UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the Quarterly Period Ended ~~March~~June 3130, 2011

o¨ 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) 000-51263

NORTH CHINA HORTICULTURE, INC.

(Exact Name of Registrant As Specified in Its Charter)

Nevada		20-4650531
(State or Other Jurisdiction of Incorporation)		(IRS Employer Identification No.)
(State or Other Jurisdiction of		(IRS Employer
Incorporation)		Identification No.)

LongSheng Village, Tangshan Town, Zhengan District

Dandong City, Liaoning, P.R.China

(Address of Principal Executive Offices)

Not Applicable

(Zip Code)

86-0415-8176321

~~Indicate by check mark whether the registrant~~ (1)Registrant’s ~~has~~Telephone 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)Number, ~~and~~Including ~~(2)~~Area ~~has been subject to such filing requirements for at least the past 90 days. Yes x No ¨~~Code)

~~Indicate~~Securities byregistered ~~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~~Section ~~405 of Regulation S-T~~ 12(~~§232.405~~b) of ~~this chapter) during~~ the ~~preceding 12 months (or for such shorter that the registrant was required to submit and post such files). Yes ¨ No ¨~~Act: None

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 at least the past 90 days. Yes xNo ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter that the registrant was required to submit and post such files). Yes x No ¨

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

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

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

As of ~~March~~August 311, 2011, the registrant had 5051,~~000~~750,~~139~~144 shares of common stock outstanding.

NORTH CHINA HORTICULTURE, INC.

FORM 10-Q

Quarterly Period Ended ~~March~~June 3130, 2011

INDEX	~~INDEX~~
		~~Page~~	Page
	~~PART I – FINANCIAL INFORMATION~~	PART I – FINANCIAL INFORMATION
ITEM 1.	~~Financial Statements~~	Financial Statements
	Condensed Consolidated Balance Sheets as of March 31, 2011 (Unaudited) and December 31, 2010	3
		Condensed Consolidated Balance Sheets as of June 30, 2011 (Unaudited) and December 31, 2010	3
	Condensed Consolidated Statements of Operations and Comprehensive Income for the Three Months Ended March 31, 2011 and 2010 (Unaudited)	4
		Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) for the Three and Six Months Ended June 30, 2011 and 2010 (Unaudited)	4
	Condensed Consolidated Statement of Changes in Stockholders’ Equity for the Three Months ended March 31, 2011 and 2010 (Unaudited)
		Condensed Consolidated Statement of Changes in Shareholders’ Equity for the Six Months ended June 30, 2011 and 2010 (Unaudited)	5
	Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2011 and 2010 (Unaudited)	5
		Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2011 and 2010 (Unaudited)	6
	~~Notes to Condensed Consolidated Financial Statements (Unaudited)~~	6Notes to Condensed Consolidated Financial Statements (Unaudited)	8
ITEM 2.	~~Management’s Discussion and Analysis of Financial Condition and Results of Operations~~	11Management’s Discussion and Analysis of Financial Condition and Results of Operations	15
ITEM 3.	~~Quantitative and Qualitative Disclosures About Market Risk~~	17Quantitative and Qualitative Disclosures About Market Risk	22
ITEM 4.	~~Controls and Procedures~~	17Controls and Procedures	22
	~~PART II – OTHER INFORMATION~~	PART II – OTHER INFORMATION
ITEM 1.	~~Legal Proceedings~~	17Legal Proceedings	23
ITEM 1A	~~Risk Factors~~	17Risk Factors	23
ITEM 2.	~~Unregistered Sales of Equity Securities and Use of Proceeds~~	17Unregistered Sales of Equity Securities and Use of Proceeds	23
ITEM 3.	~~Defaults Upon Senior Securities~~	17Defaults Upon Senior Securities	23
ITEM 5.	~~Other Information~~	18Other Information	23
ITEM 6.	~~Exhibits~~	18Exhibits	23

NORTH CHINA HORTICULTURE, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

	March 31,		December 31,
	June 30,		December 31,
	2011 (Unaudited)		2010
	2011		2010
	(Unaudited)
ASSETS
Current assets
Cash and cash equivalents	$	37405,~~019~~192	$	240,719
Accounts receivable, net of allowance for doubtful accounts of $906,534 and $888,844		2,642,216		1,392,020
Accounts receivable, net of allowance for doubtful accounts of $2,331,758 and $888,844 at June 30, 2011 and December 31, 2010, respectively		4,299,066		1,392,020
Inventories, net		1,771,~~774~~653		1,199,099
Prepaid rent and other current assets		144,790		116,170
Deferred costs related to sales not recognized		208,017		-
Deposits and advance to suppliers		~~330~~343,~~835~~932		93,658
Receivable from unaffiliated entities		2,943,415		3,143,307
Prepaid rent and other current assets		147,246		116,170
Receivable from unaffiliated entities		1,623,537		3,143,307
Deposit to related party		-		727,722
Due from officer		-		81,668
Total current assets		78,~~870~~798,~~049~~643		6,994,363
Property and equipment, net		~~383~~361,~~401~~490		139,997
Land use rights		613,000		-
Deposit on greenhouse improvements		-		211,743
TOTAL ASSETS	$	89,~~253~~773,~~450~~133	$	7,346,103
LIABILITIES AND STOCKHOLDERS’ EQUITY
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities
Accounts payable	$	1855,~~172~~390	$	27,289
Accrued expenses and other payables		7379,~~478~~804		103,460
Due to officer		14,537		-
Amount due to officer		168,006		-
Total current liabilities		~~106~~303,~~187~~200		130,749
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS’ EQUITY
SHAREHOLDERS’ EQUITY
Common stock, $0.00001 par value; 50,000,139 shares issued and outstanding at March 31, 2011 and December 31, 2010, respectively		500		500
Common stock, $0.00001 par value; 51,750,144 and 50,000,139 shares issued and outstanding at June 30, 2011 and December 31, 2010, respectively		518		500
Additional Paid-in capital		142,~~850~~639,840		14,850
Accumulated other comprehensive income		~~340~~459,~~158~~544		268,780
Retained earnings		76,~~791~~370,~~755~~031		6,931,224
TOTAL STOCKHOLDERS’ EQUITY		8,147,263		7,215,354
TOTAL SHAREHOLDERS’ EQUITY		9,469,933		7,215,354
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	8,253,450	$	7,346,103
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	9,773,133	$	7,346,103

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

NORTH CHINA HORTICULTURE, INC.

~~CONDENSED~~CONDESNED CONSOLIDATED STATEMENTS OF ~~INCOME AND COMPREHENSIVE INCOME (UNAUDITED)~~OPERATIONS

	For the three months ended March 31,
	2011		2010
Revenues, net	$	1,585,134	$	827,249
Cost of goods sold		329,398		116,890
Gross profit		1,255,736		710,359
Operating expenses		395,205		32,855
Net income		860,531		677,504
Other comprehensive income-foreign currency translation gains		71,378		56,029
Comprehensive income	$	931,909	$	733,533
Basic and diluted earnings per share	$	0.02	$	0.01
Basic and diluted weighted average number of shares		50,000,139		49,870,814

AND COMPREHENSIVE INCOME (LOSS) (UNAUDITED)

	For the three months ended June 30,					For the six months ended June 30,
	2011			2010		2011			2010

Net revenues	$	3,595,412		$	2,826,296	$	5,183,071		$	3,653,545
Cost of goods sold		776,985			597,651		1,106,383			714,541

Gross profit		2,818,427			2,228,645		4,076,688			2,939,004

Selling, general and administrative expenses		210,158			34,945		605,363			67,800
Share based consulting fee		2,625,008			-		2,625,008			-
Bad debt expense		1,404,985			-		1,407,510			-

Net (loss) income		(1,421,724	)		2,193,700		(561,193	)		2,871,204

Other comprehensive income-foreign currency translation gains		329,779			26,499		190,764			26,739

Comprehensive (loss) income	$	(1,091,945	)	$	2,220,199	$	(370,429	)	$	2,897,943

Basic and diluted (loss) earnings per share	$	(0.03	)	$	0.04	$	(0.01	)	$	0.06

Weighted average number of shares		50,437,640			49,870,814		50,875,142			49,870,814

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

NORTH CHINA HORTICULTURE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF ~~CASH~~CHANGES ~~FLOWS~~IN ~~(UNAUDITED)~~SHAREHOLDERS' EQUITY

	For the three months ended March 31,
	2011			2010
Cash flows from operating activities:
Net income	$	860,531		$	677,504
Adjustments to reconcile net income to cash (used in) provided by operating activities:
Depreciation		12,970			1,345
Changes in operating assets and liabilities:
Accounts receivable		(1,233,148	)		(345,101	)
Inventories		(559,594	)		(274,255	)
Deposit and advance to suppliers		(248,481	)		(285,895	)
Prepaid rent and other current assets		(27,438	)		61,551
Accounts payable		(9,340	)		(21,027	)
Accrued expenses and other payables		(58,809	)		82,530
Due to outside parties		-			198,687
Net cash (used in) provided by operating activities		(1,263,309	)		95,339
Cash flows from investing activities:
Purchase of property and equipment		(41,228	)		(2,048	)
Deposit to related party		725,400			-
Repayments of receivable from unaffiliated entities		304,609			-
Receivable from unaffiliated entities		(75,837	)		-
Net cash provided by (used in) investing activities		912,944			(2,048	)
Cash flows from financing activities:
Repayment and advances by officer		95,907			-
Additional paid-in capital		-			1,291
Net cash provided by financing activities		95,907			1,291
Effect of exchange rate changes on cash		50,758			233
Net (decrease) increase in cash and cash equivalents		(203,700	)		94,815
Cash and cash equivalents, beginning of the period		240,719			11,300
Cash and cash equivalents, ending of the period	$	37,019		$	106,115
SUPPLEMENTARY DISCLOSURE:
Interest paid	$	-		$	-
Income tax paid	$	-		$	-

FOR THE SIX MONTHS ENDED JUNE 30, 2011 (UNAUDITED)

	Common Stock						Accumulated
	Shares		Par value $0.00001		Additional Paid-in Capital		Other Comprehensive Income		Retained Earnings			Total

Balance- January 1, 2011		50,000,139	$	500	$	14,850	$	268,780	$	6,931,224		$	7,215,354

Issuance of shares for consulting fee		1,750,005		18		2,624,990		-		-			2,625,008

Foreign currency translation gain		-		-		-		190,764		-			190,764

Net loss		-		-		-		-		(561,193	)		(561,193	)

Balance- June 30, 2011, (Unaudited)		51,750,144	$	518	$	2,639,840	$	459,544	$	6,370,031		$	9,469,933

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

NORTH CHINA HORTICULTURE, INC.

~~NOTES~~CONDENSED TOCONSOLIDATED ~~UNAUDITED~~STATEMENTS ~~CONDENSED~~OF ~~CONSOLIDATED~~CASH ~~FINANCIAL~~FLOWS ~~STATEMENTS~~(UNAUDITED)

THE THREE MONTHS ENDED MARCH 31, 2011 AND 2010 (UNAUDITED)

	For the six months ended June 30,
	2011			2010

Cash flows from operating activities:
Net (loss) income	$	(561,193	)	$	2,871,204
Adjustments to reconcile net income to cash (used in) provided by operating activities:
Depreciation		40,760			3,946
Provision for bad debt		1,407,511			-

Share based consulting fee		2,625,008			-
Changes in operating assets and liabilities:
Accounts receivable		(4,412,262	)		1,554,439
Inventories		(605,308	)		(373,390	)
Deferred costs related to sales not recognized		(208,017	)		-
Deposit and Advance to suppliers		(252,832	)		(673,674	)
Prepaid rent and other current assets		(34,249	)		25,005
Accounts payable		28,846			400,477
Accrued expenses and other payables		(20,830	)		(34,038	)
Net cash (used in) provided by operating activities		(1,992,566	)		3,773,969

Cash flows from investing activities:
Purchase of property and equipment		(2,429	)		(108,635	)
Purchase of land use right		(606,580	)		-
Deposit to related party		716,497			-
Receivable from unaffiliated entities		(75,837	)		(3,079,845	)
Repayment of receivables from unaffiliated entities		1,727,205			-
Net cash provided by (used in) investing activities		1,758,856			(3,188,480	)

Cash flows from financing activities:
Repayment and advances by officer		238,790			216,674
Due to outside parties		-			4,389
Due to employee		-			248,833
Contribution by former shareholder		-			1,290
Net cash provided by financing activities		238,790			471,186

Effect of exchange rate changes on cash		159,393			4,147

Net increase in cash and cash equivalents		164,473			1,060,822

Cash and cash equivalents, beginning of the period		240,719			11,300

Cash and cash equivalents, ending of the period	$	405,192		$	1,072,122

(continued)

NORTH CHINA HORTICULTURE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

(continued)

	For the six months ended June 30,
	2011		2010

Supplemental disclosure of cash flow information:

Interest paid	$	-	$	-
Income tax paid	$	-	$	-

Non-cash investing and financing activities

Reclass of deposit to Property and Equipment	$	211,743	$	-

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

NORTH CHINA HORITICULTURE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS AND SIX MONTHS ENDED JUNE 30, 2011 AND 2010 (UNAUDITED)

NOTE 1 – BASIS OF PRESENTATION

The accompanying unaudited condensed consolidated financial statements of North China Horticulture, Inc. (the “Company”, “We”, “Our”) and Subsidiaries have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and pursuant to the requirements for reporting on Form 10-Q and Regulation S-K for scaled disclosures for smaller reporting companies. Accordingly, they do not include all the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. However, such information reflects all adjustments (consisting solely of normal recurring adjustments), which are, in the opinion of management, necessary for the fair presentation of the consolidated financial position and the consolidated results of operations. Results shown for interim periods are not necessarily indicative of the results to be obtained for a full fiscal year. The condensed consolidated balance sheet information as of December 31, 2010 was derived from the audited consolidated financial statements included in the Company's Annual Report on Form 10-K filed with the SEC. These interim financial statements should be read in conjunction with that report.

The accompanying consolidated financial statements include the financial statements of ~~North~~the ~~China~~Company, its wholly owned subsidiaries, Honour Bond Limited ("Honour Bond") and Shenzhen ZhihaoDongbo Technology Co., Ltd. (“Zhihao”), and Zhihao’s VIE, Longsheng Horticulture Technology Co., Ltd. (“Dandong Longsheng”). Inter-company balances and transactions have been eliminated in consolidation.

NOTE 2 – ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

~~The~~North China Horticulture, Inc. (the “Company”, “We”, “Our”), formerly known as iDcentrix, Inc., was incorporated in the State of Nevada on January 26, 2004. The Company, along with its subsidiary and variable interest entity (“VIE”), is engaged in the cultivation and sales of blueberry seedlings. The Company’s facilities are located in and around the city of Dandong in Liaoning Province, People’s Republic of China (“PRC”). Our products consist of a number of blueberry seedling varietals.

On June 1, 2010 the Company effected a one for two hundred eighty-four (1:284) reverse stock split resulting in the Company having 240,269 (post-split) shares of common stock outstanding after the reverse stock split. All share and per share amounts in the accompanying consolidated financial statements have been adjusted to reflect the reverse stock split as if it had occurred at the beginning of the earliest period presented.

On July 16, 2010, the Company completed a share exchange transaction with Honour Bond Limited ("Honour Bond") and its shareholders, whereby the Company acquired 100% of the issued and outstanding capital stock of Honour Bond in exchange for 49,870,814 shares of our common stock which constituted 99.74% of our issued and outstanding capital stock as of and immediately after the consummation of the share exchange transaction. As a result of the share exchange transaction, Honour Bond became our wholly-owned subsidiary and the former shareholders of Honour Bond became our controlling stockholders.

For accounting purposes, the share exchange transaction is accounted for as a recapitalization (reverse merger), with Honour Bond treated as the accounting acquirer and iDcentrix treated as the legal acquirer. The financial statements presented herein are those of the accounting acquirer given the effect of the issuance of 129,325 shares of common stock upon completion of the transaction. In addition, the Company incurred expenses of $568,516 in connection with the reverse merger in 2010.

Honour Bond is a corporation organized under the laws of Hong Kong Special Administrative Region in January 2010 with registered capital of HKD 10,000 (approximately $1,291). Honour Bond’s wholly owned subsidiary, Shenzhen ZhihaoDongbo Technology Co., Ltd. (“Zhihao”), is a limited liability company organized under the laws of the People’s Republic of China (“PRC”) in March 2010. Honour Bond does not conduct any substantive operations of its own, but conducts its primary business operations through Zhihao’s variable interest entity (“VIE”), Longsheng Horticulture Technology Co., Ltd. (“Dandong Longsheng”). Dandong Longsheng was incorporated under the laws of the PRC in March 2008.

Honour Bond, through Zhihao, has entered into certain exclusive agreements with Dandong Longsheng, which obligate the Company to absorb a majority of the risk of loss from Dandong Longsheng’s activities and entitle it to receive a majority of its residual returns. In addition, Dandong Longsheng’s shareholders have pledged their equity interest in Dandong Longsheng to Zhihao, irrevocably granted Zhihao an exclusive option to purchase, to the extent permitted under PRC law, all or part of the equity interests in Longsheng and agreed to entrust all the rights to exercise their voting power to the person(s) appointed by Zhihao. Through these contractual arrangements, the Company is deemed to be the primary beneficiary of Longsheng.

Based on these contractual arrangements, the Company believes that Longsheng isshould be considered as a VIE under authoritative guidance issued by the Financial Accounting Standards Board (“FASB”) on consolidations. As the Company through Zhihao is deemed to be the primary beneficiary of Longsheng, the Company consolidates the assets, liabilities, and results of operations of Longsheng.

Use of estimates

The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the consolidated financial statements and the amounts of revenues and expenses during the reporting periods. Items subject to such estimates and assumptions include the carrying value and estimated useful lives of long-lived assets and the valuation allowances for receivables and for unsecured advances to unaffiliated entities. Management makes these estimates using the best information available at the time the estimates are made. However, actual results could differ materially from those results.

Impairment of long-lived assets

Authoritative guidance issued by the FASB establishes guidelines regarding when impairment losses on long-lived assets, which include property and equipment, should be recognized, and how impairment losses should be measured.

Management regularly reviews property, equipment and other long-lived assets for possible impairment. This review occurs quarterly, or more frequently if events or changes in circumstances indicate the carrying amount of the asset may not be recoverable. If there is indication of impairment, then management prepares an estimate of future cash flows (undiscounted and without interest charges) expected to result from the use of the asset and its eventual disposition. If these cash flows are less than the carrying amount of the asset, an impairment loss is recognized to write down the asset to its estimated fair value. Management’s assumptions about cash flows and discount rates require significant judgment. Factors we consider important that could trigger an impairment review include significant underperformance relative to historical or projected future operating results, significant changes in the manner of the use of our assets or the strategy for our overall business, and significant negative industry or economic trends. Based on managements’ assessment, there were no indicators of impairment at March 31, 2011 and December 31, 2010

Revenue recognition

The Company recognizes sales in accordance with the United States Securities and Exchange Commission (“SEC”) Staff Accounting Bulletin (“SAB”) No. 104, “Revenue Recognition”. The Company recognizes revenue when the following fundamental criteria are met: (i) persuasive evidence of an arrangement exists, (ii) delivery has occurred or services have been rendered, (iii) the price to the customer is fixed or determinable and (iv) collection of the resulting receivable is reasonably assured. Revenue is not recognized until title and risk of loss is transferred to the customer, which generally occurs upon delivery of goods, and objective evidence exists that customer acceptance provisions have been met. We assess collectability at the time of the sale and if collectability is not reasonably assured, the sale is not recognized until collectability is probable or payment is received. Costs related to sales not recognized are recorded as deferred expenses and will be recorded to expense on the cost recovery method. Deposits or advance payments from customers prior to delivery of goods and passage of title of goods are recorded as advances from customers.

7Accounts receivable

~~Earnings~~Accounts ~~per~~receivable ~~share~~are recognized and carried at the original invoiced amount less an allowance for any uncollectible accounts. The Company uses the aging method to estimate the valuation allowance for anticipated uncollectible receivable balances. Under the aging method, bad debts determined by management are based on historical experience as well as the current economic climate and are applied to customers’ balances categorized by the number of months the underlying invoices have remained outstanding. The valuation allowance balance is adjusted to the amount computed as a result of the aging method. When facts subsequently become available to indicate that an adjustment to the allowance should be made, this is recorded as a change in estimate in the current year. As of June 30, 2011 and 2010, the allowance for doubtful accounts amounted to $2,331,758 and $888,844 respectively.

Earnings per share are calculated in accordance with the authoritative guidance issued by the FASB on earnings per share. Basic net earnings per share are based upon the weighted average number of common shares outstanding. Diluted net earnings per share are based on the assumption that all dilutive convertible shares and stock options were converted or exercised, and that all unvested shares have vested. Dilution is computed by applying the treasury stock method. Under this method, options and warrants are assumed to be exercised at the beginning of the period (or at the time of issuance, if later), and as if funds obtained thereby were used to purchase common stock at the average market price during the period. At March 31, 2011 and 2010, basic and diluted earnings per share are the same as the Company did not have any dilutive convertible shares or stock options outstanding.9

Earnings (loss) per share

Earnings (loss) per share are calculated in accordance with the authoritative guidance issued by the FASB on earnings per share. Basic net earnings (loss) per share are based upon the weighted average number of common shares outstanding, but excluding shares issued as compensation that have not yet vested. Diluted net earnings (loss) per share are based on the assumption that all dilutive convertible shares and stock options were converted or exercised, and that all unvested shares have vested. Dilution is computed by applying the treasury stock method. Under this method, options and warrants are assumed to be exercised at the beginning of the period (or at the time of issuance, if later), and as if funds obtained thereby were used to purchase common stock at the average market price during the period. At June 30, 2011 and December 31, 2010, the Company did not have any dilutive convertible shares or stock options outstanding.

Foreign currency translation

The accompanying consolidated financial statements are presented in United States dollars. The functional currency of the Company is the Renminbi (RMB). Capital accounts of the consolidated financial statements are translated into United States dollars from RMB at their historical exchange rates when the capital transactions occurred. Assets and liabilities are translated at the exchange rates as of balance sheet date. Income and expenditures are translated at the average exchange rate of the period.

March 31, 2011

December 31, 2010

March 31, 2010

June 30, 2011

December 31, 2010

June 30, 2010

Period end RMB : US$ exchange rate

6.~~5483~~463

6.~~6000~~600

6.~~8263~~809

Average period end RMB : US$ exchange rate

6.~~5790~~532

6.~~7690~~769

6.~~8272~~835

The RMB is not freely convertible into foreign currency and all foreign exchange transactions must take place through authorized institutions. No representation is made that the RMB amounts could have been, or could be, converted into US dollars at the rates used in translation.

Concentrations

Financial instruments, which potentially subject the Company to concentrations of credit risk, consist principally of cash and unsecured trade accounts receivable.

Cash denominated in RMB with a US dollar equivalent of $37405,~~019~~192 and $240,719 at ~~March~~June 3130, 2011 and December 31, 2010, respectively, was held in accounts at financial institutions located in the PRC. The Company and its subsidiaries have not experienced any losses in such accounts and do not believe the cash is exposed to any significant risk.

For the ~~three~~six months ended ~~March~~June 3130, 2011, ~~five~~four customers accounted for ~~94.11~~52% of sales (~~33.6~~17%, ~~19.44~~12%, ~~15.87~~12%, ~~13.65%,~~ and 11~~.55~~% respectively) and at ~~March~~June 3130, 2011, these customers accounted for ~~33.98~~31%, of accounts receivable (~~9.13~~8%, ~~9.94~~8%, 8% and 7% respectively).76 For the six months ended June 30, 2010, three customers accounted for 58% of sales (22%, 020%, and 6.16% respectively). For the three months ended ~~March~~June 3130, ~~2010~~2011, ~~four~~three customers accounted for ~~100~~43% of sales (~~33.81~~17%, ~~29.91~~15%, ~~18.6%,~~ and ~~17.68~~11% respectively) ~~and~~. For atthe ~~December~~three 31months ended June 30, 2010, ~~six~~four customers accounted for 4976%, of ~~accounts~~sales ~~receivable~~ (1828%,~~6%,~~ 1426%,~~15%~~ ~~,13~~12% and 710% respectively). For the six months and three months ended June 30, 2011 or 2010, there were no other customers that accounted for over 10% of sales, respectively.

For the ~~three~~six months ended ~~March~~June 3130, 2011, ~~two~~three vendors accounted for ~~83.66~~86% of total purchases (5745%, 29% and 12% respectively).86 For the six months ended June 30, 2010, three vendors accounted for 92% of total purchases (47%, 33% and 2512%, respectively).8 For the three months ended June 30, 2011, three vendors accounted for 84% of total purchases (33%, 32% and 19% respectively). For the three months ended ~~March~~June 3130, 2010, ~~two~~three vendors accounted for ~~90.86~~94% of total purchases (~~74.46~~42%, 34% and ~~16.4~~18%, respectively). For the six months and three months ended ~~March~~June 3130, 2011 or 2010, there were no other vendors that accounted for over 10% of total purchases, respectively.

810

Economic and Political Risks

The Company’s operations are conducted in the PRC. Accordingly, the Company’s business, financial condition and results of operations may be influenced by the political, economic and legal environments in the PRC, and by the general state of the PRC's economy.

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

Recent Accounting Pronouncements

~~Recently~~In ~~issued~~May 2011, ~~accounting~~the ~~pronouncements~~Financial ~~issued~~Accounting byStandards ~~the~~Board (FASB) issued ~~(including~~Accounting ~~its~~Standards ~~Emerging~~Update ~~Issues Task Force~~(ASU) No. 2011-4, which amends the ~~AICPA,~~Fair ~~and~~Value Measurements Topic of the ~~Securities~~Accounting ~~Exchange~~Standards ~~Commission~~Codification (~~the "SEC"~~ASC) to ~~have~~help ~~either~~achieve ~~been~~common ~~implemented~~fair orvalue ~~are~~measurement and disclosure requirements in U.S. GAAP and IFRS. ASU No. 2011-4 does not ~~significant~~require additional fair value measurements and is not intended to establish valuation standards or affect valuation practices outside of financial reporting. The ASU is effective for interim and annual periods beginning after December 15, 2011. The Company will adopt the ASU as required. The ASU will affect the Company’s fair value disclosures, but will not affect the Company’s results of operations, financial condition or liquidity.

In June 2011, the FASB issued ASU No. 2011-5, which amends the Comprehensive Income Topic of the ASC. The ASU eliminates the option to present the components of other comprehensive income as part of the statement of changes in shareholders’ equity, and instead requires consecutive presentation of the statement of net income and other comprehensive income either in a continuous statement of comprehensive income or in two separate but consecutive statements. ASU No. 2011-5 is effective for interim and annual periods beginning after December 15, 2011. The Company will adopt the ASU as required. It will have no affect on the Company’s results of operations, financial condition or liquidity.

Other recent accounting pronouncements issued by the FASB (including its Emerging Issues Task Force), the AICPA, and the Securities Exchange Commission (the "SEC") did not or are not believed by management to have a material impact on the Company's present or future consolidated financial statements.

Reclassifications

In presenting the Company’s condensed consolidated statement of cash flows for the six months ended June 30, 2010, the Company presented $3,079,845 advances to unaffiliated entities as financing cash flows. In presenting the Company’s condensed consolidated statement of cash flows for the six months ended June 30, 2011, the Company has reclassified advances to unaffiliated entities as investing cash flows.

NOTE 3 –DEPOSIT TO RELATED PARTY

At December 31, 2010, the Company had a deposit of approximately $727,722 (RMB 4,811,555) that had been paid to the father of the Company’s chairman and CEO for the purchase of certain farming real estate. During the first quarter ~~ended~~in ~~March 31~~ 2011, the proposed acquisition was terminated and the deposit was returned to the Company.

NOTE 4 – RELATED PARTY TRANSACTIONS

At December 31, 2010, a balance of $81,668 of advances was due from the Company’s chairman and CEO. The advances were made for Company business purposes and were repaid to the Company by March 10, 2011. The amounts were unsecured, non-interest bearing, and due on demand.

During the ~~quarter~~six months ended ~~March~~June 3130, 2011, the Company’s chairman and CEO made advances of $14168,~~537~~006 to the Company which was outstanding at ~~March~~June 3130, 2011. The amounts are unsecured, non-interest bearing, and are payable on demand.

NOTE 5 – INVENTORIES

Inventories consist of the following as of:

	March 31, 2011 (Unaudited)		December 31, 2010
	June 30,		December 31,
Raw material	$	115,340	$	61,746
	2011		2010
Work in process		1,265,204		926,857
	(Unaudited)
Finished goods		391,230		210,496
Raw material	$	201,724	$	61,746
Total	$	1,771,774	$	1,199,099
Work in process		1,356,636		926,857
Finished goods		213,293		210,496
Total	$	1,771,653	$	1,199,099

~~NOTE~~At 6June –30, ~~RECEIVABLE~~2011 ~~FROM~~and ~~UNAFFLIATED~~December ~~ENTITIES~~31, 2010, there were no reserves for inventories recorded.

InNOTE ~~May~~6 ~~2010,~~– ~~the~~LAND ~~Company~~USE ~~made~~RIGHTS ~~advances~~AND totaling approximately $4,129,115 (RMB 27,950,000) to four unaffiliated entities. The advances were initially made in anticipation of being equity investments and were subsequently restructured into term loans. One advance for approximately $435,810 (RMB 2,950,000) was repaid in full in December 2010. An aggregate of approximately $623,000 (RMB 4,217,080) was repaid on the other three advances during 2010. At December 31, 2010, the aggregate outstanding balance was approximately $3,143,307 (RMB 20,782,920), including an exchange gain of approximately $73,000. During three months ended March 31, 2011, an aggregate of approximately $304,609 (RMB 2,000,000) was repaid on the outstanding three advances and at March 31, 2011, the aggregate outstanding balance was approximately $2,867,578 (RMB 18,782,920), including an exchange gain of approximately $28,880. The advances are unsecured, non-interest bearing, due in various installments, and any unpaid principal is due in full on September 30, 2011. Repayment of the advances is guaranteed by an unrelated commercial finance company.DEPOSIT

9On June 23, 2011, the Company entered into a leasing agreement with Youhao Forestry Bureau, Heilongjiang Province (the “Bureau”) and agreed to lease 59 acres of blueberry fields from the Bureau. At June 30, 2011. the cost of the lease of $613,000 was prepaid by the Company and will be amortized over the lease term of 50 years. In addition, the Company agreed to pay the Bureau for the existing blueberry plants on the leased land, and as of June 30, 2011, had paid $343,932 to the Bureau as a deposit on the plant inventory.

InNOTE ~~March~~7 ~~2011,~~– ~~the~~RECEIVABLE ~~Company~~FROM ~~made~~UNAFFLIATED two more advances totaling approximately $75,837 (RMB 496,740) to two potential suppliers which were still outstanding at March 31, 2011. The advances are unsecured, non-interest bearing, due in fifteen days. The advances were fully repaid on April 12, 2011.ENTITIES

Advances to unaffiliated entities are reviewed periodically as to whether their carrying value has become impaired. The Company considers the assets to be impaired if the collectibility of the balances becomes doubtful. Based upon management’s assessment at March 31, 2011 and December 31, 2010, there was no allowance necessary for potential uncollectible advances.

	June 30,
	2011		December 31,
	(Unaudited)		2010

Receivable from unaffiliated entities	$	1,623,537	$	3,143,307

~~NOTE 7 – INCOME TAX~~12

In May 2010, the Company made advances totaling approximately $4,129,115 (RMB 27,950,000) to four unaffiliated entities. The advances were initially made in anticipation of being equity investments and were subsequently restructured into term loans. At December 31, 2010, the aggregate outstanding balance was approximately $3,143,307 (RMB 20,782,920). During the six months ended June 30, 2011, an aggregate of approximately $1,587,295 (RMB 10,290,000) was repaid on the advances and at June 30, 2011, the aggregate outstanding balance was approximately $1,623,537 (RMB 10,492,920), including an exchange gain of approximately $67,000. The advances are unsecured, non-interest bearing, due in various installments, and any unpaid principal is due in full on September 30, 2011. Repayment of the advances is guaranteed by an unrelated commercial finance company.

In March 2011, the Company made two more advances totaling approximately $75,837 (RMB 496,740) to two potential suppliers which were fully repaid on April 12, 2011.

Advances to unaffiliated entities are reviewed periodically as to whether their carrying value has become impaired. The Company considers the assets to be impaired if the collectability of the balances becomes doubtful. Based upon management’s assessment at June 30, 2011 and December 31, 2010, there was no allowance necessary for potential uncollectible advances.

NOTE 8 – INCOME TAX

Companies in the PRC are generally subject to PRC Enterprise Income Tax at a uniform tax rate of 25% under the China's Unified Enterprise Income Tax Law ("New EIT Law"), which took effect from January 1, 2008. Longsheng is exempt from both income tax and value-added tax because it operates in the agriculture industry, which the Chinese government encourages and offers special incentives. We benefited from the tax exemptions in both 2011 and 2010.

Honour is a Hong Kong company. Honour’s operations are conducted through its wholly owned subsidiary Zhihao and its VIE Dandong Longsheng, and Honour has no operations or income in Hong Kong. Accordingly no income tax provision is recorded for Hong Kong.

North China Horticulture, Inc. iswas incorporated in the state of Nevada and has no operations in the United States of America. Accordingly, the Company has not recorded a provision for U.S. federal income tax for the ~~three~~six months ended ~~March~~June 3130, 2011 and 2010. The Company has a net operating loss carry forward in the United States of America which begins to expire in 2028. The deferred tax asset created by the net operating loss has been offset by a 100% valuation allowance.

The following table reconciles the U.S. Statutory rate to the Company’s effective tax rate for the three and six months ended ~~March~~June 3130:

	2011			2010
US statutory rate		34	%		34	%
Tax rate difference		(9	%)%		(9	%)%
Effect of tax exempt		(25	%)%		(25	%)%
Effective tax rate		0	%		0	%

Effective January 1, 2007, the Company adopted authoritative guidance issued by the FASB for uncertainty in income taxes. The Interpretation addresses the determination of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the financial statements. Under the authoritative guidance, we may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position should be measured based on the largest benefit that has a greater than fifty percent likelihood of being realized upon ultimate settlement. The authoritative guidance also provides guidance on de-recognition, classification, interest and penalties on income taxes, accounting in interim periods and requires increased disclosures. At the date of adoption, and as of ~~March~~June 3130, 2011, the Company does not have a liability for unrecognized tax uncertainties except as described below. The Company’s Chinese subsidiaries have never been subject to a tax examination and all years are open to examination by the tax authorities.

1013

NOTE 9 – SHAREHOLDERS’ EQUITY

Issuance of Common Stock for Services

On May 16, 2011, we issued 1,750,005 common shares to a consultant for services, and recorded $2,625,008 in consulting fees based on the market price $1.50 per share. The consultant specializes in providing brokers, fund managers, institutions and the financial marketplace with investor relations for emerging growth companies in Asia and Latin America.

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

The following discussion and analysis should be read together with the factors discussed in Part I. Item 1A “Risk Factors” of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2010, and with the consolidated financial statements, including the notes thereto, and the other financial information appearing elsewhere in this Report. Period-to-period comparisons of financial data are not necessarily indicative, and therefore should not be relied upon as indicators, of the Company’s future performance. Words or phrases such as “believes,” “does not believe,” “will,” “may,” “plan,” “estimate,” “anticipate,” “expect,” “intend” and similar expressions may identify “forward-looking statements.”

Business Overview and Basis of Presentation

On July 16, 2010, we completed a reverse acquisition transaction through a share exchange with Honour Bond Limited, a Hong Kong limited company (“Honour Bond”) and its shareholders (“Honour Bond Shareholders”), whereby we acquired 100% of the issued and outstanding capital stock of Honour Bond in exchange for 49,870,814 shares of our common stock which constituted 99.74% of our issued and outstanding capital stock as of and immediately after the consummation of the reverse acquisition. As a result of the reverse acquisition, Honour Bond became our wholly-owned subsidiary and the Honour Bond Shareholders became our controlling stockholders. The share exchange transaction with Honour Bond and the Honour Bond Shareholders was treated as a reverse acquisition, with Honour Bond as the acquirer and iDcentrix, Inc. as the acquired party. Unless the context suggests otherwise, when we refer in this report to business and financial information for periods prior to the consummation of the reverse acquisition, we are referring to the business and financial information of Honour Bond and its consolidated subsidiaries and replace the historical financial results of iDcentrix, Inc. pre-acquisition. iDcentrix, Inc. and its subsidiaries and controlled affiliates are referred to collectively as “we,” “us,” and the “Company.”

Upon the closing of the reverse acquisition, TsoiTik Man, our former President, Secretary and a director, submitted a resignation letter pursuant to which he resigned from all offices that he held effective immediately and from his position as our director that became effective on August 7, 2010. In addition, our board of directors on July 16, 2010, appointed Guang Zhao to fill the vacancy created by such resignation, which appointment became effective on August 7, 2010. In addition, our executive officer was replaced by Guang Zhao upon the closing of the reverse acquisition.

As a result of our acquisition of Honour Bond, we now own all of the issued and outstanding capital stock of Honour Bond, which in turn owns all of the issued and outstanding capital stock of ShengzhengZhihaoDongbo Technology Ltd., a Chinese limited company (“Dongbo Consulting”). In addition, we effectively and substantially control Dandong LongSheng Horticulture Technology Co., Ltd., a Chinese limited company (“Dandong LongSheng”), through a series of captive agreements with Dongbo Consulting. Dandong LongSheng is principally engaged in the production of blueberry seedlings in the PRC.

Honour Bond was established in Hong Kong on January 5, 2010 to serve as an intermediate holding company. Dongbo Consulting was established in China on March 4, 2010.

Dandong LongSheng was founded in March of 2008 in the People’s Republic of China to meet the strict supply chain demands of the food and beverage industry for quality high-end agricultural products. Our offices and growing facilities are located in and around the city of Dandong in Liaoning Province. Our products consist of a number of blueberry seedling varietals. Currently, we have the capacity to grow approximately nine million seedlings per year in our 42 greenhouses on six acres of growing facilities. We sell our seedlings to a number of agricultural enterprises throughout northern China, who then replant them and cultivate them to maturity in blueberry farms.

Our unique cultivation techniques allow us to produce multiple semi-mature blueberry plants from seedlings at far higher efficiencies, survival rates and in shorter periods of time than many of our competitors, contributing to our strong gross margins. We currently employ approximately 208 individuals.

1115

Contractual Arrangements with our Controlled Affiliate and its Shareholder

On March 10, 2010, prior to the reverse acquisition transaction, Dongbo Consulting and Dandong LongSheng and its sole shareholder Guang Zhao entered into a series of agreements known as variable interest agreements (the “VIE Agreements”) pursuant to which Dandong LongSheng became Dongbo Consulting’s contractually controlled affiliate. The use of VIE agreements is a common structure used to acquire PRC corporations, particularly in certain industries in which foreign investment is restricted or forbidden by the PRC government. The VIE Agreements included:

(1) an Exclusive Technical Consulting and Service Agreement between Dongbo Consulting and Dandong LongSheng pursuant to which Dongbo Consulting is to provide technical support and consulting services to Dandong LongSheng in exchange for all of the net income after taxes of Dandong LongSheng.

(2) a Call Option and Cooperation Agreement among Guang Zhao, Dandong LongSheng and Dongbo Consulting under which the sole shareholder of Dandong LongSheng has granted to Dongbo Consulting the irrevocable right and option to acquire all of his equity interests in Dandong LongSheng to the extent permitted by PRC law. If PRC law limits the percentage of Dandong LongSheng that Dongbo Consulting may purchase at any time, then Dongbo Consulting may repeatedly exercise its option in such increments as may be allowed by PRC law. The exercise price of the option is the net asset value of Dandong LongSheng at the time of exercise, or the percentage of such net asset value which corresponds to any incremental exercise of the option, or any higher price required by PRC law. Any such difference between such net asset value and such higher price required by PRC law is, subject to all applicable laws and regulations, to be paid over to Dandong LongSheng. Dandong LongSheng and its owner agree to refrain from taking certain actions which might harm the value of Dandong LongSheng or Dongbo Consulting’s option, and Dongbo Consulting undertakes to offer necessary financial support to Dandong LongSheng with respect to any losses or capital requirements to the extent permitted by law;

(3) a Power of Attorney by Guang Zhao pursuant to which Mr. Zhao authorizes Dongbo Consulting to designate someone to exercise all of his shareholder decision rights with respect to Dandong LongSheng, provided that Dandong LongSheng consents to such authorization; and

(4) an Equity Pledge Agreement between Guang Zhao and Dongbo Consulting under which the sole shareholder of Dandong LongSheng has pledged all of his equity in Dandong LongSheng to Dongbo Consulting to guarantee Dandong LongSheng’s and Guang Zhao’s performance of their obligations under the Exclusive Technical Consulting and Service Agreement, the Call Option and Cooperation Agreement and the Equity Pledge Agreement.

The VIE Agreements with our Chinese affiliate and its shareholder, which relate to critical aspects of our operations, may not be as effective in providing operational control as direct ownership. In addition, these arrangements may be difficult and costly to enforce under PRC law. Furthermore, our failure to perform our obligations under the VIE Agreements could give Dandong LongSheng the right to cease performance under or terminate the VIE Agreements and thereby deprive us of the economic benefit of the VIE Agreements from which we derive all of our revenues. See “Item 1. Risk Factors - Risks Relating to the VIE Agreements” of this report.

Because of the common control between Honour Bond, Dongbo Consulting and Dandong LongSheng, for accounting purposes, the acquisition of these entities has been treated as a recapitalization with no adjustment to the historical basis of their assets and liabilities. The restructuring has been accounted for using the “as if” pooling method of accounting and the operations were consolidated as if the restructuring had occurred as of the beginning of the earliest period presented in our consolidated financial statements and the current corporate structure had been in existence throughout the periods covered by our consolidated financial statements.

Principal Factors Affecting Our Financial Performance

Our operating results are primarily affected by the following factors:

Growth in the Chinese Economy - We operate our agricultural facilities in China and derive the majority of our revenues from sales to customers in China. Economic conditions in China, therefore, affect virtually all aspects of our operations, including the demand for our products, the availability and prices of our raw materials and our other expenses. China has experienced significant economic growth, achieving a compound annual growth rate of over 10% in gross domestic product from 1996 through 2008. Concurrent with this growth, domestic demand for our products has also increased. China is expected to experience continued growth in all areas of investment and consumption, even in the face of a global economic recession.

Growth of Demand in the Agricultural Products Market – We believe that China’s recent rise in consumption of fruit has been due to China’s economic growth and increased health and wellness consciousness. Management believes that along with increases in disposable income, Chinese consumers will elect to purchase more health foods and fresh fruits, which will benefit our sales.

Fluctuations in Raw Material Supply, Prices and Demand for our Products - Our Company’s production costs depend largely on readily available supply price of necessary raw materials which include seedlings, fertilizer, and other growing equipment. Increases in the price of oil directly impact fertilizer prices. Blueberry demand impacts both our raw material costs as well as our sales price. We set our prices according to local market prices for seedlings, which are determined by supply and demand factors in Northern China.

PRC Government Policy Promoting the Development of the Agricultural Industry - As part of the PRC’s eleventh five-year plan, local and federal authorities have offered assistance in the form of a variety of subsidies and tax incentives to farmers and agricultural producers with the goal of modernizing China’s agriculture industry and promoting rural affluence.

Management's Discussion and Analysis of Financial Condition and Results of Operations

Comparison of ~~Three~~Six Months Ended ~~March~~June 3130, 2011 and 2010

The following tables set forth key components of our results of operations during the ~~three~~six months ended ~~March~~June 3130, 2011 and 2010, both in dollars and as a percentage of our net sales.

	Three Months Ended						Three Months Ended
	Six Months Ended						Six Months Ended
	March 31, 2011						March 31, 2010
	June 30, 2011						June 30, 2010
	(Unaudited)						(Unaudited)
				% of Net						% of Net
	Amount			Sales			Amount			Sales
Net Sales	$	15,~~585~~183,~~134~~071			100	%	$	~~827~~3,~~249~~653,545			100	%
Cost of sales		(~~329~~1,~~398~~106,383	)		(21	%)%		(~~116~~714,~~890~~541	)		(1420	%)%
Gross profit		14,~~255~~076,~~736~~688			79	%		~~710~~2,~~359~~939,004			8680	%
Selling, General and Administrative Expenses		(~~395~~605,~~205~~363	)		(2512	%)%		(3267,~~855~~800	)		(41	%)%
Operating Income		860,531			54	%		677,504			82	%
Share based consulting fee		(2,625,008	)		(51	)%		-			-
Income before income taxes		860,531			54	%		677,504			82	%
Bad debt expense		(1,470,510	)		(29	)%		-			-
(Loss) Income before income taxes		(561,193	)		(11	)%		2,871,216			79	%
Income taxes		-			-			-			-
Net income	$	860,531			54	%	$	677,504			82	%
Net (loss) income	$	(561,193	)		(11	)%	$	2,871,204			79	%

Comparison of Three Months Ended June 30, 2011 and 2010

The following tables set forth key components of our results of operations during the three months ended June 30, 2011 and 2010, both in dollars and as a percentage of our net sales.

	Three Months Ended						Three Months Ended
	June 30, 2011						June 30, 2010
	(Unaudited)						(Unaudited)
				% of Net						% of Net
	Amount			Sales			Amount			Sales
Net Sales	$	3,595,412			100	%	$	2,826,296			100	%
Cost of sales		(776,985	)		(22	)%		(597,651	)		(21	)%
Gross profit		2,818,427			78	%		2,228,645			79	%

Selling, General and Administrative Expenses		(210,158	)		(6	)%		(34,945	)		(1	)%
Share based consulting fee		(2,625,008	)		(73	)%		-			-
Bad debt expense		(1,404,985			(39	)%		-			-

(Loss) Income before income taxes		(1,421,724	)		(40	)%		2,193,700			78	%
Income taxes		-			-			-			-
Net (loss) income	$	(1,421,724	)		(40	)%	$	2,193,700			78	%

Net Sales and Cost of Sales

Our net sales increased 9242% to $5,1,~~585~~83,~~134~~071 in the six months ended June 30, 2011 from $3,653,545 in the six months ended June 30, 2010. Our net sales increased 27% to $3,595,412 in the three months ended ~~March~~June 3130, 2011 from $~~827~~2,~~249~~826,296 in the three months ended ~~March~~June 3130, 2010. The cost of goods sold per sales ratio changed from 1420% to 21% in the six months ended June 30, 2011, and changed from 21% to 22% in the three months ended ~~March~~June 3130, 2011.

The ~~increasing~~increase ofin ~~the~~ net sales ~~was~~in ~~mainly attributed to~~ the ~~enhancement~~three ofand ~~the~~six ~~market~~months ~~recognition~~ended ofJune ~~the~~30, ~~products~~2011 ofwas ~~the~~mainly ~~Company~~attributed ~~and~~to the ~~expansion~~enhancement of the market. ~~Through~~recognition ~~years~~ of ~~cultivating~~ the products of the Company, ~~our clients recognized the quality characteristics such as high survival ratio,~~ and ~~this enhanced~~ the ~~cooperation~~expansion ~~with~~of the ~~Company~~market.

13Increasing cost of goods sold per sales ratio in six and three months ended June 30, 2011 was mainly due to the higher cost of acquisition due to the age of the seeds. Further, costs of other raw materials were also higher in 2011 compared to 2010.

Increasing cost of goods sold per sales ratio in three months ended March 31, 2011 was mainly due to the higher unit selling price for each seed in the first quarter of 2010, which was twice as the unit price in 2011. The reason for the higher unit price was because of the age of seed. The unit price is higher with the two-year-old seed than the one-year-old seed. In other words, the unit price is increasing accordingly during the growing of seeds. Moreover, the costs of raw materials were also higher in 2011 which according to the trends of the market causing our overall cost to rise and our gross profit to decline to 79% from 86%.

Gross Profit and Gross Margin

Our gross profit increased 7739% to $14,~~255~~076,~~736~~688 in the six months ended June 30, 2011 from $2,939,004 in the same period 2010, and increased 26% to $2,818,427 in the three months ended ~~March~~June 3130, 2011 from $~~710~~2,~~359~~228,645 in the same period 2010. Gross profit as a percentage of net revenue was 79% and 8680% for the six months ended June 30, 2011 and 2010 respectively, and 78% and 79% for the three months ended ~~March~~June 3130, 2011 and 2010, respectively.

~~The~~Most ~~increasing~~ of ~~gross~~the ~~profit~~maturity ~~was~~seeding ~~driven~~plants bywe sold in the ~~increase~~first quarter of ~~the~~2010 ~~net~~were ~~sales~~aged over 1 or 2 years, ~~and~~with ~~decreasing~~a ~~gross~~price ~~margin~~twice ~~was~~as ~~due~~typical, toso the ~~rising~~gross margin of the ~~raw~~first ~~material~~half ~~purchasing~~year ~~cost~~in ~~which~~2010 ~~was~~is ~~discussed~~higher ~~above~~than that of 2011.

Also, most of the maturity seeding plants we sold in first quarter of 2010 were aged over 1 or 2 years, with a price twice as typical, so the gross margin of the first quarter in 2010 is higher than that of 2011 causing our overall cost to rise and our gross profit to decline to 79% from 86%.

Selling, General and Administrative Expenses

Our selling, general and administration expenses significantly increased to $~~395~~605,~~205~~363 in the ~~three~~six months ended ~~March~~June 3130, 2011 from $3267,~~742~~800 in 2010. ~~The~~ ~~increase~~In isthe ~~mainly~~first ~~due~~half toof the ~~increase~~year of ~~audit~~2011, ~~fee~~the ~~and~~Company increased spending on consulting ~~fee~~to inimprove ~~2011~~our cultivation skills and business procedures. In ~~2011~~addition, wecosts ~~spend~~for ~~significantly~~marketing, ~~more~~employee oncompensation, ~~consulting~~professional tofees ~~improve~~and ~~our~~travel ~~cultivative~~increased ~~skill~~sharply ~~and~~in ~~business procedure~~2011.

~~Income~~Selling, ~~before~~general ~~Income~~and ~~Taxes~~administration expenses increased to $210,158 in the three months ended June 30, 2011 from $34,945 in 2010. The increase is mainly due to the increase of audit and legal fees in 2011. In addition, costs for employee salaries, vehicle rentals and travel increased.

Our income before income taxes increased 27%, to $860,531 in the three months ended March 31, 2011 from $677,504 in 2010. This change was mainly due to the increase of sales in 2011 offset by higher cost of plants and an increase in selling, general and administration expenses.18

Share Based Consulting Fee

Bad debt expense

Bad debt expense increased to $1,407,510 and $1,404,985 for the six months and three months ending June 30, 2011, respectively, from zero for the same period in 2010. At June 30, 2010, the Company had one accounts receivable from an affiliated entity which was collected subsequent to June 30, 2010. The business characteristic of our industry led the accounts receivables to age a little bit longer than that of other industries, so we accrued the provision for bad debt based on aging of or outstanding receivable balances. We will continue to monitor the collection of accounts receivables to determine if additional adjustments are appropriate in the future.

Income Taxes

As all of our operations are conducted in China, according to the PRC’s new Enterprise Income Tax, we are exempt from paying income taxes because we operate our business in the agriculture industry, which the government encourages and offers special incentives. We benefited from the tax exemption in both 2011 and 2010.

Net Income (loss)

Our net loss decreased 120%, to ($561,193) in the six months ended June 30, 2011 from $2,871,204 in 2010. Net loss decreased 165%, to ($1,421,724) in the three months ended June 30, 2011 from $2,193,700 in 2010. These changes was mainly due to the increase of G&A expenses, share based consulting fee, and bad debt expense in 2011. The share based consulting fee of $2,625,008 affected our current profit, but for its strategic nature, we believe our financing activities may benefit from it in the future.

Liquidity and Capital Resources

As of ~~March~~June 3130, 2011, we had cash and cash equivalents of $37405,~~019~~192, primarily consisting of cash on hand and demand deposits. The following table provides detailed information about our net cash flow for all financial statement periods presented in this report. To date, we have financed our operations primarily through cash flows from operations and equity contributions by our shareholders.

The following table sets forth a summary of our cash flows for the periods indicated:

	Three Months Ended
	Six Months Ended
	March 31,
	June 30,
	2011			2010
Net cash (used in) provided by operating activities	$	(1,263,309	)	$	95,339
	(Unaudited)			(Unaudited)
Net cash provided by (used in) investing activities		912,944			(2,048	)
Net cash (used in) provided by operating activities	$	(1,992,566	)	$	3,773,969
Net cash provided by financing activities		95,907			1,291
Net cash provided by (used in) investing activities		1,758,856			(3,188,480	)
Effects of Exchange Rate Change in Cash		50,758			233
Net cash provided by (used in) financing activities		238,790			471,186
Net (Decrease) Increase in Cash and Cash Equivalents		(203,700	)		94,815
Effects of Exchange Rate Change in Cash		159,393			4,147
Net Increase in Cash and Cash Equivalents		164,473			1,060,822
Cash and Cash Equivalent at Beginning of the Period		240,719			11,300
Cash and Cash Equivalent at End of the Period		37405,~~019~~192			~~106~~1,~~115~~072,122

1419

Operating activities

Net cash used in operating activities was $(1,~~263~~992,~~309~~566) for the ~~three~~six months ended ~~March~~June 3130, 2011, as compared to net cash provided $953,~~339~~773,969 for the ~~three~~six months ended ~~March~~June 3130, 2010. The change is attributable to the increase of the accounts receivable and inventories. The accounts receivable contributed $1(4,~~233~~412,~~148~~262) to the net cash outflow, and inventories purchasing led to $~~559~~(605,~~594~~308) net cash outflow.

Investing activities

Net cash provided by investing activities for the ~~three~~six months ended ~~March~~June 3130, 2011 was $~~912~~1,~~944~~758,856, as compared to net cash used in investing activities of $2(3,~~048~~188,480) during the first ~~quarter~~half year of 2010. The change is attributable to receiving repayment of unsecured advances to ~~third~~unaffiliated ~~parties~~entities ~~and~~in ~~more~~2011 ~~assets~~for ~~purchase~~receivables made in 2010.

Financing activities

Net cash provided by financing activities for the ~~three~~six months ended ~~March~~June 3130, 2011 was $95238,~~907~~790 due to the repayment of amounts due from aoffice ~~director~~and advances from the officer. Net cash provided by financing activities for the six months ended June 30, ~~compared~~2010 towas $1471,~~291~~186 ~~additional~~due ~~paid~~to incollections ~~capital~~of ~~received~~advance into ~~2010~~an officer and advances from employee.

Receivable from unaffiliated entities

In May 2010, the Company made advances totaling approximately $4,129,115 (RMB 27,950,000) to four unaffiliated entities. The advances were initially made in anticipation of being equity investments and were subsequently restructured into term loans. One advance for approximately $435,810 (RMB 2,950,000) was repaid in full in December 2010. An aggregate of approximately $623,000 (RMB 4,217,080) was repaid on the other three advances during 2010. At December 31, 2010, the aggregate outstanding balance was approximately $3,143,307 (RMB 20,782,920)~~, including an exchange gain of approximately $73,000~~. During ~~three~~the six months ended ~~March~~June 3130, 2011, an aggregate of approximately $~~304~~1,~~609~~587,295 (RMB 210,~~000~~290,000) was repaid on the ~~outstanding~~advances ~~three~~and ~~advances. At~~at ~~March~~June 3130, 2011, the aggregate outstanding balance was approximately $21,~~867~~623,~~578~~537 (RMB 1810,~~782~~492,920), including an exchange gain of approximately $2867,~~880~~000. The advances are unsecured, non-interest bearing, due in various installments, and any unpaid principal is due in full on September 30, 2011. Repayment of the advances is guaranteed by an unrelated commercial finance company.

In March 2011, the Company made two more advances totaling approximately $75,837 (RMB 496,740) to two potential suppliers which were ~~still outstanding at March 31, 2011. The advances are unsecured, non-interest bearing, due in fifteen days. The advances were~~ fully repaid on April 12, 2011.

Advances to unaffiliated entities are reviewed periodically as to whether their carrying value has become impaired. The Company considers the assets to be impaired if the ~~collectibility~~collectability of the balances becomes doubtful. Based upon management’s assessment at ~~March~~June 3130, 2011 and December 31, 2010, there was no allowance necessary for potential uncollectible advances.

At December 31, 2010, the Company had a deposit of approximately $727,722 (RMB 4,811,555) that had been paid to the father of the Company’s chairman and CEO for the purchase certain farming real estate. During the quarter ended March 31 2011, the proposed acquisition was terminated and the deposit was returned to the Company.

During the quarter ended March 31, 2011, the Company’s chairman and CEO made advances to the Company and at March 31, 2011, $14,537 was due to the Company’s chairman and CEO. The amounts are unsecured, non-interest

We believe that our cash on hand and cash flow from operations will meet part of our present cash needs and we will require additional cash resources, to meet our expected capital expenditure and working capital for the next 12 months. 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.

Inflation

Inflation and changing prices have not had a material effect on our business and we do not expect that inflation or changing prices will materially affect our business in the foreseeable future. However, our management will closely monitor the price change in travel industry and continually maintain effective cost control in operations.

Off Balance Sheet Arrangements

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

Seasonality

Our products’ growth is subject to seasonal weather conditions. During the winter our products are mostly dormant.

Critical Accounting Policies

Use of estimates

The preparation of consolidated financial statements in conformity with USaccounting ~~GAAP~~principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the consolidated financial statements and the amounts of revenues and expenses during the reporting periods. Items subject to such estimates and assumptions include the carrying value and estimated useful lives of long-lived assets and the valuation allowances for receivables and for unsecured advances to unaffiliated entities. Management makes these estimates using the best information available at the time the estimates are made. However, actual results could differ materially from those results.

Revenue recognition

Accounts receivable

Accounts receivables are recorded at net realizable value consisting of the carrying amount less an allowance for uncollectible amounts, as needed.

The Company uses the aging method to estimate the valuation allowance for anticipated uncollectible receivable balances. Under the aging method, bad debt percentages determined by management based on historical experience as well as current economic climate are applied to customers’ balances categorized by the number of months the underlying invoices have remained outstanding. The valuation allowance balance is adjusted to the amount computed as a result of the aging method. When facts subsequently become available to indicate that the allowance provided requires an adjustment, then the adjustment will be classified as a change in estimate.

1621

Recent Accounting Pronouncements

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

Not applicable.

Item 4. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our principal executive officer and principal financial officer, evaluated the effectiveness of our disclosure controls and procedures. The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports, such as this report, that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company’s management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Based on that evaluation, Guang Zhao, our Chief Executive Officer and Chief Financial Officer concluded that as of ~~March~~June 3130, 2011, our disclosure controls and procedures were not effective to satisfy the objectives for which they are intended.

Changes in internal control over financial reporting

During the ~~fiscal~~first ~~quarter~~half year ended ~~March~~June 3130, 2011, there were no changes in our internal control over financial reporting identified in connection with the evaluation performed during the fiscal quarter covered by this report that has materially affected, or is reasonably likely to materially affect our internal control over financial reporting.

PART II. OTHER INFORMATION.

Item 1. Legal Proceedings

Not applicable.

Item 1A. Risk Factors

Not applicable.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Not applicable.

Item 3. Defaults Upon Senior Securities

Not applicable.

Item 5. Other Information

Not applicable.

Item 6. Exhibits

Exhibit Number		Description of Exhibit
Exhibit
Number		Description of Exhibit
10.1		Translated Lease Agreement (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed on July 1, 2011)
31.1		Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002*
32.1		Certifications of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002*
101.INS*		XBRL Instance Document
101.SCH*		XBRL Taxonomy Extension Schema Document
101.CAL*		XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF*		XBRL Taxonomy Extension Definition Linkbase Document
101.LAB*		XBRL Taxonomy Extension Label Linkbase Document
101.PRE*		XBRL Taxonomy Extension Presentation Linkbase Document

* Filed herewith

1823

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.

	North China Horticulture, Inc.,	~~North China Horticulture, Inc.,~~
Date: May 23, 2011		/s/ Guang Zhao
Date: August 15, 2011	/s/ Guang Zhao
	Guang Zhao	~~Guang Zhao~~
	Chief Executive Officer	~~Chief Executive Officer~~
Date: May 23, 2011		/s/ Guang Zhao
Date: August 15, 2011	/s/ Guang Zhao
	Guang Zhao	~~Guang Zhao~~
	Chief Financial Officer	~~Chief Financial Officer~~

1924

Filing Compare · North China Horticulture, Inc.