Yanglin Soybean (YSYB) 10-K/A 2008 FY Annual report (amended)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

Amendment No. 2

(Mark One)

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

For the fiscal year ended December 31, 2008

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: 01-31937 

YANGLIN SOYBEAN, INC.

(Exact name of registrant as specified in its charter)

Nevada	20-4136884
(State or other jurisdiction	(I.R.S. Employer
of incorporation or organization)	Identification No.)

NO. 99 FANRONG STREET, JIXIAN COUNTY

SHUANG YA SHAN CITY

HEILONGJIANG PROVINCE

CHINA, 155900

(Address of Principal Executive Offices)

86-469-469300 

(Registrant’s Telephone Number, Including Area Code)

VICTORY DIVIDE MINING COMPANY

(Former Name, Former Address And Former Fiscal Year, If Changed Since Last Report)

Securities registered pursuant to Section 12(b) of the Act: None

Securities registered pursuant to Section 12(g) of the Act: 

Title of Each Class:	Name of Each Exchange on Which Registered
Common Stock, par value $0.001	None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

Yes ¨ No þ

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.

Yes ¨ No þ

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Sections 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 þ No ¨

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. Yes ¨ No þ

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

Large accelerated filer ¨	Accelerated filer o
Non-accelerated filer ¨	Smaller Reporting Company þ
(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 Act):

Yes ¨ No þ

The aggregate market value of the 1,700,003 shares of voting and non-voting common equity stock held by non-affiliates of the registrant was $9,350,016.5 as of June 30, 2008, the last business day of the registrant’s most recently completed second fiscal quarter, based on the last sale price of the registrant’s common stock on such date of $5.50   per share, as reported by The Over-The-Counter Bulletin Board.

As of April 10, 2009, there are 20,000,003 shares of common stock outstanding.

EXPLANATORY NOTE

 This amendment no. 2 to our annual report on Form 10-K initially filed with the Securities and Exchange Commission (“Commission”) on April 13, 2009 is being filed in response to Commission’s comment letter dated May 21, 2009. Together with amendment no. 1 to our annual report on Form 10-K filed with the Commission on May 8, 2009, we (i) added two more risk factors on page 26 regarding Mr. Liu Shulin, our chief executive officer’s conflict of interest and the uncertainties with our contractual control over domestic Yanglin Soybean Group Co. because of the new Merger & Acquisition Rules issued by the Chinese government; (ii) added summary of terms for the RMB 190 million credit line on page 48; (iii) revised note 1 to our financial statements to indicate that on April 3, 2009. we amended the Exclusive Purchase Option Agreement and the Consigned Management Agreement between us and domestic Yanglin Soybean  Group Co.; and (iv) also revised note 20 to our financial statements regarding parent-only balance sheets.

YANGLIN SOYBEAN, INC.

(A Nevada Corporation)

TABLE OF CONTENTS

		Page
	PART I
Item 1	Business		3
Item 1A	Risk Factors		18
Item 1B	Unresolved Staff Comments
Item 2	Properties		31
Item 3	Legal Proceedings		34
Item 4	Submission of Matters to a Vote of Security Holders		34
	PART II
Item 5	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities		34
Item 6	Selected Financial Data		35
Item 7	Management’s Discussion and Analysis of Financial Condition and Results of Operation		36
Item 7A	Quantitative and Qualitative Disclosures About Market Risk		54
Item 8	Financial Statements and Supplementary Data		55
Item 9	Changes in and Disagreements With Accountants on Accounting and Financial Disclosure		56
Item 9A	Controls and Procedures		56
Item 9B	Other Information		58
	PART III
Item 10	Directors, Executive Officers and Corporate Governance		58
Item 11	Executive Compensation		61
Item 12	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters		63
Item 13	Certain Relationships and Related Transactions, and Director Independence		66
Item 14	Principal Accounting Fees and Services		66
	PART IV
Item 15	Exhibits and Financial Statement Schedules		67

-2-

PART I

Item 1. Business

Organizational History

Yanglin Soybean, Inc. (formerly known as Victory Divide Mining Company, the “Company”) was incorporated in the state of Nevada on May 26, 1921. Our original Articles of Incorporation were oriented toward mining operations. Our Common Stock traded on the San Francisco Mining Exchange and on the OTCBB. We operated a number of mining properties and in 1980, we became inactive and trading in our Common Stock ceased. We have had no operations, assets or liabilities since 1980 and accordingly, were deemed to be a "blank check" or shell company, that is, a development stage company that has no specific business plan or purpose or has indicated that its business plan is to engage in a merger or other acquisition with an unidentified company or companies, or other entity or person. Our Articles of Incorporation were restated and amended on June 29, 2006 to reflect our objective of finding a merger partner.

On October 3, 2007, the Company executed a reverse-merger with Faith Winner Investments Limited (“Faith Winner (BVI)”) by an exchange of shares whereby the Company issued 18,500,000 common shares at $0.001 par value in exchange for all Faith Winner (BVI) shares.

Faith Winner (BVI) formed Faith Winner (Jixian) Agriculture Development Company (“Faith Winner (Jixian)” or “WFOE”), which entered into a series of agreements with Heilongjiang Yanglin Soybean Group Co., Ltd. (“Yanglin”). As a result of entering the agreements, WFOE gained control of all of Yanglin’s assets, management and business as if Yanglin were a wholly-owned subsidiary of WFOE. However, the shareholders of Yanglin, Mr. Shulin Liu with his wife, Mrs. Huanqin Ding, also have effective control over Faith Winner (BVI) and WFOE as our subsidiaries, because they beneficially own approximately 91% of our common stock through their 100% holding in Winner State (BVI) and thus have a controlling interest in us. These contractual arrangements included a loan agreement, a consigned management agreement, two consignment agreements of equity interests, an exclusive purchase option agreement, a registered trademark transfer contract and a trademark licensing agreement. The Consignment Agreement was entered into on September 1, 2007, and the other agreements were all signed on September 24, 2007. The exclusive purchase option agreement and the consigned management agreement were amended as of April 3, 2009.

-3-

Pursuant to those agreements, Faith Winner made a loan of $17 million and intended to satisfy Yanglin’s working capital needs in the future (the “Loan”). In return, the Company obtained the management control of Yanglin and an exclusive right to acquire all of the equity of Yanglin. The rights of existing shareholders of Yanglin are assigned by the consignment of equity interests to Faith Winner (BVI). The exclusive purchase agreement and the loan agreement restrict both Yanglin and its shareholders from significant decisions including but not limited to any amendments of articles of assocaiton or rules of the Company, any change in registered capital, any transfer, mortgage or disposal of Yanglin’s assets or income in a way that would affect WFOE’s security interest, entering any material contract (exceeding RMB5 million in value) and distributing any dividends to the shareholders. Pursuant to the consigned management agreement between WFOE and Yanglin, Yanglin agreed to entrust the business operations of Yanglin and its management to WFOE until WFOE formally acquires all equity or substantially all the assets of Yanglin. Under the consigned management agreement as amended on April 3, 2009, WFOE will provide financial, technical and human resources management services to Yanglin which will enable WFOE to control Yanglin's operations, assets and cash flows. In turn, it will be entitled to 5% of Yanglin’s revenue on a yearly basis.

Under the Registered Trademark Transfer Agreement, Yanglin agreed to transfer to WFOE all of its rights in connection with the two trademarks, including without limitation the title of the trademarks and right to license ( the “Transferred Trademark”) for a purchase price of $1,000,000, which is subject to a purchase price adjustment based on the minimum appraised value on intellectual property (“IP”) rights allowed under PRC laws and regulations for such transfer. Under the Trademark Licensing Agreement, WFOE agreed to grant an exclusive license to Yanglin, for a term of 10 years, to use the Transferred Trademark for an annual licensing fee equal to 1% of Yanglin’s revenue of that year. The license fee and the management fee aforesaid – total of 6% of the revenue of Yanglin- entitled to WFOE are designed to approximate Yanglin’s annual net profit before  tax. Any excess profit in Yanglin will not be distributed as dividend according to the contractual arrangements until WFOE exercises the Exclusive Purchase Option Agreement to acquire all shareholders’ equity interest of Yanglin. If the 6% of licence and management fees exceed the net profit before tax of Yanglin, the amount  the  WFOE  is entitled to receive is limited to the actual annual net profit before tax of Yanglin under the contracts.

According to the exclusive purchase option agreement, the WFOE has the exclusive purchase option to purchase all or part of Yanglin’s shareholders’ equity interest in Yanglin when and as permitted under PRC laws and regulations and any other party has no right to purchase any equity from the shareholders of Yanglin. The agreement provides that, unless otherwise required under PRC laws and regulations, the consideration for the equity transfer or the asset transfer under the agreement will be $17 million or such greater amount as required by the then applicable Chinese law and regulations (the “Option Price”). Under the loan agreement and the exclusive purchase option agreement, the money received as the Option Price by the shareholders of Yanglin upon execution of the option shall be contributed to Yanglin and used to satisfy the repayment of the Loan, that is, any amount of money received by Yanglin’s shareholders shall be paid back to WFOE as the repayment of Loan on behalf of Yanglin. Therefore, the actual consideration of acquisition of  the direct investment in Yanglin is exactly the amount of the Loan. Under such contractual arrangements, all of assets and equity including any residual profits of Yanglin are totally controlled by WFOE and will be formally captured upon exercise of the exclusive purchase option.

The loan of $17 million to Yanglin is considered as an investment in Yanglin by the Company through a series of contractual arrangements by way of the Loan. As a result of entering into the abovementioned agreements, WFOE  is deemed to control Yanglin as a Variable Interest Entity as required by FASB Interpretation No. 46 (revised December 2003) Consolidation of Variable Interest Entities, and Interpretation of ARB No. 51. The reverse-merger also included an equity financing of $21,500,000 by the issuance of 10,000,000 Series A Convertible Preferred Stock at $2.15 per share to 10 accredited investors.

-4-

The Company, through its subsidiaries and Yanglin, (hereinafter, collectively referred to as “the Group”), is now in the business of manufacturing, distribution, and selling of non-genetically modified soybean products, including soybean oil, soybean salad oil, and soybean meal,  throughout the Province of Heilongjiang and other parts of China.

The contractual agreements were utilized instead of a direct acquisition of Yanglin’s assets because current PRC law which took effect on September 8, 2006 does not specifically establish the approval procedures and detailed implementation regulations for a non-PRC entity’s equity to be used as consideration to acquire a PRC entity's equity or assets. This makes it highly uncertain, if not impossible, for a non-PRC entity to use its equity to acquire a PRC entity. If acquisition of a PRC entity using foreign equity were possible, we could have acquired 100% of the stock of Yanglin by paying the price of $17 million with any excess treated as interests pursuant to amendment to exclusive purchase option agreement dated April 3, 2009. While PRC law does allow for the purchase of equity interests in (or assets of) a PRC entity by a non-PRC entity for cash, the purchase price must be based on the appraised value of such equity (or assets). Because we presently do not have sufficient cash to pay the estimated full value of all of the assets of Yanglin, we, through WFOE, purchased the maximum amount of assets possible with the net proceeds of the private placement on October 7, 2007, and leased from Yanglin the remainder of the assets used in Yanglin’s business.

On January 18, 2008, the Company changed its name from “Victory Divide Mining Company” to Yanglin Soybean, Inc.”

Our Industry

We are a leading non-genetically modified (non-GM) soybean processor in the PRC. We currently manufacture soybean oil in bulk and soybean meal, which are sold throughout China to our customers directly or through distributors. Most of our customer (approximately 80%) are located in Northern China.

Our manufacturing process includes sifting, crushing, heating and pressing soybeans, extracting and separating oil from crushed soybeans, and cleansing, hydrating and packaging oil as well as drying and packaging soybean meal. Currently, our main products include soybean oil, salad oil and soybean meal. We plan to broaden our product line to include high end products such as squeezed oil, powdered oil, protein concentrates, textured protein, and defatted soybean powder, while greatly enlarging the production capacity of salad oil. We have installed the equipment for manufacturing squeezed oil and expanded the production line for salad oil and have started production of these products at the end of 2007. The production facilities for powdered soy oil have been built and are now in trial production and the “debugging” phase. The pilot production of protein concentrates began in late 2008, with small quantities of commercial grade product provided to customers. Defatted soy powder will be launched in 2009, and the production line of textured protein will also be put into operation in 2009.

The Soybean Processing Industry

Soybean processing is a traditional industry. Typically, soybeans are ground and refined into soybean oil and protein meal, which in turn are processed into refined oils, animal feed, proteins and more value-added products such as foods, pharmaceuticals and cosmetics. 

(i) Soybean Oil and Soybean Salad Oil

Soybean oil is obtained by the extraction of oil from soybean seeds. Soybean oil contains various vitamins, minerals and unsaturated fatty acids which are essential to the well-being of the human body. It is an important ingredient in products such as salad dressings, margarine, paint and medicines. The price, adaptability and performance of soybean oil make it appropriate for a broad range of food, chemical and medical manufacturing applications. Soybean oil refers to Grade IV oil, as compared to the more refined salad oil. Both oils are for human consumption.

-5-

(ii) Soybean Meal

Soybean meal is manufactured by grinding soybean flakes which remain after removal of most of the oil from soybeans by a solvent or mechanical extraction process. Soybean meal is an important raw material used in the animal feed and farming industry due to its high protein content, low fat composition and edible characteristics. Given the PRC’s closer proximity to customers in the Asia, there is a growing demand for PRC produced soybean meal from countries such as Korea and Japan. This in turn has led to an increase in demand for our soybean meal products.

Growth in the Soybean Industry

Apart from being a food commodity, soybean oil is also used in the cosmetics, pharmaceutical and medical industries.  As soybean oil consumption in the PRC has been rapidly increasing, the PRC has imported soybean oil from other countries, such as Argentina, Brazil and the USA.

World Vegetable Oil Consumption 2006

	Million Short Tons		Million Metric Tons
Palm		42.0		38.1
Soybeans		39.3		35.7
Rapeseed		19.7		17.8
Sunflower seed		11.3		10.2
Peanut		5.4		4.9
Cottonseed		5.2		4.8
Palm Kernel		4.8		4.3
Coconut		3.6		3.3
Olive		3.2		2.9
Total		134.5		122.0

Source: USDA

-6-

World Protein Meal Consumption 2006 

	Million Short Tons		Million Metric Tons
Soybeans		166.7		151.3
Rapeseed		30.2		27.4
Cottonseed		16.4		14.9
Sunflower seed		12.7		11.5
Peanut		6.3		5.7
Fish		6.0		5.5
Palm Kernel		6.1		5.5
Copra		1.9		1.7
Total		246.3		223.4

Source: USDA

In the past few years, the soybean industry has seen a period of sustained growth. We believe that the soybean industry in the PRC has significant potential for further growth and we, through Yanglin, are well positioned to take advantage of such growth. Soybeans are grown for their oil and protein and are used to manufacture various products including soybean oil and soybean meal. According to the Food and Agriculture Organization of the United Nations, during the year of 2005/06, global consumption of oils and fats has been steadily increasing, rising at an average rate of approximately 3-4%.

Non-Genetically Modified Soybean Products

Genetically modified soybean plants are widespread in the world’s leading soybean producing countries (such as Brazil, Argentina and the United States) and genetically modified soybeans comprise a very large proportion of the world’s soybean production. Conversely, most of the soybean food products exported from the PRC is primarily made from non-genetically modified soybeans that are cultivated and grown in the PRC.

We believe that a growing number of consumers prefer their food products to be made from non-genetically modified raw materials, including soybean based products. Such non-genetically modified soybean products are perceived to be “green” and hence more desirable to certain classes of consumers than genetically modified soybean products, especially with respect to soy protein and other value-added soybean products. Furthermore, we believe that as a result of the increasing affluence and sophistication of the consumers in the PRC, European Union, Korea and Japan, they have also become more aware of potential health issues arising from the consumption of genetically modified soybean products and are willing to pay a premium for non-genetically modified soybean products.

-7-

As a producer of non-genetically modified soybean products, we believe we are well positioned to take advantage of such growth.

Government Support for the Soybean Industry

In addition, there has been strong government support for the development of our industry. In recent years, the PRC government has sought to differentiate soybean exports from the PRC from those from other international exporters of soybeans such as the United States and Argentina. Specifically, the PRC government has take measures to promote industries and enterprises, such as our business operations, that produce non-genetically modified soybean food products. In 2003, the PRC Ministry of Agriculture announced a plan to develop the PRC’s northeastern region (including the Heilongjiang province where we are located) into the world’s largest non-genetically modified soybean production centre for export within five years.

In addition, the Heilongjiang provincial government has introduced a number of measures to develop its organic farming industry such as improving its local agriculture infrastructure and promoting the development of large industrial groups that produce green and organic food products. Over the past five years, Heilongjiang's green food industry has grown significantly and has become an important growth sector in Heilongjiang’s burgeoning economy. Further, we believe that the proportion of “deep-processed” soybean food products produced by the PRC will increase and is expected to grow significantly, particularly with the completion of the PRC’s largest non-genetically modified soybean deep-processing base in by 2010.

We believe that these various government initiatives at the national and local levels will have a positive impact on the further development of our business operations.

Our Competitive Advantages

We believe that we have several competitive advantages:

· Our products have favorable brand-name recognition due to their superior quality and our proven track record in the industry;

· We are strategically located to access cheaper and more stable soybean supplies. Jixian County, where the company is headquartered, is in heart of the Three Rivers Plains, a major soybean production area, and Yanglin has established long-term relationships with the local farmers and suppliers;

· We have an extensive sales network covering most areas of China and have negotiated better arrangements with distributors to save costs and to promote higher efficiency;

· Our business is better managed and our operations are more efficient compared to many larger state-owned soybean processors. Our costs are lower, margins are higher and we are in better financial conditions;

· We believe that we do not face direct competition from international conglomerates such as Archer Daniels Midlands and Cargill as they produce predominantly genetically modified soybean products whereas Yanglin produce non-genetically modified soybean products which appeal to more health-conscious customers;

· Both our management and workers are skilled and experienced in the soybean industry. Many of them have worked in the industry for more than 20 years.

-8-

Our Strategy

Increase Our Sources of Supply

Due to the increasing market demand, we expect our business to grow significantly in the next few years. We believe that our need for soybean supply will only increase. In order to increase our raw material supplies, we intend to expand the soybean cultivation area supplying us through the development of further supply arrangements with other private and state-owned farms within the Heilongjiang province. Currently, we have access to soybeans produced in approximately 164,745 acres of farmland and we plan to increase our access in the next few years in other locations by signing up more soybean farmers and through other arrangements.

Expand Capacity by Building New Plants or through Acquisitions

To meet the demand for soybean products, we plan to increase our capacity. We intend to expand our production facilities by acquiring some additional factories. We expect that these acquisitions will allow us to increase our current annual soybean processing capacity to over 1 million tons of soybeans or even higher over the next few years.

Expansion of our Sales Network

We currently sell more volume of products in northern China than any other parts of China and currently do not have many sales offices in the South. We plan to expand our sales and marketing network by establishing more sales offices within the PRC. In addition, we are negotiating with potential agents in Southeast Asia and Russia. Our plan is to expand internationally into countries such as Singapore, Malaysia, Canada and the United States.  We intend to use Chinese export agents to manage currency risks.

  Expansion of our Product Line

We believe that value added soybean products will yield higher profit margins for our operations. We intend to expand our product lines to include the following high-end soybean products:

(i) Powdered Soybean Oil

Powdered soybean oil is manufactured by processing soybean oil and soybean salad oil together with corn syrup and other raw materials. Powdered soybean oil not only retains the nutritional value of liquid soybean oil, but also has a long shelf life and can be easily packaged and transported. In addition, powdered soybean oil can be used as a cheap substitute for milk or powdered milk because it can be easily dissolved or mixed with other ingredients in water to produce a mixture that has a strong fragrance similar to that of milk, as well as containing beneficial proteins and minerals.

(ii) Textured Protein

Textured protein products are manufactured from soy protein. Textured protein products are hydrated in the production process and accordingly have a symmetrical, consistent and smooth texture and specific structure. Textured protein can be added to food products to impart a taste that is similar to that of meat. Therefore, textured protein can be used as a food substitute for beef and pork. In addition, textured protein contains anti-oxygenation ingredients that could prolong the shelf-life of certain food products.

(iii) Defatted Soybean Powder

Defatted soybean powder is manufactured from specially-extracted soy meal and has a high protein content (higher than 50 percent). Defatted soybean powder can be added to fish, noodles, meat, dairy products and candy to improve the quality and taste of food. Further, defatted soybean powder can prolong shelf life and reduce cost.

-9-

(iv) Squeezed Oil

Squeezed oil is made by extracting crude soybean oil from selected soybeans through traditional methods of refining and hydration in order to remove the acids in the oil. Squeezed oil is readily absorbed by the human body and contains no cholesterol. It possesses vitamins such as A, D, and E, as well as other nutrients which have been shown to help growth, improve immunity and prevent hypertension and arteriosclerosis.

(v) Concentrated Soy Protein

Concentrated soy protein has a high protein content of up to 98% and contains no cholesterol. Concentrated soy protein can be used as an ingredient in food products to improve their texture and nutritional value. Concentrated soy protein is used as an ingredient in a wide range of food products, including nutritional supplements, seafood, processed meats, frozen food, nutritional beverages, cream soups, sauces and snacks.

Our Current Products

Our current products include the following:

Product	Use	Major Customers	2008 Volume (tons)
Soybean Oil	Cooking	Hou Xinglin, Yingkou Bohai Oil Industries Co. Ltd.		52,842
Salad Oil	Cooking	Yingkou Bohai Oil Industries Co. Ltd., Gu Changchun		17,708
Soybean Meal	Animal Feed	Jilin Zhuoyue Animal Feed Factory		337,660

We sell our products under the “Yanglin” brand name to various geographic regions of the PRC through our various distribution channels (see “Sales and Marketing” below) and directly to our customers primarily within the PRC market. In the fiscal year ending 2008, we processed approximately 420,000 tons of soybeans and generated total revenues amounting to approximately $250.7 million with net income amounting to $14.4 million. Within the 2008 production volume of our main products, namely soybean meal, soybean oil and salad oil, soybean meal occupied a major share of about 83%, while soybean oil and salad oil combined made up of approximately 17% of our production volume.

Our Suppliers of Soybeans

Maintaining a stable supply of raw materials (soybeans) is one of the key components for our success. We purchase all of our soybean supplies from various farms in the Heilongjiang province. We have established and maintained good relationships with these farms. 

The following is a list of our top ten major suppliers of soybeans for the financial year ended December 31, 2008:

Supplier	Amount Purchased (in US$)		% of Total Purchases (%)
Cui Binyan		9,054,611		4.4	%
Duan Xufeng		8,694,515		4.2	%
Tang Lijun		8,398,688		4.1	%
Jiang Minghui		8,093,791		3.9	%
Wang Li		7,664,558		3.7	%
Baoqing North Granary		7,605,785		3.7	%
Bian Chaofeng		7,564,136		3.7	%
Guo Hongjun		7,286,556		3.5	%
Chi Cui’e		7,128,677		3.4	%
Lin Baosen		7,122,672		3.4	%

-10-

Note: the amounts are converted from RMB value using the yearly average rate of 2008, 1USD = 6.9623RMB.

Our top ten suppliers together made up an aggregate of 38% of our total supply of soybeans, but our biggest supplier only supplied about 4.4% of our total supply. We believe this diversification of supply is beneficial to us as it increases our bargaining power and prevents us from being over-reliant on any single supplier.

We have implemented unique arrangements with soybean suppliers. Through our affiliate company, Heilongjiang Yanglin Group Seed Co. Ltd., we supply these farmers with “Yanglin” soybean seeds which provide higher oil yield. Pursuant to annual supply contracts, the farmers sell the harvested soybeans back to us. We extend favorable commercial terms to these farmers, such as low price and credit payment terms, for them to purchase “Yanglin” soybean seeds, and offer favorable price, which is higher than average market price, and cash-upon-delivery payment terms to the farmers for our purchases of the harvested soybeans grown from “Yanglin” soybean seeds. These arrangements ensure that we maintain good relations with our suppliers, enjoy a stable supply of soybeans that meet our high quality standards at competitive rates, and allow us to maintain a low rate of expenditure on raw materials.

To further ensure a consistent supply of soybeans and to increase its volume, we intend to enter into similar supply agreements with other soybean farmers in the PRC.

The Supplier of “Yanglin” Soybean Seeds

Heilongjiang Yanglin Group Seed Co, Ltd. is owned and managed by Mr. Shulin Liu, our chief executive officer.

Heilongjiang Yanglin Group Seed Co., Ltd has developed several strains of non-genetically modified soybean seeds (collectively, “Yanglin” seeds”). The Yanglin “East Nong 42” and the “Black Nong 44” boast high protein and fat content. It has also developed the high oil content “Yang 02-01”, “Yang 03-02” and “Yang 03-03” soybean seeds, the high protein content “Yang 03-656” soybean seeds and the high protein and high yielding “Yang 03-149” soybean seeds.

A brief summary of the characteristics of each strain of soybean seed is set forth below:

Soybean	Oil Content	Protein Content	Status of Development
“East Nong 42”	19.33%	45% - 46.4%	Completed
“Black Nong 44”	21.56% -22.61%	38.56% -46.69%	Completed
“Yang 02-01” (high oil)	22.3%-22.6%	37.8%-40.2%	Received governmental approval
“Yang 03-02” (high oil)	21.9%-22.7%	37.2%-41.5%	In trial phase
��Yang 03-03” (high protein)	21.7%-22.1%	38.4%-45.9%	In trial phase
“Yang 03-656” (high protein)	19.8%-20.6%	39.7%-45.3%	In trial phase
“Yang 03-149” (high protein)	20.3%-21.9%	41.5%-44.7%	In trail phase

Major Customers

Our customers are primarily distributors of soybean oil and soybean meal, with some of them being soybean food processors and animal feed manufacturers. The following is a list of our top ten major customers for fiscal year 2008. All of our major customers are located in the PRC.

-11-

Customers	Type of Product	Fiscal 2007 Sales (USD)		% of Total Sales (%)
Yingkou Bohai Grease Industrial Co. Ltd.	Soybean Oil		24,078,664		9.6	%
Gu Changchun	Soybean Meal		8,461,130		3.4	%
Hou Xinglin	Soybean Meal		7,175,525		2.9	%
Zhao San	Soybean Meal		6,914,165		2.8	%
Huang Zujian	Soybean Meal		6,912,752		2.8	%
Li Zhengqian	Soybean Meal		6,697,392		2.7	%
Lin Xiwu	Soybean Meal		6,420,336		2.6	%
Wang Chunyu	Soybean Meal		6,405,120		2.6	%
Wang Xihe	Soybean Meal		5,905,945		2.4	%
Jilin Zhuoyue Animal Feed Factory	Soybean Meal		5,832,863		2.3	%

Note: the amounts are converted from RMB value using the yearly average rate of 2008, 1USD = 6.9623 RMB

Our sales are widely diversified among our customers. Our largest customer accounts for only 9.6% of our total sales in fiscal 2008 while our top ten customers accounted for about 33.8% of our net sales in fiscal 2008. As such, we are not dependent on any single customer and have accordingly maintained our bargaining position in relation to our customers. Holding such a diversified customer base, we have mitigated the commercial risk and associated impact of the loss of sales from any single customer. As we begin to expand our product offering to include “high end” soybean products, our customer base will accordingly change to include more industrial users and some retail consumers.

Sales of Products by Type and Locations

The following table shows the breakdown of sales volume by customer type for fiscal year 2008.

	Salad Oil						Soy Oil						Soy Meal
Type	Volume (Tonnes)		Number of customers		%		Volume (Tonnes)		Number of customers		%		Volume (Tonnes)		Number of customers		%
Distributor		17,708		64		100		52,842		93		100		337,660		64		100
Food Manufacturer
Animal Feed Manufacturer
Others
Total		17,708		64		100		52,842		93		100		337,660		64		100

-12-

All our sales are primarily made to customers within the PRC, although some of our products may be exported by some of the distributors to countries such as Japan, Korea, Russia and India. The geographical distribution of our sales in the PRC for fiscal 2008 is shown below.

	Sales Revenue (Salad Oil)				Sales Revenue (Soybean Oil)				Sales Revenue (Soybean Meal)
Province	Volume (Tonnes)		Value (USD)		Volume (Tonnes)		Value (USD)		Volume (Tonnes)		Value (USD)
Heilongjiang		6,590		9,612,783		21,384		28,479,808		149,200		68,285,578
Jilin		1,589		2,317,456		6,263		8,340,771		56,611		25,905,799
Liaoning		5,808		8,470,600		13,236		17,627,088		29,570		13,531,548
Inner Mongolia		862		1,257,172		3,108		4,139,090		15,278		6,991,376
Shanghai				-		1,155		1,538,175		1,631		746,363
Jiangsu		331		482,743		814		1,084,047		1,939		887,307
Shanxi		268		390,861		1,804		2,402,483		19,798		9,059,776
Henan				-		303		403,521		9,719		4,447,518
Sha’anxi				-		363		483,426		7,117		3,256,815
Zhejiang		518		755,470		1,248		1,662,028		10,445		4,779,744
Guangxi		270		393,778		1,210		1,611,422		5,995		2,743,376
Sichuan		466		679,631		1,029		1,370,374		16,369		7,490,629
Hebei		1,006		1,467,187		925		1,231,872		13,988		6,401,058

Note: the amounts are converted from RMB value using the yearly average rate of 2008, 1USD = 6.9623RMB.

Our Competitors

Our competitors are the non-genetically modified soybean processors operating in the PRC. Our main competitor is Heilongjiang 93 Oil and Fat Co., Ltd., an integrated state-owned enterprise which is located in Heilongjiang, Dalian and Tianjin. The rest of our competitors are smaller state-owned enterprises.

Position	Company	Estimated Annual Non- GM Production Capacity (in Tonnes)		Estimated Market Share
1	Heilongjiang Jiushan 93 Group (SOE)		600,000		6.7	%
2	Yanglin Soybean Group, Ltd		520,000		5.0	%
3	Shandong Gaotang Lanshan Group (SOE)		200,000		2.2	%
4	Henan Xuchang Vegetable Oil Company (SOE)		100,000		1.1	%
5	Qitaihe City Nature Oil Company		100,000		1.1	%
6	Shandong Guanxian Vegetable Oil Company		100,000		1.1	%
7	Jiamusi Zhenda Company		90,000		1.0	%

Source: Information from respective companies' websites and Yanglin estimates

Generally, we do not compete with companies that are engaged primarily in the manufacturing of genetically modified soybean products, especially international agriculture conglomerates. Currently, most major producers of genetically modified soybean products are state-owned enterprises and joint ventures of global agriculture companies. Their operations are mostly located in the coastal cities in Southern China, which enables them to conveniently import genetically modified soybean from the U.S., Brazil, Argentina and other countries in bulk volume at acceptable prices. The market for their products is also mainly in the southern parts of China. Meanwhile our supply sources, production facilities and customers are mostly in Northern China, where there is abundant supply of non-genetically modified soybean. There is a geographical division between the market for genetically modified soybean products and that for non-genetically modified soybean products. Thus, we generally do not have direct competition with our genetically modified counterparts.

-13-

Sales and Marketing

Apart from our high product quality, our marketing efforts have also contributed to our success in the PRC markets. Presently, our main method of selling our products is direct marketing, supplemented with indirect marketing. Given that we are located in the Heilongjiang province, we are in close proximity to our suppliers and customers and, thus, are able to communicate with them directly (as opposed to going through the Dalian Commodities Exchange).

We have sales offices in more than 5 cities in the PRC with approximately 40 independent distributors spread over approximately 27 provinces. These provinces include locations in the northeastern, northwestern and southern regions of the PRC. Furthermore, we have a dedicated in-house sales team with 10 salespersons. Their duties include monitoring the soybean industry, collecting market and price information, developing and managing distributors, providing recommendations for our marketing and sales strategy and pricing policies, filling sales orders and after-sale services.

The following map illustrates the geographical coverage of our sales and distribution network within the PRC:

-14-

In addition to our direct marketing efforts in the PRC, and as part of our international expansion plans, we plan to appoint sales agents in North America, Europe, Russia, Japan, Korea and other countries in southeast Asia in the near future.

Advertising

We advertise our products through various forms of media, including billboards alongside highways. We are now building our own business website at the domain name www.yanglin.com.cn.

In addition, our marketing team develops and maintains a unified and distinctive image throughout all of our corporate publicity materials, including our corporate billboard advertisements, media publicity and corporate branding.

Publicity

We hold an annual conference with distributors and potential customers to promote our products. We regularly attend exhibitions in different regions to market our products.We plan to maintain and strengthen our existing customer relations through symposiums, guided tours of the company and direct correspondences that provide further information of our product offering. We will also strengthen communications with the relevant government departments in order to keep abreast of new policies and guidelines. This will enable us to adapt quickly to any changes, better seize business opportunities and develop new markets.

-15-

Delivery of Products

Approximately 70% of our products are transported to our customers by railways, thanks to our easy access to the PRC railroad network (see “Our Competitive Advantages”). The costs of transportation are borne by our customers and are pre-paid in advance ahead of delivery of the products. The remainder of our products is collected from our facilities by our customers.

Pricing and Terms

Prices of our products are determined based on the daily spot market price, which is determined by the average of ex-works prices of local producers and the quotation on commodities exchanges. We distinguish between long-term customers and short-term customers and provide rebate policies accordingly. Our short-term customers (typically customers we have been dealing with for less than a year) are required to pay us the full retail price in cash in advance of delivery of their ordered products. For our long-term customers, we may offer credit terms as well as certain preferential terms to them depending on the size of their orders. Since we are paid with cash in advance most of the time, there are almost no accounts receivables.

The current prices for our products, as of December 31, 2008 are: (excluding VAT)

Products	Price (USD/metric  ton)
Soybean oil (Grade IV)	$	930
Salad oil	$	981
Soybean meal	$	385

Based on 2008 year end exchange rate of 1US$ = 6.8542RMB

For the past three years, the price of soybean meal has been in the range of $232 per metric ton to $600 per metric ton (converted at the above mentioned foreign exchange rate 1US$ = 6.8542RMB; the same rate is used hereinafter). By comparison, the price range of soybean oil has been in the range of $633 per metric ton to $2247 per metric ton, while the price range of salad oil was from $704 per metric ton to $2324 per metric ton. The prices of our products are determined by taking into account the costs of labor as well as the seasonality of demand in the soybean market. Traditionally, the prices of our raw materials are lowest during the soybean harvest period between October and December. Our prices then peak from January to February because of the New Year and Spring Festival. 

Intellectual Property

Yanglin has registered the following trademarks in the PRC, which are currently used for all of our products:

Trademark	Country of Registration	Class	Registration Number		Date of Registration	Validity Period
“Yanglin”logo	PRC	29		1587278	June 14, 2001	From June 14, 2001 to June 13, 2011
“Yanglin”logo	PRC	31		1586742	June 14, 2001	From June 14, 2001 to June 13, 2011

Class 29 is for meat, fish, poultry and game; meat extracts, preserved, dried and cooked fruits and vegetables; jellies, jams, fruit sauces; eggs, milk and milk products; edible oils and fats. Class 31 is for agricultural, horticultural and forestry products and grains not included in other classes; live animals, fresh fruits and vegetables; seeds, natural plants and flowers; foodstuffs for animals, malt.

-16-

Employees

Currently we have 472 employees, most of whom are involved in production and operations.

The functional breakdown of our full-time employees as at December 31, 2007 and 2008 was:

	FY2007		FY2008
Production and operations		291		291
Sales		10		10
Management		165		171
Total number of employees		466		472

Along with staff incentive policies, we provide social security to every employee who signs a long term contract with us, and we have paid all social security fees as required by laws and regulations.

We have a system of periodic performance reviews that are conducted annually.

Insurance

We have the following insurance policies:

Description of Policy	Term	Coverage ($)		Premium ($)		Insured
China Pingan Property	July 9,		4,623,476		6,372	The assets of Plant 3
Insurance Co. Ltd.,	2008 to
21900004601010800092	July 9,
	2009
China Pingan Property	July 9,		350,150		2,068	The assets of Plant 3
Insurance Co. Ltd.,	2008 to
21900005801100800002	July 9,
	2009

Note: the amounts in the column Coverage are converted from RMB value using the year end rate of 2008, 1USD = 6.8542 RMB, and those in the column Premium are converted from RMB value using the yearly average rate of 2008, 1USD = 6.9623 RMB.

Government Regulations

We are subject to various government regulations, such as Food Sanitation Law, Environment Protection Law and Fire Prevention Law, and to national standards for food issued by the national Food and Drug Administration. We have obtained the Sanitation Admission certificate from the local Sanitation Bureau as well as the industrial production permit, and our facilities are regularly inspected by local authorities.

In addition, we have been issued an ISO 9001-2000 Certificate by the Beijing Zhongjing Kehuan Quality Authorization Co. Ltd and a Certificate of Class A Green Food by the China Center of Development of Green Food.

-17-

Environmental Compliance

We are subject to the PRC environmental laws, rules and regulations governing our type of manufacturing facility. We have complied with the prescribed standard of environmental protection as evidenced by a certificate issued by the Jixian Environment Protection Bureau dated February, 2007.

The treatment of our waste water is subject to the PRC Environment Protection Law. Our process of treating waste water meets the strict requirement of this law.

Item 1A. Risk Factors

Cautionary Statement Regarding Future Results, Forward-Looking Information And Certain Important Factors

In this report we make, and from time to time we otherwise make, written and oral statements regarding our business and prospects, such as projections of future performance, statements of management’s plans and objectives, forecasts of market trends, and other matters that are forward-looking statements .. Statements containing the words or phrases “will likely result,” “are expected to,” “will continue,” “is anticipated,” “estimates,” “projects,” “believes,” “expects,” “anticipates,” “intends,” “target,” “goal,” “plans,” “objective,” “should” or similar expressions identify forward-looking statements, which may appear in documents, reports, filings with the Securities and Exchange Commission, news releases, written or oral presentations made by officers or other representatives made by us to analysts, stockholders, investors, news organizations and others, and discussions with management and other of our representatives.

Our future results, including results related to forward-looking statements, involve a number of risks and uncertainties. No assurance can be given that the results reflected in any forward-looking statements will be achieved. Any forward-looking statement speaks only as of the date on which such statement is made. Our forward-looking statements are based upon assumptions that are sometimes based upon estimates, data, communications and other information from suppliers, government agencies and other sources that may be subject to revision. There are other factors that could cause our future results to differ materially from historical results or trends, results anticipated or planned by us, or which are reflected from time to time in any forward-looking statement.

We face special risks for doing business in China. We face the risk of changes in the policies of the PRC government, the risk of recent PRC regulations restricting the establishment of offshore companies by PRC residents, the risk of ineffective contractual control of Yanglin, the risk of uncertain legal environment in China, the risk of substantial influence by the PRC government over the manner we conduct our business activities, the risk of inflation in China, the risk of restrictions on currency exchange, the risk of fluctuation of Renminbi exchange rate, the risk of distribution our assets upon liquidation, the risk of being treated as a resident enterprise for PRC tax purposes, the risk of limited business insurance coverage, and the risk of future outbreaks of SARS and Avain Flu in China.

In addition to other matters identified or described by us from time to time in filings with the SEC, there are several important factors that could cause our future results to differ materially from historical results or trends, results anticipated or planned by us, or results that are reflected from time to time in any forward-looking statement. Some of these important factors, but not necessarily all important factors, include the following:

Risks Related To Our Business

Our raw material supply is vulnerable to natural disasters, which could severely disrupt the normal operation of our business and therefore adversely affect our business. 

As soybeans are our main raw materials and most of our soybeans are grown in and obtained from farmers in the Heilongjiang province, natural disasters such as drought, earthquakes, floods, and heavy rains in Heilongjiang may lead to a shortage in our supply of soybeans and result in soybean price increases, and consequently adversely affect our operations.

-18-

Our efforts to manufacture value added products may not be successful. 

In order to grow our business and achieve higher profit margins, we have begun to construct new plants and add new equipment to manufacture value added products such as high-grade oil, protein concentrate, textured protein, powdered oil, etc. If the consumers do not accept our new products, the market for such products has not fully developed, or we do not have experienced sales personnel to market such products, we may not achieve the result as we expect and our business operation and financial conditions may be adversely affected.

Soybean prices fluctuate greatly. This may adversely affect our operations.

As a commodity, soybeans are subject to the price fluctuation of the commodity market in China and indirectly to the international commodity market. For example, the soybean price went up from RMB 2.16 per 500 grams at the beginning of 2008 to RMB2.75 per 500 grams at the beginning of Mar 2008, then to RMB 2.70 per 500 grams in early July and went down to RMB 1.65 per 500 grams at the end of 2008, due to both the shortage in soybean supply caused by a severe drought in 2007 and farmers’ cutting growing areas of soybeans brought by the continuously low price level by the end of 2006. If the soybean price increases significantly, we may have a problem caused by increased demand on working capital to satisfy the raw materials needs of our operations.

Our full capacity may be reached soon. Our growth may be impacted if we could not expand our capacity in the near future. 

The designed capacity of our facilities is 520,000 tons per year and the maximum utilization rate for our industry is approximately 90%. We processed 420,000 tons of soybean in 2008 and we expect to process about 450,000 tons in 2009.We will soon need additional capacity to grow our business. If we are not able to build or acquire new facilities in 2009, the growth of our business maybe adversely affected.

We do not have long-term soybean supply contracts, which could have a material adverse effect on us.

Currently, we source about 70%of our raw materials from farmers with whom we have a long term relationship and about 30% from intermediaries who purchase directly from other farmers. However, we do not have long term contracts with the farmers or the intermediaries. All current supply contracts with the soybean farmers are one-year contracts without fixed prices. Therefore, we may not be able to control supply risks. Any significant fluctuation in price of our raw materials could have a material adverse effect on the manufacturing cost of our products.

We have tried to mitigate the risks by paying attractive premium to those farmers who will purchase “Yanglin” soybean seeds, cultivate and plant them and then sell the soybeans to us in order to guarantee our soybean supplies. However, if our competitors also pay premium or even pay higher premium to attract the suppliers, we may lose our advantage in purchasing price and lose some of the soybean supplies.

The soybean price is largely beyond our control in addition to natural disaster or supply competition.

The soybean price may also be affected by other factors in addition to natural disaster or supply competition, such as global commodity price increase, government control or suppliers’ financial difficulties. We may have limited options in the short-term for alternative supply if our suppliers fail for any reason, including suppliers’ business failure or financial difficulties to continue the supply of raw materials. Moreover, identifying and accessing alternative sources may increase our costs. Although raw materials are generally available and we have not experienced any raw material shortage in the past, we cannot assure that the necessary materials will continue to be available to us at prices currently in effect or acceptable to us.

-19-

Some of our land may be reclaimed by the government and this may materially impact our operations.

Most land in China is state-owned and land use rights may be granted, transferred, leased or allocated. Allocated land use rights are generally provided by the government for an indefinite period (usually to state-owned entities) and cannot be pledged, mortgaged, leased, or transferred by the user. As the same time, allocated land can be reclaimed by the government at any time. The lands occupied by Factory No. 1 and No. 2 is allocated land and accordingly subject to the risk of being reclaimed. We are in the process of applying for the land use rights over Factory No. 2 to be changed to transferred. Although the risk being reclaimed is very small because the government is encouraging the growth of our industry and in general the market economy system and will continue to support our business, we cannot guarantee the land will not be reclaimed in the future.

We may lose our advantages if there is emergence of new production technologies for other competitors.

Our business is dependent on our ability to utilize current technologies to produce high quality products with low cost. Currently, we employ advanced technologies now available in our manufacturing process. However, newer and better manufacturing technologies may emerge. If we are unable to adapt the production processes to newer and more efficient manufacturing technologies that may be used by our competitors to manufacture products that are of higher quality or at a lower cost, we may lose market share and our financial performance may be adversely affected because we do not have the financial resources to build new facilities using such new technologies.

Our manufacturing process is highly dangerous, which could cause adverse effects on our operation.

In our manufacturing process, we use highly inflammable and explosive chemical solutions. Therefore, fires and explosions could occur, which could cause delay in our production, damages to our facilities and injuries to our workers.

We receive a significant portion of our revenues from a small number of customers. Our business will be harmed if our main customers reduce their orders from us. 

Our customers mainly comprise approximately 40 distributors of soybean oil and other soybean products, as well as soybean food product and animal feed manufacturers. Although our sales are widely diversified among our customers and our largest customer accounts for only 10% of our total sales, our top ten customers accounted for about 34% of our net sales in fiscal 2008. Dependence on a few customers could make it difficult to negotiate attractive prices for our products and could expose us to the risk of substantial losses if a single dominant customer ceases purchasing. If we lose any customers and are unable to replace them with other customers that would purchase a similar amount of our products, our revenues and net income would decline considerably.

Our product delivery is dependent upon the efficiency of the rail system and any disruption in the services or increase in transportation costs will have a material adverse impact on our operations.

Approximately 70% of our products are transported to our customers by rail. We are largely dependent upon the efficiency of China’s rail system and network to deliver our products. Any disruption of their service will largely impact our ability to fulfill our orders on a timely basis and recognize revenue. Also any increase in transportation costs may deter our customers and lead them to source products from other nearby suppliers, thus negatively affecting our sales.

-20-

Potential environmental liability could have a material adverse effect on our operations and financial condition.

To the knowledge of management, we have complied with the prescribed standard of environment protection as evidenced by a certificate issued by the government. Although it has not been alleged by government officials that we have violated any current environmental regulations, we cannot assure that the government will not amend the current environmental protection laws and regulations. Our business and operating results may be materially and adversely affected if we were to be held liable for violating existing environmental regulations or if we were to increase expenditures to comply with environmental regulations affecting our operations.

Inadequate funding for our capital expenditure may affect our growth strategy and profitability.

Our continued growth depends upon our ability to raise capital from outside sources. To maintain our profitability, we should increase the efficiency and achieve economies of scale in production of those low-margin products, and at the same time to develop those high-margin profit products. Adequate funding is needed to expand the production scale or develop new products. However, adequate funding is dependent upon a number of factors, including but without limitation the nation’s or the world’s economy, our business condition, the financial environment as well as the relevant legal environment. If we are unable to obtain sufficient financing, our growth and profitability may be adversely limited.

The sales price fluctuation for our products is periodic, which could affect on our financial results. 

The prices of our products vary seasonably, among others, by the change of soybean supply and demand. Usually, our prices are lowest during the soybean harvest time between October and December and on the peak from January to February because of the New Year and Spring Festival. However, the price also subject to other conditions. As a result, we believe that period-to-period comparisons of our historical results of businesses are not necessarily meaningful and that you should not rely on them as an indication for future performance. It is also possible that our quarterly results of operations may be below the expectations of public market analysts and investors.

Risks Related To Our Management and Internal Control

We may not be able to achieve and maintain an effective system of internal control over financial reporting, a failure of which may prevent us from accurately reporting our financial results or detecting and preventing fraud.

We are constantly striving to establish and improve our business management and internal control over financial reporting to forecast, budget and allocate our funds. However, as a Chinese company that has recently become a US public company, we face difficulties  in hiring and retaining a sufficient number of qualified employees to achieve and maintain an effective system of internal control over financial reporting in a short period of time.

The following is a description of each deficiency with respect to our internal controls over financial reporting identified by our management.

 The Company does not have an accounting policy manual based on U.S. GAAP and has not formulated formal procedures on the accounting treatment of significant transactions and processes.

-21-

Because of the above-referenced deficiencies and weaknesses in our disclosure controls and procedures and internal control over financial reporting, we may be unable to comply with the Sarbanes-Oxley Act’s internal controls requirements, and therefore may not be able to obtain the independent auditor certifications that the Sarbanes-Oxley Act requires publicly-traded companies to obtain.  As a result of any deficiencies and weaknesses, we may experience difficulty in collecting financial data and preparing financial statements, books of account and corporate records, and instituting business practices that meet international standards, failure of which may prevent us from accurately reporting our financial results or detecting and preventing fraud.

We depend on key personnel for our business operations, whose discontinuance could incur our high replacement cost.

Our future success depends substantially on the continued services of our executive officers, especially Mr. Shulin Liu, our chairman and chief executive officer, Mr. Zhongtai Guo, chief operating officer, and Mr. Shaocheng Xu, chief financial officer. If one or more of our key executive officers are unable or unwilling to continue in their present positions, we may not be able to replace them readily, if at all. Therefore, our business may be severely disrupted, and we may incur additional expenses and take additional time to recruit and retain new officers.

We may not be able to effectively protect our proprietary rights, which could harm our business and competitive position.

Our success depends, in part, on our ability to protect our proprietary rights. At present, we have registered the trademarks for “Yanglin” logo in China which are currently used for all our products. We cannot assure you that we will be able to effectively protect our trademarks in the future. Currently, implementation of PRC intellectual property-related laws has historically been lacking, primarily because of ambiguities in the PRC laws and difficulties in enforcement. Accordingly, intellectual property rights and confidentiality protections in the PRC may not be as effective as in the United States or other developed countries. Policing unauthorized use of proprietary technology is difficult and expensive, and we might need to resort to litigation to enforce our rights or defend us, or to determine the enforceability, scope and validity of our proprietary rights or those of others. Such litigation may require significant expenditure of cash and management efforts and could harm our business, financial condition and results of operations. An adverse determination in any such litigation will impair our intellectual property rights and may harm our business, competitive position, business prospects and reputation.

We may be exposed to intellectual property infringement and other claims by third parties, which, if successful, could cause us to pay significant damage awards and incur other costs.

While we believe that the technology we use is not protected by any patent or intellectual property rights, we face the risk of being the subject of intellectual property infringement claims. The validity and scope of claims relating to the manufacturing of soybean products may involve complex technical, legal and factual questions and analysis and, therefore, may be highly uncertain. The defense and prosecution of intellectual property suits, patent opposition proceedings and related legal and administrative proceedings can be both costly and time consuming and may significantly divert the efforts and resources of our technical and management personnel. An adverse determination in any such litigation or proceedings to which we may become a party could subject us to significant liability, including damage awards to third parties, require us to seek licenses from third parties, to pay ongoing royalties, or to redesign our products or subject us to injunctions preventing the manufacture and sale of our products. Protracted litigation could also result in our customers or potential customers deferring or limiting their purchase or use of our products until resolution of such litigation. Further, we do not have adequate product liability insurance coverage against defective products as our products are manufactured according to fairly basic formulas. Any disputes so far have been resolved through friendly negotiations. There is no guarantee that we will not be involved in any legal proceedings should such negotiations fail one day.

-22-

Risks Related to Our Expansion

We give no assurances that any plans for future expansion will be implemented or that they will be successful.

While we have expansion plans, which include manufacturing “deep-processed” and refined soybean products, expanding our production lines and expanding our sales, there is no guarantee that such plans will be implemented or that they will be successful. These plans are subject to, among other things, the feasibility to meet the challenges we face, our ability to arrange for sufficient funding for more manufacturing facilities and the increasing working capital and the ability to hire qualified and capable employees to carry out these expansion plans.

Our personnel may not effectively support our growth and therefore impeding the expansion plan.

We currently have sufficient experienced and skilled employees for our business operations. But if our business and markets grow and develop, it will be necessary for us to expand our operation in an orderly fashion, which will put added pressure on our management and operational infrastructure. We may not have the requisite experience to manage and operate a larger, more modern manufacturing plant and bigger production lines. In addition, we may face challenges in product offerings and in integrating acquired businesses. These events would increase demands on our existing management, workforce and facilities. Failure to satisfy these increased demands could interrupt or adversely affect our operations and cause production backlogs, longer product development time frames and administrative inefficiencies.

We may not able to increase our sources for soybean supply. As a result, we may not support our plan to increase production.

In order to increase our raw material supplies, we intend to expand our soybean supply area through development of additional farmland soybean agreements, which in turn will be accomplished through contract negotiations with private farmers and cooperation with state-owned farms. However, it is difficult to obtain access to farmlands from private farmers or state-owned farms. If we cannot expand the soybean supply area, we may not be able to increase the supplies of the soybean and our plan to increase soybean production.

We may have difficulty to expand our sales network in domestic market or to explore new overseas market.

We intend to intensify our marketing efforts in the PRC by expanding existing sales and marketing network coverage to reach more areas by establishing more sales offices within the PRC and maybe in other countries such as Singapore, Malaysia, Canada and the United States. However, overseas consumers may not accept the value of non-generically modified soybean products and would not like to pay the premium of it. It also may be difficult to expand the sales channels in China’s markets if we are unable to advertise our products through various forms of media. But the advertising in commercial magazines, popular newspapers or over the internet will enhance our sales costs.

Our acquisition plan may not succeed, which will adversely affect our overall expansion plan.

We plan to expand our production facilities through the acquisition of approximately 3 to 4 additional factories, which can increase our current annual soybean production capacity up to about 1.5 million tons of soybeans over the next 3 years. However, it will be difficult for us to negotiate the acquisition with those factories, who may bargain for higher acquiring prices. Additionally, the acquisition will be submitted to the government for approval. That process may increase the risk of the acquisition failure or increase our acquisition cost, which decreases the value of the acquisition. If our acquisition fails, it will block our overall expansion plan.

-23-

Risks Related To Our Industry

Disruptions in the capital and credit markets related to the current national and worldwide financial crisis, which may continue indefinitely or intensify, could adversely affect our results of operations, cash flows and financial condition, or those of our customers and suppliers.

The current disruptions in the capital and credit markets may continue indefinitely or intensify, and adversely impact our results of operations, cash flows and financial condition, or those of our customers and suppliers. Disruptions in the capital and credit markets as a result of uncertainty, changing or increased regulation, reduced alternatives or failures of significant financial institutions could adversely affect our access to liquidity needed to conduct or expand our businesses or conduct acquisitions or make other discretionary investments, as well as our ability to effectively hedge our currency or interest rate. Such disruptions may also adversely impact the capital needs of our customers and suppliers, which, in turn, could adversely affect our results of operations, cash flows and financial condition.

China’s commitments to the World Trade Organization may intensify competition.

In connection with its accession to the World Trade Organization, China made many commitments including opening its markets to foreign products, allowing foreign companies to conduct distribution business and reducing customs duties. Foreign manufacturers may begin to manufacture non-genetically modified soybean products and ship their products or establish manufacturing facilities in China. Competition from foreign companies may reduce profit margins and hence our business results would suffer.

If the substitute products for soybean oil increase, we may lose our market share of soybean oil market.

Substitute products for soybean oil, such as vegetable oil of peanut and palm oil could increase the intensity of competition faced by us. With the appearance of substitute products for soybean oil, consumers have more choices. Part of consumers may prefer vegetable oil. As a result, we may lose our market share of soybean oil market.

If we are not be able to maintain competitive in non-genetically modified soybean product business, we may not achieve sufficient product revenues.

At present, we are the largest and most integrated private non-genetically modified soybean producer in China. Our products compete with a multitude of products developed, manufactured and marketed by others and we expect competition from new market entrants in the future. Our current competitors are the other domestic non-genetically modified soybean companies and global manufacturers who may enter the non-genetically modified soybean business. Although currently we view ourselves in a favorable position, we may not remain competitive if existing or future competing products may provide better quality, greater utility, lower cost or other benefits from their intended uses than our products, or may offer comparable performance at lower cost. If our products fail to capture and maintain market share, we may not achieve sufficient product revenues, and our business would suffer.

The inability of the PRC government to keep the PRC a genetically modified-free soybean zone will remove our competitive edge and negatively impact our operations.

We distinguish ourselves from our competitors in that we manufacture and sell non-genetically modified soybean products. Because the PRC is a non-genetically modified soybean growing zone, our competitors are not the large, better capitalized producers of genetically modified soybean products. The PRC has one of the strictest bio-safety regulations in the world, requiring safety certificates and labeling of genetically modified products. However, with so much genetically modified soybeans being imported into the country, there is a question as to whether the PRC is able to keep it a genetically modified-free soybean zone. If the PRC is unsuccessful in keeping the PRC a genetically modified-free soybean zone and our soybeans are tainted through pollination, we will lose our competition edge and this would adversely affect our operations.

-24-

Our failure to comply with ongoing governmental regulations could hurt our operations and reduce our market share.

In China, the food industry is undergoing increasing regulations as environmental awareness increases in China. The trend is that the Chinese government toughens its regulations and penalties for violations of environmental regulations. New regulatory actions are constantly changing our industry. Although we believe we have complied with applicable government regulations, there is no assurance that we will be able to do so in the future.

Risks Related To Doing Business In China

We face the risk that changes in the policies of the PRC government could have a significant impact upon the business we may be able to conduct in the PRC and the profitability of such business.

All of our business operations are conducted in China. Accordingly, our business, financial condition, results of operations and prospects are affected significantly by economic, political and legal developments in China. The Chinese economy differs from the economies of most developed countries in many respects, including level of government involvement in economic activities, stage of national development, and control of foreign exchange.

While the Chinese economy has grown significantly in the past 20 years, the growth has been uneven, both geographically and among various sectors of the economy. Policies of the PRC government can have significant effects on the economic conditions of the PRC. The PRC government has confirmed that economic development will follow the model of a market economy. Under this direction, we believe that the PRC will continue to strengthen its economic and trading relationships with foreign countries and business development in the PRC will follow market forces. While we believe that this trend will continue, we cannot assure you that this will be the case. A change in policies by the PRC government could adversely affect our interests by, among other factors: changes in laws, regulations or the interpretation of laws and regulations, confiscatory taxation, restrictions on currency conversion, imports or sources of supplies, or the expropriation or nationalization of private enterprises. Although the PRC government has been pursuing economic reform policies for more than two decades, we cannot assure you that the government will continue to pursue such policies or that such policies may not be significantly altered, especially in the event of a change in leadership, social or political disruption, or other circumstances affecting the PRC’s political, economic and social life.

Recent PRC regulations relating to the establishment of offshore companies by PRC residents may subject our PRC resident shareholders to personal liability and limit our ability to inject capital into our PRC subsidiaries, limit our subsidiaries’ ability to distribute profits to us or otherwise adversely affect us.

China State Administration of Foreign Exchange, or the SAFE, issued a public circular on October 21, 2005 concerning the acquisition by an offshore company controlled by PRC residents of onshore assets in China. This circular requires that (1) a PRC resident shall register with a local branch of the SAFE before he or she establishes or controls an overseas special purpose vehicle, or SPV, for the purpose of overseas equity financing (including convertible debt financing); (2) when a PRC resident contributes the assets of or his or her equity interests in a domestic enterprise to an SPV, or engages in overseas financing after contributing assets or equity interests to an SPV, such PRC resident must register his or her interest in the SPV and any changes in such interest with a local branch of the SAFE; and (3) when the SPV undergoes a material change outside of China, such as a change in share capital or merger or acquisition, the PRC resident shall, within 30 days from the occurrence of the event that triggers the change, register such change with a local branch of the SAFE. Furthermore, PRC residents who are shareholders of SPVs established before November 1, 2005 are required to register with a local branch of the SAFE before March 31, 2006.

The beneficial owners of our company who are PRC residents are required to update their respective registrations with the local branch of the SAFE. However, we cannot assure you that these beneficial owners will update their registrations with the local branch of the SAFE in full compliance with the October 2005 SAFE circular. The failure or inability of beneficial owners of our company who are resident in the PRC to comply with the registration procedures set forth in the October 2005 SAFE circular may subject these beneficial owners to fines and legal sanctions and may also limit our ability to contribute additional capital into our PRC subsidiaries, limit our PRC subsidiaries’ ability to distribute dividends to us or otherwise adversely affect our business.

-25-

Contractual arrangements through which we have established control of Yanglin may not be as effective in providing operational control as direct ownership. If Yanglin fails to perform its obligations under these contractual arrangements, we may have to legally enforce such arrangements and our business, financial condition and results of operations may be materially and adversely affected if these arrangements cannot be enforced.

We rely on contractual arrangements with Yanglin and its shareholders for operating our business. These contractual arrangements may not be as effective in providing us with control over Yanglin as direct ownership.

Under the current contractual arrangements, as a legal matter, if Yanglin fails to perform its obligations under these contractual arrangements, we may have to (i) incur substantial costs and resources to enforce such arrangements, and (ii) rely on legal remedies under PRC law, which we cannot be sure would be effective.

These contractual arrangements are governed by PRC law and provide for the resolution of disputes through either arbitration or litigation in the PRC. Accordingly, these contracts would be interpreted in accordance with PRC law and any disputes would be resolved in accordance with PRC legal procedures. If Yanglin fails to perform its obligations under these contractual arrangements, we may have to rely on legal remedies under PRC law, including seeking specific performance or injunctive relief, and claiming damages, which we cannot be sure would be effective. In addition, the legal environment in the PRC is not as developed as in other jurisdictions, such as the United States. As a result, uncertainties in the PRC legal system could limit our ability to enforce these contractual arrangements. In the event that we are unable to enforce these contractual arrangements, our business, financial condition and results of operations could be materially and adversely affected.

Our Chief Executive Officer, Mr. Shulin Liu and his wife Mrs. Huanqin Ding, beneficially own approximately 91% of our common stock through their 100% holding in Winner State (BVI). Our loan in the amount of approximately $17 million to the domestic Chinese Yanglin Soybean Group Co. Ltd. is callable should Mr. Shulin Liu decide to sell his and/or his wife’s majority interest in Yanglin. This could cause disruption in our operations and as a consequence may adversely affect our financial condition and results of operation.

According to the Exclusive Purchase Option Agreement, Faith Winner (Jixian) (“WFOE”) has the exclusive purchase option to the equity and assets of Yanglin, any other party has no right to purchase any equity from Mr. Shulin Liu and his wife. If Mr. Shulin Liu and his wife breach the Exclusive Purchase Option Agreement to sell the equity, under the Loan Agreement, repayment should be made in its entirety or in part, at WFOE’s option and upon 10 days written notice. Yanglin may choose two ways to repay the debt, either (i) in cash, or (ii) by a transfer of equity interests of Yanglin or all its assets (at the price of $17 million with excess treated as interests on the loan). If Yanglin chooses to repay the debt in cash, it may cause disruption in its operations due to lack of the working capital.

Conflict of interest that exists as a result of Mr. Liu’s role as our chief executive officer and our majority shareholder, and his role as a majority shareholder of Yanglin and therefore Yanglin may not repay the loan which would cause disruption in our business and adversely affect our financial condition and result of  operations.

Mr. Shulin Liu with his wife, Mrs. Huanqin Ding, beneficially own approximately 91% of our common stock through their 100% holding in Winner State (BVI). Mr. Liu is also our chief executive officer.  Mr. Liu with his wife beneficially own approximately 90% of Yanglin’s equity interest.  Thus, there is conflict of interest as a result of Mr. Liu’s role as our chief executive officer and our majority shareholder, and his role as a majority shareholder of Yanglin.  As a consequence, Yanglin may not repay the loan made on September 24, 2007.  Even though we may choose to foreclose on the equity interests of Yanglin or all its assets and become the owner of Yanglin  under Article 1 of the Exclusive Purchase Option Agreement, there is the risk that the equity interests of Yanglin or all its assets will not be sufficient to repay the loan or that we may not be able to foreclose on the equity interests of Yanglin or all its assets at all, which would cause disruption in our business and adversely affect our financial condition and result of operations.

The approval of the China Securities Regulatory Commission, or the CSRC, may be required in connection with this Prospectus under a recently adopted PRC regulation. Any requirement to obtain prior CSRC approval could delay the effectiveness of this Prospectus and a failure to obtain this approval, if required, could have a material adverse effect on the rights of our current and prospective stockholders, and would adversely affect the value of our common stock.

On August 8, 2006, six PRC regulatory agencies, namely, the PRC Ministry of Commerce, the State Assets Supervision and Administration Commission, or SASAC, the State Administration for Taxation, the State Administration for Industry and Commerce, the CSRC and SAFE, jointly adopted the Regulations on Mergers and Acquisitions of Domestic Enterprises by Foreign Investors, or the New M&A Rule, which became effective on September 8, 2006. The New M&A Rule purports to require, among other things, offshore special purpose vehicles, or SPVs, formed for overseas listing purposes through acquisitions of PRC domestic companies and directly or indirectly controlled by PRC companies or individuals to obtain the approval of the CSRC prior to publicly listing their securities on an overseas stock exchange. The application of their new PRC regulation is unclear. On December 14, 2006, the CSRC published a notice on its official website specifying the documents and materials required to be submitted by SPVs seeking CSRC approval of their overseas listings, or the Related Clarification.

However, the CSRC has not promulgated any guidance on the application and acceptance procedures for these matters. If the CSRC or other PRC regulatory authorities subsequently determine that we need to obtain the CSRC’s approval for this offering, we may face sanctions by the CSRC or such other PRC regulatory authorities. In such event, these regulatory authorities may impose fines and penalties on our operations in the PRC, limit our operating privileges in the PRC, require us to divest ourselves of any interests we hold in Yanglin, or take other actions that could have a material adverse effect on our business, financial condition, results of operations, the rights of our current and prospective stockholders, as well as onthe value of our common stock.

Our business is largely subject to the uncertain legal environment in China and your legal protection could be limited.

The Chinese legal system is a civil law system based on written statutes. Unlike common law systems, it is a system in which precedents set in earlier legal cases are not generally used. The overall effect of legislation enacted over the past 20 years has been to enhance the protections afforded to foreign invested enterprises in China. However, these laws, regulations and legal requirements are relatively recent and are evolving rapidly, and their interpretation and enforcement involves uncertainties. These uncertainties could limit the legal protections available to foreign investors, such as the right of foreign invested enterprises to hold licenses and permits such as requisite business licenses. In addition, all of our executive officers and our directors are residents of China, and substantially all the assets of these persons are located outside the U.S. As a result, it could be difficult for investors to effect service of process in the U.S., or to enforce a judgment obtained in the U.S. against us or any of these persons.

-26-

You may experience difficulties in effecting service of legal process and enforcing judgments against us and our management in China.

Substantially all of our assets and our subsidiaries are located in China. In addition, all of our directors and officers reside within China, including our certified public accountant (“CPA”), Albert Wong & Co. As a result, it may not be possible to effect service of process within the United States or elsewhere outside of China upon most of our directors and officers and our CPA, including with respect to matters arising under the U.S. federal securities laws or applicable state securities laws. Moreover, China is not a party to any treaties providing for reciprocal enforcement of judgments of courts with the United States or most other western jurisdictions. As a result, recognition and enforcement in China of judgments of a court in the United States or any other jurisdictions mentioned above in relation to any matter may be difficult or impossible. In addition, you will have difficulties in bring an original action in a Chinese court to enforce liabilities against our directors, officers and our CPA based upon the U.S. federal securities laws.

The Chinese government exerts substantial influence over the manner in which we must conduct our business activities.

China only recently has permitted provincial and local economic autonomy and private economic activities. Chinese government has exercised and continues to exercise substantial control over virtually every sector of the Chinese economy through regulation and state ownership. Our ability to operate in China may be harmed by changes in its laws and regulations, including those relating to taxation, import and export tariffs, environmental regulations, land use rights, property and other matters. We believe that our operations in China are in material compliance with all applicable legal and regulatory requirements. However, the central or local governments of these jurisdictions may impose new, stricter regulations or interpretations of existing regulations that would require additional expenditures and efforts on our part to ensure our compliance with such regulations or interpretations. Accordingly, government actions in the future, including any decision not to continue to support recent economic reforms and to return to a more centrally planned economy, or regional or local variations in the implementation of economic policies, could have a significant effect on economic conditions in China or particular regions thereof, and could require us to divest ourselves of any interest we hold in Chinese properties.

Inflation in China may inhibit our activity to conduct business in China.

In recent years, the Chinese economy has experienced periods of rapid expansion and high rates of inflation. During the past ten years, the rate of inflation in China has been as high as 20.7% and as low as -2.2%. These factors have led to the adoption by Chinese government, from time to time, of various corrective measures designed to restrict the availability of credit or regulate growth and contain inflation. While inflation has been more moderate since 1995, high inflation may in the future cause Chinese government to impose controls on credit and/or prices, or to take other action, which could inhibit economic activity in China, and thereby harm the market for our products.

Restrictions on currency exchange may limit our ability to receive and use our revenues effectively.

The majority of our revenues will be settled in Renminbi, and any future restrictions on currency exchanges may limit our ability to use revenue generated in Renminbi to distribute dividend or make other payments in U.S. dollars. Normally the revenue will be reinvested in China. If we distribute dividend or  make other payments in U.S. dollars to the shareholders, PRC Foreign Investment Companies Laws require us to provide relevant documents such as tax payment evidence and resolutions of the board of the directors.  Although the Chinese government introduced regulations in 1996 to allow greater convertibility of the Renminbi for current account transactions, significant restrictions still remain, including primarily the restriction that foreign-invested enterprises may only buy, sell or remit foreign currencies after providing valid commercial documents at those banks in China authorized to conduct foreign exchange business. In addition, conversion of Renminbi for capital account items, including direct investment and loans, is subject to governmental approval in China, and companies are required to open and maintain separate foreign exchange accounts for capital account items. We cannot be certain that the Chinese regulatory authorities will not impose more stringent restrictions on the convertibility of the Renminbi.

-27-

The fluctuation of the Renminbi may materially and adversely affect your investment.

The value of our common stock will be affected by the foreign exchange rate between U.S. dollars and Renminbi, and between those currencies and other currencies in which our sales may be denominated. For example, to the extent that we need to convert U.S. dollars into Renminbi for our operational needs and should the Renminbi appreciate against the U.S. dollar at that time, our financial position, the business of the company, and the price of our common stock may be harmed. If we decide to convert our Renminbi into U.S. dollars for the purpose of declaring dividends on our common stock or for other business purposes and the U.S. dollar appreciates against the Renminbi, the U.S. dollar equivalent of our earnings from our subsidiaries in China would be reduced.

We may not be able to distribute our assets upon liquidation and dividend payment will be subject to restrictions under Chinese foreign exchange rule.

Our assets are predominately located inside China. Under the laws governing foreign investment enterprises in China, dividend distribution and liquidation are allowed but subject to special procedures under the relevant laws and rules. Any dividend payment will be subject to the decision of the board of directors and subject to foreign exchange rules governing such repatriation. Any liquidation is subject to both the relevant government agency’s approval and supervision as well the foreign exchange control. The foreign exchange control authority may or may not approve the repatriation of funds out of China if any funds left after liquidation.  This may generate additional risk for our investors in case of liquidation.

We may be treated as a resident enterprise for PRC tax purposes as the Enterprise Income Tax Law became effective on January 1, 2008, which may subject us to PRC income tax for any dividends we receive from our subsidiaries and PRC income tax withholding for any dividends we pay to our non-PRC shareholders.

The Enterprise Income Tax Law provides that enterprises established outside of China whose “de facto management bodies” are located in China are considered “resident enterprises” and will generally be subject to the uniform 25.0% enterprise income tax rate as to their global income, including income we receive from our subsidiaries. The term “de facto management bodies” is not defined under the Enterprise Income Tax Law and it is currently unclear in which situations a non-PRC enterprise’s “de facto management body” is located in China. All of our management is currently based in China, and if a majority of the members of our management team continue to be located in China after the effective date of the Enterprise Income Tax Law, we may be considered a PRC resident enterprise and therefore subject to PRC enterprise income tax at the rate of 25% on our worldwide income, which will include any dividend income we receive from our subsidiaries. If we are required under the Enterprise Income Tax Law to pay income tax for any dividends we receive from our subsidiaries, our revenues could decrease significantly.

We have limited business insurance coverage in China, which could harm our business. 

We are exposed to many risks, including equipment failures, natural disasters, industrial accidents, power outages, and other business interruptions. We do not carry business interruption insurance and as a result, we may be required to pay for financial and other losses, damages and liabilities, including those caused by natural disasters and other events beyond our control, out of our own funds, which could have a material adverse effect on our business, financial condition and results of operations.

Our property and equipment insurance does not cover the full value of our property and equipment, which leaves us with exposure in the event of loss or damage to our properties or claims filed against us. We currently do not carry any product liability or other similar insurance. We cannot assure you that we would not face liability in the event of the failure of any of our products. This is particularly true given our plan to significantly expand our sales into international markets, like the United States, where product liability claims are more prevalent.

-28-

Except for property and automobile insurance, we do not have other insurance such as business liability or disruption insurance coverage for our operations in the PRC. We do not maintain a reserve fund for warranty or defective products claims. Our costs could substantially increase if we experience a significant number of warranty claims. We have not established any reserve funds for potential warranty claims since historically we have experienced few warranty claims for our products so that the costs associated with our warranty claims have been low. If we experience an increase in warranty claims significantly, it would have a material adverse effect on our financial condition and results of operations.

Any future outbreak of severe acute respiratory syndrome or avian influenza in China, or similar adverse public health developments, may severely disrupt our business and operations. 

A renewed outbreak of severe acute respiratory syndrome, the Avian Flu or another widespread public health problem in China, where all of our manufacturing facilities are located and where all of our revenues are derived from, could have a negative effect on our operations. In addition, there have been confirmed human cases of avian influenza in PRC, Vietnam, Iraq, Thailand, Indonesia, Turkey, Cambodia and other countries which have proven fatal in some instances. If such an outbreak or any other similar epidemic were to spread in China, where our operations are located, it may adversely affect our business and operating results. Such an outbreak could have an impact on our operations as a result of quarantines or closures of our manufacturing facilities or the retail outlets, which would severely disrupt our operations, the sickness or death of our key officers and employees, and a general slowdown in the Chinese economy.

Risks Related To The Market For Our Stock

Our Common Stocks subject to price volatility and may result in losses for investors.

The stock market has experienced significant price and volume fluctuations that have particularly affected the trading prices of equity securities of many companies that have business operations exclusively in China. These fluctuations have often been unrelated or disproportionate to the operating performance of many of these companies. Any negative change in the public’s perception of these companies could decrease our stock price regardless of our operating results. The market price of our common stock has been and may continue to be volatile. We expect our stock price to be subject to fluctuations as a result of a variety of factors, including factors beyond our control.

These factors include without limitation actual or anticipated variations in our quarterly operating results, announcements of technological innovations or new products or services by us or our competitors, announcements relating to strategic relationships or acquisitions, additions or terminations of coverage of our common stock by securities analysts, statements by securities analysts regarding us or our industry, conditions or trends in the our industry, and changes in the economic performance and/or market valuations of other soybean product companies.

The prices at which our common stock trades will affect our ability to raise capital, which may have an adverse affect on our ability to fund our operations.

Our common stock may be considered to be a “penny stock” and, as such, the market for our common stock may be further limited by certain SEC rules applicable to penny stocks. 

To the extent the price of our common stock remains below $5.00 per share or we have net tangible assets of $2,000,000 or less, our common shares will be subject to certain “penny stock” rules promulgated by the SEC. Those rules impose certain sales practice requirements on brokers who sell penny stock to persons other than established customers and accredited investors (generally institutions with assets in excess of $5,000,000 or individuals with net worth in excess of $1,000,000). For transactions covered by the penny stock rules, the broker must make a special suitability determination for the purchaser and receive the purchaser’s written consent to the transaction prior to the sale. Furthermore, the penny stock rules generally require, among other things, that brokers engaged in secondary trading of penny stocks provide customers with written disclosure documents, monthly statements of the market value of penny stocks, disclosure of the bid and asked prices, disclosure of the compensation to the brokerage firm, and disclosure of the sales person working for the brokerage firm. These rules and regulations adversely affect the ability of brokers to sell our common shares and limit the liquidity of our securities.

-29-

We do not intend to pay cash dividends in the foreseeable future. 

We do not anticipate paying any cash dividends in the foreseeable future. We currently intend to retain all available funds and any future earnings for use in the operation and expansion of our business. In addition, the terms of any future debt or credit facility may preclude us from paying any dividends. As a result, capital appreciation, if any, of our common stock will be your sole source of potential gain in your investment for the foreseeable future.

Our chief executive officer could exert significant influence over our significant corporate decisions and may act in a manner that advances his best interests and not necessarily those of other stockholders. 

Our Chief Executive Officer, Mr. Shulin Liu and his wife Mrs. Huanqin Ding, beneficially own approximately 91% of our common stock through their 100% holding in Winner State (BVI). As a result, Mr. Liu may be able to influence significantly the outcome of all matters requiring stockholder approval, including the election and removal of directors and any merger, consolidation, or sale of all or substantially all of our assets and he may act in a manner that advances his best interests and not necessarily those of other stockholders, including investors in this offering, by, among other things: delaying, deferring or preventing a change in control of us; entrenching our management and/or our board of directors; impeding a merger, consolidation, takeover or other business combination involving us; discouraging a potential acquirer from making a tender offer or otherwise attempting to obtain control of us; or causing us to enter into transactions or agreements that are not in the best interests of all stockholders.

There is currently a very limited trading market for our common stock

Our common stock is quoted on the over-the-counter Bulletin Board. However, our bid and asked quotations have not regularly appeared on the OTC Bulletin Board for any consistent period of time. There is no established trading market for our common stock and our common stock may never be included for trading on any stock exchange or through any other quotation system (including, without limitation, the NASDAQ Stock Market). You may not be able to sell your shares due to the absence of a trading market.

We will incur increased costs as a result of changes in laws and regulations relating to corporate governance matters.

As a public reporting company, we will need to comply with the Sarbanes-Oxley Act of 2002 and the related rules and regulations adopted by the SEC, including expanded disclosures, accelerated reporting requirements and more complex accounting rules. Compliance with Section 404 of the Sarbanes-Oxley Act of 2002 and other requirements will increase our costs and require additional management resources. Additionally, these laws and regulations could make it more difficult or more costly for us to obtain certain types of insurance, including director and officer liability insurance, and we may be forced to accept reduced policy limits and coverage or incur substantially higher costs to obtain the same or similar coverage. The impact of these events could also make it more difficult for us to attract and retain qualified persons to serve on our board of directors, our board committees or as executive officers. We are presently evaluating and monitoring developments with respect to these laws and regulations and cannot predict or estimate the amount or timing of additional costs we may incur to respond to their requirements.

-30-

We may not be able to achieve and maintain an effective system of internal control over financial reporting, a failure which may prevent us from accurately reporting our financial results or detecting and preventing fraud.

We will be subject to reporting obligations under the U.S. securities law. Beginning with our annual report on Form 10-K for the fiscal year ending December 31, 2007, we will be required to prepare a management report on our internal control over financial reporting containing our management’s assessment of the effectiveness of our internal control over financial reporting. In addition, our independent registered public accounting firm must attest to and report on the effectiveness of our internal control over financial reporting. Our management may conclude that our internal controls over our financial reporting is not effective. Moreover, even if our management concludes that our internal control over financial reporting is effective our independent registered public accounting firm may still decline to attest to the effectiveness or may issue a report that is qualified if it is not satisfied with our controls or the level at which our controls are documented, designed, operated or reviewed, or if it interprets the relevant requirements differently from us. Our reporting obligations as a public company will place a significant strain on our management, operational and financial resources and systems for the foreseeable future.

We may require additional capital, which may not be available on commercially reasonable terms, or at all. 

Capital raise through the sale of equity securities may result in dilution to our shareholders. The incurrence of indebtedness would result in increased debt service obligations and could result in operating and financing covenants that would restrict our operations. Financing may be unavailable in amounts or on terms acceptable to us, or at all. Failure to obtain such additional capital could have an adverse impact on our business strategies and growth prospects.

Our future capital raising and the conversion of our outstanding shares of preferred stock and warrants may dilute our shareholders’ equities.

If we need to obtain external financing, our capital raising could require us to sell additional equity or debt securities or obtain credit facilities. The sale of additional equity or equity-linked securities could result in additional dilution to our then existing shareholders. In addition the conversion of outstanding shares of preferred stock and exercise of warrants into common stock may dilute our then existing shareholders’ equities. Certain registration rights have been granted to holders of the preferred stock and warrants. Pursuant to the registration rights agreement, certain holders of the preferred stock and warrants have the demand rights to require us to register the shares common stock held by these holders. Therefore, as our existing shareholders, your share equities may be diluted upon the conversion of outstanding shares of preferred stock, exercise of warrants and sale of common stock pursuant to the registration rights agreement.

ITEM 2. Properties

We own and operate three soybean production factories in Jixian county in the Heilongjiang province. Our factories have a combined annual soybean processing capacity of 520,000 tons.

Factory No.1 manufactures salad oil, Grade IV soybean oil and soybean meal. Factory No. 2 manufactures Grade IV soybean oil and soybean meal. Our newest facility, Factory No.3, which was built in 2005, manufactures Grade IV soybean oil, soybean meal and salad oil. Our new, high end products, including defatted soy powder, soy protein concentrates and textured protein, will be manufactured in Factory No. 2. Powdered soy oil will be produced in Factory No. 3. We have finished building the production lines for salad oil and squeezed oil and put them into operations in the last quarter of 2007.

The following tables indicate the land area and annual production capacity of our production facilities:

Production Facility	Area			Capacity
Factory No. 1		27,000	m2		100,000
Factory No. 2		43,572	m2		120,000
Factory No. 3		45,596	m2		300,000

-31-

Annual  Production  Capacity for  2007  (Tonnes)	Actual  Output for  2007  (Tonnes)		Utilization Rate for 2007		Annual  Production  Capacity for  2008  (Tonnes)	Actual  Output for  2008  (Tonnes)		Utilization Rate for 2008
520,000		385,000	74	%	520,000		420,000	81	%

Note: The annual production capacity is based on 3 shifts (8 hours per shift) a day for 300 days a year.

We purchased the land use rights for the 45,596 m2 of land of Factory No. 3. The land use rights for Factory No. 1 and No. 2 are allocated by the local government at minimal cost.

Our machinery and equipment for soybean processing include conveyor belt, sifting machines, dyers; steamer, crushers; flaking machines, extractors; distillers; packaging machines; containers, etc. Our machinery has been kept in good conditions and with property insurance coverage.

 All land in the PRC is owned by the government and cannot be sold to any individual or entity. Instead, the government grants or allocates landholders a “land use right.” There are four methods to acquire land use rights:

· grant of the right to use land;

· assignment of the right to use land;

· lease of the right to use land; and

· allocated land use rights.

In comparison with Western common law concepts, granted land use rights are similar to life estates and allocated land use rights are in some way similar to leaseholds.

Granted land use rights are provided by the government in exchange for a grant fee, and carry the rights to pledge, mortgage, lease, and transfer within the term of the grant. Land is granted for a fixed term - generally 70 years for residential use, 50 years for industrial use, and 40 years for commercial and other use. The term is renewable in theory. Unlike the usual case in Western nations, granted land must be used for the specific purpose for which it was granted.

Allocated land use rights are generally provided by the government for an indefinite period (usually to state-owned entities) and cannot be pledged, mortgaged, leased, or transferred by the user. Furthermore, allocated land can be reclaimed by the government at any time. Allocated land use rights may be converted into granted land use rights upon the payment of a grant fee to the government.

In addition to the abovementioned land use rights, Yanglin has the following leased land use right:

-32-

Lessor	Location	Area (square meters)	Rental Fee (RMB)	Construction on Land	Term and Expiration
Jixian Industrial Company	Jixian County Hedong  District	27,000	8,900,567	Workshop, warehouse	December 4, 2001 - December 3, 2051
Hongtai Oil Factory	Jixian County, Shuangfu Road East	43,572.1	8,714,400	Workshop, warehouse	November 1, 2006 – October 30, 2056
Jixian County Government	Jixian County	45,596	9,383,267.88	Workshop, warehouse	September 6, 2005 – September 5, 2055
Wansheng Village Commission	Wansheng Village Oil Pump Station West, Daoban Dong Qiang	3,844.6	100,000	Farmland	October 19, 2003 - October 18, 2053
Wansheng Village Commission	Hatong Expressway North, Wansheng Village	16,643.7	99,862.2	Farmland	April 1, 2004 – December 31, 2028
Mr.Liu Fengyu, Ms. Tian Shubai	Jian San Jiang Administration Daxing Farm 24 Group Nan.	1,000,000	1,100,000	Farmland	January 1, 2005 - December 31, 2026

We have embarked on the process to convert the allotted land use rights for Factory No. 1, Factory No. 2, Wansheng Village and Jiansan Farm into granted land use rights. The conversion will involve a payment of a “transfer fee” to the Jixian County Land Bureau.

Yanglin also owns the following buildings, comprising Factory No. 3:

Location	Area (square meters)		Nature of building	Function	Certificate
Bei No.4, Nongfeng Village (Factory No. 3)		1658.46	Private Asset	Office, garage	Ji Fang Quan Zheng Fanrong Zi No. 00033652
Bei No.4, Nongfeng Village ( Factory No. 3)		9224.93	Private Asset	Workshop	Ji Fang Quan Zheng Fanrong Zi No. 00036015
Factory No. 3		1401.47	Private Asset	Boiler room	Ji Fang Quan Zheng Fanrong Zi No. 00033653
Hedong 51A (Factory No. 1)		5772	Private Asset	Office, electricity distribution room, workshop, storage room.	Ji Fang Quan Zheng Shagang Zi No. 000278

-33-

Item 3. Legal Proceedings

There are no known pending legal proceedings to which we or our properties are subject.

Item 4. Submission Of Matters To A Vote Of Shareholders

No matters were submitted to a vote of shareholders in the last quarter.

PART II

Item 5. Market For Registrant’s Common Equity, Related Shareholder Matters, And Issuer Purchases Of Equity Securities

Our stock is currently quoted on the Over the Counter Bulletin Board and our trading symbol is "YSYB.OB”. There has never been any established public market for shares of our Common Stock.

The following table sets forth for the period indicated the prices of the Common Stock in the over-the-counter market, as reported and summarized by the OTC Bulletin Board. Such prices are based on inter-dealer bid and asked prices, without markup, markdown, commissions, or adjustments and may not represent actual transactions.

CALENDAR QUARTER ENDED	HIGH			LOW
March 31, 2007		0	*		0	*
June 30, 2007		0	*		0	*
September 30, 2007		0	*		0	*
December 31, 2007	$	4.50		$	2.50
March 31, 2008	$	3.25		$	3.25

CALENDAR QUARTER ENDED	HIGH		LOW
June 30, 2008	$	5.50	$	2.85
September 30, 2008	$	5.50	$	4.90
December 31, 2008	$	5.25	$	2.50
March 31, 2009	$	4.90	$	3.25
Until April 9, 2009	$	4.90	$	3.50

* There was almost no trading activity of the company’s common stock on and before September 30, 2007.

On April 9, 2009, the last reported sale price of our common stock on the Over the Counter Bulletin Board was $3.50 per share.

Shareholders

As of April 10, 2009, we have 20,000,003 shares of Common Stock issued and outstanding held by approximately 360 shareholders and 10,000,000 shares of Series A Preferred Stock issued and outstanding held by approximately 10 shareholders. We have authorized and issued 10,000,000 Series A Preferred Stock and authorized 10,000,000 Series B Preferred Stock but have not issued any Series B Preferred Stock.

Dividend Policy

Our board of directors has not declared a dividend on our Common Stock during the last two fiscal years or the subsequent interim period and we do not anticipate the payments of dividends in the near future, as we intend to reinvest our profits to grow operations. We rely on dividends from Yanglin for our funds and PRC regulations may limit the amount of funds distributed to us from Yanglin, which will affect our ability to declare any dividends.

-34-

Repurchases of Equity Securities

No repurchases of our common stock were made in a month within the fourth quarter of the fiscal year covered by this report.

Item 6.   Selected Financial Data

SELECTED CONSOLIDATED FINANCIAL DATA

You should read the following selected consolidated financial data in conjunction with “Management's Discussion and Analysis of Financial Condition and Results of Operations,” the financial statements and related notes, and the other financial information included in this prospectus.

Consolidated Statement of Operations	The year ended Dec. 31, 2004 ($)			The year ended Dec. 31, 2005 ($)			The year ended Dec. 31, 2006 ($)			The year ended Dec. 31, 2007 ($)			The year ended Dec. 31, 2008 ($)
	(audited)			(audited)			(audited)			(audited)			(audited)
Sales Revenue (net of discounts, returns and allowances)		26,325,611			38,430,465			88,078,494			155,206,867			250,728,674
Other sales		-			-			-			-
Cost of sales		(24,557,296	)		(35,132,664	)		(79,862,179	)		(142,568,658	)		(229,838,842	)
Gross Profit		1,768,315			3,297,801			8,216,315			12,638,209			20,889,832
Selling expenses		(54,553	)		(43,094	)		(63,209	)		(146,411	)		(249,812	)
General and administrative expenses		(902,258	)		(1,103,262	)		(1,078,184	)		(1,812,450	)		(5,552,223	)
Income from operations		811,504			2,151,445			7,074,922			10,679,348			15,087,797
Interest expense, net		(100,455	)		(150,370	)		(219,032	)		(394,705	)		(677,015	)
Other income		211,168			-			-			39,385			797
Other expense					-			-			-			(31,113	)
Income before taxation		922,217			2,001,075			6,855,890			10,324,028			14,380,466
Income tax		-			-			-			-			-
Net Income		922,217			2,001,075			6,855,890			10,324,028			14,380,466
Basic earnings per share		0.046			0.100			0.343			0.516			0.72
Diluted earnings per share		0.046			0.100			0.343			0.069			0.38

Consolidated Balance Sheets	The year ended Dec. 31, 2004 ($)		The year ended Dec. 31, 2005 ($)		The year ended Dec. 31, 2006 ($)		The year ended Dec. 31, 2007 ($)		The year ended  Dec. 31, 2008 ($)
	(audited)		(audited)		(audited)		(audited)		(audited)
Current Assets		13,069,478		9,911,883		11,272,054		35,828,927		46,386,564
Total Assets		20,454,198		27,090,833		35,245,747		70,732,531		82,549,237
Current Liabilities		6,350,104		10,634,636		11,050,319		15,587,625		9,243,080
Total Liabilities		6,670,729		10,908,533		11,512,096		16,044,732		9,677,758
Total Stockholders’ Equity		13,783,469		16,182,300		23,733,651		54,687,799		72,871,479

-35-

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operation

The following discussion of our financial condition and results of operations should be read in conjunction with our audited consolidated financial statements and the notes to those financial statements appearing elsewhere in this Form 10-K. This discussion contains forward-looking statements that involve significant risks and uncertainties. As a result of many factors, such as those set forth under "Forward Looking Statements" and "Item 1A. Risk Factors" and elsewhere in this Form 10-K, our actual results may differ materially from those anticipated in these forward-looking statements.

Company Overview

We are a leading non-genetically modified (non-GM) soybean processor in the PRC. We currently manufacture ordinary soybean oil, salad oil and soybean meal in bulk package, which are sold throughout China to our customers directly or through distributors. Most of our customers (approximately 80%) are located in Northern China.

Our manufacturing process includes sifting, crushing, heating and pressing soybeans, extracting and separating oil from crushed soybeans, and cleansing, hydrating and packaging of oil as well as drying and packaging soybean meal. Currently, our main products include ordinary soybean oil, salad oil and soybean meal. We plan to broaden our product line to include high end products such as squeezed oil, powdered soy oil and protein concentrates, textured protein and defatted soybean powder, while greatly enlarging the production capacity of salad oil. We have installed the equipment for manufacturing squeezed oil and expanded the production line for salad oil and have started production of these products at the end of 2007. The production facilities for powdered soy oil have been built and are now in the trial production and “debugging” phase. The pilot production of protein concentrates began in late 2008, with small quantities of commercial grade product provided to customers. Defatted soy powder will be launched in 2009, and the production line of textured protein will also be put into operation in 2009.

We sell our products under the “Yanglin” brand name primarily to various geographic regions of the PRC through our various distribution channels. In the fiscal year ended December 31, 2008, we processed approximately 420,000 tons of soybeans and generated total revenues amounting to approximately $250.7 million with net income amounting to $14.4 million.

Our goal is to become the market leader in the non-GM soybean industry of China, and we believe that we can accomplish this objective in the near future. We are now considering future expansion and an acquisition plan, with the intention of significantly increasing our processing capacity. The plan is still in a preliminary stage, but this will be a vital step in achieving our objective. We are also making great efforts to improve and strengthen our management and internal control over financial reporting. We have engaged Ernst & Young as a consultant on our Sarbanes-Oxley compliance project, and Ernst & Young’s project team has finished their review of our internal control over financial reporting. By the end of 2008, we were close to successfully completing the project . This project is a great opportunity to reinforce our capability to protect the interests of the company and its shareholders while improving management effectiveness and efficiency.

Organizational History

Yanglin Soybean Inc. (f/k/a, Victory Divide Mining Company, the “Company”) was incorporated in the state of Nevada on May 26, 1921. Prior to October 3, 2007 the company had only nominal operations and assets.

On October 3, 2007, the Company executed a reverse-merger with Faith Winner Investments Limited (“Faith Winner (BVI)”) by an exchange of shares whereby the Company issued 18,500,000 common shares at $0.001 par value in exchange for all Faith Winner (BVI) shares.

Faith Winner (BVI) formed Faith Winner (Jixian) Agriculture Development Company (“Faith Winner (Jixian)” or “WFOE”), then Faith Winner (BVI) and WFOE entered into a series of agreements with Heilongjiang Yanglin Soybean Group Co., Ltd. (“Yanglin”) including but not limited to management, loan, purchase option, consignment, trademark licensing, non-competition, etc. As a result of such arrangements WFOE gained control of all of Yanglin’s assets, management and business as if Yanglin were a wholly-owned subsidiary of WFOE, so WFOE is deemed to control Yanglin as a Variable Interest Entity as required by FASB Interpretation No. 46 (revised December 2003) Consolidation of Variable Interest Entities, an Interpretation of ARB No. 51.

-36-

However, the shareholders of Yanglin, Mr. Shulin Liu with his wife, Mrs. Huanqin Ding, also have effective control over Faith Winner (BVI) and WFOE as our subsidiaries, because they beneficially own approximately 91% of our common stock through their 100% holding in Winner State (BVI) and thus have a controlling interest in us.

Pursuant to those agreements, WFOE made a loan of $17 million and intended to satisfy Yanglin’s working capital needs in the future (the “Loan”). In return, the Company obtained the management control of Yanglin and an exclusive right to acquire all of the equity of Yanglin. The rights of existing shareholders of Yanglin are assigned by the consignment of equity interests to Faith Winner (BVI). The exclusive purchase agreement as amended on April 3, 2009, and the loan agreement restrict both Yanglin and its shareholders from significant decisions including but not limited to any amendments of articles of assocaiton or rules of the Company, any change in registered capital, any transfer, mortgage or disposal of Yanglin’s assets or income in a way that would affect WFOE’s security interest, entering any material contract (exceeding RMB5 million in value) and distributing any dividends to the shareholders. Pursuant to the consigned management agreement between WFOE and Yanglin, Yanglin agreed to entrust the business operations of Yanglin and its management to WFOE until WFOE formally acquires all equity or substantially all the assets of Yanglin. Under the consigned management agreement as amended on April 3, 2009, WFOE will provide financial, technical and human resources management services to Yanglin which will enable WFOE to control Yanglin's operations, assets and cash flows. In turn, it will be entitled to 5% of Yanglin’s revenue on a yearly basis.

Under the Registered Trademark Transfer Agreement, Yanglin agreed to transfer to WFOE all of its rights in connection with the two trademarks, including without limitation the title of the trademarks and right to license ( the “Transferred Trademark”) for a purchase price of $1,000,000, which is subject to a purchase price adjustment based on the minimum appraised value on intellectual property (“IP”) rights allowed under PRC laws and regulations for such transfer. Under the Trademark Licensing Agreement, WFOE agreed to grant an exclusive license to Yanglin, for a term of 10 years, to use the Transferred Trademark for an annual licensing fee equal to 1% of Yanglin’s revenue of that year. The license fee and the management fee aforesaid – total of 6% of the revenue of Yanglin- entitled to WFOE are designed to approximate Yanglin’s annual net profit before tax. Any excess profit in Yanglin will not be distributed as dividend according to the contractual arrangements until WFOE exercises the Exclusive Purchase Option Agreement to acquire all shareholders’ equity interest of Yanglin. If the 6% of licence and management fees exceed the net profit before tax of Yanglin, the amount entitled to WFOE is limited to the actual annual net profit before tax of Yanglin under the contracts.

According to the exclusive purchase option agreement, the WFOE has the exclusive purchase option to purchase all or part of Yanglin’s shareholders’ equity interest in Yanglin when and as permitted under PRC laws and regulations and any other party has no right to purchase any equity from the shareholders of Yanglin. The agreement provides that, unless otherwise required under PRC laws and regulations, the consideration for the equity transfer or the asset transfer under the agreement will be $17 million or such greater amount as required by the then applicable Chinese law and regulations (the “Option Price”). Under the loan agreement and the exclusive purchase option agreement, the money received as the Option Price by the shareholders of Yanglin upon execution of the option shall be contributed to Yanglin and used to satisfy the repayment of the Loan, that is, any amount of money received by Yanglin’s shareholders shall be paid back to WFOE as the repayment of Loan on behalf of Yanglin. Therefore, the actual consideration of acquisition of  the direct investment in Yanglin is exactly the amount of the Loan. Under such contractual arrangements, all of assets and equity including any residual profits of Yanglin are totally controlled by WFOE and will be formally captured upon exercise of the exclusive purchase option.

The reverse-merger also included an equity financing of $21,500,000 by the issuance of 10,000,000 Series A Convertible Preferred Stock at $2.15 per share to 10 accredited investors.

-37-

The Company, through its subsidiaries and Yanglin, (hereinafter, collectively referred to as “the Group”), is now in the business of manufacturing, distribution, and selling of non-genetically modified soybean oil, soybean salad oil, and soybean meal throughout the Province of Heilongjiang and other parts of China.

On January 17, 2008, the Company changed its name from “Victory Divide Mining Company” to Yanglin Soybean, Inc.”

Major Performance Factors

Revenue

We derive our revenue mainly from the sales of 3 main products, namely ordinary soybean oil, salad oil and soybean meal. The revenue may be affected by the following factors:

· Processing capacity of soybean;

· Pricing of soybean oil, salad oil and soybean meal; and,

· Market demand

Processing capacity of soybean. Our current annual processing capacity of soybean is 520,000 metric tons, which is sufficient for our current level of operations.

Pricing of soybean oil, salad oil and soybean meal. Generally, we determine the price of our products based on market price and our cost, while there is an overall trend towards price increases to compensate for inflation and strong demand for soybean products. We believe that our price is usually more competitive than those of our major competitors, which are mostly state owned enterprises (SOEs), because we have higher operating efficiencies and better cost controls.

Market demand. The growth potential of our revenue depends on the market demand for our products. As the total market demand for these products is more than sufficient to absorb our production, and our products have been recognized as high quality and competitively priced, we can sell substantially all of our production volume, and we believe that there is a considerable growth potential for our sales revenue, especially after we expand our production capacity and when our new high-end products, which will be sold at higher prices, are put into the market.

Cost of Sales

Cost of sales generally consists of four major parts: raw materials, labor, production overhead and manufacturing related depreciation. Raw materials mainly refers to soybean, and it accounts for the most significant part of the cost of sales (COS), over 90%. Labor cost is relatively low and only makes up less than 1% of COS. Production overhead includes auxiliary materials, utility expenses, machinery maintenance costs, inspection costs and other related expenses. Depreciation costs are applied to manufacturing facilities and equipment, such as production lines, steam generators, factory buildings, etc.

Cost of sales is mainly determined by the following factors, directly or indirectly:

· The availability and price of raw materials, especially soybeans; and,

· Output ratio and operating efficiency of production facilities.

-38-

The availability and price of raw materials, especially soybeans. Raw material cost accounts for the major portion of our cost of sales, and soybean is the only major raw material, so its price fluctuation will have a material impact on our cost. The price of soybeans may be affected by a series of factors, including the production volume of soybeans, the weather, government policies, and the transactions of soybeans on domestic and international commodity markets. Meanwhile, if there is a shortage in the supply of raw materials, our production facilities will have to operate at lower than the achievable maximum efficiency. As our processing volume represents a relatively small portion of the total soybean supply of Heilongjiang Province, let alone the whole of China, we expect that this factor will have little influence over our cost.

Output ratio and operating efficiency of production facilities. Output ratio is the ratio between the input of raw materials, mostly soybeans, and the output of finished products. The more units of finished products we can produce using a single unit of raw material, the higher the output ratio. As the labor, production overheads and manufacturing related depreciation expenses are mostly of a fixed nature, generally speaking, the more we produce, the lower the unit cost. Our output ratio and operating efficiency are continuously being raised, due to the recent purchase and renovation of facilities and equipment, the enhanced competence and proficiency of our staff and the improvement of our management skills.

Gross Profit

Gross profit is the result of the combined effects of the following factors: (a) the selling price of our products, (b) the sales volume and the individual profit margin of each product, and (c) the cost of sales. As we are a middle stream processor, and the profit margin of middle stream processing is usually relatively stable, our gross profit ranges between 7% to 9% over the past 4 years.

Operating Expenses

Operating expenses consist of selling expenses and general & administrative expenses. Generally speaking, operating expenses occupy only a small portion of total costs and expenses.

Selling expenses generally include business development expenses, sales meeting expenses, loading and handling, advertising, sales-related staff salaries and welfare expenses, and travel expenses. We expect that these expenses will rise considerably in the following years, as we will be recruiting more sales staff and expanding our sales network, establishing new sales channels, plus  investing in promotion and advertising to promote and sell our new products.

General & administrative expenses cover the depreciation of office buildings and equipment, office expenses & supplies, management & administrative salaries, etc. These expenses are generally more of a fixed nature. There may be an increase in these expenses, as we will restructure our organizational structure and improve our management systems. As a public company, we need to maintain our internal control over financial reporting to comply with the Sarbanes-Oxley Act, which involves substantial redesign and restructure of our internal control system and processes.  We expect that this will cause a material increase in our management expenses.

-39-

Income Tax

We are a company incorporated in the State of Nevada and Faith Winner (BVI) is incorporated under the laws of the British Virgin Islands, and we conduct all our operations under certain contractual arrangements with Yanglin, a PRC company.

Although we are subject to United States taxation, we do not anticipate incurring significant United States income tax liability for the foreseeable future because:

· We do not conduct any material business or maintain any branch office in the United States;

· the earnings generated from our non-U.S. operating companies are generally eligible for a deferral from United States taxation until such earnings are repatriated to the United States; and,

· we believe that we will not generate any significant amount of income inclusions under the income imputation rules applicable to a United States company that owns "controlled foreign corporations" for United States federal income tax purposes.

Therefore, we have made no provision for U.S. federal income taxes or tax benefits on the undistributed earnings and/or losses.

Yanglin, a PRC company, has income tax liabilities in the PRC. PRC enterprise income tax is calculated based on taxable income determined under PRC accounting principles. In accordance with Income Tax Law applicable to domestic companies, we are generally subject to an enterprise income tax rate of 25%.

However, as Yanglin has been recognized as a Key Leading Enterprise in the Industrialization of Agriculture Industry by a collection of government agencies, including the National Development and Reform Commission, the Department of Finance and the Department of Agriculture, we enjoy a complete exemption from income taxes. Our status is reviewed every two years, and the next review has been postponed by the government until the end of 2009.

-40-

Results of Operations

The following table shows the operating results for the years ended December 31, 2008 and December 31, 2007.

Consolidated Statement of Operations	The year ended Dec. 31, 2008 ($)			The year ended Dec. 31, 2007 ($)
	(audited)			(audited)
Sales Revenue (net of discounts, returns and allowances)		250,728,674			155,206,867
Other sales					-
Cost of sales		(229,838,842	)		(142,568,658	)
Gross Profit		20,889,832			12,638,209
Selling expenses		(249,812	)		(146,411	)
General and administrative expenses		(5,552,223	)		(1,812,450	)
Income from operations		15,087,797			10,679,348
Interest expense, net		(677,015	)		(394,705	)
Other income		797			39,385
Other expense		(31,113	)		-
Income before income taxs		14,380,466			10,324,028
Income tax		-			-
Net Income		14,380,466			10,324,028
Foreign currency translation adjustment		3,803,214			2,676,688
Comprehensive income		18,183,680			13,000,716

Year Ended December 31, 2008 Compared with Year Ended December 31, 2007

Net Sales

	For The Year Ended December 31				Period to Period Change
Item	2008 Amount ($)		2007 Amount ($)		Amount ($)		%
Soybean meal		154,526,888		92,563,442		61,963,446		66.9
Soybean oil		70,374,106		47,071,641		23,302,465		49.5
Salad Oil		25,827,680		15,571,784		10,255,896		65.9
Total Net Sales		250,728,674		155,206,867		95,521,807		61.5

Net sales were $250,728,674 for the year ended December 31, 2008, an increase of $95,521,807 or 61.5% from $155,206,867 for the year ended December 31, 2007. This is primarily due to the increase in the market price of soybean products and partly due to the considerable increase in our processing and production volume and the resultant growth in sales volume. Our three main products, soybean meal, soybean oil and salad oil, achieved a year over year sales growth rate of 66.9%, 49.5% and 65.9%, respectively.

The price of processed soybean products continuously rose during 2008. The average selling price of soybean meal increased by $168 or 57.9% from $290 per ton for the year ended December 31, 2007 to $458 per ton for the year ended December 31, 2008. The price of soybean oil rose by $382 or 40.2% from $950 per ton to $1,332 per ton over the same period, while the price increase of salad oil over the period was $435 or 42.5%, from $1,024 per ton to $1,459 per ton. These increases are in line with the trend of material increases in soybean prices, which started in early 2007. The trend was primarily due to two reasons,  First,  farmers were disincentivized by the unusually low soybean prices by the end of 2006 and reduced soybean production. Second, soybean production volume was further decreased by the large scale drought in Heilongjiang, the major soybean farming area of China (please refer to the section “Cost of Sales and Gross Profit” for more details). The effects of these factors were transferred downstream and increased soybean prices, which increased the prices of soybean products at the same time, and thus made a major contribution to the growth in our sales revenue.

-41-

In the year ended December 31, 2007, we processed 421,314 metric tons of soybeans and produced 337,870 tons of soybean meal, 52,994 tons of soybean oil and 18,038 tons of salad oil, compared to 385,087 metric tons of soybeans, 308,069 tons of soybean meal, 49,576 tons of soybean oil and 15,238 tons of salad oil respectively for the previous year, resulting in growth rates of 9.4%, 9.7%, 6.9% and 18.4%, respectively.

In the year ended December 31, 2008, we sold 337,660 tons of soybean meal, 52,842 tons of soybean oil and 17,708 tons of salad oil, achieving growth rates of 5.6%, 6.6% and 16.4%, respectively, over the previous year ended December 31, 2007, when we sold 319,706 tons of soybean meal, 49,566 tons of soybean oil and 15,207 tons of salad oil. So we have sold almost everything we have produced in 2008, due to the demand for soybean products in the PRC market consistently exceeding total domestic supply.

We expect that the sales revenue growth rate will decrease in the early part of 2009, due to the surge in imported soybean and the resulting material increase in the supply volume of soybean products in the PRC,.The situation may improve later in 2009, as we will increase our processing and sales volume and formally introduce some of our high-end products that possess higher prices (please refer to the section “Company Overview” above for more details). In addition, we believe that the price of soybean products will increase as a result of the likely rise in soybean prices due to the expected materially lowered supply of imported soybean in the later part of 2009. (Please refer to the section “Cost of Sales and Gross Profit” for more details.)

Cost of Sales and Gross Profit

	For The Year Ended December 31										Period to Period Change
	2008			% of Sales		2007			%of Sales
	Amount ($)			Revenue		Amount ($)			Revenue		Amount ($)		%
Soybean meal		(141,924,170	)		91.8		(86,654,275	)		93.6		55,269,895		63.8
Soybean oil		(64,571,952	)		91.8		(42,075,631	)		89.4		22,496,321		53.5
Salad Oil		(23,342,720	)		90.4		(13,838,752	)		88.9		9,503,968		68.7
Cost of Sales		(229,838,842	)		91.7		(142,568,658	)		91.9		87,270,184		61.2
Soybean meal		12,602,718			8.2		5,909,167			6.4		6,693,551		113.3
Soybean oil		5,802,154			8.2		4,996,010			10.6		806,144		16.1
Salad Oil		2,484,960			9.6		1,733,032			11.1		751,928		43.4
Gross Profit		20,889,832			8.3		12,638,209			8.1		8,251,623		65.3

-42-

Our cost of sales for the year ended December 31, 2008 increased by $87,270,184 or 61.2% as compared to the year ended December 31, 2007, from $142,568,658 to $229,838,842, while the ratio of cost as a percentage to net sales fell slightly to 91.7% from 91.9% over the same period. The main reasons for the changes in the cost of sales were the significant increase in the price of soybeans and the growth in processing and production volumes in 2008..

The rise in soybean prices was due to two reasons. First, the drought in the summer of 2007 caused soybean production volumes to fall significantly in Heilongjiang province, with some of Heilongjiang’s soybean production areas witnessing a 60% fall in production. Second, the continuously low price of soybeans in 2006 and prior years discouraged farmers from producing soybeans.

As a result, soybean planting areas in China were 12% less in 2007 than in 2006. The reduction in supply resulted in the average unit cost of soybeans rising to about $538 per ton for the year ended December 31, 2008 from $405 per ton for the year ended December 31, 2007, an increase of approximately 32.8%. The price increase trend started in early 2007 and lasted until the third quarter of 2008. During this period, the purchase price of soybean in our local area increased from $318 per ton at the beginning of 2007 to $439 per ton around September 20, 2007, before the harvest season (when the price for soybeans is usually at its peak). Prices then reached a record high of $697 per ton in early July 2008, and decreased to $478 before the harvest season of 2008. In the fourth quarter of 2008, the Chinese government started to conduct a strategic reserve purchase of soybeans, buying soybean from farmers at higher than market price to encourage the farmers to continue to grow more soybeans. This campaign helped to keep soybean prices at a level higher then the market price. Such large scale price increases constituted the main reason for the increase in our cost of sales in 2008.

The fact that the ratio of cost as a percentage to net sales remained almost unchanged from 2007 to 2008 reflected the characteristics of our business as a middle stream processor. Our cost ratio and, hence our gross margin, is usually quite stable. Generally, the changes in the ratio of cost and gross margins are usually quite small, although there may be differences between various products due to the respective market status and trends of each product. For example, the cost ratio of soybean meal dropped from 93.6% in the year ended December 31, 2007 to 91.8% in the year ended December 31, 2008, reflecting the fact that the price of soybean meal grew in line with the increase in soybean prices. This was due to China’s recent strong demand for animal feed. The cost ratio of soybean oil and salad oil rose from 89.4% and 88.9% in 2007 to 91.8% and 90.4% in 2008, respectively, showing a lagging effect to the change in prices of soybean oil and salad oil in the market generally, which was caused by the influence of soybean oils made from imported soybeans.

As a result, overall gross margin improved by 0.2%, from 8.1% in the year ended December 31, 2007 to 8.3% in the year ended December 31, 2008, and gross profits enjoyed an increase of $8,251,623 or 65.3% over the same period. With respect to our individual products, the gross margin of soybean meal, soybean oil and salad oil changed from 6.4%, 10.6% and 11.1% in the year 2007 to 8.2%, 8.2% and 9.6% in the year 2008, respectively. The changes were in accordance with the changes and trends analyzed in the preceding paragraph.

We expect that gross margins may decline in early 2009, as a result of the national reserve purchase of soybeans conducted by the Chinese government at the end of 2008. The purchases were done at a price higher than market price and have increased the market price of soybeans, which will be reflected in the rising cost of materials in the first quarter of 2009 or perhaps even longer. At the same time, the large volume of cheap imported soybeans may tend to keep the overall price levels of soybean products low. Nevertheless, we also anticipate that gross margins may improve in the later part of 2009. This is due to the fact that it is estimated that soybean production in the US will only increase slightly in 2009, while soybean production in South America will be reduced over the same period. Consequently, there may be less imported soybeans in China’s market after harvest season in 2009 and, as a result, those imports and the soybean products made from them may be at higher prices in China’s market, which will help raise the overall market prices of soybean products, considering the strong and growing domestic demand.

-43-

Operating Expenses

	For The Year Ended December 31										Period to Period
	2008			% of Sales		2007			% of Sales		Change
	Amount ($)			Revenue		Amount ($)			Revenue		Amount ($)		%
Selling Expenses		(249,812	)		0.1		(146,411	)		0.1		103,401		70.6
General & Administrative Expenses		(5,552,223	)		2.2		(1,812,450	)		1.2		3,739,773		206.3
Total Operating Expenses		(5,802,035	)		2.3		(1,958,861	)		1.3		3,843,174		196.2

Selling expenses for the year ended December 31, 2008 increased by $103,401 or 70.6% as compared to the year ended December 31, 2007. This was mainly due to the increase in sales-related shipping and handling expenses, which usually is directly related to sales volume. As a percentage of net sales, selling expenses remained stable at 0.1% year over year.

General and administrative expenses for the year ended December 31, 2008 rose by $3,739,773 or 206.3% over the year ended December 31, 2007. The increase was primarily due to two reasons. First, there were large management expenses related to our Sarbanes-Oxley compliance project launched in 2008 with Ernst and Young as our consultant. The related expenses cover items such as the professional fees of the consultant, investigating the internal control systems, drafting and implementation of procedures, and redesigning of business processes. Another important reason for the increase was the more than $3 million expenses of disposing fixed assets. As a percentage of net sales, general and administrative expenses rose from 1.2% for the year ended December 31, 2007 to 2.2% for the year ended December 31, 2008.

We expect that selling expenses will increase over the coming years as we launch the commercial sales of our new high end products, including soy protein concentrates and powdered soy oil. This is due to the fact that we will need to expand our sales network and develop new sales channels as well as conduct promotional campaigns. General and administrative expenses may also rise, because we will reorganize our organizational structure to prepare for future expansion. In addition, as we are now a public company and plan to file the application to transfer to the main board of NASDAQ, there will be increased expenses related to strengthening our reporting, compliance, internal controls and corporate governance systems to comply with the relevant laws and regulations applicable to a U.S. listed company.

-44-

Income from Operations and Net Income

	For The Year Ended December 31										Period to Period
	2008			% of Sales		2007			%of Sales		Change
	Amount ($)			Revenue		Amount ($)			Revenue		Amount ($)		%
Income from operations		15,087,797			6.0		10,679,348			6.9		4,408,449		41.3
Interest expenses, net		(677,015	)		0.3		(394,705	)		0.25		282,310		71.5
Other income, net of expenses		(30,316	)		0.01		39,385			0.03		69,701		177.0
Income tax							-
Net income		14,380,466			5.7		10,324,028			6.7		4,056,438		39.3

Income from operations rose by 41.3% or $4,408,449 for the year ended December 31, 2008, to $15,087,797, as compared to $10,679,348 for the year ended December 31, 2007, primarily due to the increase of 61.5% in sales revenue. At the same time, operating margin fell from 6.9% to 6.0%, as a result of the material general and administrative expenses related to compliance and the disposal of fixed assets. We estimate that this ratio may fall in early 2009, due to the impact of imported soybeans, the launch of new products and heavy compliance expenses (please refer to the section “Operating Expenses” above for more details), and improve later in 2009 due to the  the likely reduction in import volumes after the harvest of 2009 (please refer to the section “Cost of Sales and Gross Profit” for more details).

Net interest expenses increased by $282,310 or 71.5% from the year ended December 31, 2007 to the year ended December 31, 2008. As a percentage of net sales, net interest expense was 0.3% for the year ended December 31, 2008, compared to 0.25% for the year ended December 31, 2007. The increase was largely due to the repayment of interest  of a large short-term bank loan that was due in 2008.

Net other expenses were $30,316 for the year ended December 31, 2008, and consisted mostly of a donation to the earthquake areas in Sichuan Province. This compares with $39,385 of net other income for the year ended December 31, 2007, which was mainly a government subsidy.

Since we have been recognized as a “Key Leading Enterprise” in the industrialization of the agriculture industry by the Chinese government, we enjoy a complete exemption from income taxes. This status is usually reviewed in every two years, and the next review has currently been postponed and scheduled for the end of 2009.

Net income increased by $4,056,438 or 39.3% from the year ended December 31, 2007 to the year ended December 31, 2008. During the same period, net profit margin fell from 6.7% to 5.7%. This was related to the reasons previously discussed under the section Income from Operations.

-45-

Operating Activities

Year Ended December 31, 2008 Compared with Year Ended December 31, 2007

Cash generated from operating activities for the year ended December 31, 2008 was $30,834,483, while cash used in operating activities for the year ended December 31, 2007 was $4,866,156. This change was mainly due to the reduction of inventories, especially those of raw materials.

At the end of 2008, the Chinese government conducted a national strategic reserve purchase of soybeans, which was designed to uphold the price of domestically produced non-GM soybeans (please refer to the section “Cost of Sales and Gross Profit” for more details). The designated purchase price was about $58 per ton higher than market price. Consequently, we reduced our volume of purchase to avoid absorbing the high cost of raw materials. In the year ended December 31, 2008, we released nearly $15 million of cash from maintaining inventories, mostly raw materials.

Due to the pressure of the national strategic reserve purchase, we spent $4.4 million in advances to suppliers, in order to secure the supply of raw materials.

As a result of the reduced purchase volumes, we released about $1.68 million in cash from prepaid VAT and other taxes, which mostly comprises the incoming VAT included in the gross purchase price of the soybean we have bought.

Generally, our cash flows are stable, as we sell mostly on cash basis, with ignorable trade receivables, and usually, our products are sold just a few days after they are produced. We expect that this will continue in 2009, We expect that this will continue in 2009, as the sales of our products is still very robust and we can sell almost everything we produce, and we do not plan to change our mostly cash sales policy.

-46-

Investing Activities

Year Ended December 31, 2008 Compared with Year Ended December 31, 2007

Net cash used in investing activities for the year ended December 31, 2008 was $4,166,921, compared to $12,413,404 for the year ended December 31, 2007. The major reason for this reduction was that we have completed the majority of our construction projects, including the renovation of Plant 2 and the building of several production lines in 2007.

In the year ended December 31, 2008, we paid net cash of $135,534 for plant and equipment, and made payment of $4,176,943 for construction in progress.

We satisfied the demand for cash used in capital investments with a short-term bank loan, supplemented by our cash reserves.

-47-

Financing Activities

Recent Events

On October 3, 2007, we completed, at a price of $2.15 per share, a private placement of 10,000,000 shares of Series A Convertible Preferred Stock, with a par value $0.001 per share and attached warrants to purchase Common Stock. The gross proceeds of the offering was $21.5 million.

Year Ended December 31, 2008 Compared with Year Ended December 31, 2007

Net cash used in financing activities was $6,367,610 for the year ended December 31, 2008, compared to net cash provided of $22,926,970 for the year ended December 31, 2007. The major reason for this change in year 2008 was that we repaid $12,974,669 of a bank loan due, while we received a new loan of $6,607,059.

Loans

The balance of short-term bank loans was $6,711,214 at December 31, 2008, compared to $12,305,000 at December 31, 2007. This was caused by the decrease in demand for working capital, mainly due to reduced soybean purchases(please refer to the section “Cost of Sales and Gross Profit” in the comparison between the operational results of 2008 and 2007 above).

The balance of our long-term bank loan was about $434,678 at December 31, 2008, plus a current portion of $55,149, payable within one year of the balance sheet date.

As a result of our A credit ranking by the Agricultural Development Bank, Shuangyashan City Branch, we currently have a credit line of up to RMB190 million, or about USD27.7 million. We believe that this is sufficient for our working capital needs at current level of operations.

The credit line has the following material terms: 

1. The term of the credit line is for one year, and the interest rate is 6.93%. subject to adjustment;   The Company/borrower shall purchase insurance for pledged assets, with the Bank as the first beneficiary of insurance proceeds.

2. The loans borrowed within this credit line can only be used to purchase crops. In Yanglin’s case, the loans  can only be used to purchase soybeans.

3. When Yanglin applies to actually borrow the funds, the Bank shall confirm the conditions and/or circumstances of the loan, and report to the appropriate higher officers within the Bank to verify, examine and approve such applications, before actually releasing any money to Yanglin under the maximum credit line.

4. When the People’s Bank of China adjusts the interest rate of loans, the Bank has the right and discretion to adjust the interest rate of loans accordingly.

5. The loans would be secured by Yanglin’s assets, i.e., building, machinery and land use rights.

-48-

Future Cash Commitments

We have no future cash commitments as at December 31, 2008.

Critical Accounting Policies and Estimates

Management's discussion and analysis of its financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with United States generally accepted accounting principles. Our financial statements reflect the selection and application of accounting policies that require management to make significant estimates and judgments. See note 1 to our consolidated financial statements, "Summary of Significant Accounting Policies and Organization". We believe that the following reflect the more critical accounting policies that currently affect our financial condition and results of operations:

Method of accounting

The Company maintains its general ledger and journals with the accrual method accounting for financial reporting purposes.  The financial statements and notes are representations of management.  Accounting policies adopted by the Company conform to generally accepted accounting principles in the United States of America and have been consistently applied in the presentation of its financial statements.

The share exchange transaction has been accounted for as a recapitalization of Yanglin Soybean Inc. where the Company (the legal acquirer) is considered the accounting acquiree and Faith Winner (BVI) (the legal acquiree) is considered the accounting acquirer. As a result of this transaction, the Company is deemed to be a continuation of the business of Faith Winner (BVI).

Accordingly, the accompanying financial statements are those of the accounting acquirer, Faith Winner (BVI). The historical stockholders’ equity of the accounting acquirer prior to the share exchange has been retroactively restated as if the share exchange transaction occurred as of the beginning of the first period presented.

Principles of consolidation

The consolidated financial statements, which include the Company and its subsidiaries, are complied in accordance with generally accepted accounting principles in the United States of America. All significant inter-company accounts and transactions have been eliminated. The consolidated financial statements include 100% of assets, liabilities, and net income or loss of those wholly-owned subsidiaries.

Name of Company	Place of incorporation	Attributable interest
Faith Winner Investments Ltd	British Virgin Islands		100	%
Faith Winner (Jixian) Agriculture Development Company	PRC		100	%
Heilongjiang Yanglin Soybean Group Co. Ltd	PRC		100	%

*Deemed variable interest entity member

-49-

Use of estimates

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

Economic and political risks

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

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

Land use rights

Land use rights are stated at cost less accumulated amortisation.  Amortisation is provided over the respective useful lives, using the straight-line method.  Estimated useful lives range from 22 to 50 years.

Railway use rights

Railway use rights are stated at cost less accumulated amortisation. Amortisation is provided over the respective useful lives, using the straight-line method. Estimated useful life is 10 years.

Property, plant and equipment

Property, plant and equipment are carried at cost less accumulated depreciation.  Depreciation is provided over their estimated useful lives, using the straight-line method. Estimated useful lives of the plant and equipment are as follows:

Buildings	10 - 35 years
Machinery and equipment	3.5 - 30 years
Office equipment	4 - 20 years
Motor vehicles	6 - 10 years

The costs and related accumulated depreciation of assets sold or otherwise retired are eliminated from the accounts and any gain or loss is included in the statement of income. The cost of maintenance and repairs is charged to income when incurred, whereas significant renewals and betterments are capitalized.

Accounting for the impairment of long-lived assets

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

-50-

If such assets are considered to be impaired, the impairment losses to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. Assets to be disposed of are reported at the lower of the carrying amount or fair value less estimated costs of disposal.

During the reporting years, there was no known impairment losses.

Inventories

Inventories consist of finished goods, and raw materials, and are stated at the lower of cost or market value. Substantially all inventory costs are determined using the weighted average basis. Finished goods are comprised of direct materials, direct labor and an appropriate proportion of production overheads.

Trade receivables

Trade receivables are recognized and carried at the original invoice amount less allowance for any uncollectible amounts. An allowance for doubtful accounts is maintained for all customers after considering a variety of factors, including the length of time past due, significant one-time events and the company’s historical experience.  Bad debts are written off as incurred.

Cash and cash equivalents

The Company considers all highly liquidate investments purchased with original maturities of three months or less to be cash equivalents.

Foreign currency translation

The accompanying financial statements are presented in United States Dollars.  The reporting currency of the Group is the U.S. Dollar (USD). Faith Winner (Jixian) and Yanglin use its local currency, Renminbi (RMB), as its functional currency. Results of operations and cash flow are translated at average exchange rates during the period, and assets and liabilities are translated at the end of period exchange rates. Translation adjustments resulting from this process are included in accumulated other comprehensive income in stockholders’ equity. Transaction gains and losses that arise from exchange rate fluctuations from transactions denominated in a currency other than the functional currency are included in the results of operations as incurred.

The PRC government imposes significant exchange restrictions on fund transfers out of the PRC that are not related to business operations. These restrictions have not had a material impact on the Group because it has not engaged in any significant transactions that are subject to the restrictions.

The exchange rates used to translate amounts in RMB into USD for the purposes of preparing the consolidated financial statements were as follows:

	2008		2007
Year end RMB : USD exchange rate		6.8542		7.3141
Average yearly RMB : USD exchange rate		6.9623		7.6172

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 USD at the rates used in translation.

Revenue recognition

Revenue represents the invoiced value of goods sold recognized upon the delivery of goods to customers. Revenue is recognized when all of the following criteria are met: Persuasive evidence of an arrangement exists, delivery has occurred or services have been rendered, the seller’s price to the buyer is fixed or determinable, and collection is reasonably assured.

-51-

Costs of sales

Cost of sales consists primarily of direct material costs, direct labor cost, direct depreciation and related direct expenses attributable to the production of products.  Written-down inventory to the lower of cost or market value is also reflected in cost of revenues.

Advertising

The Group expenses all advertising expenses as incurred.

Shipping and handling

All shipping and handling costs are expensed as incurred.

Research and development

All research and development costs are expensed as incurred.

Retirement benefits

Retirement benefits in the form of contributions under defined contribution retirement plans to the relevant authorities are charged to the statements of income as incurred.

Income taxes

The Group accounts for income tax using an asset and liability approach and allows for recognition of deferred tax benefits in future years.  Under the asset and liability approach, deferred taxes are provided for the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes.  A valuation allowance is provided for deferred tax assets if it is more likely than not these items will either expire before the Group is able to realize their benefits, or that future realization is uncertain.

Statutory reserves

As stipulated by the PRC’s Company Law and as provided in the Faith Winner (Jixian), and Yanglin’s Articles of Association, Faith Winner and Heilongjiang Yanglin’s net income after taxation can only be distributed as dividends after appropriation has been made for the following:

(i) Making up cumulative prior years’ losses, if any;

(ii) Allocations to the “Statutory surplus reserve” of at least 10% of net income after taxation, as determined under PRC accounting rules and regulations, until the fund amounts to 50% of the Company's registered capital, which is restricted for set off against losses, expansion of production and operation or increase in registered capital;

(iii) Allocations of 5-10% of income after tax, as determined under PRC accounting rules and regulations, to the Company's “Statutory common welfare fund”, which is restricted for capital expenditure for the collective benefits of the Company's employees; and

(iv) Allocations to the discretionary surplus reserve, if approved in the shareholders’ general meeting.

-52-

On December 31, 2001, Heilongjiang Yanglin established a statutory surplus reserve as well as a statutory common welfare fund and commenced to appropriate 10% and 5%, respectively of the PRC net income after taxation to these reserves.

Comprehensive income

Comprehensive income is defined to include all changes in equity except those resulting from investments by owners and distributions to owners.  Among other disclosures, all items that are required to be recognized under current accounting standards as components of comprehensive income are required to be reported in a financial statement that is presented with the same prominence as other financial statements. The Group’s current component of other comprehensive income is the foreign currency translation adjustment.

Recent accounting pronouncements

In December 2007, the Financial Accounting Standards Board issued Statement of Financial Accounting Standard (“SFAS”) No. 160, "Noncontrolling Interests in Consolidated Financial Statements, an amendment of ARB No. 51”. SFAS 160 establishes accounting and reporting standards for the noncontrolling interest in a subsidiary and for the deconsolidation of a subsidiary.  SFAS 160 is effective for fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2008. As such, the Company is required to adopt these provisions at the beginning of the fiscal year ended December 31, 2009. The Company is currently evaluating the impact of SFAS 160 on its consolidated financial statements but does not expect it to have a material effect

In December 2007, the Financial Accounting Standards Board issued Statement of Financial Accounting Standard (“SFAS”) No. 141(R), "Business Combinations”.  SFAS 141(R) establishes principles and requirements for how the acquirer recognizes and measures in its financial statements the identifiable assets acquired, the liabilities assumed, an any noncontrolling interest in the acquiree, recognizes and measures the goodwill acquired in the business combination or a gain from a bargain purchase, and determines what information to disclose to enable users of the financial statements to evaluate the nature and financial effects of the business combination.  SFAS 141(R) is effective for fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2008.  As such, the Company is required to adopt these provisions at the beginning of the fiscal year ended December 31, 2009.  The Company is currently evaluating the impact of SFAS 141(R) on its consolidated financial statements but does not expect it to have a material effect.

In March 2008, the Financial Accounting Standards Board issued Statement of Financial Accounting Standard (“SFAS”) No. 161 “Disclosures about Derivative Instruments and Hedging Activities”. SFAS 161 is intended to improve financial reporting about derivative instruments and hedging activities by requiring enhanced disclosures to enable investors to better understand their effects on an entity’s financial position, financial performance, and cash flows. It is effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008, with early application encouraged. The Company is currently evaluating the impact of SFAS 161 on its consolidated financial statements but does not expect it to have a material effect.

In May 2008, the FASB issued SFAS No. 162, The Hierarchy of Generally Accepted Accounting Principles. SFAS 162 identifies the sources of accounting principles and the framework for selecting the principles to be used in the preparation of financial statements of nongovernmental entities that are presented in conformity with GAAP. SFAS 162 directs the GAAP hierarchy to the entity, not the independent auditors, as the entity is responsible for selecting accounting principles for financial statements that are presented in conformity with GAAP. SFAS 162 is effective 60 days following the SEC's approval of the Public Company Accounting Oversight Board amendments to remove the GAAP hierarchy from the auditing standards. SFAS 162 is not expected to have a material impact on the Company’s financial statements.

-53-

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements.

Tabular Disclosure of Contractual Obligations

	Payments due by period
Contractual obligations	Total		Less than 1 year		1-3 years		3-5 years		More than 5 years
Long-Term Debt Obligations	$	489 , 827	$	55,149	$	123,719	$	113,507	$	197,452
Capital Lease Obligations		-		-		-		-		-
Operating Lease Obligations		-		-		-		-		-
Purchase Obligations		-		-		-		-		-

Item 7A. Quantitative And Qualitative Disclosures About Market Risk

Market risk is the risk of loss to future earnings, to fair values or to future cash flows that may result from changes in the price of a financial instrument. The value of a financial instrument may change as a result of changes in interest rates, exchange rates, commodity prices, equity prices and other market changes. Our cash and cash equivalents are held for working capital purposes and consist primarily of bank deposits. We do not enter into investments for trading or speculative purposes.

Interest Rate Risk

Our exposure to interest rate risk primarily relates to the interest income generated by excess cash invested in demand deposits. We have not used derivative financial instruments in our investment portfolio in order to reduce interest rate risk. Interest earning instruments carry a degree of interest rate risk. We have not been exposed nor do we anticipate being exposed to material risks due to changes in interest rates.

Foreign Currency Risk

Our business is operated in the PRC, and its value is effectively denominated in Renminbi. The fluctuation of foreign exchange rate between U.S. dollars and Renminbi could affect the value of our common stock. Our revenues and expenses are primarily denominated in Renminbi, and so our exposure to foreign exchange risks should generally be limited. We do not have material monetary assets and liabilities denominated in U.S. dollars, although to the extent that we do in the future, the fluctuation of foreign exchange rate would affect the value of these monetary assets and liabilities denominated in U.S. dollars. Generally, appreciation of Renminbi against U.S. dollars will devaluate the assets and liabilities denominated in U.S. dollar, while devaluation of Renminbi again U.S. dollars will appreciate the assets and liabilities denominated in U.S. dollar. In China, very limited hedging transactions are available to reduce our exposure to exchange rate fluctuations. To date, we have not entered into any hedging transactions in an effort to reduce our exposure to foreign currency exchange risk. While we may decide to enter into hedging transactions in the future, the availability and effectiveness of these hedges may be limited and we may not be able to successfully hedge our exposure at all.

-54-

The conversion of RMB into foreign currencies, including U.S. dollars, has been based on rates set by the People’s Bank of China. On July 21, 2005, the PRC government changed its decade-old policy of pegging the value of the RMB to the U.S. dollar. Under the new policy, the RMB is permitted to fluctuate within a narrow and managed band against a basket of certain foreign currencies. This change in policy has resulted in an appreciation of the RMB against the U.S. dollar by approximately 6% during 2007 and approximately 12% since the change of the policy to the end of 2007. While the international reaction to the RMB revaluation has generally been positive, there remains significant international pressure on the PRC government to adopt an even more flexible currency policy, which could result in a further and more significant appreciation of the RMB against the U.S. dollar. We use the U.S. dollar as the reporting currency for our financial statements. Fluctuations in exchange rates, primarily those involving the U.S. dollar, may affect our costs and operating margins as well as our net income reported in U.S. dollars. For example, to the extent that we need to convert U.S. dollars into RMB for our operations, appreciation of the RMB against the U.S. dollar would have an adverse effect on the RMB amount we receive from the conversion. Assuming we had converted the U.S. dollar denominated cash balance equivalent to US$ 30,365,413 as of December 31, 2008 into RMB at the exchange rate of US$1.00 for RMB 6.8346, the respective People’s Bank of China rates as of December 31, 2008, this cash balance would have been RMB 207.5 million. Assuming a further 10% appreciation of the RMB against the U.S. dollar, this cash balance would have decreased to RMB 186.75 million as of December 31, 2008. Conversely, if we decide to convert our RMB into U.S. dollars for the purpose of making payments for dividends for business purposes, appreciation of the U.S. dollar against the RMB would have a negative effect on the U.S. dollar amount available to us.

Commodity Price Risk

We engage in manufacturing of non-genetically modified soybean-based products in the PRC. Our main raw materials are commodities. Our exposure to commodity price risk is directly related to fluctuations of PRC domestic market and indirectly related to that of international market. For example, the soybean price went up from RMB 1.23 per 500 grams at the beginning of the last year to RMB 2.13 per 500 grams at the end of 2007, and in early March 2008 it has climbed to as high as RMB 2.75 per 500 grams, due to both the shortage in soybean supply caused by a severe drought in 2007 and farmers’ cutting growing areas of soybeans brought by the continuously low price level by the end of 2006. However, due to current economic crisis, the price dropped to RMB 1.62 per 500 grams as of April 10, 2009. To date, we have not entered into any hedging transactions in an effort to reduce our exposure to commodity price risk.

Item 8. Financial Statements And Supplementary Data

Please refer to Item 15 “Exhibits and Financial Statement Schedules” of this report.

-55-

Item 9.  Changes In and Disagreements With Accountants On Accounting and Financial Disclosure

There are no such reportable events as required by Item 304(b) of Regulation S-K.

Item 9a. Controls And Procedures

(a) Management’s Report on Disclosure Controls and Procedures

As required by Rule 13a-15(e) and 15d-15(e) under the Securities Exchange Act, our management has carried out an evaluation, with the participation and under the supervision of our chief executive officer and chief financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures as of December 31, 2008.

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

Management conducted its evaluation of disclosure controls and procedures under the supervision of our chief executive officer and our chief financial officer. Based upon, and as of the date of this evaluation, our chief executive officer and chief financial officer concluded that, as of December 31, 2008, our disclosure controls and procedures were effective, though there were some significant deficiencies in our internal control over financial reporting described below.

(b) Management’s Report on Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act. The Company's internal control system over financial reporting is a process designed under the supervision of the Company's Chief Executive Officer and Chief Financial Officer to provide reasonable assurance regarding the reliability of financial reporting and the preparation of the consolidated financial statements in accordance with United States generally accepted accounting principles (“U.S. GAAP”). Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies and procedures may deteriorate.

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control over financial reporting that is less severe than a material weakness, yet important enough to merit attention by those responsible for oversight of our financial reporting.

Management assessed the effectiveness of our internal control over financial reporting as of December 31, 2008. In making this assessment, we used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control - Integrated Framework. Based on our assessment, we determined that, as of December 31, 2008, our internal control over financial reporting was effective, though there were certain identified significant deficiencies by December 31, 2008 as follows:

The significant deficiencies include: that there were no code of ethics for the board of directors and of independent directors as of December 31, 2008 (we have remedied these deficiencies, please see “Recent progress after December 31, 2008” below); that special committees of the board have not been established; and that no formal accounting manual has been issued. These deficiencies will be described in details in the section “Management’s Remediation Initiatives and Interim Measures” below.

As we have disclosed in our prior SEC filings, we conduct all of our operations through our Chinese operating subsidiaries, which were privately owned until October 2007. At the time of their acquisition, these Chinese companies did not have in place the financial controls and procedures required of a U.S. public company. Now as a public company, we are implementing and will continue to implement remediation initiatives and interim measures with respect to our internal controls over financial reporting.

Management’s Remediation Initiatives and Interim Measures

The following is a description of each deficiency with respect to our internal controls over financial reporting identified by our management and the remediation initiatives and progress that we have implemented or intend to implement in the near future.

-56-

1) The Company currently does not have a complete set of Articles for the board of directors. The Company now does not have any independent director as of December 31, 2008.

Recent progress after December 31, 2008

We have formally released our bylaws, appointed independent directors and established the audit, compensation and nomination committees of the board on March  9, 2009 and filed Form 8-K with SEC.

2) The special committees of the board, including audit committee, appointment committee and compensation committee, have not been established.

Recent progress after Dec. 31, 2008

We have formally appointed independent directors, established the audit, compensation and nomination committees of the board and approved the charters for each of the committees on March 9, 2009 and filed Form 8-K.

3) The Company does not have an accounting policy manual based on U.S. GAAP and have not formulated formal procedures on the accounting treatment of significant transactions and processes.

Remediation Initiative and Progress

We have already formulated the Financial Management Procedure under China GAAP and released it formally after approval of senior management. This procedure became effective on September  1, 2008. We will draft the Accounting Manual under US GAAP, and it will include accounting policies and the detailed procedures of accounting treatments. To complete this task, we need the help of competent professional accounting advisors. We are currently seeking such advisors.

There will be the significant costs involved for  engaging professional accounting advisors; studying and researching U.S. GAAP; drafting, revising and approving our accounting manual; and training and educating our accounting staff with the knowledge of U.S.GAAP.

This annual report does not include an attestation report of the company's registered public accounting firm regarding internal control over financial reporting. Management's report was not subject to attestation by the company's registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit the company to provide only management's report in this annual report.

(c) Changes in Internal Controls over Financial Reporting

During the year ended December 31, 2008, we have completed the following remediation measures on the internal control  over financial reporting:

1. We have already formulated a Code of Conduct, in both Chinese and English, and released it formally in September, 2008 after it was approved by the Board of Directors. This Code of Conduct is applicable to all staff including our senior management, and it covers various contents such as integrity, fair trading, conflict of interests, disclosure of information, compliance to laws, confidentiality of information, non-discriminatory treatment, safe-guarding of the company’s assets, reporting of violation of the Code and reporting of fraud. We have also established a channel for issuing and communicating the Code of Conduct to all staff.

-57-

2. We have developed the detailed procedures and regulations for identifying and investigating fraud and for staff reporting and exposing wrongful behavior, and include such contents into the Code of Conduct ,which was formally released in September, 2008.

3. We have formulated the Management Procedure of Company Institutions, which provides the management regulations on the formulation, approval and update of the management institutions of the company, and released it formally after being approved by senior management.

Item 9b. Other Information

None.

PART III

Item 10. Directors, Executive Officers and Corporate Governance

Our Directors and Executive Officers

We have provided below certain information about our executive officers and directors. Our directors serve one-year terms or until their successors are elected Officers serve at the discretion of the board of directors.

Name	Age	Position
Shulin Liu	44	Chief Executive Officer/Director
Shaocheng Xu	33	Chief Financial Officer
Yang Miao (resigned March 2009)	36	Director
Zongtai Guo	50	Director and Chief Operating Officer
Albert McLelland (since March 2009)	50	Director
Michael Marks (since March 2009)	36	Director
Xiao Feng	52	Director
Yulin Liu	51	President and General Manager of Heilongjiang Yanglin Soybean Group Co. Ltd
Shuhua Xia	56	Accounting Supervisor of Heilongjiang Yanglin Soybean Group Co. Ltd

The following is a summary of the biographical information of our directors and officers:

Shulin Liu, is founder, Chairman and Chief Executive Officer of Yanglin. Mr. Liu is involved in Yanglin’s overall management and is responsible for establishing strategic directions. From 2002 to present, Mr. Liu has been the Chief Executive Officer, Chairman and Director of Yanglin when its name was changed. From 2001 to 2002, he jointly established Jixian County Golden Land Oil Company Limited (predecessor to Yanglin) with Ms. Huanqin Ding and Mr. Shulin Liu and had been the Chief Executive Officer, Chairman and a Director. From 1996-2000, he was manager of Jinxian County Longfu Food & Oil Trade Co. Ltd., Xiwang Feed Company, Jixian County Tianlin Food & Oil Co. Ltd in Jixian County. From 1992 to 1996, Mr. Liu was appointed General Manger of Jixian Construction Material Food and Oil Trading Company. Prior to that, from 1983-1992, Mr. Liu assumed the positions of supervisor at the Shuangyashan Jixian County Land Authority, supervisor of the Minerals Resources Management Station, and manager of Labor Service Company of Land Bureau of Jixian County. From 1980 to 1983, Mr. Liu worked as a government officer in Shuangyashan Jixian County, Fuli Town. Mr. Liu holds a Master degree in Enterprise Management from Heilongjiang University.

-58-

Shaocheng Xu, was appointed as Yanglin’s Chief Financial Officer in March 2007. Previously, he worked as a financial consultant in Dow Jones Business Consultants, Inc. from August 2006 t o March 2007 and as the Internal Control Supervisor at Citigroup Asia Pacific Operations Center from July 2005 to August 2006. From September 2004 to July 2005, he was studying for a Master of Professional Accounting with the Shanghai University of Finance and Economics and will soon obtain the degree. From September 2001 to August September 2004, he was the corporate management coordinator for United Automotive Electronics Systems Co., Ltd. From August 1999 to September 2001, he worked as a senior customer services representative in Shanghai Eastern Rohm and Haas Corp. From July 1997 to August 1999, he was the Manager Assistant in Shanghai Foreign Aviation Corp. Mr. Xu received his Bachelor of Arts in English from Foreign Affairs College of China in 1997. He is currently still studying for a Master of Accounting with the Shanghai University of Finance and Economics. Mr. Xu is also soon to be qualified as a Professional Accountant with the Association of Chartered Certified Accountants (ACCA) of the United Kingdom.

Zongtai Guo,joined Yanglin as its Vice President and Chief Operating Officer in 2006. Mr. Guo is responsible sales, operations and assists Mr. Shulin Liu, Yanglin’s President and Chief Executive Officer, in the strategic planning and the development of Yanglin. Prior to joining Yanglin, Mr. Guo was the Vice President of Qingdao Haoke Family Products Company (daily housekeeping products company, such as soap and detergent)between 2004 and 2005.From 2001 to 2004, he was an Assistant Manager at Heilongjiang Sanjiang Food Company (manufacturing soybean products). He also worked in Shanghai Yikun Food Company as its General Manager from 1999 to 2001. From 1994 to 1999, Mr. Guo also worked in various companies such as Hainan Longhua Company and China Xingnan Company and Heilongjiang Eight One Farm University as their Finance Manager. He graduated from Bayi Agriculture Development University of Heilongjiang Province, majoring degree in Enterprise Management and became a qualified accountant in the PRC in 1993.

Mr. Albert McLelland was appointed as a director since March 2009. He has been senior managing director of AmPac Strategic Capital LLC (AmPac) since 2003. He is also a founder and managing director of AmPac-TDJ LLC. Prior to founding AmPac, Albert was responsible for cross-border transactions practice of PricewaterhouseCoopers’ (PwC) Financial Advisory Services. Albert possesses extensive investment and merchant banking experience. He has built two Asian based financial service firms in 1980-1990’s. He also ran corporate finance at CEF Taiwan Limited. Albert began his investment banking career at Shearson Lehman underwriting bond issues. Albert holds an MBA degree from the University of Chicago and a Master of International Affairs from Columbia University. He did his undergraduate studies at the University of South Florida and also studied Mandarin at the National Normal University in Taiwan.

Mr. Michael Marks was appointed as a director since March 2009.  He is the President and Director of Middle Kingdom Alliance Corp., a special purpose acquisition corporation listed on Over-The-Counter Bulletin Board. Until December 2007 he was a managing director and principal of Sonnenblick Goldman Asia Pacific Limited, a firm that provides advisory services in real estate investments. Previously, Mr. Marks served as a director of Horwath Asia Pacific from January 2002 to December 2005 and was the Chief Executive Officer and Director at B2Globe Limited from May 2001 to August 2002. Mr. Marks received both Bachelor’s and Master’s Degrees in Commerce from the University of the Witwatersrand in Johannesburg, South Africa in 1994 and 1997, respectively, and also received a Bachelor’s Degree in Psychology from the University of South Africa in 1998. In 1997, Mr. Marks qualified as a Chartered Accountant in South Africa, and in 1999 as a Fellow of the Association of International Accountants in the United Kingdom.

Mr. Xiao Feng was the President of Soybean Research & Development Center of Heilongjiang Province since November 2005.  He has also been the Vice President of Northeastern Agriculture University since September 2007.  He was the section chief for Development and Planning in Science & Technology division of Heilongjiang Provincial government from March 1998 to November 2005.  He obtained his Medical Doctor’s degree from Harbin Medical University in 1983.

-59-

Yulin Liu, was appointed Yanglin’s President and General Manager in March 2007. He is responsible for Yanglin’s day-to-day operations. Mr. Liu has a strong background in financial management. He worked as chief internal auditor of the Central Bank of Ji Xian County between 1986 and 1989. He was the vice president of Industrial and Commercial Bank of China, Ji Xian County between 1989 and 2001. From January 2002 to May 2005, he was the President of Industrial and Commercial Bank of China, Jianshan Branch and from May 2005 to February 2007, he was President of Industrial and Commercial Bank of China, Dianchang Branch. Mr. Liu graduated from Harbin Senior Finance College, majoring in Finance

Shuhua Xia, joined Yanglin as Chief Accountant in 2003. Ms. Xia is primarily responsible for Yanglin’s accounting and financial operations as well as its reporting requirements. Prior to joining Yanglin, Ms. Xia was the Finance Manager of Jixian Drying Tobacco Leaf Factory from 1991-2002. She also held various positions in Jixian Steel and Iron Factory including Finance Manager from 1986 to 1990, and Finance Supervisor from 1970 to 1983. Between 1983 and 1986, Ms. Xia pursued and obtained a Junior College degree from Jiamusi Engineering College.

There are no family relationships among our directors and executive officers except that Yulin Liu is the first cousin of Shulin Liu. There is no arrangement or understanding between or among our executive officers and directors pursuant to which any director or officer was or is to be selected as a director or officer, and there is no arrangement, plan or understanding as to whether non-management shareholders will exercise their voting rights to continue to elect the current board of directors.

Our directors and executive officers have not, during the past five years:

· had any bankruptcy petition foiled by or against any business of which was a general partner or executive officer, either at the time of the bankruptcy or within two years prior to that time,

· been convicted in a criminal proceeding and is not subject to a pending criminal proceeding,

· been subject to any order, judgment or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting his involvement in any type of business, securities, futures, commodities or banking activities; or

· been found by a court of competent jurisdiction (in a civil action), the Securities Exchange Commission or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended or vacate

-60-

Board Composition and Committees:

Our Board has 5 members. Messrs McLelland, Marks and Feng are independent directors.  We have an Audit Committee, a Compensation Committee and a Nominating and Corporate Governance Committee. The Audit Committee has at least one member, Mr. Albert McLelland, who meets the definition of a “financial expert” under SEC rules and whom the Board has determined to be “independent”.

Audit Committee. The Audit Committee is currently comprised of Messrs. Albert McLelland, Xiao Feng and Michael Marks with Mr. Albert Mclelland as the chairman, each of whom are “independent” as that term is defined by SEC rules and under the NASDAQ listing standards. The Audit Committee is directly responsible for the appointment, retention, compensation and oversight of the work of any registered public accounting firm employed by the Company (including resolution of disagreements between management and the accounting firm regarding financial reporting) for the purpose of preparing or issuing an audit report or related work or performing other audit, review or other services. The Audit Committee has the ultimate authority and responsibility to evaluate and, where appropriate, replace the registered public accounting firm. The Audit Committee has the authority to review and approve transactions between the Company and its directors, officers and affiliates.

Compensation Committee. The Compensation Committee is responsible for the administration of all salary, bonus and incentive compensation plans for our officers and key employees. The members of the Compensation Committee are Messrs. Michael Marks, Albert McLelland and Xiao Feng, with Mr. Marks as the chairman. All of whom are “independent” directors.

Nominating and Corporate Governance Committee. The Nominating and Corporate Governance Committee is responsible for preparing the list of candidates to fill the expiring terms of directors on our Board of Directors. The committee submits the list of candidates to the Board of Directors who determines which candidates will be nominated to serve on the Board of Directors. The nominees are then submitted for election at the annual meeting of stockholders. The committee also submits to the entire Board of Directors, a list of candidates to fill any interim vacancies on the Board of Directors resulting from the departure of a member of the Board of Directors for any reason prior to the expiration of his term. In recommending candidates for the Board of Directors, the committee keeps in mind the functions of this body.

The committee considers various criteria, including the ability of the individual to meet SEC and NASDAQ “independence” requirements, general business experience, general financial experience, knowledge of the company’s industry (including past industry experience), education, and demonstrated character and judgment. The committee will consider director candidates recommended by a stockholder if the stockholder mails timely notice to the secretary of the Company at its principal offices, which notice includes (i) the name, age and business address of such nominee, (ii) the principal occupation of such nominee, (iii) a brief statement as to such nominee’s qualifications, (iv) a statement that such nominee consents to his or her nomination and will serve as a director if elected, (v) whether such nominee meets the definition of an “independent” director under the SEC rules and under NASDAQ listing standards and (vi) the name, address, class and number of shares of company stock held by the nominating stockholder.

Any person nominated by a stockholder for election to the Board of Directors will be evaluated based on the same criteria as all other nominees. The committee also oversees our adherence to our corporate governance standards. The members of the committee are Messrs. Xiao Feng, Michael Marks and Albert McLelland, with Xiao Feng as the chairman.

The Board had 3 meetings during last fiscal year.  All members attended at least 75% of the meetings.

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Exchange Act requires our executive officers, directors and beneficial owners of more than ten percent (10%) to report their beneficial ownership of equity interests in the company to the SEC. Their initial reports are required to be filed using the SEC's Form 3, and they are required to report subsequent purchases, sales, and other changes using the SEC's Form 4, which must be filed within two business days of most transactions. Officers, directors, and persons owning more than 10% of our capital shares are required by SEC regulations to furnish us with copies of all of reports they file pursuant to Section 16(a).

According to our records, Zongtai Guo and Yang Miao have not filed their form 3’s in a timely manner.

Code of Ethics

We have adopted a Code of Ethics (as defined in Item 406 of Regulation S-K) that applies to our principal executive, financial and accounting officers. Yanglin Soybean, Inc. will provide a copy of its code of ethics, without charge, to any person that requests it. Requests should be addressed in writing to Mr. Bode Xu, Chief Financial Officer, #99 Fanrong Street, Jixian, Shuan Ya Shan City, Heilongjiang Province, 155900, People’s Republic of China.

Item 11 Executive Compensation

The Company’s executive compensation program is designed to pay key management personnel competitive remuneration based on the authority, responsibility and accountability of the position held by the individual.

The following is a summary of the compensation paid by the company to its executive officers for years 2008 ended December 31, 2008, 2007 ended December 31, 2007 and for 2006 ended December 31, 2006. No other executive officers received compensation in excess of $100,000 for the years of 2008, 2007 and 2006. We did not engage in any benchmarking of compensation to set the compensation to our executive officers.

-61-

Compensation Table

Name & Principal Position	Year	Salary (1)		Bonus	Non-Equity Incentive Plan Compensation		All other Compensation	Total
Shulin Liu	2008	$	34,472	0		0	0	$	34,472
(President and Chief Executive Officer )	2007	$	31,508	0		0	0	$	31,508
	2006		40,090	0					40,090
Shaocheng Xu	2008	$	20,683	0		0	0	$	20,683
(Chief Financial Officer )(2)	2007		18,905						18,905
Zongtai Guo	2008	$	25,854	0		0	0	$	23,631
(Chief Operational Officer )	2007	$	23,631	0		0	0	$	7,517
	2006		7,517
Glenn A. Little	2007		0	0		0	0		0
(President, Chief Executive Officer	2006		0	0		0	0		0
Officer and Chief Financial) (3)
Yulin Liu	2008	$	25,854	0		0	0	$	25,854
(President and General Manager of	2007		23,631					$	23,631
Heilongjiang Yanglin Soybean Group Co. Ltd)(4)

(1) The relevant exchange rates for financial years 2008, 2007 and 2006 are $1 to RMB 6.8347, $1 to RMB7.6172 and $1 to RMB7.98189.

(2) Shaocheng Xu, was appointed as Yanglin’s Chief Financial Officer in March 2007.

(3) Mr. Little was appointed President, Chief Executive Officer and Chief Financial Officer in February 2006. He resigned from these positions effective October 3, 2007.

(4) Yulin Liu, was appointed Yanglin’s President and General Manager in March 2007 and is the first cousin of Mr. Shulin Liu.

Material Terms of Employment

Each of the executive officers has signed a three-year employment contract with Yanglin effective September 2007 until September 2010. In addition to their salary compensation, the executive officers are entitled to social insurance benefits according to PRC laws and regulations.

Termination of Employment

Yanglin can terminate the employment contract with the executive officers with immediate effect without any prior notice under the following circumstances: serious violation of Yanglin’s rules and disciplines by the executive officers, serious dereliction of duties by the executive officers; executive officers being prosecuted under Chinese criminal law.

Yanglin can terminate the employment contract with the executive officers with 30 days’ prior written notice under the following circumstances: unfit to perform for the jobs or any new jobs after non-work-related injury; unfit to perform for the jobs despite additional training; unable to reach an agreement regarding the employment between the executive officers and Yanglin due to major change of circumstances.

Compensation Discussion & Analysis

Yanglin strives to provide its named executive officers (as defined in Item 402 of Regulation S-K) with a competitive base salary that is in-line with their roles and responsibilities.

It is not uncommon for PRC corporations in that locality to have base salaries as the sole and only form of compensation. The base salary level is established and reviewed based on the level of responsibilities, the experience and tenure of the individual and the current and potential contributions of the individual. The base salary is compared to the list of similar positions within comparable peer companies and with consideration of the executive’s relative experience in his or her position.  Base salaries are reviewed periodically and at the time of promotion or other changes in responsibilities.

We plan to implement a more comprehensive compensation program, which takes into account other elements of compensation, including without limitation, short and long term compensation, cash and non-cash, and other equity-based compensation such as stock options. Such compensation program shall be comparative to our peers in the industry and aimed to retain and attract talented individuals.

Our Compensation Committee comprising predominantly of independent directors will oversee the compensation of our named executive officers.

Grants of Plan-Based Awards

The Company currently does not have any award plans. No options were granted to any officer in 2008.

Outstanding Equity Awards at Fiscal Year End

The Company currently does not have an equity compensation plan. No options or shares of stock were granted to any officer in 2008.

-62-

Option Exercises and Stock Vested

No options were exercised and no shares of stock were vested in 2008.

Pension Benefits

The Company does not have any pension plans for its officers.

Nonqualified Deferred Compensation

There was no nonqualified deferred compensation for the officers in 2008.

Potential Payment Upon Termination or Change in Control

The Company currently does not have payment arrangements for its officers upon termination or change in control.

Compensation of Directors

We have no formal or informal arrangements or agreements to compensate our directors for services they provide as directors. We plan to implement a compensation program for our independent directors, as and when they are appointed, which we anticipate will include such elements as an annual retainer, meeting attendance fees and stock options. The details of such compensation program will be negotiated with each such director.

The directors for Yanglin are not compensated for their services as directors as of the date of this report.

Item 12. Security Ownership Of Certain Beneficial Owners And Management And Related Shareholders Matters

The following table sets forth certain information with respect to the beneficial ownership of our voting securities following the closing of the Share Exchange Agreement and the Series A Convertible Preferred Stock Purchase Agreement by (i) any person or group owning more than 5% of each class of voting securities, (ii) each director, (iii) our chief executive officer and our top three most highly compensated officers and (iv) all executive officers and directors as a group as of April 9, 2009.

-63-

	Amount and Nature of Beneficial Ownership (1)
Name and Address of Beneficial Owner	Series A		Series B			Common Stock			Percentage of Class (1)
Owner of More than 5% of Class
Vision Opportunity Master Fund Ltd 20 West 55th Street, 5th Floor, New York, NY 10019-5373		3,720,930								37.2	%
Sansar Capital Special Opportunity Master Fund, LP (Cayman Master) Walkers SPV Ltd. Walkers House Mary Street 908GT Georgetown, Grand Cayman Cayman Islands		2,767,442								27.7	%
Vicis Capital Master Fund 126 East 56th Streey, 7th Floor, New York, NY 10019-5373		2,093,023								20.9	%
Vision Opportunity Master Fund Ltd 20 West 55th Street, 5th Floor, New York, NY 10019-5373 (2)				3,382,664	(2)					43.4	%
Sansar Capital Special Opportunity Master Fund, LP (Cayman Master) Walkers SPV Ltd. Walkers House Mary Street 908GT Georgetown, Grand Cayman Cayman Islands (2)				2,515,856	(2)					32.3	%
Vicis Capital Master Fund 126 East 56th Streey, 7th Floor, New York, NY 10019-5373 (2)				1,902,748	(2)					24.4	%
Vision Opportunity Master Fund Ltd 20 West 55th Street, 5th Floor, New York, NY 10019-5373 (7)							18,283,985	(3)		47.8	%
Sansar Capital Special Opportunity Master Fund, LP (Cayman Master) (7)							13,208,245	(3)		39.8	%
Vicis Capital Master Fund 126 East 56th Streey, 7th Floor, New York, NY 10019-5373 (7)							9,989,429	(3)		33.3	%
Winner State Investments Limited No. 99, Fanrong Street, Jixian Town, Heilongjiang, the People’s Republic of China.							18,200,000	(4) (5)		91.0	%
Directors and Executive Officers
Shulin Liu 99 Fanrong Street, Jixian County, Heilongjiang Province, People’s Republic of China 155900							9,100,000	(5)		45.5	%
Yang Miao 99 Fanrong Street, Jixian County, Heilongjiang Province, People’s Republic of China 155900							100,000			0.5	%
All Directors and Executive Officers							9,200,000			46	%

(1) On October 3, 2007, we entered and consummated a Series A Preferred Agreement for the sale of a total of 10,000,000 shares of our newly designated Series A Preferred Shares for the purchase price of $2.15 per share. Each entity’s number of Series A Preferred Shares were determined by dividing the amount of Purchase Price (as defined in the Series A Preferred Agreement) paid by such entity by the $2.15 per share price. Each share of Series A Preferred Stock is convertible into one share of our Common Stock. In determining the percent of preferred stock owned by a person or entity on April 9, 2009, (a) the numerator is the number of shares of the class beneficially owned by such person or entity, and (b) the denominator is the total shares of that class outstanding on April 9, 2009. Unless otherwise stated, each beneficial owner has sole power to vote and dispose of its shares.

In addition, in determining the percent of common stock owned by a person or entity on April 9, 2009, (a) the numerator is the number of shares of the class beneficially owned by such person and includes shares which the beneficial owner may acquire within 60 days upon conversion or exercise of a derivative security, and (b) the denominator is the sum of (i) the shares of that class outstanding on April 9, 2009, (20,000,000 shares of Common Stock)and (ii) the total number of shares that the beneficial owner may acquire upon conversion or exercise of a derivative security within such 60 day period. Unless otherwise stated, each beneficial owner has sole power to vote and dispose of the shares.

-64-

(2) Pursuant to the October 3 2007 Series A Preferred Agreement, each purchaser who purchases not less than $4 million worth of Series A Preferred Shares shall also be issued a Series J Warrant (expired on April 2, 2009; the same is true hereafter), to purchase such number of our newly designated Series B Preferred Shares, equal to the Purchase Price (as defined in the Series A Preferred Agreement) paid by such purchaser pursuant to this Agreement divided by $2.37 per share or, if the Purchase Price is reduced pursuant to Section 1.6 of the Agreement, 110% of the adjusted per share Purchase Price. Vision Opportunity Master Fund Ltd, Sansar Capital and Vicis Master Fund have exceeded this threshold and have been granted a Series J Warrant to purchase 3,382,664, 2,515,856 and 1,902,748 shares of our Series B Preferred Shares respectively.

(3) Each Series A Preferred Share is convertible, at the option of the holder, into one share of our Common Stock. Accordingly, in total, the Series A Preferred Shares are convertible into 10,000,000 shares of our Common Stock. Each share of Series B Preferred Share is convertible, at the option of the holder, into one share of our Common Stock. The share number of Common Stock is determined by assuming conversion of all Series A and Series B Preferred Shares, exercise of all warrants (A, B, J, C, and D)(series C and D warrants are conditional on the exercise of series J warrants; the same is true hereafter) by the parties and then add all the numbers together, we would have the shares of our Common Stock for such parties. For example, for Vision Opportunity Master Fund Ltd, we add all the numbers from different columns from the table of footnote 8 below, and we would have 18,283,985 shares of Common Stock.

Pursuant to the Series A Preferred Agreement, the Purchasers shall also be issued (i) Series A Warrants to purchase the number of shares of our Common Stock equal to one hundred percent (100%) of the number of shares of Common Stock issuable upon conversion of the Series A Preferred Shares purchased by each Purchaser and (ii) Series B Warrants to purchase the number of shares of Common Stock equal to fifty percent (50%) of the number of shares of Common Stock issuable upon conversion of the Series A Preferred Shares purchased by each Purchaser.

Also, each Purchaser who purchases not less than $4 million worth of Series A Preferred shall also be issued (i) a Series J Warrant, to purchase such number of our newly designated Series B Preferred Shares, par value $0.001 per share, (ii) a Series C Warrant to purchase the number of shares of Common Stock equal to one hundred percent (100%) of the number of Series B Preferred Shares purchased by such Purchaser pursuant to the Series J Warrant, and (z) a Series D Warrant to purchase the number of shares of Common Stock equal to fifty percent (50%) of the number of Series B Preferred Shares purchased by such Purchasers pursuant to the Series J Warrant.

Pursuant to Section 3.27 of the Series A Preferred Agreement, at no time may a Purchaser of preferred shares convert their preferred shares into shares of our Common Stock if the number of shares of Common Stock to be issued pursuant to such conversion would exceed, when aggregated with all other shares of Common Stock beneficially owned by such Purchaser at such time, the number of shares of Common Stock which would result in such Purchaser beneficially owning (as determined in accordance with Section 13(d) of the Exchange Act and the rules thereunder) in excess of 4.99% of the then issued and outstanding shares of Common Stock; provided, however, that upon a Purchaser providing us with sixty-one (61) days notice that such Purchaser wishes to waive the cap, then the cap will be of no force or effect with regard to all or a portion of the preferred shares referenced in the waiver notice.

(4) On October 3, 2007, we acquired Faith Winner (BVI) in a share exchange transaction with Winner State (BVI), Fang Chen, Yang Miao and Ying Zhang. Winner State (BVI), Fang Chen, Yang Miao and Ying Zhang are collectively the owners of 100% of the Faith Shares.

In the Share Exchange, we received the Faith Shares from Winner State (BVI), Fang Chen, Yang Miao and Ying Zhang and in exchange we issued and delivered to them 18,500,000 of our newly -issued shares of Common Stock. Winner State (BVI) received 18,200,000 shares of Common Stock.

(5) Winner State (BVI) is jointly owned in equal shares by Mr. Shulin Liu, our Chief Executive Officer and his wife, Ms. Huanqin Ding. Accordingly, shares of Common Stock issued to Winner State (BVI) as a result of the consummation of the Share Exchange Agreement are beneficially attributed to Mr. Shulin Liu and Ms. Huanqin Ding based on their respective shareholder percentage ownership in Winner State (BVI) immediately prior to the Share Exchange. Mr Shulin Liu was appointed our director and Chief Executive Officer on October 3, 2007.

(6) Mr. Glenn Little was appointed our President, Chief Executive Officer and Chief Financial Officer in February 2006. He resigned from these positions effective October 3, 2007. He resigned from his position as director on October 13, 2007.

(7)  As of April 9, 2009, below is a breakdown of the current holdings of:

-65-

	Amount and Nature of Beneficial Ownership
	Preferred Stock				Common		Warrants
Name	Series A		Series B		Stock		A		B		J		C		D
Vision Opportunity Master Fund Ltd		3,720,930		—		525,000		3,720,930		1,860,465		3,382,664		3,382,664		1,691,332
Sansar Capital Special Opportunity Master Fund, LP (Cayman Master)		2,767,442		—		—		2,767,442		1,383,721		2,515,856		2,515,856		1,257,928
Vicis Capital Master Fund		2,093,023		—		—		2,093,023		1,046,512		1,902,748		1,902,748		951,374

As of April 9, 2009, we had outstanding (i) 20,000,000 shares of Common Stock, (ii) 10,000,000 shares of Series A Preferred Shares, which were issued in a private placement to the Purchasers under the Series A Preferred Agreement, (iii) Series A Warrants to purchase an aggregate of 10,000,000 shares of Common Stock at $2.75 per share, (iv) Series B Warrants to purchase an aggregate of 5,000,000 shares of Common Stock at $3.50 per share, (v) Series J Warrants to purchase an aggregate of 7,801,268 shares of Series B Preferred Shares at $2.37 per share; (vi) Series C Warrants to purchase an aggregate of 7,801,268 shares of Common Stock at $3.03 per share, (vii) Series D Warrants to purchase an aggregate of 3,900,634 shares of Common Stock at $3.85 per share, (viii) Series E Warrants to purchase 1,000,000 shares of Common Stock issued to Kuhns Brothers, Inc. and its designees under the Kuhns Bros Engagement Agreement at $2.58 per share and (ix) Series F Warrants to purchase 500,000 shares of Common Stock issued to Mass Harmony Asset Management Limited pursuant to the Mass Harmony Financial Consulting Agreement at $3.01 per share.

Each of Series A, B, C, D, E and F Warrants have five year terms. Series J Warrants have an eighteen (18) month term. The Series C and D Warrants are only exercisable once the Series J Warrant is exercised.

Item 13. Certain Relationships and Related Transactions

None.

Item 14. Principal Accounting Fees And Services

Samuel H. Wong & Company, LLP issued a report on the audited financial statements of Heilonjiang Yanglin Soybean Group Co. Ltd. for the three years ended December 31, 2004, December 31, 2005, and December 31, 2006 which were included in our current report on Form 8-K filed on October 10, 2007.

On January 16, 2008, we dismissed Samuel H. Wong & Company, LLP as our independent accountant. On the same date, we retained Albert Wong & Company, LLP to serve as our principal independent accountant.

All of the services described below were approved by our board prior to performance. Our board has determined that the payments made to its independent accountant for these services are compatible with maintaining such auditor's independence.

Audit Fees. The aggregate fees billed by Samuel H. Wong & Company, LLP, for professional services rendered for the audit of the company’s financial statements for the year December 31, 2006 as well as for the review of the interim financial statements ended September 30, 2007 are $150,000.

The aggregate fees billed by Albert Wong & Company, LLP for professional services rendered for the audit of the company’s financial statements for the year December 31, 2007 and 2008 are $90,000 and $86,000.

Audit-Related Fees. There were no fees for assurance and related services by Samuel H. Wong & Company, LLP or Albert Wong & Company, LLP for years 2007 or 2008.

Tax Fees. There were no fees for services for the income tax returns in US by Samuel H. Wong & Company, LLP or Albert Wong & Company, LLP for years 2007 or 2008.

All Other Fees. There was no other fees for either audit-related or non-audit services billed by Samuel H. Wong & Company, LLP or Albert Wong & Company, LLP for years 2007 or 2008.

-66-

PART IV

Item 15. Exhibits And Financial Statement Schedules

(a) (1) Financial Statements

(2) Financial Statement Schedules

None

YANGLIN SOYBEAN INC.

YANGLIN SOYBEAN INC.

CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2008 AND 2007

 (Stated in US dollars)

 

-67-

YANGLIN SOYBEAN INC.

CONTENTS	PAGES
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM	1
CONSOLIDATED BALANCE SHEETS	2 – 3
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME	4
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY	5
CONSOLIDATED STATEMENTS OF CASH FLOWS	6
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS	7 – 29

ALBERT WONG & CO.

CERTIFIED PUBLIC ACCOUNTANTS

7th Floor, Nan Dao Commercial Building

359-361 Queen’s Road Central

Hong Kong

Tel : 2851 7954

Fax: 2545 4086

ALBERT WONG

B.Soc., Sc., ACA., LL.B.,

CPA(Practising)

To:	The board of directors and stockholders of
	Yanglin Soybean Inc.

Report of Independent Registered Public Accounting Firm

We have audited the accompanying consolidated balance sheets of Yanglin Soybean Inc. and subsidiaries as of December 31, 2008, and 2007 and the related consolidated statements of income, stockholders' equity and cash flows for the years then ended. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audit.

We conducted our audit in accordance with standards of the Public Company Accounting Oversight Board (United States).  Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

We were not engaged to examine management’s assertion about the effectiveness of the Company’s internal control over financial reporting as of December 31, 2008 included in the Company’s Item 9A “Controls and Procedures” in the Annual Report on Form 10-K and, accordingly, we do not express an opinion thereon.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of Yanglin Soybean Inc. as of December 31, 2008, and 2007 and the results of its operations and its cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America.

Hong Kong, China	Albert Wong & Co
April 6, 2009	Certified Public Accountants

1

YANGLIN SOYBEAN INC.

CONSOLIDATED BALANCE SHEETS

AS AT DECEMBER 31, 2008, AND 2007

(Stated in US Dollars)

	Notes		2008		2007
ASSETS
Current assets
Cash and cash equivalents		2(k)	$	30,365,413	$	9,210,121
Pledged deposits		4		484,000		500,000
Trade receivables	2(j)&5			8,043		13,854
Inventories	2(i)&7			3,896,334		17,883,652
Advances to suppliers				10,597,701		5,736,267
Prepaid VAT and other taxes				920,083		2,457,137
Other receivables		6		114,990		27,896
Total current assets			$	46,386,564	$	35,828,927
Property, plant and equipment, net	2(g)&8			31,529,936		22,563,196
Intangible assets, net	2(e),(f)&9			4,619,716		3,444,081
Prepaid deposits for equipment
and construction				13,021		8,896,327
TOTAL ASSETS			$	82,549,237	$	70,732,531
LIABILITIES AND
STOCKHOLDERS’ EQUITY
Current liabilities
Short-term bank loans		10	$	6,711,214	$	12,305,000
Current portion of long-term bank
loans		12		55,149		47,433
Accounts payable				13,753		12,921
Other payables		11		683,403		44,380
Customers deposits				1,187,582		2,656,777
Accrued liabilities				591,979		521,114
Total current liabilities			$	9,243,080	$	15,587,625
Long-term liabilities
Long-term bank loans		12		434,678		457,107
TOTAL LIABILITIES			$	9,677,758	$	16,044,732

See notes to consolidated financial statements

2

YANGLIN SOYBEAN INC.

CONSOLIDATED BALANCE SHEETS (Continued)

AS AT DECEMBER 31, 2008, AND 2007

(Stated in US Dollars)

	Notes		2008		2007
STOCKHOLDERS’ EQUITY
Preferred Stock – Series A $0.001 par
value, 50,000,000 shares authorized;
9,999,999 shares issued and
outstanding as of December 31, 2008
and December 31, 2007		13	$	10,000	$	10,000
Common stock - $0.001 par value
100,000,000 shares authorized;
20,000,003 shares issued and
outstanding as of  December 31, 2008
and December 31, 2007		14		20,000		20,000
Additional paid-in capital		14		38,389,635		38,389,635
Statutory reserves		2(t)		5,628,636		3,490,834
Retained earnings				21,664,524		9,421,860
Accumulated other comprehensive
income		2(u)		7,158,684		3,355,470
			$	72,871,479	$	54,687,799
TOTAL LIABILITIES AND
STOCKHOLDERS’ EQUITY			$	82,549,237	$	70,732,531

See notes to consolidated financial statements

3

YANGLIN SOYBEAN INC.

CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

FOR THE YEARS ENDED DECEMBER 31, 2008, AND 2007

(Stated in US Dollars)

			2008			2007
	Notes
Net sales	2(m)&18		$	250,728,674		$	155,206,867
Cost of sales	2(n)&18			(229,838,842	)		(142,568,658	)
Gross profit			$	20,889,832		$	12,638,209
Selling expenses				(249,812	)		(146,411	)
General and administrative expenses				(5,552,223	)		(1,812,450	)
Income from operation			$	15,087,797		$	10,679,348
Interest income				145,340			64,277
Interest expenses				(822,355	)		(458,982	)
Other income				797			39,385
Other expenses				(31,113	)		-
Income from operations before income taxes			$	14,380,466		$	10,324,028
Income taxes	2(s)&16			-			-
Net income			$	14,380,466		$	10,324,028
Beneficial conversion feature on Series A
preferred stock				-			(7,988,359	)
Net income attributable to common
shareholders			$	14,380,466		$	2,335,669
Foreign currency translation adjustment				3,803,214			2,466,280
Comprehensive income			$	18,183,680		$	4,801,949
Basic earnings per share		15	$	0.72		$	0.12
Diluted earnings per share		15	$	0.38		$	0.07
Basic weighted average share outstanding		15		20,000,003			19,998,473
Diluted weighted average share outstanding		15		37,757,827			34,003,038

See notes to consolidated financial statements

4

YANGLIN SOYBEAN INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

FOR THE YEARS ENDED DECEMBER 31, 2008, AND 2007

(Stated in US Dollars)

															Accumulated
	Common stock						Additional								other
	Number				Preferred		paid-in			Statutory		Retained			comprehensive
	of share		Amount		stock		capital			reserves		earnings			income		Total
Bal., 1/1/2007		18,500,000	$	18,500		-		12,248,936			1,716,827		8,860,198			889,190		23,733,651
Net income		-		-		-		-			-		10,324,028			-		10,324,028
Reverse acquisition		1,497,608		1,498		-		(88	)		-		-			-		1,410
Addition of capital		2,395		2		10,000		26,140,787			-		-			-		26,150,789
Beneficial conversion
feature on Series A
preferred stock		-		-		-		-			-		(7,988,359	)		-		(7,988,359	)
Appropriations to
surplus reserves		-		-		-		-			1,774,007		(1,774,007	)		-		-
Foreign currency
adjustment		-		-		-		-			-		-			2,466,280		2,466,280
Bal., 12/31/2007		20,000,003	$	20,000		10,000		38,389,635			3,490,834		9,421,860			3,355,470		54,687,799
Bal., 1/1/2008		20,000,003	$	20,000		10,000		38,389,635			3,490,834		9,421,860			3,355,470		54,687,799
Net income		-		-		-		-			-		14,380,466			-		14,380,466
Appropriations to
surplus reserves		-		-		-		-			2,137,802		(2,137,802	)		-		-
Foreign currency
adjustment		-		-		-		-			-		-			3,803,214		3,803,214
Bal., 12/31/2008		20,000,003	$	20,000		10,000		38,389,635			5,628,636		21,664,524			7,158,684		72,871,479

See notes to consolidated financial statements

5

YANGLIN SOYBEAN INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED DECEMBER 31, 2008, AND 2007

(Stated in US Dollars)

	2008			2007
Cash flows from operating activities
Net income	$	14,380,466		$	10,324,028
Depreciation		1,860,076			2,028,313
Amortization		203,374			78,397
Loss/(gain) on disposal of property, plant and
equipment		3,185,544			(13,048	)
Adjustments to reconcile net income to net
cash provided by/(used in) operating activities:
Accounts receivable		6,636			182,708
Inventories		14,951,570			(9,712,307	)
Advances to suppliers		(4,407,071	)		(5,508,012	)
Prepaid VAT and other taxes		1,675,509			(1,667,452	)
Other receivables		(62,451	)		714,295
Accounts payable		(12	)		(730,106	)
Other payables		627,034			(698,636	)
Customers deposits		(1,621,890	)		152,225
Accrued liabilities		35,698			(16,561	)
Net cash provided by/(used in) operating activities	$	30,834,483		$	(4,866,156	)
Cash flows from investing activities
Payment of plant and equipment		(135,534	)		(386,260	)
Sales proceeds of plant and equipment		129,556			55,138
Payment of construction in progress		(4,176,943	)		(11,702,842	)
Payment of land use right		-			120,560
Decrease/(increase) in restricted cash		16,000			(500,000	)
Net cash used in investing activities	$	(4,166,921	)	$	(12,413,404	)
Cash flows from financing activities
Issue of share capital and warrants		-			17,849,093
Bank borrowings		6,607,059			11,815,365
Bank loan repayments		(12,974,669	)		(6,737,488	)
Net cash (used in)/provided by financing activities	$	(6,367,610	)	$	22,926,970
Net cash and cash equivalents sourced		20,299,952			5,647,410
Effect of foreign currency translation on cash and
cash equivalents		855,340			549,191
Cash and cash equivalents–beginning of year		9,210,121			3,013,520
Cash and cash equivalents–end of year	$	30,365,413		$	9,210,121
Supplementary cash flow information:
Interest received	$	133,828		$	64,277
Interest paid		819,882			457,647

See notes to consolidated financial statements

6

YANGLIN SOYBEAN INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2008 AND 2007

(Stated in US Dollars)

1.  ORGANIZATION AND PRINCIPAL ACTIVITIES

Yanglin Soybean Inc. (the “Company”) was incorporated in the state of Nevada on May 26, 1921. Prior to October 3, 2007 the company had only nominal operations and assets. The Company currently operates through (1) itself, (2) one directly wholly-owned subsidiary in the British Virgin Islands: Faith Winner Investments Limited (“Faith Winner (BVI)”), (3) one directly wholly-owned subsidiary of Faith Winner (BVI) located in Mainland China: Faith Winner (Jixian) Agriculture Development Company (“Faith Winner (Jixian)” or “WFOE”) and (4) one operating company located in Mainland China: Heilongjiang Yanglin Soybean Group Co., Ltd. (“Yanglin”) which is controlled by the Company through contractual arrangements between WFOE and Yanglin, as if Yanglin were a wholly-owned subsidiary of the Company.

On October 3, 2007, the Company executed a reverse-merger with Faith Winner Investments Limited (“Faith Winner (BVI)”) by an exchange of shares whereby the Company issued 18,500,000 common shares at $0.001 par value in exchange for all Faith Winner (BVI) shares. As a result of the shares exchange, Faith Winner (BVI) became a wholly-owned subsidiary of the Company.

The exchange transaction was accounted for as a reverse acquisition in accordance with Statements of Financial Accounting Standards (“SFAS”) No. 141. “Business Combinations”. The 1,494,173 shares of Yanglin Soybean Inc. outstanding prior to the stock exchange transaction were accounted for at the net book value at the time of the transaction, which was a deficit of $1,410. Accordingly, the consolidated statements of income include the results of operations of Heilongjiang Yanglin Soybean Group Co., Ltd from the acquisition date through December 31, 2007.

Faith Winner (BVI) and WFOE entered into a series of agreements respectively with Yanglin and as a result of such arrangements WFOE gained control of all of Yanglin’s assets, management and business as if Yanglin were a wholly-owned subsidiary of WFOE. These contractual arrangements included a loan agreement, a consigned management agreement, two consignment agreements of equity interests, an exclusive purchase option agreement, a registered trademark transfer contract and a trademark licensing agreement. The Consignment Agreements were entered into on September 1, 2007, and the other agreements were all signed on September 24, 2007. The exclusive purchase option agreement and the consigned management agreement were amended as of April 3, 2009.

7

YANGLIN SOYBEAN INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2008 AND 2007

(Stated in US Dollars)

1.  ORGANIZATION AND PRINCIPAL ACTIVITIES (Continued)

Pursuant to those agreements, WFOE made a loan of $17 million and covenanted to satisfy Yanglin’s working capital in future to Yanglin (the “Loan”). In return, the Company obtained the management control and an exclusive right to acquire all of the equity of Yanglin. The rights of existing shareholders of Yanglin are assigned by the consignment of equity interests to Faith Winner (BVI). The exclusive purchase agreement and the loan agreement restrict both Yanglin and its shareholders from significant decisions including but not limited to any amendments of articles of association or rules of the Company, any change in registered capital, any transfer, mortgage or disposal of Yanglin’s assets or income in a way that would affect WFOE’s security interest, entering any material contract (exceeding RMB5 million in value) and distributing any dividends to the shareholders. Pursuant to the consigned management agreement between WFOE and Yanglin, Yanglin agreed to entrust the business operations of Yanglin and its management to WFOE until WFOE formally acquires all equity or substantially all the assets of Yanglin. Under the consigned management agreement as amended on April 3, 2009, WFOE will provide financial, technical and human resources management services to Yanglin which will enable WFOE to control Yanglin's operations, assets and cash flows. In turn, it will be entitled to 5% of Yanglin’s revenue on a yearly basis.

Under the Registered Trademark Transfer Agreement, Yanglin agreed to transfer to WFOE all of its rights in connection with the two trademarks, including without limitation the title of the trademarks and right to license ( the “Transferred Trademark”) for a purchase price of $1,000,000, which is subject to a purchase price adjustment based on the minimum appraised value on intellectual property (“IP”) rights allowed under PRC laws and regulations for such transfer. Under the Trademark Licensing Agreement, WFOE agreed to grant an exclusive license to Yanglin, for a term of 10 years, to use the Transferred Trademark for an annual licensing fee equal to 1% of Yanglin’s revenue of that year. The license fee and the management fee aforesaid –total of 6% of the revenue of Yanglin-entitled by WFOE are designed to approximate Yanglin’s annual net profit before  tax. Any excess profit in Yanglin will not be distributed as dividend according to the contractual arrangements until WFOE exercises the Option Agreement to acquire all shareholders’ equity interest of Yanglin. If the 6% of licence and management fees exceed the net profit before tax of Yanglin, the amount entitled to WFOE is limited to the actual annual net profit before tax of Yanglin under the contracts.

According to the exclusive purchase option agreement, the WFOE has the exclusive purchase option to purchase all or part of Yanglin’s shareholders’ equity interest in Yanglin when and as permitted under PRC laws and regulations and any other party has no right to purchase any equity from the shareholders of Yanglin. The agreement provides that, unless otherwise required under PRC laws and regulations, the consideration for the equity transfer or the asset transfer under the agreement will be $17 million or such greater amount as required by the then applicable Chinese law and regulations (the “Option Price”). Under the loan agreement and the exclusive purchase option agreement, the money received as the Option Price by the shareholders of Yanglin upon execution of the option shall be used to satisfy the repayment of the Loan, that is, any amount of money received by Yanglin’s shareholders shall be paid back to WFOE as the repayment of Loan. Therefore, the actual consideration of the investment in Yanglin is exactly the amount of the Loan. Under such contractual arrangements, all of assets and equity including any residual profits of Yanglin are totally controlled by WFOE and will be formally captured upon exercise of the exclusive purchase option.

8

YANGLIN SOYBEAN INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2008 AND 2007

(Stated in US Dollars)

1. ORGANIZATION AND PRINCIPAL ACTIVITIES (Continued)

The loan of $17 million to Yanglin is considered as an investment in Yanglin by the Company through a series of contractual arrangements by way of the Loan. As a result of entering into the abovementioned agreements, WFOE  should be deemed to control Yanglin as a Variable Interest Entity as required by FASB Interpretation No. 46 (revised December 2003) Consolidation of Variable Interest Entities, and Interpretation of ARB No. 51. The reverse-merger also included an equity financing of $21,500,000 by the issuance of 10,000,000 Series A Convertible Preferred Stock at $2.15 per share to 10 accredited investors.

The Company, through its subsidiaries and Yanglin, (hereinafter, collectively referred to as “the Group”), is now in the business of manufacturing, distribution, and selling of non-genetically modified soybean products, including soybean oil, soybean salad oil, and soybean meal,  throughout the Province of Heilongjiang and other parts of China.

2.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(a) Method of accounting

The Company maintains its general ledger and journals with the accrual method of accounting for financial reporting purposes.  The financial statements and notes are representations of management.  Accounting policies adopted by the Company conform to generally accepted accounting principles in the United States of America and have been consistently applied in the presentation of financial statements.

The share exchange transaction has been accounted for as a recapitalization of Yanglin Soybean Inc. where the Company (the legal acquirer) is considered the accounting acquiree and Faith Winner (BVI) (the legal acquiree) is considered the accounting acquirer. As a result of this transaction, the Company is deemed to be a continuation of the business of Faith Winner (BVI).

Accordingly, the accompanying financial statements are those of the accounting acquirer: Faith Winner (BVI). The historical stockholders’ equity of the accounting acquirer prior to the share exchange has been retroactively restated as if the share exchange transaction occurred as of the beginning of the first period presented.

(b) Principles of consolidation

The consolidated financial statements, which include the Company and its subsidiaries, are completed in accordance with, and are compliant with, generally accepted accounting principles in the United States of America. All significant inter-company accounts and transactions have been eliminated. The consolidated financial statements include 100% of assets, liabilities, and net income or loss of those wholly-owned subsidiaries.

Name of Company	Place of incorporation	Attributable interest
Faith Winner Investments Ltd	British Virgin Islands		100	%
Faith Winner (Jixian) Agriculture Development Company	PRC		100	%
Heilongjiang Yanglin Soybean Group Co. Ltd	PRC		100	%
*Deemed variable interest entity member

9

YANGLIN SOYBEAN INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2008 AND 2007

(Stated in US Dollars)

2.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

(c) Use of estimates

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

(d) Economic and political risks

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

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

(e) Land use rights

Land use rights are stated at cost less accumulated amortisation.  Amortisation is provided over the respective useful lives, using the straight-line method.  Estimated useful lives range from 22 to 50 years.

(f) Railway use rights

Railway use rights are stated at cost less accumulated amortisation. Amortisation is provided over the respective useful lives, using the straight-line method. Estimated useful life is 10 years.

10

YANGLIN SOYBEAN INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2008 AND 2007

(Stated in US Dollars)

2.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

(g) Property, plant and equipment

Property, plant and equipment are carried at cost less accumulated depreciation.  Depreciation is provided over their estimated useful lives, using the straight-line method. Estimated useful lives of the property, plant and equipment are as follows:

Buildings	10 - 35 years
Machinery and equipment	3.5 - 30 years
Office equipment	4 - 20 years
Motor vehicles	6 - 10 years

The costs and related accumulated depreciation of assets sold or otherwise retired are eliminated from the accounts and any gain or loss is included in the statement of income. The cost of maintenance and repairs is charged to income when incurred, whereas significant renewals and betterments are capitalized.

(h) Accounting for the impairment of long-lived assets

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

If such assets are considered to be impaired, the impairment losses to be recognized are measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. Assets to be disposed of are reported at the lower of the carrying amount or fair value less estimated costs of disposal.

During the reporting years, there were no impairment losses.

(i) Inventories

Inventories consist of finished goods, and raw materials, and are stated at the lower of cost or market value. Substantially all inventory costs are determined using the weighted average basis. Finished goods are comprised of direct materials, direct labor and an appropriate proportion of production overheads.

(j) Trade receivables

Trade receivables are recognized and carried at the original invoice amount less allowance for any uncollectible amounts. An allowance for doubtful accounts is maintained for all customers after considering a variety of factors, including the length of time past due, significant one-time events and the company’s historical experience.  Bad debts are written off as incurred.

11

YANGLIN SOYBEAN INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2008 AND 2007

(Stated in US Dollars)

2.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

(k) Cash and cash equivalents

The Company considers all highly liquid investments purchased with original maturities of three months or less to be cash equivalents.

	2008		2007
Cash on hand	$	40,298	$	18,362
Industrial And Commercial Bank of China		520		-
Agricultural Development Bank of China		409,323		1,362,651
Agricultural Bank of China		29,903,662		7,829,108
Hongkong and Shanghai Banking Corp.		11,610		-
Total cash and cash equivalents	$	30,365,413	$	9,210,121

(l) Foreign currency translation

The accompanying financial statements are presented in United States dollars.  The reporting currency of the Group is the U.S. dollar (USD). Faith Winner (Jixian) and Yanglin use its local currency, Renminbi (RMB), as its functional currency. Results of operations and cash flow are translated at average exchange rates during the period, and assets and liabilities are translated at the end of period exchange rates. Translation adjustments resulting from this process are included in accumulated other comprehensive income in stockholders’ equity. Transaction gains and losses that arise from exchange rate fluctuations from transactions denominated in a currency other than the functional currency are included in the results of operations as incurred.

The PRC government imposes significant exchange restrictions on fund transfers out of the PRC that are not related to business operations. These restrictions have not had a material impact on the Group because it has not engaged in any significant transactions that are subject to the restrictions.

The exchange rates used to translate amounts in RMB into USD for the purposes of preparing the consolidated financial statements were as follows:

	2008		2007
Year end RMB : USD exchange rate		6.8542		7.3141
Average yearly RMB : USD exchange rate		6.9623		7.6172

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 USD at the rates used in translation.

12

YANGLIN SOYBEAN INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2008 AND 2007

(Stated in US Dollars)

2.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

(m) Revenue recognition

Revenue represents the invoiced value of goods sold recognized upon the delivery of goods to customers. Revenue is recognized when all of the following criteria are met: Persuasive evidence of an arrangement exists, delivery has occurred or services have been rendered, the seller’s price to the buyer is fixed or determinable, and collection is reasonably assured.

(n) Costs of sales

Cost of sales consists primarily of direct material costs, direct labor cost, direct depreciation and related direct expenses attributable to the production of products.  Write-down of inventory to lower of cost or market value is also reflected in cost of revenues.

(o) Advertising

The Group expenses all advertising expenses as incurred.  Advertising expenses included in selling expenses were $4,546 and $9,167 for the years ended December 31, 2008 and 2007 respectively.

(p) Shipping and handling

All shipping and handling costs are expensed as incurred.  The allocation of shipping and handling expenses between selling expenses and general and administrative expenses is shown as follows:

	2008		2007
Selling expenses	$	96,997	$	75,347
General and administrative expenses		2,653		-
Total shipping and handling expenses	$	99,650	$	75,347

(q) Research and development

All research and development costs are expensed as incurred. The research and development costs included in general and administrative expenses were $23,829 and $11,815 for the years ended December 31, 2008, and 2007 respectively.

(r) Retirement benefits

Retirement benefits in the form of contributions under defined contribution retirement plans to the relevant authorities are charged to the statements of income as incurred. The retirement benefit funds included in general and administrative expenses were $184,006 and $168,535 for the years ended December 31, 2008 and 2007 respectively.

13

YANGLIN SOYBEAN INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2008 AND 2007

(Stated in US Dollars)

2.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

(s) Income taxes

The Group accounts for income tax using an asset and liability approach and allows for recognition of deferred tax benefits in future years.  Under the asset and liability approach, deferred taxes are provided for the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes.  A valuation allowance is provided for deferred tax assets if it is more likely than not these items will either expire before the Group is able to realize their benefits, or that future realization is uncertain.

(t) Statutory reserves

As stipulated by the PRC’s Company Law and as provided in the Faith Winner (Jixian), and Yanglin’s Articles of Association, Faith Winner and Heilongjiang Yanglin’s net income after taxation can only be distributed as dividends after appropriation has been made for the following:

(i) Making up cumulative prior years’ losses, if any;

(ii) Allocations to the “Statutory surplus reserve” of at least 10% of net income after taxation, as determined under PRC accounting rules and regulations, until the fund amounts to 50% of the Company's registered capital, which is restricted for set off against losses, expansion of production and operation or increase in registered capital;

(iii) Allocations of 5-10% of income after tax, as determined under PRC accounting rules and regulations, to the Company's “Statutory common welfare fund”, which is restricted for capital expenditure for the collective benefits of the Company's employees; and

(iv) Allocations to the discretionary surplus reserve, if approved in the shareholders’ general meeting.

On December 31, 2001, Heilongjiang Yanglin established a statutory surplus reserve as well as a statutory common welfare fund and commenced to appropriate 10% and 5%, respectively of the PRC net income after taxation to these reserves. The amounts included in the statutory reserves consisted of surplus reserve of $3,752,424 and common welfare fund of $1,876,212 as of December 31, 2008.

(u) Comprehensive income

Comprehensive income is defined to include all changes in equity except those resulting from investments by owners and distributions to owners.  Among other disclosures, all items that are required to be recognized under current accounting standards as components of comprehensive income are required to be reported in a financial statement that is presented with the same prominence as other financial statements. The Group’s current component of other comprehensive income is the foreign currency translation adjustment.

14

YANGLIN SOYBEAN INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2008 AND 2007

(Stated in US Dollars)

2.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

(v) Recent accounting pronouncements

In December 2007, the Financial Accounting Standards Board issued Statement of Financial Accounting Standard (“SFAS”) No. 160, "Noncontrolling Interests in Consolidated Financial Statements, an amendment of ARB No. 51”.  SFAS 160 establishes accounting and reporting standards for the noncontrolling interest in a subsidiary and for the deconsolidation of a subsidiary.  SFAS 160 is effective for fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2008.  As such, the Company is required to adopt these provisions at the beginning of the fiscal year ended December 31, 2009.  The Company is currently evaluating the impact of SFAS 160 on its consolidated financial statements but does not expect it to have a material effect

In December 2007, the Financial Accounting Standards Board issued Statement of Financial Accounting Standard (“SFAS”) No. 141(R), "Business Combinations”. SFAS 141(R) establishes principles and requirements for how the acquirer recognizes and measures in its financial statements the identifiable assets acquired, the liabilities assumed, any noncontrolling interest in the acquiree, recognizes and measures the goodwill acquired in the business combination or a gain from a bargain purchase, and determines what information to disclose to enable users of the financial statements to evaluate the nature and financial effects of the business combination. SFAS 141(R) is effective for fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2008. As such, the Company is required to adopt these provisions at the beginning of the fiscal year ended December 31, 2009. The Company is currently evaluating the impact of SFAS 141(R) on its consolidated financial statements but does not expect it to have a material effect.

In March 2008, the Financial Accounting Standards Board issued Statement of Financial Accounting Standard (“SFAS”) No. 161 “Disclosures about Derivative Instruments and Hedging Activities”. SFAS 161 is intended to improve financial reporting about derivative instruments and hedging activities by requiring enhanced disclosures to enable investors to better understand their effects on an entity’s financial position, financial performance, and cash flows. It is effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008, with early application encouraged. The Company is currently evaluating the impact of SFAS 161 on its consolidated financial statements but does not expect it to have a material effect.

In May 2008, the FASB issued SFAS No. 162, The Hierarchy of Generally Accepted Accounting Principles. SFAS 162 identifies the sources of accounting principles and the framework for selecting the principles to be used in the preparation of financial statements of nongovernmental entities that are presented in conformity with GAAP. SFAS 162 directs the GAAP hierarchy to the entity, not the independent auditors, as the entity is responsible for selecting accounting principles for financial statements that are presented in conformity with GAAP. SFAS 162 is effective 60 days following the SEC's approval of the Public Company Accounting Oversight Board amendments to remove the GAAP hierarchy from the auditing standards. SFAS 162 is not expected to have a material impact on the Company’s financial statements.

15

YANGLIN SOYBEAN INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2008 AND 2007

(Stated in US Dollars)

3.  CONCENTRATIONS OF CREDIT RISK AND MAJOR CUSTOMERS

Financial instruments which potentially expose the Group to concentrations of credit risk, consists of cash and accounts receivable as of December 31, 2008 and 2007. The Group performs ongoing evaluations of its cash position and credit evaluations to ensure sound collections and minimize credit losses exposure.

As of December 31, 2008 and 2007, the Group’s bank deposits were all conducted with banks in the PRC where there is currently no rule or regulation mandated on obligatory insurance of bank accounts.

For the years ended December 31, 2008 and 2007, all of the Group’s sales were generated from the PRC. In addition, all accounts receivable as of December 31, 2008 and 2007 also arose in the PRC.

The maximum amount of loss exposure due to credit risk that the Group would bear if the counter parties of the financial instruments failed to perform represents the carrying amount of each financial asset in the balance sheet.

Normally the Group does not require collateral from customers or debtors.

No customer accounted for 10% or more of the Group’s revenue in 2008.

Details of customer account for 10% or more of the Group’s accounts receivable are as follows:

	December 31,
	2008		2007
Customer A	$	9,352	$	-
Customer B		-		7,927
Customer C		-		7,140

16

YANGLIN SOYBEAN INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2008 AND 2007

(Stated in US Dollars)

4.  PLEDGED DEPOSITS

Pledged deposits are restricted cash kept in a trust account maintained in the United States for the purpose of investor and public relation affairs.

5.  TRADE RECEIVABLES, NET

Details of trade receivables are as follows:

	2008			2007
Trade receivables, gross	$	9,352		$	15,067
Provision for doubtful debts		(1,309	)		(1,213	)
Net balance at end of year	$	8,043		$	13,854

All of the above trade receivables are due within 12 months of aging.

An analysis of the allowance for doubtful accounts for the years ended December 31, 2008 and 2007 is as follows:

	2008		2007
Balance at beginning of year	$	1,213	$	1,689
Addition/(reduction) of bad debt expense		14		(569	)
Foreign exchange adjustment		82		93
Balance at end of year	$	1,309	$	1,213

Allowance was made when collection of the full amount is no longer probable.  Management reviews and adjusts this allowance periodically based on historical experience, current economic climate as well as its evaluation of the collectibility of outstanding accounts. The Group evaluates the credit risks of its customers utilizing historical data and estimations of future performance.

17

YANGLIN SOYBEAN INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2008 AND 2007

(Stated in US Dollars)

6.  OTHER RECEIVABLES

Details of other receivables are as follows:

	2008		2007
Advances to employees for purchasing
materials	$	32,271	$	14,108
Advances for traveling		11,417		-
Loans to employees		57,902		9,777
Sundry		13,400		4,011
Balance at end of year	$	114,990	$	27,896

Loans to employees are unsecured, interest-free, and repayable on demand.

7.  INVENTORIES

Inventories comprise the followings:

	2008		2007
Finished goods	$	904,375	$	537,360
Raw materials		2,991,959		17,346,292
Balance at end of year	$	3,896,334	$	17,883,652

18

YANGLIN SOYBEAN INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2008 AND 2007

(Stated in US Dollars)

8.  PROPERTY, PLANT AND EQUIPMENT, NET

Property, plant and equipment comprise the followings:

	2008			2007
At cost
Building	$	5,908,205		$	7,060,690
Machinery and equipment		15,826,005			17,900,662
Office equipment		130,512			134,060
Motor vehicles		1,165,410			1,054,995
	$	23,030,132		$	26,150,407
Less: accumulated
depreciation		(7,725,246	)		(5,931,919	)
	$	15,304,886		$	20,218,488
Construction in progress		16,225,050			2,344,708
Balance at end of year	$	31,529,936		$	22,563,196

As of December 31, 2008, building with net book value of $1,239,396 and machinery and equipment with net book value of $6,335,754 of the Company were pledged as collateral under certain loan arrangements. These loans were primarily obtained for general working capital.

Depreciation expense is included in the statement of income and comprehensive income as follows:

	2008		2007
Cost of sales	$	1,378,837	$	1,686,129
General and administrative
expenses		481,239		342,184
Total depreciation expenses	$	1,860,076	$	2,028,313

Construction in progress mainly comprises capital expenditures for construction of the Group’s corporate campus, including offices, factories and staff dormitories. It represents direct costs of construction and design fees incurred. Capitalization of these costs ceases and the construction in progress is transferred to plant and equipment when substantially all the activities necessary to prepare the assets for their intended use are completed. No depreciation is provided until it is completed and ready for intended use.  There is no capital commitment of these projects as at December 31, 2008.

19

YANGLIN SOYBEAN INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2008 AND 2007

(Stated in US Dollars)

9.  INTANGIBLE ASSETS, NET

Intangible assets are as follows:

	2008			2007
Land use rights, at cost	$	3,994,597		$	3,743,422
Railway use rights, at cost		1,151,125			-
Less: accumulated amortization		(526,006	)		(299,341	)
Balance at end of year	$	4,619,716		$	3,444,081

Amortization expenses included in the costs of sales for the years ended December 31, 2008 and 2007 were $85,772 and $78,397, respectively. Amortization expenses included in selling expenses for the years ended December 31, 2008 and 2007 were $117,602 and nil respectively. Total amortization expenses for the years ended December 31, 2008 and 2007 amounted to $203,374 and $78,397 respectively.

As of December 31, 2008, land use rights with net book value of $ 1,293,076 of the Group were pledged as collateral under certain loan arrangements. These loans were primarily obtained for general working capital.

10.  SHORT-TERM BANK LOANS

Short-term bank loans are as follows:

	2008		2007
Loans from Agricultural Development
Bank of China, interest rates at 6.66%
per annum, due October 29, 2009	$	6,711,214	$	-
Loans from Agricultural Development
Bank of China, interest rates at 7.02%
per annum, due August 29, 2008		-		8,203,333
Loans from Agricultural Development
Bank of China, interest rates at 7.29%
per annum, due November 21, 2008		-		4,101,667
Balance at end of year	$	6,711,214	$	12,305,000

Interest paid for the years ended December 31, 2008 and 2007 were $771,555 and $415,632, respectively.

20

YANGLIN SOYBEAN INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2008 AND 2007

(Stated in US Dollars)

11.  OTHER PAYABLES

Other payables are as follows:

	2008		2007
Due for construction	$	670,368	$	-
Due for employees		35		10,670
Sundry		13,000		33,710
Balance at end of year	$	683,403	$	44,380

Due for employees are unsecured, interest-free, and repayable on demand. They are travel and expenses reimbursements.

12.  LONG-TERM BANK LOANS

Long-term bank loans are as follows:

	2008			2007
Loans from Industrial And Commercial
Bank of China, interest rates at 9.405%
and 8.892% per annum respectively,
with various installments, final
due October 28, 2016	$	489,827		$	504,540
Current portion due within one year		(55,149	)		(47,433	)
	$	434,678		$	457,107

All of the installments due in 2008 were paid on their due dates.  Interest paid for the years ended December 31, 2008 and 2007 were $48,327 and $42,015, respectively.

The future principal payments under the bank loans as of December 31, 2008 are as follows:

Year	2008
2009	$	55,149
2010		61,276
2011		62,443
2012		54,419
2013		59,088
2014		64,194
Thereafter		133,258
Total	$	489,827

21

YANGLIN SOYBEAN INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2008 AND 2007

(Stated in US Dollars)

13.  PREFERRED STOCK AND WARRANTS

On October 3, 2007, the Company sold 10,000,000 shares of Series A Preferred Stock and various stock purchase warrants for cash consideration totaling $21.5 million dollars. The exercise price, expiration date and number of share eligible to be purchased with the warrants are summarized in the following table:

Series of warrant	Number of shares		Exercise price		Contractual term
Series A		10,000,000	$	2.75	5.00 years
Series B		5,000,000	$	3.50	5.00 years
Series J		7,801,268	$	2.37	1.50 years
Series C		7,801,268	$	3.03	5.00 years
Series D		3,900,634	$	3.85	5.00 years

The Series A preferred stock has liquidation rights senior to common stock and to any other class or series of stock issued by the Company not designated as ranking senior to or pari passu with the Series A Preferred Share.  In the event of a liquidation of the Company, holders of Series A preferred stock are entitled to receive a distribution equal to $2.15 per share of Series A preferred stock prior to any distribution to the holders of common stock or any other stock that ranks junior to the Series A Preferred Shares. The Series A preferred stock is entitled to non-cumulative dividends only upon declaration of dividends by the Company.  To date, no dividends have been declared or accrued.  The Series A preferred stock will participate based on their respective as-if conversion rates if the Company declares any dividends.  Holders of Series A Preferred Shares also have voting rights required by applicable law and the relevant number of votes shall be equal to the number of shares of Common Stock issuable upon conversion of Series A Preferred Shares.

The gross proceeds of the transaction were $21.5 million. The proceeds from the transaction were allocated to the Series A preferred stock, warrants and beneficial conversion feature based on the relative fair value of the securities.  The value of the Preferred Series A was determined by reference to the market price of the common shares into which it converts, and the gross value of the warrants was calculated using the Black –Scholes model with the following assumptions:  expected life of 5 year, volatility of 27% and an interest rate of 4.24%.

The Company recognized a beneficial conversion feature discount on the Series A preferred stock at its intrinsic value, which was the fair value of the common stock at the commitment date for the Series A preferred stock investment, less the effective conversion price but limited to the $21.5 million of proceeds received from the sale. The Company recognized the $8.0 million beneficial conversion feature as an increase in paid in capital in the accompanying consolidated balance sheets on the date of issuance of the Series A preferred shares since the Series A preferred shares were convertible at the issuance date.

The agreement also provides that if the Company doesn’t file, or if the registration statements aren’t declared effective throughout the required period, or if the company ceases to trade on certain exchanges as defined, the Company shall pay damages equal to 1.5% of the amount invested for each calendar month capped at a cumulative damage payment amount of 15%.  Further, if the Company fails to obtain a listing on NASDAQ or the New York Stock Exchange, then 1,000,000 shares of common stock of the company will be given to the investors.  The company is accounting for these penalties in accordance with FAS 5 - Accounting for Contingencies, whereby the penalty will not be recorded as a liability until and if it is probable the penalty will be incurred. No penalty has been recorded in the accompanying consolidated financial statements for this instance.

22

YANGLIN SOYBEAN INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2008 AND 2007

(Stated in US Dollars)

13. PREFERRED STOCK AND WARRANTS (Continued)

Pursuant to the Registration Rights Agreement dated as of October 3, 2007 by and among the Company and certain holders (the Holders), the Company agreed to have a registration statement registering certain of the securities of the Holders declared effective with the Securities and Exchange Commission on or prior to the Effectiveness date defined in the Registration Rights Agreement or pay the liquidated damages.

Although the registration statement has not yet been declared effective, pursuant to a Waiver and Release dated December 31, 2008, the Holders have waived their right to the liquidated damages for the Company’s failure to have the registration statement declared effective on or prior to the Effectiveness date under Registration Rights Agreement.

In exchange for the waiver and release of the liquidated damages, the Company entered into an Agreement dated December 31, 2008 (the Agreement). Under the Agreement, the Company agreed to hire and engage, by February 28, 2009, three (3) independent directors as defined by NASDAQ Rule 4200(a)(15) and who are acceptable to the Holders. Further, the Company shall comply with all of the provisions of NASDAQ Rule 4350 by February 28, 2009. If these requirements are not met, the Company shall pay to each Holder five percent (5%) of its initial investment under the Securities Purchase Agreement by and among the Company and the Holders dated October 3, 2007. On February 27, we signed an addendum to the Agreement with the Holders, which extended the deadline for hiring and engaging three (3) independent directors to March 13, 2009. On March 9, 2009, the Company adopted a form of new Bylaws, appointed three (3) independent directors, established three (3) standing committees under the Board of Directors (audit committee, compensation committee and governance and nominating committee), and approved the articles of the three (3) abovementioned standing committees and the Code of Conduct and Ethics, thus has been compliant with the provisions of NASDAQ Rule 4350.In addition, the Company agreed to effect and announce, no later than June 30, 2009, a change to the Company’s current independent audit firm and engage a new independent audit firm listed as a Top 10 audit firm according to Public Accounting Report’s 2008 Annual Audit Rankings to audit the 2009 financial statements and review the interim financial statements as of June 30, 2009.  If these requirements are not met, the Company shall pay to each Holder ten percent (10%) of its initial investment under the Securities Purchase Agreement. Furthermore, the Company and the Holders agreed to extend the required Effectiveness date of the Company’s Registration Statement filed with the Securities and Exchange Commission to June 30, 2009.

23

YANGLIN SOYBEAN INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2008 AND 2007

(Stated in US Dollars)

14.  CAPITALIZATION

As a result of the Group’s reverse-merger on October 3, 2007, the Group’s capital structure has been changed. The number of common stock was 20,000,003 after reverse-merger. The common stock is $20,000 with paid-in capital $38,389,635.

15.  EARNINGS PER SHARE

The calculation of the basic and diluted earnings per share attributable to the common stock holders is based on the following data:

	2008		2007
Net income	$	14,380,466	$	10,324,028
Beneficial conversion feature on Series A
preferred stock		-		(7,988,359	)
Net income attributable to common shareholders	$	14,380,466	$	2,335,669
Earnings:
Earnings for the purpose of basic
earnings per share	$	14,380,466	$	2,335,669
Effect of dilutive potential common stock		-		-
Earnings for the purpose of dilutive
earnings per share	$	14,380,466	$	2,335,669
Number of shares:
Weighted average number of common
stock for the purpose of basic earnings
per share		20,000,003		19,998,473
Effect of dilutive potential common stock
- conversion of convertible preferred
stock		9,999,999		9,999,999
Effect of dilutive potential common stock
- conversion of warrants		7,757,825		4,004,566
Weighted average number of common
stock for the purpose of dilutive earnings
per share		37,757,827		34,003,038
Earnings per share
Basic earnings per share	$	0.72	$	0.12
Dilutive earnings per share	$	0.38	$	0.07

24

YANGLIN SOYBEAN INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2008 AND 2007

(Stated in US Dollars)

16.  INCOME TAXES

(a) The Company is registered in the State of Nevada whereas its subsidiary, Faith Winner (BVI) being incorporated in the British Virgin Islands is not subject to any income tax and conducts all of its business through its PRC subsidiary, Faith Winner (Jixian) and VIE, Yanglin (see note 1).

Faith Winner (Jixian), and Yanglin, being registered in the PRC, are subject to PRC’s Enterprise Income Tax. Under applicable income tax laws and regulations, an enterprise located in PRC, including the district where our operations are located, is subject to a 25% enterprise income tax (“EIT”).

However, Yanglin has been named as a leading enterprise in the agricultural area and awarded with a tax exemption for the years up to 2009.  After 2009, review is required for the extension of the tax exemption status.

A reconciliation between the income tax computed at the U.S. statutory rate and the Group’s provision for income tax is as follows:

	2008			2007
U.S. statutory rate		34	%		34	%
Foreign income not recognized in the U.S.		(34	)%		(34	)%
PRC Enterprise Income Tax		25	%		33	%
Tax exemption		(25	)%		(33	)%
Provision for income tax		-			-

(b) For 2008, the PRC corporate income tax rate was 25%. Heilongjiang Yanglin Soybean Group Co., Ltd are entitled to tax exemptions (tax holidays) for 2008.

Income before income tax expenses of $14,380,466, and $10,324,028 for the years ended December 31, 2008, and 2007 respectively, were attributed to subsidiaries with operations in China. Income tax (benefit) expense related to China income for the years ended December 31, 2008 and 2007 are nil, and nil, respectively.

The combined effects of the income tax expense exemptions and reductions available to the Company for the years ended December 31, 2008, and 2007 are as follows:

	2008		2007
Tax holiday effect	$	3,595,117	$	3,406,929
Basic net income per share effect		0.18		0.17

(c) No deferred tax has been provided as there are no material temporary differences arising during the years ended December 31, 2008 and 2007.

25

YANGLIN SOYBEAN INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2008 AND 2007

(Stated in US Dollars)

17.  FAIR VALUE OF FINANCIAL INSTRUMENTS

The fair value of a financial instrument is the amount at which the instrument could be exchanged in a current transaction between willing parties.  The carrying amounts of financial assets and liabilities, such as cash and cash equivalents, accounts receivable, other receivables, accounts payable, and other payables, approximate their fair values because of the short maturity of these instruments and market rates of interest available to the Group.

18.  SALES BY PRODUCTS

The Company operates in one business segment, manufacturing, distribution, and selling of non-genetically modified soybean products, including soybean oil, soybean salad oil, and soybean meal, throughout the Province of Heilongjiang and other parts of China.

For the years ended December 31, 2008 and 2007, the Group’s net sales and cost of sales from these three product types, namely soybean meal, soybean oil and salad oil, are shown as follows:

2008	Soybean			Soybean
	meal			oil			Salad oil			Consolidated
Net sales	$	154,526,888		$	70,374,106		$	25,827,680		$	250,728,674
Cost of sales		(141,924,170	)		(64,571,952	)		(23,342,720	)		(229,838,842	)
Product result	$	12,602,718		$	5,802,154		$	2,484,960		$	20,889,832

2007	Soybean			Soybean
	meal			oil			Salad oil			Consolidated
Net sales	$	92,563,442		$	47,071,641		$	15,571,784		$	155,206,867
Cost of sales		(86,654,275	)		(42,075,631	)		(13,838,752	)		(142,568,658	)
Product result	$	5,909,167		$	4,996,010		$	1,733,032		$	12,638,209

26

YANGLIN SOYBEAN INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2008 AND 2007

(Stated in US Dollars)

19.  RELATED PARTIES TRANSACTIONS

The following material transactions with related companies, during the periods were opinion of the directors, carried out in the ordinary course of business and on normal commercial terms:

On October 3, 2007, we entered into a consulting agreement (“Consulting Agreement”) with our ex-President, Chief Executive Officer and Chief Financial Officer, Glenn A. Little. Pursuant to the Consulting Agreement, the services to be performed by Mr. Little include providing advice, information and true and correct copies of documents regarding our historical records and operations to our auditors, attorneys, officers and directors, and signing such documents as they may reasonably request and providing information to the extent the requested information is reasonably available to Mr. Little. In consideration thereof, Mr. Little will be paid the sum of $550,000; provided, however, that as a condition to the making of the foregoing payment, he shall have: (i) delivered a resignation from all officer positions effective upon delivery, (ii) delivered a resignation as director which shall be effective on the tenth (10th) day after we mail a Schedule 14f-1 to our shareholders of record; and (iii) appointed Mr. Shulin Liu as our director and Chief Executive Officer and Mr. Shaocheng Xu as our Chief Financial Officer. Mr. Little completed the provision of the services and was paid $550,000 as provided in the Consulting Agreement on October 4, 2007.

On November 2, 2006, Yanglin entered into a Financial Consulting Agreement (the “MHA Agreement”) with Mass Harmony Asset Management Limited (“MHA”). Pursuant to the MHA Agreement, Yanglin is to pay MHA an aggregate of RMB 300,000 (approximately US$ 39,891), half of which is payable within five business days upon the execution of the MHA Agreement, and the balance is due within five business days after the closing of a reverse merger.

Additionally MHA is also to receive 1% of the issued and outstanding common stock of the Company post-private placement (including the underlying common stock of the Series A Preferred Stock) and warrants to purchase common stock of the Company valued at 5% of the dollar amount of private placement at an exercise price of 140% of the Series A Preferred Stock price. i.e. 500,000 warrants.

The services MHA shall render, pursuant to the MHA Agreement, include initial due diligence on Yanglin, preparing Yanglin’s business plan and assisting in the corporate restructuring and financial documentation. Our incumbent director, Yang Miao is the Managing Director and a shareholder of MHA.

27

YANGLIN SOYBEAN INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2008 AND 2007

(Stated in US Dollars)

20.  PARENT-ONLY FINANCIAL STATEMENTS

As mentioned in note 1 to the financial statements, as a result of entering into the contractual agreements, WFOE is deemed to control Yanglin as a Variable Interest Entity. These agreements may have the restrictions on the ability of Yanglin to transfer funds to the parent through intercompany loans, advances and cash dividends which consist of additional paid in capital, statutory reserves and retained earnings of $65,744,088 and $51,312,334 respectively as at December 31, 2008 and 2007.

The following presents unconsolidated financial information of the parent company only:

Condensed Balance Sheets as of December 31, 2008 and 2007

	2008		2007
Cash and cash equivalents	$	-	$	15,472
Pledged deposits - restricted		484,000		500,000
Investments in subsidiaries		72,421,357		54,186,389
Total assets	$	72,905,357	$	54,701,861
Other current liabilities	$	33,878	$	14,062
Total liabilities	$	33,878	$	14,062
Total shareholders’ equity		72,871,479		54,687,799
Total liabilities and shareholders’
equity	$	72,905,357	$	54,701,861

28

YANGLIN SOYBEAN INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2008 AND 2007

(Stated in US Dollars)

20.  PARENT-ONLY FINANCIAL STATEMENTS (Continued)

Condensed Income Statements as of December 31, 2008 and 2007

	2008			2007
Investment income	$	14,431,754		$	10,334,033
General and administrative expenses		(35,816	)		(9,871	)
Loss from operation	$	14,395,938		$	10,324,162
Other income		-			92
Other expenses		(15,472	)		(226	)
Loss from operation before income
taxes	$	14,380,466		$	10,324,028
Income taxes		-			-
Net income	$	14,380,466		$	10,324,028
Beneficial conversion feature on
Series A preferred stock		-			(7,988,359	)
Net income attributable to common
shareholders	$	14,380,466		$	2,335,669

29

(3) Exhibits

The exhibits listed on the Exhibit Index (following the signatures section of this report) are included, or incorporated by reference, in this annual report.

SIGNATURES

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

	YANGLIN SOYBEAN, INC
	(Registrant)
Dated: May 28, 2009	/s/ Shulin Liu
	Shulin Liu
	Chief Executive Officer,
	Chairman of the Board

In accordance with the Exchange Act, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.

Signature	Title	Date
/s/ Shulin Liu	Chief Executive Officer,	May 28, 2009
Shulin Liu	Chairman of the Board
/s/ Shaocheng Xu	Chief Financial Officer	May 28, 2009
Shaocheng Xu
/s/  Xiao Feng	Director	May 28, 2009
Xiao Feng
/s/ Zongtai Guo	Director	May 28, 2009
Zongtai Guo
/s/  Michael Marks	Director	May 28, 2009
Michael Marks
/s/ Albert McLelland	Director	May 28, 2009
Albert McLelland

EXHIBIT INDEX

3.1	Restated Articles of Incorporation incorporated by reference to the exhibit of the same number to our registration statement on Form S-1 filed with the SEC on May 12, 2008.
3.2	Restated Bylaws incorporated by reference to the exhibit of the same number to our report on Form 8-K filed with the SEC on March 12, 2009.
3.3	Specimen of Common Stock certificate incorporated by reference to the exhibit of the same number to our report on Form 8-k filed with the SEC on October 10, 2007.
3.4	Certificate of Designations authorizing the Series A Convertible Preferred Stock incorporated by reference to the exhibit of the same number to our report on Form 8-k filed with the SEC on October 10, 2007.
3.5	Certificate of Designations authorizing the Series B Convertible Preferred Stock incorporated by reference to the exhibit of the same number to our report on Form 8-k filed with the SEC on October 10, 2007.
4.1	Form of Series A Warrant incorporated by reference to the exhibit of the same number to our report on Form 8-k filed with the SEC on October 10, 2007.
4.2	Form of Series B Warrant incorporated by reference to the exhibit of the same number to our report on Form 8-k filed with the SEC on October 10, 2007.
4.3	Form of Series J Warrant incorporated by reference to the exhibit of the same number to our report on Form 8-k filed with the SEC on October 10, 2007.
4.4	Form of Series C Warrant incorporated by reference to the exhibit of the same number to our report on Form 8-k filed with the SEC on October 10, 2007.
4.5	Form of Series D Warrant incorporated by reference to the exhibit of the same number to our report on Form 8-k filed with the SEC on October 10, 2007.
4.6	Form of Series E Warrant issued to Kuhns Brothers, Inc. incorporated by reference to the exhibit of the same number to our report on Form 8-k filed with the SEC on October 10, 2007.
4.7	Form of Series F Warrant issued to Mass Harmony Asset Management Limited incorporated by reference to the exhibit of the same number to our report on Form 8-k filed with the SEC on October 10, 2007.
4.8	Registration Rights Agreement dated October 3, 2007, by and among the Company and the Purchasers, incorporated by reference to the exhibit of the same number to our report on Form 8-k filed with the SEC on October 10, 2007.
4.9	Series J Registration Rights Agreement dated October 3, 2007, by and among the Company, Vision Opportunity Master Fund Ltd., Sansar Capital Special Opportunity Master Fund, LP (Cayman Master) and Vicis Capital Master Fund, incorporated by reference to the exhibit of the same number to our report on Form 8-k filed with the SEC on October 10, 2007.

4.10	Lock-Up Agreement, dated as of October 3, 2007, by and among the Company and Winner State (BVI), incorporated by reference to the exhibit of the same number to our report on Form 8-k filed with the SEC on October 10, 2007.
4.11	Share Exchange Agreement, dated as of October 3, 2007 between the Company, Winner State (BVI), Fang Chen, Yang Miao and Ying Zhang, incorporated by reference to the exhibit of the 10.1 to our report on Form 8-k filed with the SEC on October 10, 2007.
4.12	Series A Convertible Preferred Stock Purchase Agreement, dated as of October 3, 2007 between the Company and the Purchasers, incorporated by reference to the exhibit of 10.2 to our report on Form 8-k filed with the SEC on October 10, 2007.
4.13	Securities Escrow Agreement, dated October 3, 2007, by and between the Company, Vision Opportunity Master Fund, Ltd as representative of the Purchasers, Winner State (BVI) and Loeb & Loeb LLP, as escrow agent, incorporated by reference to the exhibit of 10.3 to our report on Form 8-k filed with the SEC on October 10, 2007.
10.1	Consulting Agreement, dated as of October 3, 2007, by and among the Company and Glenn A. Little, incorporated by reference to the exhibit of 10.4 to our report on Form 8-k filed with the SEC on October 10, 2007.
10.2	Engagement Letter Agreement, dated December 12, 2006, by and between Yanglin and Kuhns Brothers, Inc, incorporated by reference to the exhibit of 10.5 to our report on Form 8-k filed with the SEC on October 10, 2007.
10.3	English Translation of Consulting Agreement dated Nov. 2, 2006 between the Company and Mass Harmony Management Ltd. incorporated by reference to exhibit 10.15 to our Registration Statement on Form S-1 (Amendment No. 4) filed with the SEC on February 17, 2009.
10.4	The Consignment Agreements, dated as of September 1, 2007, incorporated by reference to the exhibit of 10.7 to our report on Form 8-k filed with the SEC on October 10, 2007.
10.5	Exclusive Purchase Option Agreement, dated as of September 24, 2007, incorporated by reference to the exhibit of 10.8 to our report on Form 8-k filed with the SEC on October 10, 2007.
10.6	Registered Trademark Transfer Agreement, dated as of September 24, 2007, incorporated by reference to the exhibit of 10.9 to our report on Form 8-k filed with the SEC on October 10, 2007.
10.7	Trademark Licensing Agreement, dated as of September 24, 2007, incorporated by reference to the exhibit of 10.10 to our report on Form 8-k filed with the SEC on October 10, 2007.
10.8	Consigned Management Agreement, dated as of September 24, 2007, incorporated by reference to the exhibit of 10.11 to our report on Form 8-k filed with the SEC on October 10, 2007.
10.9	Loan Agreement, dated as of September 24, 2007, incorporated by reference to the exhibit of 10.12 to our report on Form 8-k filed with the SEC on October 10, 2007.

10.10	Form of soybean purchase contract incorporated by reference to the same number to our report on Form 10-k filed with the SEC on March 31, 2008
10.11	Form of sales contract for soybean product incorporated by reference to the same number to our report on Form 10-k filed with the SEC on March 31, 2008
10.12	Employment Contract-Shulin Liu as of Sept. 24, 2007 incorporated by reference to the same number to our report on Form 10-k filed with the SEC on March 31, 2008.
10.13	Employment Contract-Shaocheng Xu as of Sept. 24, 2007 incorporated by reference to the same number to our report on Form 10-k filed with the SEC on March 31, 2008.
10.14	Employment Contract-Zongtai Guo as of Sept. 24, 2007 incorporated by reference to the same number to our report on Form 10-k filed with the SEC on March 31, 2008.
10.15	Approval of Credit Line from China Agricultural Development Bank  dated October 18, 2008 incorporated by reference to exhibit 10.15 to our Registration Statement on Form S-1 (Amendment No. 4, file No. 333-150822) filed with the SEC on February 17, 2009.
10.16	Agreement among the Company and Vision Opportunity Master Fund, Ltd. and certain other investors dated December 31, 2008  incorporated by reference to exhibit 10.1 to our report on Form 8-K filed with the SEC on February 10, 2009.
10.17	Waiver and Release among the Company and Vision Opportunity Master Fund, Ltd. and certain other investors dated December 31, 2008 incorporated by reference to exhibit 10.2 to our report on Form 8-K filed with the SEC on February 10, 2009.
10.18	Amendment to Exclusive Purchase Option Agreement, dated as of April 3, 2009
10.19	Amendment to Consigned Management Agreement, dated as of April 3, 2009
16.1	Letter from the Company to Hatfield, incorporated by reference to the exhibit of the same number to our report on Form 8-k filed with the SEC on October 10, 2007.
16.2	Letter from Hatfield to the SEC, incorporated by reference to the exhibit of the same number to our report on Form 8-k filed with the SEC on October 10, 2007.
16.3	Letter of Samuel H. Wong & Company, LLP, dated February 26, 2008, incorporated by reference to the exhibit of 16.1 to our report on Form 8-k/A filed with the SEC on February 28, 2008.
16.4	Letter of Samuel H. Wong & Company, LLP, dated March 17, 2008, incorporated by reference to the exhibit of 16.1 to our report on Form 8-k/A filed with the SEC on March 28, 2008.
21.1	List of Subsidiaries incorporated by reference to the exhibit of same number to our report on Form 8-k filed with the SEC on October 10, 2007
31.1*	Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*	Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1*	Certification Pursuant to 18 U.S.C. Section 1350, as Adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2*	Certification Pursuant to 18 U.S.C. Section 1350, as Adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
*	Filed herewith.