QHY GROUP - Quarter Report: 2012 June (Form 10-Q)

Unassociated Document

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED June 30, 2012

o	TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM _______ TO ________.

COMMISSION FILE NUMBER: 001-34210

YAKUN INTERNATIONAL INVESTMENT & HOLDING GROUP

(Exact Name of Registrant as Specified in its Charter)

NEVADA	42-1743094
(State or other jurisdiction of	(I.R.S. Employer
incorporation or organization)	Identification No.)

No.40-1, Dama Road, Nanguan District, Changchun city, Jilin Province 130000 , China	100020
(Address of principal executive offices)	(Zip code)

043188738636 

Issuer's telephone number

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

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

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

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

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

State the number of shares outstanding of each of the issuer's classes of common equity, for the period covered by this report and as at the latest practicable date:

At August 1, 2012, we had outstanding 13,259,600 shares of common stock

YAKUN INTERNATIONAL INVESTMENT & HOLDING GROUP

FORM 10-Q

CONTENTS

SPECIAL NOTE REGARDING FORWARD LOOKING STATEMENTS

PART I. FINANCIAL IINFORMATION

Item 1. FINANCIAL STATEMENTS

Consolidated Balance Sheets	1

Consolidated Statements of Operations and Comprehensive Income	2

Consolidated Statements of Cash Flows	3

Notes to Consolidated Financial Statements	4-11

Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	12

Item 4. CONTROLS AND PROCEDURES	16

PART II. OTHER INFORMATION

ITEM 1A. RISK FACTORS	16

ITEM 6. EXHIBITS	17

SIGNATURES	18

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This document contains certain statements of a forward-looking nature. Such forward-looking statements, including but not limited to statements regarding projected growth, trends and strategies, future operating and financial results, financial expectations and current business indicators are based upon current information and expectations and are subject to change based on factors beyond the control of the Company. Forward-looking statements typically are identified by the use of terms such as “look,” “may,” “should,” “might,” “believe,” “plan,” “expect,” “anticipate,” “estimate” and similar words, although some forward-looking statements are expressed differently. The accuracy of such statements may be impacted by a number of business risks and uncertainties that could cause actual results to differ materially from those projected or anticipated, including but not limited to those set forth herein and in our Report on Form 8-K/A (Amendment No. 2) filed on April 20, 2012. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. Except as required by the federal securities laws, the Company undertakes no obligation to update forward-looking information. Nonetheless, the Company reserves the right to make such updates from time to time by press release, periodic report or other method of public disclosure without the need for specific reference to this report.

PART I

FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

Yakun International Investment & Holding Group

CONSOLIDATED FINANCIAL STATEMENTS

THREE MONTHS AND SIX MONTHS ENDED JUNE 30, 2012 AND 2011

CONTENTS

	Pages
Consolidated balance sheets (unaudited)	1

Consolidated statements of operations and comprehensive income (unaudited)	2

Consolidated statements of cash flows (unaudited)	3

Notes to consolidated financial statements (unaudited)	4

Yakun International Investment & Holding Group

CONSOLIDATED BALANCE SHEETS

(Expressed in U.S. dollars)


	June 30, 2012		December 31, 2011

	(Unaudited)
ASSETS
Current assets
Cash and cash equivalents	$	1,843,631	$	1,586,158
Accounts receivable, net of allowance		781,888		999,488
Inventories, net		323,857		264,237
Other receivables		47,833		21,138
Advance to suppliers		382,284		189,149
Deferred tax assets		105,818		69,268
Deposits & prepayment		11,004		11,090
Total current assets		3,496,315		3,140,528

Property and equipment, net		1,992,375		1,539,785
Prepaid lease		3,433,445		1,548,259
Prepaid lease - related party		5,381,488		5,994,681
Loans to related party		1,008,444		1,016,365
Total assets	$	15,312,067	$	13,239,618

LIABILITIES AND STOCKHOLDERS’ EQUITY

CURRENT LIABILITIES
Customer deposits	$	500	$	10,912
Accounts payable and accrued liabilities		262,227		264,453
Taxes payable		595,566		305,570
Related party payable		254,990		234,860
Total current liabilities		1,113,283		815,795

STOCKHOLDERS' EQUITY Preferred stock, 5,000,000 shares authorized, 0 shares outstanding
Common stock, $0.001 par value; 70,000,000 shares authorized, 13,259,600 shares issued and outstanding at June 30, 2012 and 12,059,600 shares issued and outstanding at December 31, 2011		13,260		12,060
Additional paid in capital		322,519		143,719
Retained earnings		13,273,153		11,567,692
Accumulated other comprehensive income		589,852		700,352
Total stockholders' equity		14,198,784		12,423,823

Total liabilities and stockholders' equity	$	15,312,067	$	13,239,618

See accompanying notes to consolidated financial statements

Yakun International Investment & Holding Group

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

(Unaudited - Expressed in U.S. dollars)

	For the Three Months Ended						For the Six Months Ended
	June 30,						June 30,
	2012			2011			2012			2011

Sales	$	4,225,032		$	2,931,664		$	8,306,460		$	5,630,575
Cost of sales		1,900,707			1,516,228			3,778,483			2,813,419
Cost of sales - related party		207,573			40,385			415,652			80,234
Gross profit		2,116,752			1,375,051			4,112,325			2,736,922
Operating expenses
Selling, general and administrative		856,884			299,318			1,614,207			581,021
Lease expenses - related party		77,099			75,000			154,386			149,006
Total operating expenses		933,983			374,318			1,768,593			730,027

Income from operations		1,182,769			1,000,733			2,343,732			2,006,895

Other income
Subsidy income		-			109,231			-			109,231
Interest income		280			37,946			878			74,771
Total other income		280			147,177			878			184,002

Income before income tax expense		1,183,049			1,147,910			2,344,610			2,190,897
Income tax expense		(295,371	)		(254,822	)		(639,149	)		(518,001	)
Net income		887,678			893,088			1,705,461			1,672,896
Other comprehensive income
Foreign currency translation gain (loss)		(131,654	)		153,033			(110,500	)		165,194
Total comprehensive income	$	756,024		$	1,046,121		$	1,594,961		$	1,838,090

Earnings per share – basic and diluted		$	0.07			$	0.07			$	0.13			$	0.14
Weighted average number of shares outstanding – basic and diluted			13,259,600				12,059,600				12,910,149				12,059,600

See accompanying notes to consolidated financial statements

Yakun International Investment & Holding Group

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited - Expressed in U.S. dollars)

	For the Six Months Ended June 30,
	2012			2011

Cash flows from operating activities
Net income	$	1,705,461		$	1,672,896
Depreciation and amortization		690,221			121,924
Prepaid lease amortization- related party		570,037			229,242
Stock based compensation		180,000			-
Accounts receivable		211,130			59,507
Inventories		(62,067	)		(332,394	)
Other receivables		(27,029	)		(16,613	)
Advance to suppliers		(195,833	)		(46,905	)
Deferred tax assets		(37,323	)		2,431
Accounts payable & accrued expense		19,403			(58,430	)
Customer deposits		(10,392	)		(6,103	)
Taxes payable		294,217			(68,400	)
Prepaid lease		(2,387,820	)		-
Prepayment – related party		-			(1,222,623	)
Net cash provided by operating activities		950,005			334,532

Cash flows from investing activities
Purchase of property and equipment		(679,106	)		(65,781	)
Net cash used in investing activities		(679,106	)		(65,781	)

Cash flows from financing activities
Increase of shareholder loan		-			3,511
Net cash provided by financing activities		-			3,511

Effect of exchange rate changes on cash		(13,426	)		23,298

Net increase (decrease) in cash and cash equivalents		257,473			295,560
Cash and cash equivalents at beginning of period		1,586,158			870,042
Cash and cash equivalents at end of period	$	1,843,631		$	1,165,602

Supplementary cash flow information:
Cash paid for interest	$	-		$	-
Cash paid for income tax	$	547,296		$	615,527

See accompanying notes to consolidated financial statements

Yakun International Investment & Holding Group

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited - Expressed in U.S. dollars)

1.	Basis of presentation

The financial statements are prepared in accordance with the accounting principles generally accepted in the United States of America (“US GAAP”). This basis differs from that used in the statutory accounts of our subsidiaries in the People’s Republic of China (“PRC”), which were prepared in accordance with the accounting principles and relevant financial regulations applicable to enterprises in the PRC. All necessary adjustments have been made to present the financial statements in accordance with US GAAP.

The interim condensed consolidated financial statements included herein, presented in accordance with United States generally accepted accounting principles and stated in US dollars, have been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the disclosures are adequate to make the information presented not misleading. These statements reflect all adjustments, consisting of normal recurring adjustments, which, in the opinion of management, are necessary for fair presentation of the information contained therein. It is suggested that these interim condensed consolidated financial statements be read in conjunction with the financial statements of the Company for the year ended December 31, 2011. The Company follows the same accounting policies in the preparation of interim reports.

2.	Organization and principal activities

Yakun International Investment & Holding Group (the “Company”, “Yakun International”, or ”we”) formerly named Rhino Productions, Inc. (“Rhino Productions”) was incorporated under the laws of the State of Nevada on October 16, 2007. Prior to the acquisition of Vast Glory Holdings Limited (“Vast Glory”), we were a development stage company that had not generated any revenue from operations and maintained no essential assets since inception.

On September 13, 2011, we consummated a Share Exchange Agreement with the shareholders of Vast Glory Holdings Limited (“Vast Glory”), pursuant to which we completed the Acquisition and acquired 100% of the outstanding capital stock of Vast Glory in exchange for 8,250,000 shares of our common stock, which constituted approximately 68% of our issued and outstanding capital stock on a fully-diluted basis as of and immediately after the consummation of the Acquisition pursuant to the Exchange Agreement.

The Acquisition was accounted for as a reorganization of equity interests under common control. In accordance with the applicable accounting guidance for accounting for a business combination as a pooling of interests, Vast Glory’s assets and liabilities were recorded at their historical carrying amounts, with no goodwill or other intangible assets recorded as a result of the accounting merger of Vast Glory with the Company.

Vast Glory Holdings Limited (“Vast Glory”) was incorporated on February 26, 2009 in British Virgin Islands (“BVI”) in anticipation of a business combination. Vast Glory was inactive until April 29, 2011, when the shareholders of HK Food Logistics, Limited (“HK Food”) transferred 100% of the outstanding common shares of HK Food to Vast Glory. As a result of this transaction, HK Food became a wholly-owned subsidiary of Vast Glory.

Prior to the April 29, 2011 share transfer, the shareholders of Vast Glory and HK Food were substantially the same. According to ASC 805-30 pooling of interest method was used to account for the transactions between entities under common control whereby Vast Glory recognized the HK Food assets and liabilities transferred at their carrying amounts. Accordingly, the financial statements for Vast Glory and HK Food have been combined for all periods presented per ASC 805-45. The reorganization of entities under common control was retrospectively applied to the financial statements of all prior periods as though the assets and liabilities had been transferred at that date.

Yakun International Investment & Holding Group

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited - Expressed in U.S. dollars)

HK Food was incorporated under the laws of the Hong Kong Special Administrative Region of the People's Republic of China (“Hong Kong”, or “HK”) on June 28, 2010. HK Food established Changchun Yaqiao Business Consulting Co., Ltd. (“WFOE”), a wholly foreign-owned enterprise in China on October 28, 2010. Until December 29, 2010, when HK Food through its WFOE entered into a series of variable interest entity contractual agreements (VIEs), HK Food had no operations other than those related to its incorporation.

Pursuant to the VIE Agreements, HK Food indirectly controls Changchun Decens Foods Co., Ltd. (“Decens”). Decens is located in Changchun City, Jilin Province, the People’s Republic of China (“PRC”). It was established in September 2003 under the law of PRC and is principally engaged in the production of cakes and Chinese traditional foods which it distributes through its outlets and distribution network throughout Jilin Province.

In December 2010, WFOE entered into a series of variable interest entity contractual agreements (the “VIE Agreements”) with Decens and its shareholders (the “Decens Shareholders”). The incorporation of HK Food, WFOE and entering into of VIE Agreements did not result in any change in the basis of the assets and liabilities of Decens, which continue to be carried at their historical amounts. WFOE effectively assumed management of the business activities of Decens and has the right to appoint all executive and senior management and the members of the board of the directors of Decens.

PRC laws and regulations prohibit or restrict foreign ownership of certain bakery content businesses. To comply with these foreign ownership restrictions, the Company operates its name brand bakery sales in the PRC through VIEs, the PRC legal entities that were established by the individuals authorized by the Company. The Company has entered into certain exclusive agreements with the VIEs through WFOE, which entitles WFOE to receive all of their residual returns. In addition, the Company has entered into certain agreements with the authorized individuals through WFOE, including option agreements to acquire the equity interests in the VIEs when permitted by the PRC laws, and share pledge agreements for the equity interests in the VIEs held by the authorized individuals.

Despite the lack of technical majority ownership, there exists a parent-subsidiary relationship between the Company and VIEs. The Company demonstrates its ability and intention to continue to exercise the ability to absorb substantially all of the profits and all of the expected losses of VIEs. The VIEs are subject to operating risks, which determine the variability of the Company’s interest in those entities. Based on these contractual arrangements, the Company consolidates the VIEs as required by Accounting Standards Codification (“ASC”) subtopic 810-10 (“ASC 810-10”), Consolidation: Overall, because the Company holds all the variable interests of VIEs through WFOE, which is the primary beneficiary of the VIEs.

Yakun International, Vast Glory, HK Food, WFOE and Decens are referred to herein collectively as the “Company” or “we”, “us”, “our” or “Group”.

3.	Cash and cash equivalents

Cash and cash equivalents represent cash on hand and deposits held at call with PRC banks which are not insured. The Company considers all highly liquid investments with original maturities of three months or less at the time of purchase to be cash equivalents.

	June 30, 2012		December 31, 2011

Cash on hand	$	464,251	$	730,399
Cash in bank		1,379,380		855,759
Total	$	1,843,631	$	1,586,158

Yakun International Investment & Holding Group

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited - Expressed in U.S. dollars)

4.	Accounts receivable

Accounts receivable are recorded at net realizable value consisting of the carrying amount less an allowance for uncollectible accounts as needed. As of June 30, 2012 and December 31, 2011, no allowance for doubtful accounts was provided for.

	June 30, 2012		December 31, 2011

Due from third parties	$	781,888	$	999,488
Total	$	781,888	$	999,488

5.	Related party transactions

Loans to (from) related parties are as follows:

	June 30, 2012		December 31, 2011
Jilin Fuyuanguan Foods Co., Ltd	$	1,008,444	$	1,016,365
Total	$	1,008,444	$	1,016,365

These loans bear no interest and are due on demand.

Prepaid leases - related party

	June 30, 2012		December 31, 2011
Prepaid leases - outlets and office building (Note 5.b).1).)	$	236,030	$	475,768
Prepaid leases - outlets and office building (Note 5.b).2).)		2,391,772		2,410,560
Prepaid leases - workshop and office building (Note 5.b).3).)		2,753,686		3,108,353
	$	5,381,488	$	5,994,681

The Company leases its office building and operating outlets from one of its stockholders. The lease contract is for 5 years starting from January 2008 to December 2012. The total rental of RMB15,000,000 was prepaid in advance. The prepaid leases are amortized equally over the five years using straight line method. The monthly rental is RMB 250,000 (approximately US$38,400).

In December 2011, the Company extended the lease contract of the same office building from January 2013 to December 2017. The total rent is RMB30,000,000 (about US$4.76 million), of which RMB15,200,000 (about US$2.4 million) was paid in advance. The remaining rent is due in 2012 and 2013. The prepaid leases will be amortized equally over the five years using straight line method starting January 1, 2013. The monthly rental is RMB 500,000 (approximately US$76,800).

Yakun International Investment & Holding Group

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited - Expressed in U.S. dollars)

On June 25, 2011, the Company entered into a new lease agreement with one of the Company’s shareholders. According to the new lease agreement, the Company will lease an office building and use it as a new administration, sales and manufacturing facility. The lease contract is for 5 years starting from September 1, 2011 to September 1, 2016 and a total rental of RMB21,000,000 (approximately US$3.1 million) was prepaid in advance. The prepaid leases are amortized equally over the five years using the straight line method. The monthly rental is RMB 350,000 (approximately US$53,800).

For the three months ended June 30, 2012 and 2011, related party lease expense included in cost of goods sold were $207,573 and $40,385, respectively; related party lease expense included in operating expenses were $77,099 and $75,000, respectively.

For the six months ended June 30, 2012 and 2011, related party lease expense included in cost of goods sold were $415,652 and $80,234, respectively; related party lease expense included in operating expenses were $154,386 and $149,006, respectively

Related party payable

		June 30, 2012				December 31, 2011
Due to shareholders		$	254,990			$	234,860

Related party payable arises from Company’s expenses paid by Ms. Yakun Song, one of the shareholders of the Company. This payable is non-interest bearing and due on demand.

Inventory

	June 30, 2012		December 31, 2011
Raw materials	$	314,270	$	254,161
Finished goods		9,587		10,076
Total	$	323,857	$	264,237

7.	Property and equipment

Property and equipment are recorded at cost. Depreciation is calculated on the straight-line method after taking into account their respective estimated residual values over the following estimated useful lives:

Machinery	10 years
Vehicles	6 years
Office equipment	4 years
Leasehold improvements	Lease term

Property and equipment consist of the following:

	June 30, 2012			December 31, 2011
Machinery	$	1,550,037		$	1,383,935
Vehicles		364,290			342,097
Office equipment and electronic devices		48,691			44,841
Leasehold improvements		640,350			254,144
Total		2,603,368			2,025,017
Less: accumulated depreciation		(610,993	)		(485,232	)
Total fixed assets, net	$	1,992,375		$	1,539,785

Yakun International Investment & Holding Group

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited - Expressed in U.S. dollars)

8.	Prepaid lease

	June 30, 2012		December 31, 2011
Prepaid leases - outlet (Note 8.a).)	$	283,236	$	380,615
Prepaid leases - outlet (Note 8.b).)		519,266		628,013
Prepaid leases – workshop (Note 8.c).)		424,854		513,830
Prepaid leases - outlet (Note 8.d).)		12,224		25,801
Prepaid leases - outlet (Note 8.e).)		356,275		-
Prepaid leases - outlet (Note 8.f).)		338,091		-
Prepaid leases - outlet (Note 8.g).)		388,908		-
Prepaid leases - outlet (Note 8.h).)		294,898		-
Prepaid leases - outlet (Note 8.i).)		390,198		-
Prepaid leases - outlet (Note 8.j).)		148,103		-
Prepaid leases - outlet (Note 8.k).)		181,546		-
Prepaid leases - outlet (Note 8.l).)		95,846		-
	$	3,433,445	$	1,548,259

On June 30, 2011, the Company entered into a new lease agreement with a third party to rent a store as the Company’s retail outlet. The lease contract is for 5 years starting from July 1, 2011 to June 30, 2016. The total rental is RMB6,000,000 ($951,536), of which RMB3,000,000 ($475,768) was paid by the Company in 2011. The remaining rental of RMB3,000,000 will be due before May 31, 2014. The prepaid leases are amortized equally over the five years using the straight line method. The monthly rental is RMB 100,000 (approximately $15,800).

On June 30, 2011, the Company entered into a new lease agreement with a third party to rent a store as the Company’s retail outlet. The lease contract is for 3 years from January 1, 2012 to December 31, 2014. The total rental of RMB3,960,000 ($628,013) was paid by the Company in 2011. The prepaid leases are amortized equally over the five years using the straight line method. The monthly rental is RMB 110,000 (approximately $16,900).

On November 15, 2011, the Company entered into a new lease agreement with a third party. According to the new lease agreement, the Company will lease a building and use it as a new manufacturing and sales facility. The lease contract is for 3 years from January 1, 2012 to December 31, 2014 and a total rental of RMB3,240,000 ($513,830) was prepaid in 2011. The prepaid leases are amortized equally over the three years using the straight line method. The monthly rental is RMB 90,000 (approximately $14,300).

On November 23, 2011, the Company entered into a new lease agreement with a third party to rent a store as the Company’s retail outlet. The lease contract is for 1 year from December 15, 2011 to December 14, 2012. The total rental of RMB170,000 ($26,960) was paid by the Company in 2011. The prepaid leases are amortized equally over the 1 year using the straight line method. The monthly rental is RMB14,166 (approximately $2,300).

On February 21, 2012, the Company entered into a new lease agreement with a third party to rent a store as the Company’s retail outlet. The lease contract is for 3 years from April 2, 2012 to April 1, 2015. The total rental of RMB2,470,000 ($392,314) was paid by the Company in March 2012. The prepaid leases are amortized equally over the 3 years using the straight line method. The monthly rental is RMB68,611 (approximately $10,900).

On January 16, 2012, the Company entered into a new lease agreement with a third party to rent a store as the Company’s retail outlet. The lease contract is for 3 years from March 15, 2012 to March 14, 2015. The total rental of RMB2,380,000 ($378,020) was paid by the Company in January and March 2012. The prepaid leases are amortized equally over the 3 years using the straight line method. The monthly rental is RMB66,111 (approximately $10,500).

Yakun International Investment & Holding Group

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited - Expressed in U.S. dollars)

On March 21, 2012, the Company entered into a new lease agreement with a third party to rent a store as the Company’s retail outlet. The lease contract is for 3 years from April 7, 2012 to April 6, 2015. The total rental of RMB2,680,000 ($425,670) was paid by the Company in March 2012. The prepaid leases are amortized equally over the 3 years using the straight line method. The monthly rental is RMB74,444 (approximately $11,820).

On March 12, 2012, the Company entered into a new lease agreement with a third party to rent a store as the Company’s retail outlet. The lease contract is for 5 years from April 12, 2012 to April 12, 2017. The rental of RMB2,020,000 ($320,840) for the first 3 years was paid by the Company in March 2012. The prepaid leases are amortized equally over the 3 years using the straight line method. The monthly rental is RMB56,111 (approximately $8,910). The rental for the 4th and 5th year will be negotiated by the Company and the lessor based on the market price in years 2016 and 2017.

On March 19, 2012, the Company entered into a new lease agreement with a third party to rent a store as the Company’s retail outlet. The lease contract is for 4 years from March 19, 2012 to March 20, 2016. The rental of RMB2,740,000 ($435,200) for the first 3 years was paid by the Company in March 2012. The prepaid leases are amortized equally over the 3 years using the straight line method. The monthly rental is RMB76,111 (approximately $12,080). The rental for the 4th year will be negotiated by the Company and the lessor based on the market price in year 2016.

On May 25, 2012, the Company entered into a new lease agreement with a third party to rent a store as the Company’s retail outlet. The lease contract is for about 5 years from May 8, 2012 to July 23, 2017. The rental of RMB2,740,000 ($435,200) for the first 3 years was paid by the Company in May 2012. The prepaid leases are amortized equally over the 3 years using the straight line method. The monthly rental is RMB27,500 (approximately $4,350). The rental for the 4th and 5th year will be negotiated by the Company and the lessor based on the market price in year 2016.

On June 15, 2012, the Company entered into a new lease agreement with a third party to rent a store as the Company’s retail outlet. The lease contract is for 5 years from June 15, 2012 to June 15, 2017. The rental of RMB1,170,000 ($186,000) for the first 3 years was paid by the Company in June 2012. The prepaid leases are amortized equally over the 3 years using the straight line method. The monthly rental is RMB32,500 (approximately $5,160). The rental for the 4th year will be negotiated by the Company and the lessor based on the market price in year 2016.

On June 15, 2012, the Company entered into a new lease agreement with a third party to rent a store as the Company’s retail outlet. The lease contract is for 3 years starting May 26, 2012 to May 26, 2015. The total rental of RMB630,000 ($100,000) was paid by the Company in June 2012. The prepaid leases are amortized equally over the 3 years using the straight line method. The monthly rental is RMB17,500 (approximately $2,800).

For the three months ended June 30, 2012 and 2011, the Company recorded lease expense in operating expenses of $276,014 (RMB1,745,259) and nil, respectively; the Company recorded lease expenses in cost of sales of $42,701 (RMB270,000) and nil, respectively.

For the six months ended June 30, 2012 and 2011, the Company recorded lease expense in operating expenses of $390,810 (RMB2,482,733) and nil, respectively; the Company recorded lease expenses in cost of sales of $84,729 (RMB540,000) and nil, respectively.

9.	Taxes payable

	June 30, 2012		December 31, 2011
Value-added tax payable	$	248,792	$	100,427
Enterprise Income tax payable		322,122		195,334
Others		24,652		9,809
Total	$	595,566	$	305,570

Yakun International Investment & Holding Group

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited - Expressed in U.S. dollars)

10.	Shareholder’s Equity and Stock Based Compensation

2011 Stock Incentive Plan

In December 2011, the Board of Directors adopted the 2011 Stock Incentive Plan (“2011 Plan”) under which it may grant incentive and nonstatutory stock options, and restricted stock to eligible employees, non-employee directors, or consultants. Under the 2011 Plan, a total of 1,200,000 unissued shares of the Company’s stock will be reserved for issuance. On February 22, 2012, the Company granted 1,200,000 shares of restricted stock to 10 outside consultants under the 2011 Plan. Those shares were vested immediately and non-forfeitable. At the grant date, the fair value of these restricted shares issued was measured at estimated $0.15 per share.

The Company accounts for stock-based compensation under provisions of EITF 96-18: Accounting for Equity Instruments That Are Issued to Other Than Employees for Acquiring, or in Conjunction with Selling, Goods or Services. Under the provisions of EITF 96-18, share-based compensation cost is measured at the grant date, based on the estimated fair value of the award, and is recognized as an expense over the period that the services are provided.

For the three months ended June 30, 2012, the Company recorded stock based compensation expenses of nil in Operating Expenses.

For the six months ended June 30, 2012, the Company recorded stock based compensation expenses of $180,000 in Operating Expenses (1,200,000 shares at the fair value of $0.15 per share).

11.	Income Tax

USA

The Company and its subsidiary and branch divisions are subject to income taxes on an entity basis on income arising in, or derived, from the tax jurisdiction in which they operate. As the Company had no income generated in the United States, there was no tax expense or tax liability due to the Internal Revenue Service of the United States as of June 30, 2012 and December 31, 2011.

BVI

Vast Glory is incorporated under the International Business Companies Act of the British Virgin Islands and accordingly, is exempted from payment of British Virgin Island’s income taxes.

Hong Kong

HK Food was incorporated in Hong Kong and subject to Hong Kong income taxes. As HK Food had no income generated in Hong Kong, there was no tax expense or tax liability at June 30, 2012 and December 31, 2011.

PRC

Yakun International Investment & Holding Group

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited - Expressed in U.S. dollars)

The reconciliation of tax computed by applying respective statutory income tax rate to pre-tax income is as follows:

	For the six months ended			For the six months ended
	June 30, 2012			June 30, 2011
Income (loss) before income taxes
United States, BVI, HK	$	(249,908	)	$	(17,142	)
China (Decens)		2,594,518			2,208,039
		2,344,610			2,190,897
Provision for Income Taxes
Current income tax		676,448			515,628
Deferred income tax		(37,299	)		2,373
		639,149			518,001

Net income	$	1,705,461		$	1,672,896

Worldwide effective rate		27.26	%		23.64	%

12.	Subsequent events

In May 2009, the FASB issued a new accounting standard which established general accounting standards and disclosure for subsequent events. In accordance with this standard, we evaluated subsequent events through August 13, 2012 and no subsequent events occurred that required disclosure in the accompanying consolidated financial statements.

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

Results of Operations

Comparison of the Results of Operations for the Three Months and Six Months Ended June 30, 2012 and 2011

All amounts, other than percentages, are in U.S. dollars

	Three months ended June 30,						% increase			Six months ended June 30,						% increase
	2012			2011			(decrease)			2012			2011			(decrease)

Sales	$	4,225,032		$	2,931,664			44	%	$	8,306,460		$	5,630,575			48	%
Cost of sales		1,900,707			1,516,228			25	%		3,778,483			2,813,419			34	%
Cost of sales – related party		207,573			40,385			414	%		415,652			80,234			418	%
Selling, general & administrative expenses		856,884			299,318			186	%		1,614,207			581,021			178	%
Lease expenses - related party		77,099			75,000			3	%		154,386			149,006			4	%
Income from operations		1,182,769			1,000,733			18	%		2,343,732			2,006,895			17	%
Other income		280			147,177			(100	%)		878			184,002			(100	%)
Income before income taxes		1,183,049			1,147,910			3	%		2,344,610			2,190,897			7	%
Income taxes		(295,371	)		(254,822	)		16	%		(639,149	)		(518,001	)		23	%
Net income	$	887,678		$	893,088			(1	%)	$	1,705,461		$	1,672,896			2	%

Three Months Ended June 30, 2012 Compared With Three Months Ended June 30, 2011

Sales

For the three months ended June 30, 2012, our sales were $4,225,032, an increase of $1,293,368 or approximately 44% from $2,931,664 for the same period in 2011.The growth is primarily the result of our newly opened retail shops. We have opened 9 new retail stores since the first quarter 2012. The newly opened stores contributed approximately $855,826 in revenue, which accounts for 66% of the total increase in revenue during the three months ended June 30, 2012. The higher sales were also the result of the increased demand for our new series of western flavored bakery products and bamboo rice wraps (Zongzi), a traditional Chinese food especially for Dragon Boat Festival. This year we had exceptional higher demand of Zongzi for Dragon Boat Festival in June 2012. The sales of bamboo rice wraps and festival gift packages associated with Zongzi increased about RMB3.1million (approximately $500,000) this year compared to the same period of last year.

Yakun International Investment & Holding Group

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited - Expressed in U.S. dollars)

Cost of Sales

Cost of sales primarily consists of the cost of raw materials and manufacturing overhead expenses. The cost of sales for the three months ended June, 2012 was $1,900,707, increased by $384 479, or 25%, from $1,516,228 for the same period in 2011.

Raw material cost decreased to 33% of net sales for the three months ended June 30, 2012, compared to 40% of net sales for the same period in 2011. For the three months ended June 30, 2012, we had a higher demand for our bamboo rice wraps. The main ingredient of bamboo rice wraps is rice, so the raw material cost of bamboo rice wraps is lower compared to other bakery products.

Overhead expenses were 12% for net sales for the three months ended June 30, 2012 compared to 13% of net sales for the same period in 2011. To meet the increasing demand of our products, we leased a new workshop from a third party in December 2011. For the three months ended June 30, 2012, we had increased lease expenses and facility expenses of approximately $80,000.

Cost of Sales- Related Party

Cost of sales – related party was workshop lease expense paid to one of the shareholders of the Company. The cost of sales – related party was $207,573 for the three months ended June 30, 2012, an increase of $167,188, or 414% from $40,385 for the same period in 2011, reflecting the increase in rent expenses associated with a new building leased from the same shareholder starting from September 2011.

On June 25, 2011 the Company entered an agreement with one of the Company’s shareholders to lease a building as the new administration, sales and manufacturing facility. The lease is for 5 years starting from September 1, 2011. The total rent was paid in advance and will be amortized equally over five years using the straight line method from September 1, 2011. The monthly rental allocated to cost of sales in respect of this lease is RMB 350,000 (approximately $53,800).

Profit Margins

Our gross profit margin increased to 50.10% for the three months ended June 30, 2012, compared to 46.9% for the same period in 2011. The increase in profit margin was due to the increase in sales from the new retail outlets opened since the third quarter of 2011.

Selling, general and administrative expenses

Selling, general and administrative expenses for the three months ended June 30, 2012 were $856,884, an increase of $557,566 or 186% as compared to $299,318 for the same period in 2011. There are two main reasons for the increase: (1) the increase in salary expenses of $206,190; and (2) the increase in rent expenses of $322,432 because of the 11 new retail outlets the Company leased since July 2011.

For the three months ended June 30, 2012, among selling, general and administrative expenses the Company accrued and recorded a total salary of $15,000 for Ms. Song, our Chief Executive Officer and principal shareholder.

Lease expenses – related party

For the three months ended June 30, 2012 and 2011, the Company recorded related party lease expense in operating expenses of $77,099 and $75,000, respectively. The increase was due to the appreciation of Renminbi against US dollar.

Other Income

Other income for the three months ended June 30, 2012 was $280, a decrease of $146,897 compared to $147,177 for the same period in 2011. The decrease was due to the one-time subsidy income of $109,231 received by the Company in June 2011 and a decrease of $37,666 in interest income from two loans that the Company had in 2011 that were repaid in November 2011.

Yakun International Investment & Holding Group

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited - Expressed in U.S. dollars)

Income taxes

USA

The Company and its subsidiary and branch divisions are subject to income taxes on an entity basis on income arising in, or derived, from the tax jurisdictions in which they operate. As the Company had no income generated in the United States, there was no tax expense or tax liability due to the Internal Revenue Service of the United States for the three months ended June 30, 2012 and 2011.

BVI

Vast Glory is incorporated under the International Business Companies Act of the British Virgin Islands and accordingly, is exempted from payment of British Virgin Island’s income taxes.

Hong Kong

HK Food was incorporated in Hong Kong and subject to Hong Kong income taxes. As HK Food had no income generated in Hong Kong, there was no tax expense or tax liability at June 30, 2012 and 2011.

PRC

WFOE and Decens, which were incorporated in the PRC, are governed by the income tax law of the PRC and are subject to PRC enterprise income tax (“EIT”). The prevailing statutory rate of enterprise income tax is 25%. Income tax expense for the three months ended June 30, 2012 was $295,371, an increase of 16%, compared to $254,822 for the same period in 2011. The increase in income tax was in excess of the percentage increase in our income before taxes due to the increase in our loss in the United States which is not deductible in computing our tax to the PRC and differences in taxable income between Chinese tax base and US GAAP.

Six Months Ended June 30, 2012 Compared With Six Months Ended June 30, 2011

Sales

For the six months ended June 30, 2012, our sales were $8,306,460, an increase of $2,675,885 or approximately 48% from $5,630,575 for the same period in 2011. We have opened 9 new retail stores since the first quarter of 2012. The newly opened stores contributed approximately $ 1,944,035 in revenue, which accounts for 73% of the total increase in revenue during the six months ended June 30, 2012. The higher sales were also because of the higher demand for our new series of western flavored bakery products we introduced during 2011 and our traditional Chinese festival products, especially the rice glue balls and bamboo rice wraps, a traditional Chinese food especially for Dragon Boat Festival.

Cost of Sales

Cost of sales primarily consists of the cost of raw materials and manufacturing overhead expenses. The cost of sales for the six months ended June 30, 2012 was $3,778,483, increased by $965,064, or 34%, from $2,813,419 for the same period in 2011.

Raw material cost decreased to 33% of net sales for the six month period ended June 30, 2012, compared to 37% of net sales for the same period in 2011. For the six months ended June 30, 2012, we experienced an exceptional increase in demand for our bamboo rice wraps. The main ingredient of bamboo rice wraps is rice, so the raw material cost of bamboo rice wraps is lower compared to our traditional bakery products.

Overhead expenses were 12% of net sales for the six month period ended June 30, 2012 compared to 13% of net sales for the same period in 2011. To meet the increasing demand for our products, we leased a new workshop from a third party in December 2011. For the six months ended June 30, 2012, the lease expenses and facility expenses were increased by approximately $118,000.

Cost of Sales- Related Party

Cost of sales – related party was workshop lease expense paid to one of the shareholders of the Company. The cost of sales – related party was $415,652 for the six months ended June 30, 2012, an increase of $335,418, or 418% from $80,234 for the same period in 2011, reflecting the increase in rent expenses associated with a new building leased from the same shareholder starting from September 2011.

Yakun International Investment & Holding Group

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited - Expressed in U.S. dollars)

Profit Margins

Our gross profit margin increased to 49.51% for the six months ended June 30, 2012, compared to 48.61% for the same period in 2011. The increase in profit margin was due to the increase in sales from the new retail outlets opened since the third quarter of 2011.

Selling, general and administrative expenses

Selling, general and administrative expenses for the six months ended June 30, 2012 were $1,614,207, an increase of $1,033,186 or 178% as compared to $581,021 for the same period in 2011. There are four main reasons for the increase: (1) the increase in salary expenses of $312,574; (2) the increase in rent expenses of $458,374 because of the 11 new retail outlets the Company leased since July 2011; (3) a one-time stock based compensation of $180,000 for restricted stock issued to 10 outside consultants; (4) the increase in legal and professional fees of $173,291 associated with public company expenses.

For the six months ended June 30, 2012, among selling, general and administrative expenses, the Company accrued and recorded a total salary of $30,000 for Ms. Song’s service.

Lease expenses – related party

For the six months ended June 30, 2012 and 2011, the Company recorded related party lease expense in operating expenses of $154,386 and $149,006, respectively. The increase was due to the appreciation of Renminbi against US dollar.

Other Income

Other income for the six months ended June 30, 2012 was $878, a decrease of $183,124 compared to $184,002 for the same period in 2011. The decrease was due to (1) one-time subsidy income of $109,231 received by the Company in June 2011; (2) the decrease of $73,893 in interest income from two loans that the Company had 2011 that were repaid in November 2011.

Income taxes

USA

BVI

Vast Glory is incorporated under the International Business Companies Act of the British Virgin Islands and accordingly, is exempted from payment of British Virgin Island’s income taxes.

Hong Kong

HK Food was incorporated in Hong Kong and subject to Hong Kong income taxes. As HK Food had no income generated in Hong Kong, there was no tax expense or tax liability at June 30, 2012 and 2011.

PRC

WFOE and Decens, which were incorporated in the PRC, are governed by the income tax law of the PRC and are subject to PRC enterprise income tax (“EIT”). The prevailing statutory rate of enterprise income tax is 25%. Income tax expense for the six months ended June 30, 2012 was $639,149, an increase of 23%, compared to $518,001 for the same period in 2011. The increase in income tax was in excess of the percentage increase in our income before taxes due to the increase in our loss in the United States which is not deductible in computing our tax to the PRC.

Liquidity and Capital Resources

Liquidity is the ability of a company to generate funds to support its current and future operations, satisfy its obligations and otherwise operate on an ongoing basis. At June 30, 2012, we have cash and cash equivalents of $1,843,631 and working capital of $2,383,032. We believe that our cash and cash equivalents on hand are sufficient to satisfy our cash needs for the immediate future and that there are no commitments or anticipated events that are likely to result in a significant increase or decrease in our liquidity in the immediate future, though we might seek to raise additional cash through the issuance of debt or equity to fund expansion opportunities. In concluding that we have sufficient cash for the immediate future, we note that inflationary pressures remain strong in China. Nevertheless, we believe that we will be able to increase the prices of our products to offset any cost increases due to inflation.

Yakun International Investment & Holding Group

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited - Expressed in U.S. dollars)

Consolidated Statement of Cash Flows

	For the six months ended June 30
	2012			2011
Net cash provided by operating activities	$	950,005		$	334,532
Net cash used in investing activities		(679,106	)		(65,781	)
Net cash used in financing activities		-			3,511
Exchange rate effect on cash		(13,426	)		23,298
Net cash inflow (outflow)	$	257,473		$	295,560

Operating Activities

Net cash provided by our operating activities for the six months ended June 30, 2012 totaled $950,005, an increase of $615,473, compared to $334,532 for the same period in 2011. The increase of cash provided is mainly due to the increase in depreciation and amortization, stock based compensation, and tax payable, offset by an increase in prepaid lease and advance to suppliers. The prepaid leases reflected the prepaid rent of RMB15,080,000 ($2,387,020) to third parties for the new retail outlets opened in the first half of 2012. Although the prepayment of long term leases adversely impacted the net cash generated by the Company for the current period, the net cash generated by the Company over the balance of the terms of these leases will be positively impacted by the absence of ongoing rent payments. Further, management was willing to make the payments because it believes that even after paying these amounts the Company will continue to have the cash necessary to meet its short and long term cash needs.

Investing Activities

Net cash used in investing activities for the six months ended June 30, 2012 was $679,106, an increase of $613,225, compared to $65,781 of the same period in 2011, reflecting the payment of leasehold improvements for the new retail outlets the Company leased in the first half of 2012.

Financing Activities

Net cash used in financing activities for the six months ended June 30, 2012 was nil, compared to the positive cash inflow of $3,511 for the same period in 2011, reflecting an increase of cash payment by the shareholder on behalf of the Company.

All of our revenues are earned by Decens Foods, our PRC affiliate and subsidiary. PRC regulations restrict the ability of our PRC subsidiary to make dividends and other payments to its offshore parent company. PRC legal restrictions permit payments of dividend by our PRC subsidiary only out of its accumulated after-tax profits, if any, determined in accordance with PRC accounting standards and regulations. Our PRC subsidiary is also required under PRC laws and regulations to allocate at least 10% of its annual after-tax profits determined in accordance with PRC GAAP to a statutory general reserve fund until the amounts in said fund reaches 50% of its registered capital. Allocations to this statutory reserve fund can only be used for specific purposes and are not transferable to us in the form of loans, advances or cash dividends. Any limitations on the ability of our PRC subsidiary to transfer funds to us could materially and adversely limit our ability to grow, make investments or acquisitions that could be beneficial to our business, pay dividends and otherwise fund and conduct our business.

Off-Balance Sheet Arrangements

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

Yakun International Investment & Holding Group

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited - Expressed in U.S. dollars)

ITEM 4. CONTROLS AND PROCEDURES.

(a) Evaluation of Disclosure Controls and Procedures

We maintain "disclosure controls and procedures," as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (the "Exchange Act"), that are designed to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in Securities and Exchange Commission rules and forms, 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 recognized that disclosure controls and procedures, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the disclosure controls and procedures are met. Additionally, in designing disclosure controls and procedures, our management was required to apply its judgment in evaluating the cost-benefit relationship of possible disclosure controls and procedures. The design of any disclosure controls and procedures also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.

As of June 30, 2012, we carried out an evaluation, under the supervision and with the participation of our Chief Executive Officer, Yakun Song, and Chief Financial Officer, Fengying Su, of the effectiveness of the design and operation of our disclosure controls and procedures. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were not effective to ensure that information required to be disclosed by us in our periodic reports is recorded, processed, summarized and reported, within the time periods specified for each report and that such information is accumulated and communicated to our management, including our principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. Our financial statements are prepared by our financial and accounting staff under the direction of our Chief Financial Officer in accordance with generally accepting accounting principles in effect in the PRC; however we engage an outside consultant to convert our financial statements for presentation in accordance with generally accepted accounting principles in effect in the United States (“US GAAP”). We believe our internal controls over financial reporting in accordance with PRC GAAP are adequate for the proper supervision of the conduct of our business. Nevertheless, the need to convert our financial statements into US GAAP and the lack of familiarity of our accounting staff with US GAAP and US securities laws and regulations is a deficiency in our internal controls over financial reporting and disclosure controls and procedures. This deficiency will not be considered remediated until we hire financial and accounting personnel with the requisite knowledge and experience concerning US GAAP.

(b) Changes in Internal Control over Financial Reporting. There have not been any changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) or 15d-15(f) under the Exchange Act) during our most recently completed fiscal quarter which is the subject of this report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Yakun International Investment & Holding Group

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited - Expressed in U.S. dollars)

PART II

OTHER INFORMATION

ITEM 1A – RISK FACTORS.

The Company is subject to various risks in its operations and as a result of the concentration of its business in the People’s Republic of China. The risks to which the Company is subject have not changed materially from those set forth in its Report on Form 8-K/A (Amendment No. 2) filed April 20, 2012, which are incorporated by reference into this report.

ITEM 6 - EXHIBITS

The following exhibits are filed with this report:

31.1

Certification of the Chief Executive Officer pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as amended.

31.2

Certification of the Chief Financial Officer pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as amended.

32.1

Certification of the Chief Executive Officer pursuant to Rule 13a-14(b) or Rule 15d-14(b) of the Securities Exchange Act of 1934, as amended, and 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2

Certification of the Chief Financial Officer pursuant to Rule 13a-14(b) or Rule 15d-14(b) of the Securities Exchange Act of 1934, as amended, and 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101 *

The following financial information from our Quarterly Report on Form 10-Q for the quarter ended June 30, 2012 formatted in Extensible Business Reporting Language (XBRL): (i) the Consolidated Statements of Operations and Comprehensive Income for the six and three month periods ended June 30, 2012 and 2011, (ii) the Consolidated Balance Sheets at June 30, 2012 and December 31, 2011, (iii) the Consolidated Statements of Cash Flows for the six and three month periods ended June 30, 2012 and 2011 and (iv) the notes to the Consolidated Financial Statements.

___

* In accordance with Rule 406T of Regulation S-T, the XBRL information in Exhibit 101 to this quarterly report on Form 10-Q shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (“Exchange Act”), or otherwise subject to the liability of that section, and shall not be incorporated by reference into any registration statement or other document filed under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.

** To be filed by Amendment.

Yakun International Investment & Holding Group

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited - Expressed in U.S. dollars)

SIGNATURES

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

	YAKUN INTERNATIONAL INVESTMENT & HOLDING GROUP.

Dated: August 14, 2012	By:	/s/ Yakun Song
		Yakun Song
		Chief Executive Officer and President