,			December 31,
		2011			2010
		(Unaudited)			(Audited)
Secured short-term borrowings	$	8,447		$	6,233
Current maturities of secured long-term borrowings		--			23
	$	8,447		$	6,256
Secured long-term borrowings
Interest bearing :
- at 14.4% per annum		--			23
		-			23
Less: current maturities		--			(23	)
	$	-		$	--

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We had the following financing arrangements as of June 30, 2011, including those with third parties:

• Fujian Shengda Food Co., Ltd entered into a Maximum Amount Mortgage Contract on March 19, 2009 with China Construction Bank Corporation Ltd Songxi Branch to provide a RMB4,130,000, or $618,615 mortgage to secure certain debts owed to China Construction Bank Corporation Ltd Songxi Branch by Fujian Shengda Food Development Co., Ltd.

• Fujian Shengda Food Co., Ltd entered into a Maximum Amount Mortgage Contract on February 27, 2009 with China Construction Bank Corporation Ltd Songxi Branch to provide a RMB15,160,000, or $2,270,753 mortgage to secure certain debts owed to China Construction Bank Corporation Ltd Songxi Branch by Fujian Shengda Food Development Co., Ltd.

• Fujian Shengda Food Co., Ltd. entered into a Maximum Amount Mortgage Contract on March, 2009 with China Construction Bank Corporation Ltd Songxi Branch to provide a RMB7,840,000, or $1,174,321 mortgage to secure certain debts owed to China Construction Bank Corporation Ltd Songxi Branch by Fujian Shengda Food Development Co., Ltd.

• Fujian Yada Group Co., Ltd. entered into a RMB Fund Loan Contract on November 26, 2010 to borrow from China Construction Bank Corporation Ltd Songxi Branch the amount of RMB8,000,000 or $1,209,921 for the purpose of capital turnover, and the annual interest rate of the loan shall be 10% higher than the benchmark interest rate announced by the People’s Bank of China as of the value date. The term of such RMB Fund Loan Contract shall be from November 26, 2010 to November 26, 2011. Proceeds of the loan may be used for permitted purposes only, otherwise a 100% penalty applies.

• Mr. Zhan Youdai and Ms. Zhou Liufeng entered into a Natural Person Guarantee Contract on November 26, 2010 with Songxi Sub-branch of Construction Bank of China Co., Ltd. to assume the several and joint guarantee liability for the loan under a RMB Fund Loan Contract between Fujian Yada Group Co., Ltd., an indirectly owned subsidiary of the Company, and Songxi Sub-branch of Construction Bank of China Co., Ltd. valued at RMB8,000,000, or $1,209,921.

• Fujian Yada Group Co., Ltd entered into a Mortgage Loan Agreement on February 16, 2010 to borrow from Songxi County rural Credit Cooperative Business Department the amount of RMB6,000,000, or $913,200 for purpose of processing raw materials of agricultural and sideline products, and the monthly interest of the loan shall be 0.793333%. The term of such Mortgage Loan Agreement shall be from February 16, 2010 to August 15, 2011. The loan shall be only used for purposes in accordance with the Mortgage Loan Agreement.

• Fujian Yada Group Co., Ltd. entered into a RMB Fund Loan Contract on February 16, 2011 to borrow from Songxi Sub-branch of Construction Bank of Co., Ltd the amount of RMB2,900,000, or $441,380 for purpose of capital turnover, and the annual interest rate of the loan shall be benchmark interest rate announced by the People’s Bank of China as of the value date. The term of such RMB Fund Loan Contract shall be from February 16, 2011 to February 16, 2012.

• Mr. Zhan Youdai and Ms. Zhou Liufeng entered into a Natural Person Guarantee Contract on February 15, 2011 with Songxi Sub-branch of Construction Bank of China Co., Ltd to assume the several and joint guarantee liability for the loan under a RMB Fund Loan Contract between Fujian Yada Group Co., Ltd, and indirectly owned subsidiary of the Company, and Songxi Sub-branch of Construction Bank of China Co., Ltd. valued at RMB2,900,000, or $441,380.

• Fujian Yada Group Co., Ltd. entered into a RMB Fund Loan Contract on February 16, 2011 to borrow from Songxi Sub-branch of Construction Bank of Co., Ltd the amount of RMB3,100,000, or $471,820 for purpose of capital turnover, and the annual interest rate of the loan shall be benchmark interest rate announced by the People’s Bank of China as of the value date. The term of such RMB Fund Loan Contract shall be from February 16, 2011 to February 16, 2012.

• Mr. Zhan Youdai and Ms. Zhou Liufeng entered into a Natural Person Guarantee Contract on February 15, 2011 with Songxi Sub-branch of Construction Bank of China Co., Ltd to assume the several and joint guarantee liability for the loan under a RMB Fund Loan Contract between Fujian Yada Group Co., Ltd, and indirectly owned subsidiary of the Company, and Songxi Sub-branch of Construction Bank of China Co., Ltd. valued at RMB3,100,000, or $471,820.

• Fujian Yada Group Co., Ltd. entered into a RMB Fund Loan Contract on March 2, 2011 to borrow from Songxi Sub-branch of Construction Bank of Co., Ltd the amount of RMB5,000,000, or $761,000 for purpose of capital turnover, and the annual interest rate of the loan shall be benchmark interest rate announced by the People’s Bank of China as of the value date. The term of such RMB Fund Loan Contract shall be from March 2, 2011 to February 2, 2012.

• Mr. Zhan Youdai and Ms. Zhou Liufeng entered into a Natural Person Guarantee Contract on March 2, 2011 with Songxi Sub-branch of Construction Bank of China Co., Ltd to assume the several and joint guarantee liability for the loan under a RMB Fund Loan Contract between Fujian Yada Group Co., Ltd, and indirectly owned subsidiary of the Company, and Songxi Sub-branch of Construction Bank of China Co., Ltd. valued at RMB5,000,000, or $761,000.

• Fujian Yada Group Co., Ltd and Industrial and Commercial Bank of China Limited Jianyang Sub-branch entered into a Maximum Amount Guarantee Contract on June 28, 2010 to guarantee a maximum of RMB20,000,000, or $3,044,001 for debts within the period from June 28, 2010 to June 27, 2011 owed to the Industrial and Commercial Bank of China Limited Jianyang Sub-branch by Fujian Yaxin Food Group Co., Ltd.

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• Fujian Yaxin Food Co., Ltd. entered into a Domestic Factoring Contract on January 31, 2011 to borrow from Industrial and Commercial Bank of China Limited Jianyang Sub-branch the amount of RMB2,600,000, or $395,720 for purpose of capital turnover, and the annual interest rate of the loan shall be benchmark interest rate announced by the People’s Bank of China as of the value date. The term of such Contract shall be from January 31, 2011 to the date when Fujian Yaxin Food Co., Ltd fulfills all the obligations under the Domestic Factoring Contract.

• Fujian Yaxin Food Co., Ltd. entered into a Small Business Loan Agreement on April 6, 2011 to borrow from Industrial and Commercial Bank of China Limited Jianyang Sub-branch the amount of RMB5,000,000, or $773,503 for purpose of purchasing financial resources and materials, and the annual interest rate of the loan shall be 6.941%. The term of the Agreement shall be from April 6, 2011 to April 5, 2012.

• Fujian Yaxin Food Co., Ltd. entered into a Maximum Amount Liquid Fund Loan Contract on May 5, 2011 to borrow from Jianyang City Rural Credit Cooperative Union Business Department the amount of RMB2,000,000, or $309,401 for purpose of purchasing financial resources and materials, and the monthly interest rate of the loan shall be 10.908%. . The term of the Agreement shall be from May 5, 2011 to May 4, 2012.

The following table summarizes key elements of the aforementioned seventeen financing arrangements:

Contract	Bank	Borrower/ Mortgager/ Guarantor	Loan/ Mortgaged/ Guaranteed Amount	Repayment Term of the Loan/ Repayment Term of the Loan Covered by Mortgage/ Guarantee	Interest Rate	Maturity
Maximum Amount Mortgage Contract	China Construction Bank Corporation Ltd Songxi Branch	Fujian Shengda Food Co., Ltd.	$618,615	March 19, 2009 to March 19, 2012	N/A	March 19, 2012
Maximum Amount Mortgage Contract	China Construction Bank Corporation Ltd Songxi Branch	Fujian Shengda Food Co., Ltd	$2,270,753	February 27, 2009 to February 27, 2012	N/A	February 27, 2012
Maximum Amount Mortgage Contract	China Construction Bank Corporation Ltd Songxi Branch	Fujian Shengda Food Co., Ltd.	$1,174,321	March, 2009 to March 2012	N/A	March 2012
Maximum Amount Mortgage Contract	China Construction Bank Corporation Ltd Songxi Branch	Fujian Shengda Import & Export Trading Co., Ltd.	$4,343,788	February 27, 2009 to February 27, 2012	N/A	February 27, 2012
RMB Fund Loan Contract	China Construction Bank Corporation Ltd. Songxi Branch	Fujian Yada Group Co., Ltd.	$1,209,921	November 26, 2010 to November 26, 2011	Annual interest rate of the loan shall be 10% higher than the benchmark interest rate announced by the People’s Bank Of China as of the value date	November 26, 2011
Natural Person Guarantee Contract	Songxi Sub- branch of Construction Bank of China Co., Ltd.	Mr. Zhan Youdai and Ms. Zhou Liufeng	$1,209,921	November 26, 2010 to November 26, 2011	N/A	November 26, 2011
Mortgage Loan Agreement	Songxi County Rural Credit Cooperative Business Department	Fijian Yada Group Co., Ltd	$913, 200	February 16, 2010 to August 15, 2011	0.793333% monthly	August 15, 2011
RMB Fund Loan Contract	Songxi Sub-branch of Construction Bank of China Co., Ltd.	Fijian Yada Group Co., Ltd	$441,380	February 16, 2011 to February 16, 2012	Annual interest rate shall be the benchmark interest rate announced by the People’s Bank Of China as of the value date	February 16, 2012
Natural Person Guarantee Contract	Songxi Sub-branch of Construction Bank of China Co., Ltd	Mr. Zhan Youdai and Ms. Zhou Liufeng	$441,380	February 16, 2011 to February 16, 2012	N/A	February 16, 2012

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RMB Fund Loan Contract	Songxi Sub-branch of Construction Bank of China Co., Ltd.	Fujian Yada Group Co., Ltd.	$471,820	February 16, 2011 to February 16, 2012	Annual interest rate shall be the benchmark interest rate announced by the People's Bank Of China as of the value date	February 16, 2012
Natural Person Guarantee Contract	Songxi Sub-branch of Construction Bank of China Co., Ltd	Mr. Zhan Youdai and Ms. Zhou Liufeng	$471,820	February 16, 2011 to February 16, 2012	N/A	February 16, 2012
RMB Fund Loan Contract	Songxi Sub-branch of Construction Bank of China Co., Ltd.	Fujian Yada Group Co., Ltd.	$761,000	March 2, 2011 to February 2, 2012	Annual interest rate shall be the benchmark interest rate announced by the People’s Bank Of China as of the value date	February 2, 2012
Natural Person Guarantee Contract	Songxi Sub-branch of Construction Bank of China Co., Ltd	Mr. Zhan Youdai and Ms. Zhou Liufeng	$761,000	March 2, 2011 to February 2, 2012	N/A	February 2, 2012
Maximum Amount Guarantee Contract	Industrial and Commercial Bank of China Limited Jianyang Sub- branch	Fujian Yada Group Co., Ltd	$3,044,001	June 28, 2010 to June 27, 2013	N/A	June 27, 2013
Domestic Factoring Contract	Industrial and Commercial Bank of China Limited Jianyang Sub- branch	Fujian Yaxin Food Co., Ltd	$395,720	January 31, 2011 to the date when Fujian Yaxin Food Co., Lt fulfills all the obligations under the Contract	Annual interest rate shall be the benchmark interest rate of the loan announced by the People’s Bank Of China as of the loan issuing day	The date when Fujian Yaxin Food Co., Ltd. fulfills all the obligations under the Contract
Small Business Loan Agreement	Industrial and Commercial Bank of China Limited Jianyang Sub- branch	Fujian Yaxin Food Co., Ltd	$773,503	April 6, 2011 to April 5, 2012	6.941% annual	April 5, 2012
Maximum Amount Liquid Fund Loan Contract	Jianyang City Rural Credit Cooperative Union Business Department	Fujian Yaxin Food Co., Ltd	$309,401	May 5, 2011 to May 4, 2012	10.908 ‰ monthly	May 4, 2012

Solely for the convenience of the reader, the above amounts were converted from RMB to U.S. dollars at specified rates, as follows: for any contract entered into in the second quarter of 2011, the conversion rate was 6.4641 RMB per dollar; for any contract entered into in the first quarter of 2011, the conversion rate was 6.5703 RMB per dollar; for any contract entered into in 2010, the conversion rate was 6.6120 RMB per dollar; and for any contract entered into 2009, the conversion rate was 6.6762 RMB per dollar.

Many of the financing agreements contain covenants prohibiting us from borrowing “substantial” amounts of money, or leasing or subsequently pledging already pledged assets, without the prior consent of each relevant lender. In addition, we are prohibited from selling a “significant” amount of its assets without prior consent from each relevant lender. The terms “significant” and “substantial” are not defined in the relevant contracts. In assessing our compliance with the financing agreements we have determined that a value exceeding approximately 10% of our total assets, or about $9.1 million as of June 30, 2011, would be significant or substantial and would trigger a requirement to obtain the prior consent of various lenders. However, the lenders may have a different interpretation of the limitation on our ability to borrow money or sell assets, and it may be lower than our understanding of the provisions of the loan agreements. If we were to inadvertently sell assets or borrow money with a value in excess of what our lenders believe is permissible without their consent, they could pursue breach of contract and other claims against us, which could harm our business and reputation.

Contingent Liabilities

We have made a provision of approximately $682,000 to cover potential liability with respect to certain unpaid social insurance obligations for full-time employees. We believe that the total potential liabilities include cost of rectifying non-compliance of the social insurance obligations for full-time employees and temporary workers, and the cost of rectifying non-compliance of the housing fund obligations for full-time employees and temporary workers, and may be as much as $1,721,000. See “Risk Factors—We may face claims or administrative penalties for non-execution of labor contracts or non-payment and/or underpayment of the social insurance and housing fund obligations in respect of our temporary workers and full-time employees.” in our annual report on Form 10-K for the year ended December 31, 2010. The provision reflects our good faith estimate of the costs of rectifying our non-compliance with these obligations; actual costs could be lower or higher. If we are required to rectify our non-compliance and the costs of doing so approach or exceed our good faith estimate, it would have a material adverse effect on our liquidity and capital resources.

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Capital Expenditures

Our capital expenditures were approximately $0.3 million for the quarter ended June 30, 2011, 0.9 million for the six months ended June 30, 2011 and $19.5 million for the year ended December 31, 2010. Our capital expenditures were mainly used to acquire property, plant and equipment and land use rights to expand our production capacity. We currently estimate that our aggregate capital expenditures in fiscal year 2011 will be approximately $29 million, which we intend to use primarily for expansion of bamboo forests, constructing additional cold storage and preliminary processing facilities.

Capital Resources

At June 30, 2011, we did not have any unused credit facility that was available to us.

We believe that our cash on hand and cash flow from operations will meet our expected capital expenditures and working capital requirements for at least the next 12 months. However, our cash from operations could be affected by various risks and uncertainties, including, but not limited to the risks detailed in Part I, Item 1A titled “Risk Factors.” In addition, we may, in the future, require additional cash resources due to changed 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.

Recent Accounting Pronouncements

See Note 3 to our unaudited consolidated financial statements for the six months ended June 30, 2011 and 2010 beginning on page 12.

Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

As a smaller reporting company, we are not required to provide disclosure under this item.

Item 4. CONTROLS AND PROCEDURES.

Disclosure Controls and Procedures.

We maintain disclosure controls and procedures that are designed to provide reasonable assurance that material information is: (1) gathered and communicated to our management, including our principal executive and financial officers, on a timely basis; and (2) recorded, processed, summarized, reported and filed with the SEC as required under the Securities Exchange Act of 1934, as amended.

We conducted an evaluation under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures were not effective as of June 30, 2011 for the reasons discussed below related to material weaknesses in our internal control over financial reporting.

In our annual report on Form 10-K for the period ended December 31, 2010, we identified certain material weaknesses in our internal controls over financial reporting. These weaknesses included:

	1.	we extend credit to certain of our customers, but do not have detailed procedures in place for documenting our analysis, establishment or management of those credit terms;
	2.	we have not completed implementation of procedures to ensure our sight and verification of documentation and sales acknowledgements for delivery of product and revenue recognition;
	3.	we have limited staff and limited documented procedures for managing our procurement process and managing our inventory levels; and

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4.

we did not maintain sufficient in-house personnel resources with the technical accounting knowledge, expertise and training in the selection, application and implementation of GAAP, particularly with respect to certain complex or non-routine transactions.

The existence of these material weaknesses could impair our ability to provide timely and accurate financial information.

We are in the process of implementation of additional internal control procedures to remediate the identified material weaknesses. We have completed the set up of internal control procedures for improvement of problems specified in items 1 and 2 above. We shall continue to hire external professional consultants to evaluate our internal control system.

Changes in Internal Controls over Financial Reporting.

No changes were made in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) during our most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Limitations on Internal Controls over Financial Reporting.

Our management, including our Chief Executive Officer and Chief Financial Officer, does not expect that our disclosure controls and procedures or internal controls will prevent all errors or all instances of fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within our company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Controls can also be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the controls. The design of any system of controls is based in part upon certain assumptions about the likelihood of future events, and any design may not succeed in achieving its stated goals under all potential future conditions. Over time, controls may become inadequate because of changes in conditions or deterioration in the degree of compliance with policies or procedures. Because of the inherent limitation of a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

PART II—OTHER INFORMATION

Item 1. LEGAL PROCEEDINGS.

From time to time, we may be involved in litigation relating to claims arising out of our operations in the normal course of business, including claims of alleged infringement, misuse or misappropriation of intellectual property rights of third parties. As of the date of this report, we are not a party to any litigation which we believe would have a material adverse effect on our business operations or financial condition.

Item 1A. RISK FACTORS.

You should carefully consider the risk factors discussed in our Report on Form 10-K filed March 31, 2011, as amended, the occurrence of which could materially affect harm our business, financial position and results of operations, before making an investment decision. Such risk factors are incorporated herein by reference.

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

Unregistered Sales of Equity Securities

None.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. (REMOVED AND RESERVED).

Item 5. OTHER INFORMATION.

None.

Item 6. EXHIBITS.

See the Exhibit Index immediately following the signature page of this report.

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SIGNATURES

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

	ASIA GREEN AGRICULTURE CORPORATION
Date: August 15, 2011	/s/ Tsang Yin Chiu Stanley
	Tsang Yin Chiu Stanley, Chief Financial Officer
	(Principal Accounting Officer)

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Exhibit No.	Document Description	Incorporation by Reference
10.1	English Translation of the Small Business Loan Agreement dated April 6, 2011 by and between Fujian Yaxin Food Co. Ltd and Industrial and Commercial Bank of China Limited, Jianyang Branch.	Exhibit 10.60 to Amendment No. 10 to the registrant's registration statement on Form S-1 filed with the Commission on June 17, 2011.
10.2	English Translation of the Maximum Amount Liquid Fund Loan Contract dated May 5, 2011 by and between Fujian Yaxin Food Co., Ltd. and the Jianyang City Rural Credit Cooperative Union Business Department.	Exhibit 10.61 to Amendment No. 10 to the registrant's registration statement on Form S-1 filed with the Commission on June 17, 2011.
31.1	Certification of Chief Executive Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.	Filed herewith.
31.2	Certification of Chief Financial Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.	Filed herewith.
32	Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C, Section 1350, adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.	Filed herewith.

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