UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


Washington,
D.C. 20549





AMENDMENT
NO. 4 TO


FORM 10-K




(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, 2007
  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
                (State or other jurisdiction
                of incorporation or organization)
              
              20-4136884
                (I.R.S. Employer
                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 RegisteredCommon 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 oNo 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 oNo 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 o




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 o No þ




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





Large accelerated filer o
            Accelerated filer o


Non-accelerated filer þ
            Smaller
      Reporting Company o(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 oNo þ





The total
revenue for the most recent fiscal year is US $155,206,867.





There was
no active public trading market as of the last business day of the Company’s
second fiscal quarter.





As
of March 31, 2008, there are 20,000,003 shares of common stock
outstanding.





EXPLANATORY
NOTE




This
Amendment No. 4 to our annual report on Form 10-K, for the fiscal year ended on
December 31, 2007, initially filed with the Securities and Exchange Commission
(“SEC”) on March 31, 2008 is being filed in response to SEC’s comment letter
dated January 8, 2009.








YANGLIN
SOYBEAN, INC.


(A
Nevada Corporation)





TABLE
OF CONTENTS




PagePART
      IItem 1
                  Business
                  
                  3Item 1A
                  Risk
      Factors
                  
                  15Item 1B
                  Unresolved
      Staff Comments
                  
                  24Item 2
                  Properties
                  
                  25Item 3
                  Legal
      Proceedings
                  
                  26Item 4
                  Submission
      of Matters to a Vote of Security Holders
                  
                  26PART IIItem 5
                  Market
      for Registrant’s Common Equity, Related Stockholder Matters and Issuer
      Purchases of Equity Securities
                  
                  26Item 6
                  Selected
      Financial Data
                  
                  26Item 7
                  Management’s
      Discussion and Analysis of Financial Condition and Results of
      Operation
                  
                  28Item 7A
                  Quantitative
      and Qualitative Disclosures About Market Risk
                  
                  43Item 8
                  Financial
      Statements and Supplementary Data
                  
                  43Item 9
                  Changes
      in and Disagreements With Accountants on Accounting and Financial
      Disclosure
                  
                  44Item 9A
                  Controls
      and Procedures
                  
                  44Item 9B
                  Other
      Information
                  
                  46PART IIIItem 10
                  Directors,
      Executive Officers and Corporate Governance
                  
                  46Item 11
                  Executive
      Compensation
                  
                  47Item 12
                  Security
      Ownership of Certain Beneficial Owners and Management and Related
      Stockholder Matters
                  
                  49Item 13
                  Certain
      Relationships and Related Transactions, and Director
      Independence
                  
                  52Item 14
                  Principal
      Accounting Fees and Services
                  
                  53PART IVItem 15
                  Exhibits
      and Financial Statement Schedules
                  
                  54




-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. Prior to October 3,
2007 the company has 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”), which 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 entering the abovementioned agreements,
WFOE is deemed to control Yanglin as a Variable Interest Entity as required by
FASB Interpretation No. 46 (revised December 2003) Consolidated of Variable
Interest Entities, an Interpretation of ARB No. 51.





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 in exchange for shares of
our common stock. 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.





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 oil, salad oil,
and soybean meal throughout the Province of Heilongjiang, China.





On
January 18, 2008, the Company changed its name from “Victory Divide Mining
Company” to Yanglin Soybean, Inc.” Because we conduct our business operations
through Yanglin, in the following sections, unless otherwise noted, we , the
company, and Yanlin are used interchangeably.





Our
Industry





We are a
leading non-genetically modified (non-GM) soybean processor in the PRC. We
currently manufacture soybean oil in bulk package and soybean meal which are
sold throughout China 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 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 by
the end of 2007. The production facilities for powdered oil have been built and
are now in trial production phase. We have also begun to build facilities for
manufacturing soybean protein concentrates, textured protein and defatted soy
powder. The production of concentrated protein and defatted soy powder will be
launched within the last quarter of 2008, and the production line of textured
protein will be put into operations within the 2nd quarter
of 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.


-3-





(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.





(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 Asian
region, 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 TonsPalm
              
              
              42.0
              
              
              38.1Soybeans
              
              
              39.3
              
              
              35.7Rapeseed
              
              
              19.7
              
              
              17.8Sunflower
      seed
              
              
              11.3
              
              
              10.2Peanut
              
              
              5.4
              
              
              4.9Cottonseed
              
              
              5.2
              
              
              4.8Palm
      Kernel
              
              
              4.8
              
              
              4.3Coconut
              
              
              3.6
              
              
              3.3Olive
              
              
              3.2
              
              
              2.9Total
              
              
              134.5
              
              
              122.0


Source:
USDA


-4-





World
Protein Meal Consumption 2006





Million
                          Short Tons
                        
                        Million
                          Metric
                          TonsSoybeans
                        
                        
                        166.7
                        
                        
                        151.3Rapeseed
                        
                        
                        30.2
                        
                        
                        27.4Cottonseed
                        
                        
                        16.4
                        
                        
                        14.9Sunflower
      seed
                        
                        
                        12.7
                        
                        
                        11.5Peanut
                        
                        
                        6.3
                        
                        
                        5.7Fish
                        
                        
                        6.0
                        
                        
                        5.5Palm
      Kernel
                        
                        
                        6.1
                        
                        
                        5.5Copra
                        
                        
                        1.9
                        
                        
                        1.7Total
                        
                        
                        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, 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, and food products include 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.





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.




-5-




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





Our
Competitive Advantages





We
believe that we have several competitive advantages:





1.  
Our products have favorable brand recognition because of the superior quality of
our products;





2. Our
workers have great skills and experience in the soybean industry. Many of them
worked in the industry for more than 20 years;





3. Our
business is better managed and is more flexible than many larger state-owned
soybean processors. As a privately owned business, we are more efficient and in
better financial conditions.





4. Our
costs are lower than those of our major competitors because our management is
lean and efficient.





5. We
have vast sales networks covering the most areas of China and better
arrangements of the distributors which save cost and promote higher
efficiency.




6. We
believe that we are one of the largest players in the non-genetically modified
soybean industry. Given that large international agricultural conglomerates such
as Archer Daniels Midlands and Cargill produce predominantly genetically
modified soybean food products, we do not face direct competition from these
players in our niche market.




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. 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 to approximately 823,723 acres of farmland 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 of 3 or 4 additional factories. We
expect that these acquisitions will allow us to increase our current annual
soybean processing capacity to approximately 1.5 million tons of soybeans over
the next 3 years.





Expansion
of our Sales Network




We
currently sell more in the northern China than 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 talking to potential agents in Southeast Asia and Russia. We
intend to use Chinese export agents to manage currency risk. Our plan is to
expand internationally into countries such as Singapore, Malaysia, Canada and
the United States.


-6-





Expansion
of our Product Line





We
believe that value added soybean products will yield higher profits 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 per cent.). 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.





(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
                      
                      2007 Volume (tons)Soybean Oil
                      
                      Cooking
                      
                      Yingkou
      Bohai Grease Industrial Co. Ltd., Yi Liping
                      
                      49,566Salad Oil
                      
                      Cooking
                      
                      Yingkou
      Bohai Grease Industrial Co. Ltd., Yu Guanghai
                      
                      15,207Soybean Meal
                      
                      Animal Feed
                      
                      Yingkou
      Bohai Grease Industrial Co. Ltd., Tongliao Hongzhan Animal Feed Factory,
      Li Yuqiu, Gu Changchun, Wang Chunyu
                      
                      319,706




-7-





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)
directly to our customers primarily within the PRC market. In the fiscal
year ending 2007, we processed approximately 385,000 tons of soybeans and
generated total revenues amounting to approximately $155.2 million with net
income amounting to $10.3 million. Within the 2007 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 made up 17%
together.





Our
Suppliers of Soybeans





Maintaining
a stable supply of raw materials (soybeans) is one of the key components for our
success. We purchase all 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, 2007:





Supplier
                  
                  Amount
                    Purchased
                    (in US$)
                  
                  % of
                    Total
                    Purchases
                    (%)Baoqing
      North Granary
                  
                  
                  10,905,894.11
                  
                  
                  7.46Cui
      Bingyan
                  
                  
                  6,138,677.51
                  
                  
                  4.20Duan
      Xufeng
                  
                  
                  5,437,402.67
                  
                  
                  3.72Chi
      Cuie
                  
                  
                  5,211,779.68
                  
                  
                  3.56Wang
      Li
                  
                  
                  5,176,965.99
                  
                  
                  3.54Tang
      Lijun
                  
                  
                  4,890,610.42
                  
                  
                  3.35Jiang
      Minghui
                  
                  
                  4,279,171.14
                  
                  
                  2.93Bai
      Wenlong
                  
                  
                  4,261,078.14
                  
                  
                  2.91Chen
      Fuzhen
                  
                  
                  3,622,287.92
                  
                  
                  2.48Chen
      Libin
                  
                  
                  3,534,869.87
                  
                  
                  2.42





Note:
the amounts are converted from RMB value using the yearly average rate of 2007,
1USD = 7.6172RMB.





Our top
ten suppliers together made up an aggregate of 36.6% of our total supply of
soybeans, but our biggest supplier only supplied less than 7.5% of our total
supply, while none of the other top suppliers occupied a share of over 5%. 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
been using a unique type of 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 and 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.


-8-





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 2007. All of
our major customers are located in the PRC.





Customers
                              
                              Type of Product
                              
                              Fiscal 2007 Sales
                                (USD)
                              
                              % of Total Sales
                                (%)Yingkou Bohai
      Grease Industrial Co. Ltd.
                              
                              
                              Soybean Oil
                              
                              
                              15,705,039.65
                              
                              
                              10.1
                              %Wang
      Chunyu
                              
                              
                              Soybean Meal
                              
                              
                              5,290,261.11
                              
                              
                              3.4
                              %Huang
      Zujian
                              
                              
                              Soybean Meal
                              
                              
                              5,184,750.61
                              
                              
                              3.3
                              %Tongliao
      Hongzhan Animal Feed Factory
                              
                              
                              Soybean Meal
                              
                              
                              4,553,189.66
                              
                              
                              2.9
                              %Wang
      Linli
                              
                              
                              Soybean Meal
                              
                              
                              4,233,973.89
                              
                              
                              2.7
                              %Gu
      Changchun
                              
                              
                              Soybean Meal
                              
                              
                              3,764,879.43
                              
                              
                              2.4
                              %Wang
      Xihe
                              
                              
                              Soybean Meal
                              
                              
                              3,669,944.96
                              
                              
                              2.4
                              %Li
      Yuqiu
                              
                              
                              Soybean Meal
                              
                              
                              3,666,983.30
                              
                              
                              2.4
                              %Li
      Zhengqian
                              
                              
                              Soybean Meal
                              
                              
                              3,407,444.15
                              
                              
                              2.2
                              %Yu
      Guanghai
                              
                              
                              Soybean Meal
                              
                              
                              3,379,734.87
                              
                              
                              2.2
                              %





Note:
the amounts are converted from RMB value using the yearly average rate of 2007,
1USD = 7.6172RMB.





Our sales
are widely diversified among our customers. Our largest customer accounts for
only 10.1 % of our total sales in fiscal 2007 while our top ten customers
accounted for about 34 % of our net sales in fiscal 2007. 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.





Salad Oil
                
                Soy Oil
                
                Soy MealType
                
                Volume
                  (Tonnes)
                
                Number
                  of
                  customers
                
                %
                
                Volume
                  (Tonnes)
                
                Number
                  of
                  customers
                
                %
                
                Volume
                  (Tonnes)
                
                Number
                  of
                  customers
                
                %Distributor
                
                
                14,898
                
                
                71
                
                
                98
                
                
                48,080
                
                
                85
                
                
                97
                
                
                287,740
                
                
                85
                
                
                90Food
      Manufacturer
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                2,877
                
                
                8
                
                
                0.9Animal
      Feed Manufacturer
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                25,576
                
                
                14
                
                
                8Others
                
                
                309
                
                
                5
                
                
                2
                
                
                1,486
                
                
                8
                
                
                3
                
                
                3,513
                
                
                4
                
                
                1.1Total
                
                
                15,207
                
                
                76
                
                
                100
                
                
                49,566
                
                
                93
                
                
                100
                
                
                319,706
                
                
                111
                
                
                100


-9-





All our
sales are primarily made to customers within the PRC, though 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 2007 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
                
                
                13,686
                
                
                14,014,298.24
                
                
                29,752
                
                
                28,254,752.43
                
                
                35,970
                
                
                10,414,262.27Jilin
                
                
                1,521
                
                
                1,557,485.58
                
                
                17,355
                
                
                16,481,622.36
                
                
                36,936
                
                
                10,693,944.71Liaoning
                
                
                
                
                
                
                
                
                2,459
                
                
                2,335,265.89
                
                
                64,841
                
                
                18,773,177.10Inner
      Mongolia
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                8,999
                
                
                2,605,447.49Beijing
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                9,994
                
                
                2,893,526.19Tianjin
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                9,598
                
                
                2,778,873.76Shandong
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                15,987
                
                
                4,628,657.52Shanxi
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                15,789
                
                
                4,571,331.31Henan
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                14,798
                
                
                4,284,410.71Sha’anxi
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                9,591
                
                
                2,776,847.08Gansu
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                10,285
                
                
                2,977,778.36Guangxi
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                17,987
                
                
                5,207,710.19Sichuan
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                18,976
                
                
                5,494,051.74Hebei
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                49,955
                
                
                14,463,424.53




Note:
the amounts are converted from RMB value using the yearly average rate of 2007,
1USD = 7.6172RMB.





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 Share1
                
                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
speaking, we do not compete with companies that are engaged primarily in the
manufacturing of genetically modified soybean products, especially those
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 US, Brazil, Argentina and other countries in
bulk volume at acceptable price. 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. It is obvious that there is a geographical
division between the market for genetically modified soybean products and that
for non-genetically modified soybean products. Thus we state that generally
speaking we do not have direct competition with genetically modified
counterparts.




-10-





Sales
and Marketing





Apart
from our high product quality, our marketing efforts have also contributed to
our success in 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, so it’s easier for us to deal 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 approximately 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:










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 (www.yanglin.com.cn).


-11-





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





Publicity




We hold
an annual conference with the distributors and potential customers to promote
our products. We regularly attend exhibitions in different regions to market our
products, and plan to attend the Guangzhou Commodity Fair to promote our high
end products when we begin to produce them. 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.





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, 2007 are: (including
VAT)




Products
                
                Price
                  (USD/metric
                  ton)Soybean
      oil (Grade IV)
                
                $
                1,451Salad
      oil
                
                $
                1,533Soybean
      meal
                
                $
                472





Based on
the basis exchange rate of 1US$ = 7.3046 RMB as published on the website of
People’s Bank of China on December 28, 2007.




For the
past three years, the price of soybean meal has been in the range of $246 per
metric ton to $493 per metric ton (converted at the above mentioned foreign
exchange rate published on the website of People’s Bank of China on December 28,
2007; the same rate is used hereinafter). By comparison the price range of
soybean oil has been in the range of $659 per metric ton to $1,451 per metric
ton, while the price range of salad oil was from $746 per metric ton to $1,533
per metric ton. The prices of our products are determined by taking into account
the costs of labour as well as the seasonality of demand in the soybean market.
Traditionally, our 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.


-12-





Intellectual
Property





Yanglin
has registered the following trademarks in the PRC, which are currently
used for all 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.




Employees





Currently
we have 466 employees, most of whom are involved in production and
operations.





The
functional breakdown of our full-time employees as at December 31, 2005, 2006
and 2007 was:





FY2005
              
              FY2006
              
              FY2007Production
      and operations
              
              
              212
              
              
              291
              
              
              291Sales
              
              
              6
              
              
              10
              
              
              10Management
              
              
              30
              
              
              163
              
              
              165Total
      number of employees
              
              
              248
              
              
              464
              
              
              466





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 ($)
                          
                          InsuredChina
      Pacific Insurance Co., AAAH0300003307
                          
                          From
      Jan. 29, 2007 to Jan. 28, 2008
                          
                          30,327.72
                          
                          174.73
                          
                          The
      boiler of Factory No. 1China
      Dadi Insurance Co., PQZA200723010600000008
                          
                          From
      Jul. 10, 2007 to Jul. 9, 2008
                          
                          1,782,920.71
                          
                          2,396.77
                          
                          Workshop
      and Office Building of Factory No. 3China
      Dadi Insurance Co., PQZA200723010600000007
                          
                          From
      Jul. 10, 2007 to Jul. 10, 2008
                          
                          2,221,703.38
                          
                          2,986.62
                          
                          Machinery
      of Factory No. 3China
      Dadi Insurance Co., PQZA200723010600000008
                          
                          From
      Jul. 12, 2007 to Jul. 11, 2008
                          
                          260,319.11
                          
                          1,849.71
                          
                          The
      boiler of Factory No. 3China
      Pingan Insurance Co., 21900004601010700013
                          
                          From
      Sep. 29, 2007 to Sep. 29, 2008
                          
                          2,886,315.47
                          
                          4,157.20
                          
                          Machinery
      of Factory No. 1China
      Life Insurance Co.
                          
                          From
      Jun. 30, 2007 to May. 29, 2008
                          
                          -
                          
                          2,441.84
                          
                          The
      employees of the three factories





Note:
the amounts in the column Coverage are converted from RMB value using the year
end rate of 2007, 1USD = 7.3141RMB, and those in the column Premium are
converted from RMB value using the yearly average rate of 2007, 1USD =
7.6172RMB.


-13-





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.





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.


-14-





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.


-15-





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. Except as required by law, we do not undertake any obligation to
update or keep current either (i) any forward-looking statement to reflect
events or circumstances arising after the date of such statement, or
(ii) the important 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.





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 1.23 per 500 grams at the beginning of the last
year to RMB2.13 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. 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 385,000
tons of soybean in 2007 and we expect to process about 420,000 tons in 2008. 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.




-16-





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.





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 2007. 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.




-17-





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.





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




It will probably cost us a
long time to establish adequate management and internal controls. As a result,
there may be some operation risks with respect to our business
management.





We are
constantly striving to establish and improve our business management and
internal accounting control to forecast, budget and allocate our funds. However,
as a Chinese company that has just become a US public company, it is difficult
for us to hire and retain a sufficient number of qualified employees of
management and internal control in a short period. It will also probably take us
a long time to educate our employees about the internal control. As a result, 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 in a short period.





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





1)
            The
      Company has not formulated a complete Code of Conduct applicable to all
      staff, with Chinese and English version, defining acceptable business
      conduct, conflict of interests and other expected moral behavior, and
      including anti-fraud mechanism. Also the procedure ruling the drafting,
      revision, reviewing, approval and issue of the Code should be formulated.
      Besides, no formal system has been set up for reporting of
      fraud.





2)
            The
      Company does not have a formal system for employees to report and expose
      fraud.





3)
            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.





4)
            The
      special committees of the board, including audit committee, appointment
      committee and compensation committee, have not been
      established.





5)
            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.





6)
            The
      Company does not have a formal procedure on review, update and approval of
      the management procedures.





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 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.





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.




-18-





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.




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.


-19-





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.




Risks
Related To Our Industry




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.


-20-





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.




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 minimum price allowed
under PRC law with any excess treated as interests). If Yanglin chooses to repay
the debt in cash, it may cause disruption in its operations due to lack of the
working capital.







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.





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.


-21-


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.





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.





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.


-22-





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.





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.


-23-





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 NASDQ 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.




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 1B. Unresolved Staff
Comments





Not
applicable.


-24-





ITEM
2. Description of Properties Our Property





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
                        
                        CapacityFactory
      No. 1
                        
                        
                        27,000
                        m2
                        100,000Factory
      No. 2
                        
                        
                        43,572
                        m2
                        120,000Factory
      No. 3
                        
                        
                        45,596
                        m2
                        300,000




Annual
                        Production
                        Capacity for
                        2006
                        (Tonnes)
                      
                      Actual
                        Output for
                        2006
                        (Tonnes)
                      
                      Utilization
                        Rate for 2006
                      
                      Annual
                        Production
                        Capacity for
                        2007
                        (Tonnes)
                      
                      Actual
                        Output for
                        2007
                        (Tonnes)
                      
                      Utilization
                        Rate for 2007520,000
                      
                      
                      310,000
                      
                      
                      59
                      %
                      
                      520,000
                      
                      
                      385,000
                      
                      
                      74
                      %





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 is 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.




Properties





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.




Yanglin
has the following granted land use right:





Location
                
                Area
                  (square
                  meters)
                
                Construction
                  on Land
                
                Term and
                  Expiration
                
                Certificate No.Fuli Town
      Nongfeng Community
                
                
                45596
                
                Factory No. 3
                
                October 9, 2005 - September 5, 2055
                
                JifuGuoYong(2005)No. 178





Pursuant
to Transfer Agreement of State-owned Land Use Right (No. 05002) which was signed
between Yanglin and the Jixian County Land and Resources Bureau, the term of the
land use right shall be 50 years. Yanglin paid RMB 8,161,684 (approximately
$1,075,320.69) for the land use rights.





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





Lessor
                  
                  Location
                  
                  Area (square
                    meters)
                  
                  Rental Fee
                    (RMB)
                  
                  Construction on
                    Land
                  
                  Term and
                    ExpirationJixian Industrial Company
                  
                  Jixian County Hedong District
                  
                  27,000
                  
                  8,900,567
                  
                  Workshop, warehouse
                  
                  December 4,
      1999 - December 4, 2049Wansheng
      Village Commission
                  
                  Wansheng
      Village Oil Pump Station West, Daiban Dong Qiang
                  
                  3,844.6
                  
                  100,000
                  
                  Warehouse
                  
                  October
      19, 2003 - October 18, 2053Mr.Liu
      Fengyu
                  
                  Jian
      San Jiang Administration Daxing Farm 24 Group Nan.
                  
                  100
      acres
                  
                  1,100,000
                  
                  Farmland
                  
                  January
      1, 2005 - December 31, 2026Wansheng
      Village Commission
                  
                  From
      Hatong Road Bei Wansheng Village XinJian Muye to Yanglin Wansheng Food
      Collection Station
                  
                  30,887.41
                  
                  99,62.20
                  
                  Warehouse
                  
                  April
      1, 2004 - December 31,
2028




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
                
                CertificateBei No.4, Nongfeng
      Village (Factory No. 3)
                
                1658.46
                
                Private
      Asset
                
                Office,
      Boiler room, and garage
                
                Ji
      Fang Quan Zheng Fanrong Zi No. 00033652Bei
      No.4, Nongfeng Village ( Factory No. 3)
                
                9224.93
                
                Joint
      Stock House Asset
                
                Workshop
                
                Ji
      Fang Quan Zheng Fanrong Zi No. 00036015Factory
      No. 3
                
                1401.47
                
                Private
      Asset
                
                Boiler
      room
                
                Ji
      Fang Quan Zheng Fanrong Zi No. 00033653Hedong
      51A (Factory No. 1)
                
                5772
                
                Allotted
      state-owned houses
                
                Office,
      electricity distribution room, workshop, storage room.
                
                Ji
      Fang Quan Zheng Shagang Zi No.
000278




-25-





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





MARKET
PRICE INFORMATION




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
              
              LOWMarch 31,
      2007
              
              
              0
              *
              
              0
              *June
      30, 2007
              
              
              0
              *
              
              0
              *September
      30, 2007
              
              
              0
              *
              
              0
              *December
      31, 2007
              
              
              4.50
              
              
              2.50




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





On March
28, 2008, the last reported sale price of our common stock on the Over the
Counter Bulletin Board was $3.90 per share.





Shareholders





As of
March 31, 2008, we have 20,000,003 shares of Common Stock issued and outstanding
held by approximately 360 shareholders and 10,000,000 shares of 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.





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.


-26-





Consolidated Statement of
                    Operations
                  
                  The year ended
                    Dec. 31, 2003
                    ($)
                  
                  The year ended
                    Dec. 31, 2004
                    ($)
                  
                  The year ended
                    Dec. 31, 2005
                    ($)
                  
                  The year ended
                    Dec. 31, 2006
                    ($)
                  
                  The year ended
                    Dec. 31, 2007
                    ($)(unaudited)
                  
                  (audited)
                  
                  (audited)
                  
                  (audited)
                  
                  (audited)Sales Revenue (net of
      discounts, returns and allowances)
                  
                  
                  20,077,560
                  
                  
                  26,325,611
                  
                  
                  38,430,465
                  
                  
                  88,078,494
                  
                  
                  155,206,867Other
      sales
                  
                  
                  
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -Cost
      of sales
                  
                  
                  (19,144,441
                  )
                  
                  (24,557,296
                  )
                  
                  (35,132,664
                  )
                  
                  (79,862,179
                  )
                  
                  (142,568,658
                  )Gross
      Profit
                  
                  
                  933,119
                  
                  
                  1,768,315
                  
                  
                  3,297,801
                  
                  
                  8,216,315
                  
                  
                  12,638,209Selling
      expenses
                  
                  
                  (42,035
                  )
                  
                  (54,553
                  )
                  
                  (43,094
                  )
                  
                  (63,209
                  )
                  
                  (146,411
                  )General
      and administrative expenses
                  
                  
                  (702,247
                  )
                  
                  (902,258
                  )
                  
                  (1,103,262
                  )
                  
                  (1,078,184
                  )
                  
                  (1,812,450
                  )Income
      from operations
                  
                  
                  188,836
                  
                  
                  811,504
                  
                  
                  2,151,445
                  
                  
                  7,074,922
                  
                  
                  10,679,348Interest
      expense, net
                  
                  
                  (73,762
                  )
                  
                  (100,455
                  )
                  
                  (150,370
                  )
                  
                  (219,032
                  )
                  
                  (394,705
                  )Other
      income
                  
                  
                  32,146
                  
                  
                  211,168
                  
                  
                  -
                  
                  
                  -
                  
                  
                  39,385Other
      expense
                  
                  
                  (24,087
                  )
                  
                  
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -Income
      before taxation
                  
                  
                  123,133
                  
                  
                  922,217
                  
                  
                  2,001,075
                  
                  
                  6,855,890
                  
                  
                  10,324,028Income
      tax
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -Net
      Income
                  
                  
                  123,133
                  
                  
                  922,217
                  
                  
                  2,001,075
                  
                  
                  6,855,890
                  
                  
                  10,324,028Basic
      earnings per share
                  
                  
                  0.004
                  
                  
                  0.046
                  
                  
                  0.100
                  
                  
                  0.343
                  
                  
                  0.516Diluted
      earnings per share
                  
                  
                  0.004
                  
                  
                  0.046
                  
                  
                  0.100
                  
                  
                  0.343
                  
                  
                  0.069





Consolidated Balance Sheets
                
                The year ended
                  Dec. 31, 2003
                  ($)
                
                The year ended
                  Dec. 31, 2004
                  ($)
                
                The year ended
                  Dec. 31, 2005
                  ($)
                
                The year ended
                  Dec. 31, 2006
                  ($)
                
                The year ended
                  Dec. 31, 2007
                  ($)(unaudited)
                
                (audited)
                
                (audited)
                
                (audited)
                
                (audited)Current
      Assets
                
                
                12,343,642
                
                
                13,069,478
                
                
                9,911,883
                
                
                11,272,054
                
                
                35,828,927Total
      Assets
                
                
                19,204,789
                
                
                20,454,198
                
                
                27,090,833
                
                
                35,245,747
                
                
                70,732,531Current
      Liabilities
                
                
                6,339,685
                
                
                6,350,104
                
                
                10,634,636
                
                
                11,050,319
                
                
                15,587,625Total
      Liabilities
                
                
                6,339,685
                
                
                6,670,729
                
                
                10,908,533
                
                
                11,512,096
                
                
                16,044,732Total
      Stockholders’ Equity
                
                
                12,865,104
                
                
                13,783,469
                
                
                16,182,300
                
                
                23,733,651
                
                
                54,687,799


-27-





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 Grade 4 soy bean 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 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 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 by
the end of 2007. The production facilities for powdered oil have been built and
are now in trial production phase. We have also begun to build facilities for
manufacturing soybean protein concentrates, textured protein and defatted soy
powder. The production of concentrated protein and defatted soy powder will be
launched within the last quarter of 2008, and the production ine of textured
protein will be put into operations within the 2nd quarter
of 2009.





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)
directly to our customers primarily within the PRC market. In the fiscal year
ending 2007, we processed approximately 385,000 tons of soybeans and generated
total revenues amounting to approximately $155.2 million with net income
amounting to $10.3 million.





Our goal
is to become the champion in the non-GM soybean industry of China, and we are
fully confident that we can surely accomplish it in the near future. We are now
considering future expansion and acquisition plan, with the intention to
significantly increase our processing capacity. The plan is now still in
preliminary stage, but this will nevertheless be a vital step in achieving our
objective. On the other side, we are also making great efforts to improve and
strengthen our management and internal control system. We have engaged Ernst
& Young as consultant on our Sarbanes-Oxley compliance project, and Ernst
& Young’s project team has started to review our internal control. We
believe that we can complete the project successfully by the end of 2008,
providing ourselves with a great opportunity to reinforce our capability to
protect the interests of the company and the shareholders and improve 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 has 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”), which 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 entering the abovementioned agreements,
WFOE is deemed to control Yanglin as a Variable Interest Entity as required by
FASB Interpretation No. 46 (revised December 2003) Consolidated of Variable
Interest Entities, an 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 oil, soybean salad
oil, and soybean meal throughout the Province of Heilongjiang,
China.


-28-





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 soybean oil (4
thgrade), 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;
 ·
              Market
    demand




Processing capacity of soybean.Our current annual processing capacity of soybean is 520,000 metric tons,
which is sufficient for our current production plan of processing about 420,000
metric tons of soybeans in 2008.





Pricing of soybean oil, salad oil
and soybean meal.Generally speaking, we determine the price of our
products based on market price and our cost, while there’s an overall trend of
increase to compensate for the inflation. Our price is usually more competitive
than that of our major rivalry, mostly state owned enterprises (SOEs), because
we have higher operating efficiency and better control over cost.





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 much larger than that is sufficient to
absorb our production, and our products have been recognized as of high quality
and competitive price, we can sell almost all of our production volume, and we
believe that there’s high growth potential for our sales revenue, especially
when our high-end products 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 material mainly refers to
soybean, and it accounts for the most significant part of the cost of sales
(COS), or about 94%. Labor cost is relatively low and only makes up 0.3% 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.
 ·
              Output ratio and operating
      efficiency of production
facilities.


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





Output ratio and operating
efficiency of production facilities.Output ration is the ratio between
the input of raw materials, mostly soybeans, and the output of products. The
more units of products we can produce using a single unit of raw material, the
higher the output ratio. As the labor, production overhead 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 is being raised continuously, due to the recent purchase and
renovation of facilities and equipment, the enhanced competence and proficiency
of staff and the improvement in 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. Currently the profit margin
of our soybean oil and meal are relatively stable, so is gross profit. We expect
that the overall gross profit will rise in the future, as we will be launching
some high-end products with higher profit margin.


-29-





Operating
Expenses





Operating
expenses comprise of selling expenses and general & administrative expenses.
Generally speaking, operating expenses occupy only a very small portion of total
costs and expenses. For the past 2 years, the ratio of operating expenses as a
percentage of net sales value was kept at lower than 1.3%.





Selling
expenses generally include business development expenses, sales meeting
expenses, loading & handling, advertising, and sales-related staff salaries
and welfare expenses, and travel expenses. We expect that these expenses will
rise materially in the following years, as we will be recruiting more sales
staff and expanding sales network, establishing new sales channels, plus
inputting investment in promotion and advertising, to promote and sale 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 speaking, more of a fixed nature.
There may be increase in these expenses, as we will restructure our
organizational structure and improve management institutions. Besides, we are
now implementing our Sarbanes-Oxley Act compliance project of our internal
control system and have engaged Ernst & Young as our consultant on this
project. As this project involves the redesigning and restructuring of the whole
internal control system and its processes, we expect that it will cause a
material increase in our management expenses.





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 33% (30% state
income taxes plus 3% local income taxes).





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 Committee of Reform and Development, the
Department of Finance and the Department of Agriculture, we enjoy a complete
exemption from income taxes. Our status is reviewed each two years. We are
confident that we will continue to enjoy this status due to our size of
operations and status in this industry.


-30-





Results of
Operations





The
following table shows the operating results for the years ended December 31,
2005, December 31, 2006 and December 31, 2007.




Consolidated Statement of Operations
                
                The year ended Dec.
                  31, 2005
                  ($)
                
                The year ended Dec.
                  31, 2006
                  ($)
                
                The year ended Dec.
                  31, 2007
                  ($)(audited)
                
                (audited)
                
                (audited)Sales
      Revenue (net of discounts, returns and allowances)
                
                
                38,430,465
                
                
                88,078,494
                
                
                155,206,867Other
      sales
                
                
                
                
                
                -
                
                
                -Cost
      of sales
                
                
                (35,132,664
                )
                
                (79,862,179
                )
                
                (142,568,658
                )Gross
      Profit
                
                
                3,297,801
                
                
                8,216,315
                
                
                12,638,209Selling
      expenses
                
                
                (43,094
                )
                
                (63,209
                )
                
                (146,411
                )General
      and administrative expenses
                
                
                (1,103,262
                )
                
                (1,078,184
                )
                
                (1,812,450
                )Income
      from operations
                
                
                2,151,445
                
                
                7,074,922
                
                
                10,679,348Interest
      expense, net
                
                
                (150,370
                )
                
                (219,032
                )
                
                (394,705
                )Other
      income
                
                
                -
                
                
                -
                
                
                39,385Other
      expense
                
                
                -
                
                
                -
                
                
                -Income
      before taxation
                
                
                2,001,075
                
                
                6,855,890
                
                
                10,324,028Income
      tax
                
                
                -
                
                
                -
                
                
                -Net
      Income
                
                
                2,001,075
                
                
                6,855,890
                
                
                10,324,028Foreign
      currency translation adjustment
                
                
                397,756
                
                
                675,461
                
                
                2,676,688Comprehensive
      income
                
                
                2,398,831
                
                
                7,531,351
                
                
                13,000,716





Year
Ended December 31, 2007 Compared with Year Ended December 31, 2006





Net
Sales





For The Year Ended December 31
                
                Period to Period ChangeItem
                
                2007 Amount ($)
                
                2006 Amount ($)
                
                Amount ($)
                
                %Soybean meal
                
                
                92,563,442
                
                
                58,770,932
                
                
                33,792,510
                
                
                57.5Soybean
      oil
                
                
                47,071,641
                
                
                22,149,399
                
                
                24,922,242
                
                
                112.5Salad
      Oil
                
                
                15,571,784
                
                
                7,158,163
                
                
                8,413,621
                
                
                117.5Total
      Net Sales
                
                
                155,206,867
                
                
                88,078,494
                
                
                67,128,373
                
                
                76.2





Net sales
revenue was $155,206,867 for the year ended December 31, 2007, an increase of
$67,128,373 or 76.2% from $88,078,494 for the year ended December 31, 2006 .
This is primarily due to the 24.7% increase in our processing volume and the
resultant growth in sales volume, and the significant increase in the market
price of soybean products. Three main products of ours, namely soybean meal,
soybean oil and salad oil, achieved a year over year growth rate of 57.5%,
112.5% and 117.5% respectively.





In the
year ended December 31, 2007, we processed 385,087 metric tons of soybeans and
produced 308,069 tons of soybean meal, 49,576 tons of soybean oil and 15,238
tons of salad oil, compared to 309,161 metric tons of soybean, 245,948 tons of
soybean meal, 38,700 tons of soybean oil and 11,863 tons of salad oil
respectively for the previous year, achieving the growth rates of 24.6%, 25.3%,
28.1% and 28.4% respectively. In the year ended December 31, 2007, we sold
319,706 tons of soybean meal, 49,566 tons of soybean oil and 15,207 tons of
salad oil, achieving the growth rates of 35.8%, 27.2% and 25.5%
respectively over the year 2006 ended December 31, 2006 when we sold 235,338
tons of soybean meal, 38,960 tons of soybean oil and 12,118 tons of salad oil.
We sold as much of our products as we could produce even though we increased our
production volume in 2007. This is because the demand for soybean products in
PRC market is large as compared to the total supply, and our sales also
benefited from our efforts in capitalizing on the favorable reputation of our
products among customers.





Meanwhile,
the price of processed soybean products went up continuously during 2007, in
line with the increasing soybean price. The average selling price of soybean
meal increased by $40 or 15.9% from $250 per ton over the year ended December
31, 2006 to $290 per ton over the year ended December 31, 2007, while the price
of soybean oil rose by $381 or 67.0% from $569 per ton to $950 per ton over the
same period, and the price increase of salad oil over the period was $433 or
73.3%, from $591 per ton to $1,024 per ton. The comparison from another time
spot perspective shows that The price of soybean oil rose from $840 per ton at
the end of December of 2006 to $1,283 at the end of December of 2007, at a
growth rate of 52.7%, and that of soybean meal jumped from $236 per ton at the
end of December of 2006 to $417 per ton at the end of December of 2007, at a
growth rate of 76.7%. This factor contributed to the significant increase in our
sales revenue.


Cost
of Sales and Gross Profit
 
 For The Year Ended December 312007
                  
                  % of Sales
                  
                  2006
                  
                  % of Sales
                  
                  Period to Period ChangeAmount ($)
                  
                  Revenue
                  
                  Amount ($)
                  
                  Revenue
                  
                  Amount ($)
                  
                  %Soybean
      meal
                  
                  
                  (86,654,275
                  )
                  
                  93.6
                  
                  
                  (53,256,342
                  )
                  
                  90.6
                  
                  
                  33,397,933
                  
                  
                  62.7Soybean
      oil
                  
                  
                  (42,075,631
                  )
                  
                  89.4
                  
                  
                  (20,080,631
                  )
                  
                  90.7
                  
                  
                  21,995,000
                  
                  
                  109.5Salad
      Oil
                  
                  
                  (13,838,752
                  )
                  
                  88.9
                  
                  
                  (6,525,206
                  )
                  
                  91.2
                  
                  
                  7,313,546
                  
                  
                  112.1Cost
      of Sales
                  
                  
                  (142,568,658
                  )
                  
                  91.9
                  
                  
                  (79,862,179
                  )
                  
                  90.7
                  
                  
                  62,706,479
                  
                  
                  78.5Soybean
      meal
                  
                  
                  5,909,167
                  
                  
                  6.4
                  
                  
                  5,514,590
                  
                  
                  9.4
                  
                  
                  394,577
                  
                  
                  7.2Soybean
      oil
                  
                  
                  4,996,010
                  
                  
                  10.6
                  
                  
                  2,068,768
                  
                  
                  9.3
                  
                  
                  2,927,242
                  
                  
                  141.5Salad
      Oil
                  
                  
                  1,733,032
                  
                  
                  11.1
                  
                  
                  632,957
                  
                  
                  8.8
                  
                  
                  1,100,075
                  
                  
                  173.8Gross
      Profit
                  
                  
                  12,638,209
                  
                  
                  8.1
                  
                  
                  8,216,315
                  
                  
                  9.3
                  
                  
                  4,421,894
                  
                  
                  53.8
  -31-
 
 Our cost
of sales for the year ended December 31, 2007 rose by $62,706,479 or 78.5% over
the year ended December 31, 2006, from $79,862,179 to $142,568,658, while the
ratio of cost as a percentage to net sales value rose to 91.9% from 90.7% over
the period. The main reasons for these changes were the significant increase in
the price of soybeans and the significant increase of processing and production
volume in 2007.
 
 The rise
in soybean price was caused by two reasons. First, the drought in the summer of
2007 caused soybean production volume to fall significantly in Heilongjiang
province, with s ome of Heilongjiang’s soybean production areas witnessing a 60%
fall in volume. Second, the continuously low price in 2006 and prior years
discouraged the farmers from planting soybean, and this caused a shrink in the
growing area of soybean in China, i.e. 12% less in 2007 than in 2006. The
reduction in supply resulted in the average unit cost of soybeans rising to
about $405 per ton for the year ended December 31, 2007, from around $236 per
ton for the year ended December 31, 2006, an increase of approximately 72%. The
comparison from a time spot perspective shows that The purchase price in our
local area rose from $298 per ton at the end of December of 2006 which is
approximately 73.2% to $515 at the end of December of 2007.
 
 The rise
in the ratio of cost as a percentage to net sales value was the product of the
difference between the growth rate of the price of soybean, which is the major
raw material and the cost of which constitutes the majority of cost of sales,
and those of the prices of soybean products. As stated above, the average
purchase price of soybean rose by 72% from 2006 to 2007. During the same period,
the average selling price of soybean oil and salad oil increased by 67% and
73.4% respectively, more than sufficient to compensate for the increase in raw
material cost, so their respective ratio of cost as a percentage to net sales
value fell by 1.3% and 2.3%. However, the increase in the average selling price
of soybean meal of 2007 over 2006 was only 15.9%, obviously insufficient to
cover the rise in raw material cost, so it caused a 3% increase in the ratio of
its cost as a percentage to its net sales value. As the sales volume of soybean
meal was far larger than the aggregate of soybean oil and salad oil, for example
319,706 tons of soybean meal was sold in 2007 as compared to 64,773 tons of
soybean oil and salad oil sold in total in that year, soybean meal has a major
factor in determining the overall cost structure, so the overall ratio of cost
as a percentage to net sales value grew by 1.2% from 2006 to 2007.
 
 The
unusual rise in soybean price caused the rise in the ratio of cost as a
percentage to net sales value and, consequently, the fall in gross profit
margin, from 9.3% in 2006 to 8.1% in 2007, though the absolute amount of gross
profit enjoyed an increase of $4,421,894 or 53.8% at the same time. The growth
in absolute value was mainly due to the increase in sales volume and sales
price.
  We expect
that the ratio of cost as a percentage to net sales value may drop in 2008,
as the yearly average purchase price of soybean of 2008 is expected to
stabilize and fall as compare to that of 2007. The reasons are: first the
drought is an exceptional event at an unusual scale; second, the significant
increase in soybean price in 2007 has provided strong motives for farmers to
expand the growing area of soybeans. As a result, we believe that the gross
profit margin will rise gradually in the future. There are other reasons for
this expected increase in gross profit margin: (1) our enhanced ability to
reduce the effect of the fluctuating soybean prices, including sourcing soybean
from other soybean production areas within Heilongjiang and expanding our
soybean storage facilities; (2) further improvements of our production
efficiency.
  Operating
Expenses
  Period to PeriodFor The Year Ended December 31
                    
                    Change2007
                    
                    % of Sales
                    
                    2006
                    
                    % of Sales
                    
                    AmountAmount ($)
                    
                    Revenue
                    
                    Amount ($)
                    
                    Revenue
                    
                    ($)
                    
                    %Selling
      Expenses
                    
                    
                    (146,411
                    )
                    
                    0.09
                    
                    
                    (63,209
                    )
                    
                    0.07
                    
                    
                    83,202
                    
                    
                    131.6General
      & Administrative Expenses
                    
                    
                    (1,812,450
                    )
                    
                    1.17
                    
                    
                    (1,078,184
                    )
                    
                    1.22
                    
                    
                    734,266
                    
                    
                    68.1Total
      Operating Expenses
                    
                    
                    (1,958,861
                    )
                    
                    1.27
                    
                    
                    (1,141,393
                    )
                    
                    1.29
                    
                    
                    817,468
                    
                    
                    72.8
  -32-
 
 Selling
expenses for the year ended December 31, 2007 increased by $83,202 or 131.6%
over the year ended December 31, 2006. This was mainly due to the increase in
sales-related shipping and handling expenses, which usually is related to sales
volume directly. Another reason was that we had recruited more sales persons
while raising the overall salary level of sales staff. As a percentage of net
sales, selling expenses increased from 0.07% of 2006 to 0.09% of
2007.
 
 General
and administrative expenses for the year ended December 31, 2007 rose by $
734,266 or 68.1%, from $1,078,184 for the year ended December 31, 2006 , to
$1,812,450 for the year ended December 31, 2007. The increase was primarily due
to the management expenses, including legal, auditing, consulting and travel
expenses, spent for the equity financing closed at October 3, 2007. As a
percentage of net sales, general and administrative expenses fell from 1.22% for
the year ended December 31, 2006 to 1.17% for the year ended December 31,
2007.
 
 We expect
that selling expenses will increase significantly in the following years when we
launch our new high end products, as we need to expand our sales network and
develop new sales channel, and to conduct much more promotion and advertising.
General and administrative expenses may also go up, because we will reorganize
our organizational structure to get ready for future expansion. In addition,
there will be increased expenses spent in strengthening our reporting,
compliance, internal controls and corporate governance systems to be compliant
with relevant laws and regulations applicable to a U.S. listed
company.
  Income
fromOperations and Net Income
 
 Period to PeriodFor The Year Ended December 31
                          
                          Change2007
                          
                          % of Sales
                          
                          2006
                          
                          %of Sales
                          
                          AmountAmount ($)
                          
                          Revenue
                          
                          Amount ($)
                          
                          Revenue
                          
                          ($)
                          
                          %Income
      from operations
                          
                          
                          10,679,348
                          
                          
                          6.9
                          
                          
                          7,074,922
                          
                          
                          8.0
                          
                          
                          3,604,426
                          
                          
                          50.9Interest
      expenses, net
                          
                          
                          (394,705
                          )
                          
                          0.25
                          
                          
                          (219,032
                          )
                          
                          0.24
                          
                          
                          175,673
                          
                          
                          80.2Other
      income, net of expenses
                          
                          
                          39,385
                          
                          
                          0.03
                          
                          
                          -
                          
                          
                          -
                          
                          
                          39,385
                          
                          
                          100Income
      tax
                          
                          
                          -
                          
                          
                          
                          
                          
                          -Net
      income
                          
                          
                          10,324,028
                          
                          
                          6.7
                          
                          
                          6,855,890
                          
                          
                          7.8
                          
                          
                          3,468,138
                          
                          
                          50.6Foreign
      currency translation adjustment
                          
                          
                          2,676,688
                          
                          
                          1.7
                          
                          
                          675,461
                          
                          
                          0.76
                          
                          
                          2,001,227
                          
                          
                          296.3Comprehensive
      income
                          
                          
                          13,000,716
                          
                          
                          8.4
                          
                          
                          7,531,351
                          
                          
                          8.6
                          
                          
                          5,469,365
                          
                          
                          72.6
 
 Income
from operations rose 50.9% or $3,604,426 for the year ended December 31, 2007,
at $10,679,348, over the year ended December 31, 2006, at $7,074,922, thanks to
the increase by 76.2% in sales revenue. At the same time, operating margin fell
from 8.0% to 6.9%, due to the unexpected significant rise in soybean price as
described above, as soybean purchasing costs constitute the major portion of our
costs, while the ratio of selling expenses and general and administrative
expenses as a percentage of net sales is quite small. We expect to see this
ratio rise slightly in the future, as soybean price is expected to fall and
stabilize by end of this year , and there would be further improvement of
operating efficiency due to accumulation of skills and experience and larger
economy of scales because of increasing sales volume.
 
 Net
interest expense increased by $175,673 or 80.2% from the year ended December 31,
2006 to the year ended December 31, 2007. As a percentage of net sales, net
interest expense was 0.25% for the year ended December 31, 2007, compared to
0.24% for the year ended December 31, 2006. The increase was largely due to the
higher demand for short term bank loan as the source of working capital in
accordance to the large increase in our production volume. At December 31, 2007,
the balance of short term loan was $12,305,000, almost doubling over the balance
at December 31, 2006, $6,523,825.
 
 Other
income was $39,385 for the year ended December 31, 2007, where there was no
other income for the year ended December 31, 2006.
 
 Since we
have been recognized as a Key Leading Enterprise in the Industrialization of
Agriculture Industry by the government, so we can enjoy a complete exemption
from income taxes. We are confident that in the foreseeable future we will
continue to enjoy this favorable policy due to our size of operations and status
in this industry.
  -33-
 
 Net
income increased by $ 3,468,138 or 50.6 % from the year ended December 31, 2006
to the year ended December 31, 2007. At the same time, net profit margin fell
from 7.8% to 6.7%. This was for the same reason as income from operations, as
there was unexpected significant rise in the price of soybean, our major raw
material.
 
 As the
exchange rate of China’s currency, RMB, against US Dollar keeps increasing, the
average rate had risen from 1USD to 7.98189RMB in 2006 to 1USD to 7.61720RMB in
2007, so we have achieved $2,676,688 of foreign currency translation gains for
the year ended December 31, 2007, compared to $675,461 for the year ended
December 31, 2006. Due to this reason, the comprehensive income for the year
ended December 31, 2007 reached $13,000,716, an increase of $5,469,365 or 72.6%
over $7,531,351 for the year ended December 31, 2006. And such gains
sufficiently compensated for the significant increase in soybean price, as the
ratio of comprehensive income as a percentage of net sales for the year ended
December 31, 2007 reached 8.4%, a little bit lower than 8.6% for the year ended
December 31, 2006.
 
 However,
the change of foreign exchange rate can be affected by a series of complicated
factors, including but not limited to, the government’s policy, the trend on
global money market, the general economic status of the countries, etc., so we
cannot estimate, with any reasonable certainty, the effect of these fluctuations
on our future business, product pricing, results of operations or financial
conditions, but the fluctuation of the RMB may materially and adversely affect
your investment if the current trend of appreciation of RMB is
reversed.
 
 Year
Ended December 31, 2006 Compared with Year Ended December 31, 2005
 
 Net
Sales
 
 For The Year Ended December 31
                  
                  Period to Period ChangeItem
                  
                  2006 Amount ($)
                  
                  2005 Amount ($)
                  
                  Amount ($)
                  
                  %Soybean meal
                  
                  
                  58,770,932
                  
                  
                  25,762,803
                  
                  
                  33,008,129
                  
                  
                  128.1Soybean
      oil
                  
                  
                  22,149,399
                  
                  
                  11,420,786
                  
                  
                  10,728,613
                  
                  
                  93.9Salad
      Oil
                  
                  
                  7,158,163
                  
                  
                  1,052,868
                  
                  
                  6,105,295
                  
                  
                  579.9Soybean
                  
                  
                  -
                  
                  
                  194,008
                  
                  
                  (194,008
                  )
                  
                  -100Total
      Sales
                  
                  
                  88,078,494
                  
                  
                  38,430,465
                  
                  
                  49,648,029
                  
                  
                  129.2
 
 Net sales
revenue was $88,078,494 for the year ended December 31, 2006, an increase of
$49,648,029or 129.2% from that of $38,430,465 for the year ended December 31,
2005. This is primarily due to the 143.5% increase in our processing volume and
the resultant growth in sales volume. Three main products of our,namely soybean
meal, soybean oil and salad oil, have achieved a growth rate of 128.1%, 93.9%
and 579.9%, respectively over 2006.
 
 In the
year ended December 31, 2006, we processed 309,161 metric tons of soybean, and
produced 245,948 tons of soybean meal, 38,700 tons of soybean oil and 11,863
tons of salad oil, compared to 126,978 metric tons of soybean, 101,685 tons of
soybean meal, 19,496 tons of soybean oil and 1,635 tons of salad oil,
respectively, for the previous year, achieving a growth rate of 143.5%, 141.9%,
98.5% and 625.6%, repectively. This significant growth was primarily attributed
to our Plant No. 3, which became operational at the very end of 2005. It added
300,000 tons of annual soybean processing capacity to the original capacity of
220,000 tons, and it was newly built by ourselves and equipped with brand new
production lines and facilities.
 
 In the
year ended December 31, 2006, we sold 235,338 tons of soybean meal, 38,960 tons
of soybean oil and 12,118 tons of salad oil, achieving a growth rate of 127.1%,
99.2% and 672.8%, respectively, over 103,650 tons of soybean meal, 19,563 tons
of soybean oil and 1,568 tons of salad oil for the year ended December 31, 2005.
We sold as much of our products as we could produce even though we increased our
production volume in 2006. This is because the demand for soybean products in
PRC market is large as compared to the total supply, and our sales also
benefited from our efforts in capitalizing on the favorable reputation of our
products among customers. Another important reason for sales growth was our
efforts spent in reorganizing our sales network to remove inefficient use of
sales resources and raised motivation for distributors.
  -34-
  Cost
of Sales and Gross Profit
 
 For The Year Ended December 312006
                  
                  % of Sales
                  
                  2005
                  
                  %of Sales
                  
                  Period to Period ChangeAmount ($)
                  
                  Revenue
                  
                  Amount ($)
                  
                  Revenue
                  
                  Amount ($)
                  
                  %Soybean
      meal
                  
                  
                  (53,256,342
                  )
                  
                  90.6
                  
                  
                  (23,541,691
                  )
                  
                  92.5
                  
                  
                  29,714,651
                  
                  
                  126.2Soybean
      oil
                  
                  
                  (20,080,631
                  )
                  
                  90.7
                  
                  
                  (10,409,603
                  )
                  
                  91.1
                  
                  
                  9,671,028
                  
                  
                  92.9Salad
      Oil
                  
                  
                  (6,525,206
                  )
                  
                  91.2
                  
                  
                  (984,096
                  )
                  
                  93.5
                  
                  
                  5,541,110
                  
                  
                  563.0Soybean
                  
                  
                  -
                  
                  
                  -
                  
                  
                  (197,274
                  )
                  
                  101.7
                  
                  
                  (197,274
                  )
                  
                  (100
                  )Cost
      of Sales
                  
                  
                  (
      79,862,179
                  )
                  
                  90.7
                  
                  
                  (35,132,664
                  )
                  
                  92.2
                  
                  
                  44,729,515
                  
                  
                  127.3Soybean
      meal
                  
                  
                  5,514,590
                  
                  
                  9.4
                  
                  
                  1,897,792
                  
                  
                  7.5
                  
                  
                  3,616,798
                  
                  
                  190.6Soybean
      oil
                  
                  
                  2,068,768
                  
                  
                  9.3
                  
                  
                  1,011,183
                  
                  
                  8.9
                  
                  
                  1,057,585
                  
                  
                  104.6Salad
      Oil
                  
                  
                  632,957
                  
                  
                  8.8
                  
                  
                  68,772
                  
                  
                  6.5
                  
                  
                  564,185
                  
                  
                  820.4Soybean
                  
                  
                  -
                  
                  
                  -
                  
                  
                  (3,266
                  )
                  
                  (1.7
                  )
                  
                  3,266
                  
                  
                  100.0Gross
      Profit
                  
                  
                  8,216,315
                  
                  
                  9.3
                  
                  
                  2,974,481
                  
                  
                  7.8
                  
                  
                  5,241,834
                  
                  
                  176.2
 
 Our cost
of sales for the year ended December 31, 2006 rose by $44,729,515 or 127.3% over
the year ended December 31, 2005, from $35,132,664 to $79,862,179, while the
ratio of cost as a percentage to net sales value dropped from 92.2% to 90.7%
over the period. The main reason for the increase in cost of sales was the
significant increase in processing and production volume.
 
 In the
year ended December 31, 2006, we processed 309,161 metric tons of soybean, and
produced 245,948 tons of soybean meal, 38,700 tons of soybean oil and 11,863
tons of salad oil, compared to 126,978 metric tons of soybean, 101,685 tons of
soybean meal, 19,496 tons of soybean oil and 1,635 tons of salad oil,
respectively, for the previous year, achieving a growth rate of 143.5%, 141.9%,
98.5% and 625.6%, respectively. The cost of sales increase was in line with this
significant growth in sales volume. The result was that the costs of soybean
meal, soybean oil and salad oil grew only by 126.2%, 92.9% and 563%
respectively. In the mean time, thanks to the high efficiency of Plant No. 3’s
brand new equipment and the accumulation of the skills and experience of our
staff, improved output ratio in production had helped to lower the ratio of
costs of sales as a percentage of net sales, from 92.2% to 90.7%.
 
 Gross
profit was $8,216,315 for the year ended December 31, 2006, an increase of
$5,241,834 or 176.2% from $2,974,481 for the year ended December 31, 2005.
The main reasonfor this increase was the significant growth in sales volume as
result of the increase in production volume and the reorganization of our sales
network. The improvement in output ratio effectively lowered the ratio of costs
of sales as a percentage of net sales and thus raised gross margin, from 7.8% to
9.3%.
 
 Operating
Expenses
  Period to PeriodFor The Year Ended December 31
                                      
                                      Change2006
                                      
                                      % of Sales
                                      
                                      2005
                                      
                                      %of Sales
                                      
                                      AmountAmount ($)
                                      
                                      Revenue
                                      
                                      Amount ($)
                                      
                                      Revenue
                                      
                                      ($)
                                      
                                      %Selling
      Expenses
                                      
                                      
                                      (63,209
                                      )
                                      
                                      0.07
                                      
                                      
                                      (43,094
                                      )
                                      
                                      0.11
                                      
                                      
                                      20,115
                                      
                                      
                                      46.7General
      & Administrative Expenses
                                      
                                      
                                      (1,078,184
                                      )
                                      
                                      1.22
                                      
                                      
                                      (1,103,262
                                      )
                                      
                                      2.89
                                      
                                      
                                      (25,078
                                      )
                                      
                                      (2.27
                                      )Total
      Operating Expenses
                                      
                                      
                                      (1,141,393
                                      )
                                      
                                      1.29
                                      
                                      
                                      (1,146,356
                                      )
                                      
                                      3.0
                                      
                                      
                                      (4,963
                                      )
                                      
                                      (0.43
                                      )
 
 Selling
expenses for the year ended December 31, 2006 increased by $ 20,115 or 46.7 %
over the year ended December 31, 2005. This was mainly due to the increase in
sales-related shipping and handling expenses, which usually is directly
correlate with sales volume. As a percentage of net sales, selling expenses
dropped from 0.11% to 0.07% over the year.
 
 General
and administrative expenses for the year ended December 31, 2006 fell by $25,078
or 2.27%, from $1,103,262 for the year ended December 31, 2005, to $1,078,184
for the year ended December 31, 2006. As a percentage of net sales, general and
administrative expenses dropped from 2.89% to 1.22% over the year. The decrease
was primarily due to the fairly fixed nature of many of our management expenses,
like the depreciation of our office buildings and equipment, office expenses,
supplies, administrative salaries, insurance, and utilities, while our sales
revenue rose significantly over the year.
  -35-
  Income
from Operations and Net Income
 
 Period to PeriodFor The Year Ended December 31
                      
                      Change2006
                      
                      % of Sales
                      
                      2005
                      
                      % of Sales
                      
                      AmountAmount ($)
                      
                      Revenue
                      
                      Amount ($)
                      
                      Revenue
                      
                      ($)
                      
                      %Income
      from operations
                      
                      
                      7,074,922
                      
                      
                      8.0
                      
                      
                      2,151,445
                      
                      
                      5.6
                      
                      
                      4,923,477
                      
                      
                      228.8Interest
      expenses, net
                      
                      
                      (219,032
                      )
                      
                      0.24
                      
                      
                      (150,370
                      )
                      
                      0.39
                      
                      
                      68,662
                      
                      
                      45.7Other
      income, net of expenses
                      
                      
                      -
                      
                      
                      -
                      
                      
                      -
                      
                      
                      -
                      
                      
                      -
                      
                      
                      -Income
      tax
                      
                      
                      -
                      
                      
                      -
                      
                      
                      -
                      
                      
                      -
                      
                      
                      -
                      
                      
                      -Net
      income
                      
                      
                      6,855,890
                      
                      
                      7.8
                      
                      
                      2,001,075
                      
                      
                      5.3
                      
                      
                      4,854,815
                      
                      
                      242.6Foreign
      currency translation adjustment
                      
                      
                      675,461
                      
                      
                      0.76
                      
                      
                      397,756
                      
                      
                      1.0
                      
                      
                      277,705
                      
                      
                      69.8Comprehensive
      income
                      
                      
                      7,531,351
                      
                      
                      8.6
                      
                      
                      2,398,831
                      
                      
                      6.3
                      
                      
                      5,132,520
                      
                      
                      214.0
 
 Income
from operations rose 228.8% or $4,923,477 for the year ended December 31, 2006,
at $7,074,922, over the year ended December 31, 2005, at $2,151,445, thanks
mostly to the increase of 131.1% in sales revenue, while the ratio as a
percentage of net sales of cost of sales and general and administrative expenses
had dropped. As a result, operating margin rose from 5.6% to 8.0%, thanks to the
improvement of operating efficiency due to the accumulation of skills and
experience and largerer economy of scales .
 
 Net
interest expense increased by $68,662 or 45.7% from the year ended December 31,
2005 to the year ended December 31, 2006. The change was largely due to the
higher demand for short term bank loan as the source of working capital in
accordance to the large increase in our production volume. As a percentage of
net sales, net interest expense was 0.24% for the year ended December 31, 2006,
compared to 0.39% for the year ended December 31, 2005, due to the increase of
131.1% in sales revenue and the better efficiency in using the
borrowings.
 
 We have
been recognized as a Key Leading Enterprise in the Industrialization of
Agriculture Industry by the government, so we can enjoy a complete exemption
from income taxes. We are confident that in the foreseeable future we will
continue to enjoy this favorable policy due to our size of operations and status
in this industry.
 
 Net
income increased by $ 4,854,815 or 242.6 % from the year ended December 31, 2005
to the year ended December 31, 2006, while net profit margin rose from 5.3% to
7.8%. This was for the same reason as income from operations, as there was an
increase of 131.1% in sales revenue, while the ratio as a percentage of net
sales of cost of sales and general and administrative expenses had
dropped.
 
 As the
exchange rate of China’s currency, RMB, against US Dollar keeps increasing, the
average rate had risen from 1USD to 8.20329RMB in 2005 to 1USD to 7.98189RMB in
2006, so we achieved $675,461 of foreign currency translation gains for the year
ended December 31, 2006, compared to $397,756 for the year ended December 31,
2005. Partly due to this reason, the comprehensive income for the year ended
December 31, 2006 reached $7,531,351, an increase of $5,132,520 or 214.0% over
$2,398,831 for the year ended December 31, 2005.
 
 However,
the change of foreign exchange rate can be affected by a series of complicated
factors, including but not limited to, the government’s policy, the trend on
global money market, the general economic status of the countries, etc., so we
cannot estimate, with any reasonable certainty, the effect of these fluctuations
on our future business, product pricing, results of operations or financial
conditions, but the fluctuation of the RMB may materially and adversely affect
your investment if the current trend of appreciation of RMB is
reversed.
 
 Liquidity and Capital
Resources
 
 Generally,
we finance our business with cash flow from operations and short-term bank loans
and we use shareholders’ equity investment and retained earnings to meet capital
expenditures.
 
 Working
capital mainly consists of raw materials purchases, salaries, production
overhead (auxiliary materials, utilities, etc.) and finance expenses. Raw
materials (soybean) purchases constitute the majority of our working
capital.
 
 Because
we usually pay cash to our suppliers upon purchase of soybeans, there is a
greater than normal need for cash around harvest season. Our pattern of
operations is as follows: (i) we will keep a large cash reserve by early
October, which is harvest time, and take short-term loans from banks at that
time (ii) we will build up a substantial inventory of soybeans so that for the
period till the end of the year and for the following half year, we will have
sufficient raw materials to maintain smooth operations and convert finished
products to cash, and (iii) we will repay the short-term loans that we had taken
by the end of June or July the following year.
  -36-
 
 Our
working capital requirements may be influenced by quite a few factors, including
the fluctuation of raw material prices, cash flow, competition, our
relationships with suppliers or customers, the availability of credit facilities
and financing alternatives, none of which can be predicted with high level of
certainty.
 
 Operating
Activities
  Year
Ended December 31, 2007 Compared with Year Ended December 31, 2006
  Cash used
in operating activities for the year ended December 31, 2007 was $4,866,156,
while cash generated from operating activities for the year ended December 31,
2006 was $7,268,151. This drop was caused by the unusual and exceptionally
significant rise in soybean price in year 2007 (please refer to section “Cost of
Sales and Gross Profit” above in the comparison between the operating results of
2007 and 2006).
 
 As
mentioned above, the reduction in supply resulted in the fact that t he average
unit cost of our soybeans rose to about $405 per ton for the year ended December
31, 2007, from around $236 per ton for the year ended December 31, 2006, a
growth rate of 72%. And the comparison of soybean prices from another angle
shows that the purchase price in our local area rose from $298 per ton at the
end of December of 2006 by 73.2% to $515 at the end of December of 2007.
However, overall speaking, the rise in the average selling price of soybean
products could not compensate for the increase in raw material cost (please
refer to section “Cost of Sales and Gross Profit” above in the comparison
between the operating results of 2007 and 2006).
 
 Meanwhile,
the demand for soybean had also increased greatly over the year. In the year
ended December 31, 2007, we processed 385,087 tons metric tons of soybeans,
compared to 309,161 metric tons of soybean of the previous year, achieving a
growth rate of 24.6%. And to counter the supply shortage in 2007 and to prepare
ourselves for satisfying higher production volume in 2008, we had built up
significant stocks. At the end of 2006, our inventory level of soybeans was less
than 17,800 tons, and it rose to over 35,000 tons at the end of 2007, an
increase of 157%. The combined effect of these 2 factors resulted in a 321%
growth in the cost of inventories maintained at the end of 2007, standing at
$15.5 million, compared to only less than $3.7 million at the end of
2006.
 
 For the
above reasons, we had to spend a great more amount of cash on procuring and
maintaining our inventories. In the year ended December 31, 2007, $9,712,307
cash was used in procuring and maintaining inventories. In addition, $5,508,012
cash was used as advances to suppliers. We used to pay almost ignorable advances
to suppliers. However, due to the material fall in soybeans supply, we have to
pay large advances to major suppliers to secure the supply of raw
materials.
 
 Our view
is that the cash outflow in operating activities of 2007 was of a temporary and
exceptional nature, and it was an isolated event, so it cannot be reasonably
used to estimate the trend of our operational results in the future. The draught
in 2007 was an unforeseeable event at an exceptional scale, and the rise of
soybean price has put strong stimulation on farmers to grow soybeans, the
availability of soybean and thus its price will be stabilized and its long-term
trend is a falling one. Generally speaking, our cash flows are healthy and
stable, as we have very large sales revenue and we sell mostly on cash basis,
with ignorable A/R. Actually the situation has been improved greatly since the
beginning of 2008. In the first 2 months, we have already achieved a net cash
inflow from operations of about $1.65 million. We are confident to achieve a
good cash flow from our operations in 2008.
 
 Other
major adjustments affecting cash flows from operating activities of 2007
are:
 (1)
                An
      addition of $182,708 due to the collection of accounts
      receivables.
 (2)
                A
      reduction of $1,667,452 of prepaid VAT and other taxes, as they increased
      in line with purchase volume of raw
materials.
 (3)
                An
      addition of $714,295 due to decrease in other
  receivables.
 (4)
                A
      reduction of $730,106 for decrease in accounts
  payables.
 (5)
                A
      reduction of $698,636 for decrease in other
  payables.
 (6)
                An
      addition of $152,225 due to increase in customers
  deposits.
 
 Year
Ended December 31, 2006 Compared with Year Ended December 31, 2005
 
 Cash
generated from operating activities for the year ended December 31, 2006 was
$7,268,151, compared to cash used in operating activities of $82,307 for the
year ended December 31, 2005.
 
 The major
adjustments affecting cash flows from operating activities of 2007
are:
 
 (1)
                An
      addition of $353,941 due to the decrease of accounts
      receivables.
 (2)
                A
      reduction of $1,814,596 for cash used in
  inventories.
 (3)
                An
      addition of $463,017 due to decrease in other
  receivables.
 (4)
                An
      addition of $166,753 due to increase in accounts
  payables.
 -37-
  (5)
                A reduction of $142,442 for
      decrease in customers
deposits.
 Investing
Activities
 
 Year
Ended December 31, 2007 Compared with Year Ended December 31, 2006
 
 Net cash
used in investing activities for the year ended December 31, 2007 was
$12,413,404, compared to $9,519,203 for the year ended December 31, 2006. The
major item of investing activities in 2007 was $11,702,842 payment for
construction in progress, which was primarily spent for the renovation of Plant
No.2 and the construction of the production lines for new high end products and
the related facilities in that plant.
 
 We
satisfied the demand for cash used in capital investment mostly with the
proceeds from the equity financing completed on October 3, 2007 (please refer to
section “Recent Events” in financing activities below), supplemented by our own
cash reserves.
 
 Year
Ended December 31, 2006 Compared with Year Ended December 31, 2005
 
 Net cash
used in investing activities for the fiscal year ended December 31, 2006 was
$9,519,203, compared to net cash used in investing activities of $7,298,639 for
the year ended December 31, 2005. There were two major investing activities:
$7,251,862 of payment for plant and equipment, and $2,267,341 of payment for
land use rights. These amounts were mostly spent on two items: installments of
the payment due after completion for the construction and equipment of Plant No.
3, which was completed at the end of 2005, and the purchase of new equipment and
machinery for the two older plants, namely Plant No. 1 and No. 2.
 
 We
satisfied this cash need with our cash reserves brought forward from the year
2005 and cash generated from the year 2006 operations.
  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, 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, 2007 Compared with Year Ended December 31, 2006
 
 Net cash
provided by financing activities was $22,926,970 for the year ended December 31,
2007, compared to $2,222,504 for the year ended December 31, 2006. The major
items for 2007 are:
  (1)
                $17,849,093
      of proceeds from issue of share capital and warrants. This was the
      proceeds from the private placement mentioned
  above.
 (2)
                $11,815,365
      of bank borrowings. This was short-term bank loan to satisfy working
      capital needs.
  Year
Ended December 31, 2006 Compared with Year Ended December 31, 2005
 
 Net cash
provided by financing activities was $2,222,504 for the year ended December 31,
2006, compared to $1,759,693 for the year ended December 31, 2005. The major
items for 2006 are:
 (1)
                  $6,898,366 of bank
      borrowings. This was short-term bank loan to satisfy working capital
      needs.
 
 Loans
 
 The
balance of short-term bank loans was $12,305,000 at December 31, 2007, compared
to $6,523,825 at December 31, 2006. This increase was mainly due to the huge
increase in demand for working capital, caused mainly by both the increase need
for raw materials to satisfy the material growth of processing volume and the
exceptional and unexpected rise in soybean price (please refer to the section
“Cost of Sales and Gross Profit” in the comparison between the operational
results of 2007 and 2006 above).
 
 The
balance of our long-term bank loan was about $457,107 at December 31, 2007, plus
a current portion of $47,433, payable within one year of balance sheet
date.
  -38-
 
 Currently
we have a credit line of up to RMB190 million, or about USD 27.09 million using
current exchange rate of 1USD to 7.0130RMB, based on our credit rank AA granted
by Agricultural Development Bank. We believe that this would be sufficient for
our future working capital needs at the current operation and capacity
level.
 
 Future
Cash Commitments
 
 We have
made ambitious capital investment plans for six new projects between fiscal 2007
and fiscal 2008, estimated at a total value of over $20.4 million. This demand
for investment capital will be mainly met with the proceeds from our private
placement mentioned above, and partly with our cash reserves.
 
 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 which 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
 
 Yanglin
Soybean, Inc. (“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 financial statements.
 
 The share
exchange transaction has been accounted for as a recapitalization of Victory
Divide Mining Company (“VDMC”, the former name 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.
 
 The
company owned the three subsidiaries since its reverse-merger on October 3,
2007. Retroactively restated as of December 31, 2006, 2005, and 2004, the
detailed identities of the consolidating subsidiaries would have been as
follows:
 
 Name of Company
                    
                    Place of incorporation
                    
                    Attributable interestFaith
      Winner Investments Ltd
                    
                    British
      Virgin Islands
                    
                    
                    100
                    %Faith
      Winner (Jixian) Agriculture Development Company
                    
                    PRC
                    
                    
                    100
                    %Heilongjiang
      Yanglin Soybean Group Co. Ltd *
                    
                    PRC
                    
                    
                    100
                    %
  *Note:
This is a variable interest entity
 
 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 at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting periods. Management makes these estimates using the best
information available at the time the estimates are made; however actual results
could differ materially from those estimates.
  -39-
  Economic
and political risks
 
 The
operations of the Company, through its subsidiaries and Heilongjiang Yanglin
Soybean Group Co., Ltd. (“Yanglin”) (hereinafter, collectively referred to as
“the Group”), 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 are arranging from 22 to 50 years.
  Property,
plant and equipment
 
 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 yearsMachinery
      and equipment
                
                
                3.5 - 30 yearsOffice
      equipment
                
                
                4 -
      20 yearsMotor
      vehicles
                
                
                10
      years
 
 The cost
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 as 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 technology or other industry changes.
Determination of recoverability of assets to be held and used is by comparing
the carrying amount of an asset to future net undiscounted cash flows to be
generated by the assets.
 
 If such
assets are considered to be impaired, the impairment 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 costs to sell.
 
 During
the reporting years, there was no impairment loss.
 
 Inventories
 
 Inventories
consisting of finished goods, and raw materials 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 overhead.
 
 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 based on a variety of factors, including the length
of time the receivables are past due, significant one-time events and historical
experience. Bad debts are written off as incurred.
  -40-
  Cash
and cash equivalents
 
 The
Company considers all highly liquid investments purchased with original
maturities of three months or less to be cash equivalents. The Company maintains
bank accounts only in the PRC. The Company does not maintain any bank accounts
in the United States of America.
 
 Foreign
currency translation
 
 The
accompanying financial statements are presented in United States dollars. The
functional The reporting currency of the Group is the U.S. dollar (US$). 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 US$ for the purposes of
preparing the consolidated financial statements were as
follows:
 2007
                              
                              2006
                              
                              2005
                              
                              2004Year
      end RMB : US$ exchange rate
                              
                              
                              7.31410
                              
                              
                              7.81750
                              
                              
                              8.07340
                              
                              
                              8.28650Average
      yearly RMB : US$ exchange rate
                              
                              
                              7.61720
                              
                              
                              7.98189
                              
                              
                              8.20329
                              
                              
                              8.28723
 The RMB
is not freely convertible into foreign currency and all foreign exchange
transactions must take place through authorized institutions. No representation
is made that the RMB amounts could have been, or could be, converted into US$ 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, and the seller’s price to the buyer is fixed or
determinable, and collection is reasonably assured.
 
 Costs
of sales
 
 Cost of
sales consists primarily of material costs, employee compensation, depreciation
and related expenses, which are directly attributable to the production of
products. Write-down of inventory to lower of cost or market is also recorded in
cost of revenues.
 
 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:
 
 (1)
                Making
      up cumulative prior years’ losses, if
any;
  -41-
  (2)
                Allocations
      to the “Statutory surplus reserve” of at least 10% of income after tax, 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;
 (3)
                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
 (4)
                Allocations
      to the discretionary surplus reserve, if approved in the shareholders’
      general meeting.
  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
September 2006, the FASB issued SFAS 157, Fair Value Measurements, which defines
fair value, establishes a framework for measuring fair value in generally
accepted accounting principles, and expands disclosures about fair value
measurements. SFAS 157 applies under other accounting pronouncements that
require or permit fair value measurements, where fair value is the relevant
measurement attribute. The standard does not require any new fair value
measurements. SFAS 157 is effective for financial statements issued for fiscal
year beginning after November 15, 2007, and interim periods within that fiscal
year. The Company is currently evaluating the impact of SFAS 157 on its
operation and financial conditions.
 
 In
September 2006, the SEC issued SAB No. 108, which provides guidance on the
process of quantifying financial statement misstatements. In SAB No. 108, the
SEC staff establishes an approach that requires quantification of financial
statement errors, under both the iron-curtain and the roll-over methods, based
on the effects of the error on each of the Company’s financial statements and
the related financial statement disclosures. SAB No.108 is generally effective
for annual financial statements in the first fiscal year ending after November
15, 2006. The transition provisions of SAB No. 108 permit existing public
companies to record the cumulative effect in the first year ending after
November 15, 2006 by recording correcting adjustments to the carrying values of
assets and liabilities as of the beginning of that year with the offsetting
adjustment recorded to the opening balance of retained earnings. The Company
does not anticipate that the adoption of this standard will have a material
impact on these consolidated financial statements
 
 In
February 2007, FASB issued Statement of Financial Accounting Standards No.
(“SFAS”) 159, “The Fair Value Option for Financial Assets and Financial
Liabilities - Including an Amendment of FASB Statement No. 115” (“SFAS 159”).
SFAS 159 permits entities to choose to measure many financial instruments and
certain other items at fair value. Entities that elect the fair value option
will report unrealized gains and losses in earnings at each subsequent reporting
date. The fair value option may be elected on an instrument-by-instrument basis,
with a few exceptions. SFAS 159 also establishes presentation and disclosure
requirements to facilitate comparisons between entities that choose different
measurement attributes for similar assets and liabilities. The requirements of
SFAS 159 are effective for our fiscal year beginning on January 1,
2008.
 
 In
December 2007, the SEC issued Staff Accounting Bulletin No. 110 (“SAB 110”). SAB
110 permits companies to continue to use the simplified method, under certain
circumstances, in estimating the expected term of “plain vanilla” options beyond
December 31, 2007. SAB 110 updates guidance provided in SAB 107 that previously
stated that the Staff would not expect a company to use the simplified method
for share option grants after December 31, 2007. Adoption of SAB 110 is not
expected to have a material impact on the Company’s consolidated financial
statements
 
 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.
  Off-Balance
Sheet Arrangements
 
 We do not
have any off-balance sheet arrangements.
  -42-
  Tabular
Disclosure of Contractual Obligations
  Payments due by periodContractual
                    obligations
                  
                  Total
                  
                  Less
                    than 1
                    year
                  
                  1-3 years
                  
                  3-5 years
                  
                  More
                    than 5
                    years[Long-Term
      Debt Obligations]
                  
                  $
                  514,035
                  
                  $
                  49,405
                  
                  $
                  109,887
                  
                  $
                  124,653
                  
                  $
                  230,090[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.
 
 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$52.6 million as of July 1, 2008
into RMB at the exchange rate of US$1.00 for RMB6.92 and, the respective
People’s Bank of China rates as of July 1, 2008, this cash balance would have
been RMB364.0 million. Assuming a further 10% appreciation of the RMB
against the U.S. dollar, this cash balance would have decreased to RMB327.6
million as of July 1, 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. 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.
  -43-
  Item
9.  Changes In and Disagreements With Accountants On Accounting and
Financial Disclosure
  On
October 1, 2007, we dismissed S.W. Hatfield, CPA as our independent accountant,
as approved by our board of directors. During the fiscal years 2005, 2006 and
through the date of his dismissal, we had no disagreements with S.W. Hatfield,
CPA on any matter of accounting principles or practices, financial statement
disclosure, or auditing scope or procedure, which disagreements, if not resolved
to the satisfaction of S.W. Hatfield, CPA, would have caused it to make
reference to the subject matter of such disagreements in its report on our
financial statements for such periods. During the fiscal years 2005, 2006 and
through the date of his dismissal, there were no reportable events as defined
under Item 304(a)(1)(v) of Regulation S-K adopted by the SEC.
  On
October 1, 2007, we retained Samuel H. Wong & Company, LLP as the new
independent accountant, as approved by our board of directors. 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. Samuel H. Wong &
Company, LLP also reviewed the interim financial statements of Heilongjiang
Yanglin Soybean Group Co., Ltd. for the three months ended March 31, 2007 and
the six months ended June 30, 2007, and the proforma balance sheet of Victory
Divide Mining Company as of June 30, 2007, which were also included in our
current report on Form 8-K filed on October 10, 2007. Samuel H. Wong &
Company, LLP also reviewed the interim financial statements of Victory Divide
Company for the nine months ended September 30, 2007 which were included in our
quarterly report on Form 10-Q filed on November 29, 2007. The reports and
reviews did not contain an adverse opinion or disclaimer of opinion, nor was it
modified as to uncertainty, audit scope or accounting principles. There were no
disagreements with Samuel H. Wong & Company, LLP on any matter of accounting
principles or practices, financial statement disclosure, or auditing scope or
procedure, which, if not resolved to the satisfaction of Samuel H. Wong &
Company, LLP, would have caused it to make reference to the subject matter of
the disagreement(s) in connection with its reports.
 
 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, as approved by our board
of directors.
 
 Item
9a. Controls And Procedures
 
 Management’s
Report on Internal Control over Financial Reporting
 
 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, 2007.
 
 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, 2007, our
disclosure controls and procedures were not effective due to the material
weaknesses and significant deficiencies in our internal control over financial
reporting described below.
 
 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, 2007. 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, 2007, our internal control over financial
reporting was not effective as a result of the following identified material
weakness and significant deficiencies.
 
 The
significant deficiencies and material weaknesses include: there is no complete
version of Code of Conduct has been formulated; there is lack of the articles
for the board of directors and of independent directors; special committees of
the board have not been established; no formal accounting manual has been
issued; the procedures for managing the management procedures have not been
stipulated. They 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.
  -44-
  Management’s
Remediation Initiatives and Interim Measures
 
 The
following is a description of each deficiency or weakness with respect to our
internal controls over financial reporting identified by our outside auditors
and the remediation initiatives that we have implemented or intend to implement
in the near future.


1)
              The Company has not formulated a
      complete Code of Conduct applicable to all staff, with Chinese and English
      version, defining acceptable business conduct, conflict of interests and
      other expected moral behavior, and including anti-fraud mechanism. Also
      the procedure ruling the drafting, revision, reviewing, approval and issue
      of the Code should be formulated. Besides, no formal system has been set
      up for reporting of fraud.
 
 Remediation
Initiative
 
 We are
now drafting a Code of Conduct, and expect to finalize it in the third quarter
of 2008. Meanwhile we will formulate a procedure ruling the drafting, revision,
reviewing, approval and issue of the Code, which is also to be done in the third
quarter. The Code and the procedure will then be reviewed thoroughly and
approved by the board of directors. We will also establish a channel for issuing
and communicating the Code of Conduct to all staff, and the Code will be issued
and distributed formally, while we will start communication and training at the
same time.
 
 The cost
involved will include that of drafting, revision, reviewing and approval,
issuing and distributing, and communicating and training.
  2)
              The Company does not have a
      formal system for employees to report and expose
    fraud.
 
 Remediation
Initiative
 
 Currently
we have a hot-line telephone system for reporting fraud. We will develop this
into a formal mechanism of anti-fraud. The first stage is to design the system
framework and determine the components to be included. Then we must develop the
detailed procedures and regulations for identifying, reporting and investigating
fraud. Such procedures and regulations will be reviewed and approved by the
board of management. The system will then be established and implemented in the
third quarter of 2008. We will then provide training to employees on how to use
the system and start operation of the system after training is
completed.
 
 The cost
of implementing this measure will mainly comprise the cost of designing,
revision, reviewing and approval of the system, training employees, operating
and maintenance of the system.
  3)
              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.
 
 Remediation
Initiative
 
 We are
now drafting the Articles for the board of directors. The step is expected to be
completed in the third quarter of 2008. It will then be reviewed and approved by
the board of directors. Meanwhile, we are now also seeking appropriate
candidates for at least 3 independent directors through various channels. The
board of directors will then review the career and educational background of
each candidate and interview them, and make final decision by the end of October
2008.
 
 The
measure will incur the costs of drafting, revision, reviewing and approval of
the Articles, finding appropriate candidates, reviewing of personal background,
and interviewing.
  4)
              The special committees of the
      board, including audit committee, appointment committee and compensation
      committee, have not been
established.
 
 Remediation
Initiative
 
 We will
establish the committees and appoint qualified directors as their members. Audit
committee will be formed by at least 3 directors with appropriate level of
financial knowledge, within which there will be at least 1 financial expert.
It’s difficult to find qualified persons for these roles, so we need some time
to find them, and we expect that the three committees will be established by the
end of October 2008.
 
 The
relevant costs will be that of reviewing of candidates and recruiting, and the
remuneration of committee members. Currently the remuneration of a director is
about $10,000 per year.
  5)
              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.




-45-




Remediation
Initiative





We will
finish drafting the accounting manual in the third quarter of 2008, and it will
include accounting policies and the detailed procedures of accounting treatments
of business transactions and other affairs in it. The manual will be released to
all accounting staff, and training will start at the same time and take about 1
month. We are also eagerly seeking accountants or external consultants skilled
and experienced in several key areas of accounting to enhance the competence of
our accounting team. The task will be finished by the end of October
2008.





We expect
that there will be the costs of studying and researching U.S. GAAP, drafting,
revision, reviewing and approval of the accounting manual, issuing and
distributing, and training and educating.




6)
              The Company does not have a
      formal procedure on review, update and approval of the management
      procedures.





Remediation
Initiative





We will
formulate a formal procedure on the issue, and it will be reviewed and approved
by the board of directors by the end of the third quarter of 2008. The procedure
will require written confirmation from key managers for the issue of management
procedures. The procedure will be released to relevant management and
administration staff, and training will be provided to them then. We will also
conduct training when material change is made to the procedures.





The cost
involved will include drafting, revision, reviewing and approval of the
procedure, releasing and training.





Changes
in Internal Controls over Financial Reporting





During
the year ended December 31, 2007, there was no change in our internal controls
over financial reporting that has materially affected, or that is reasonably
likely to materially affect, our internal control over financial
reporting.





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
            
            PositionShulin
      Liu
            
            44
            
            Chief
      Executive Officer/DirectorShaocheng
      Xu
            
            33
            
            Chief
      Financial OfficerYang
      Miao
            
            36
            
            DirectorZongtai
      Guo
            
            50
            
            Director
      and Chief Operating OfficerYulin
      Liu
            
            51
            
            President
      and General Manager of Heilongjiang Yanglin Soybean Group Co.
      LtdShuhua
      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.





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.





Yang Miao,joined Yanglin the
Vice President and Secretary to the Board of Directors in August 2006. He is
currently a director of Yanglin Soybean, Inc.. Previously, he served as the
managing director of Redwood Capital Inc., a US based investment banking
firm,from September 2005 to July 2006, and the managing director of Yuehai
Zhongcheng Mechanical and Electrical Equipment Company from February 2004 to
September 2005. From 2002 to 2004, he had been studying at University of
Aberdeen. He worked for China National Overseas Engineering Corporation as
an expatriate project manager from August 1995 to June 2002. Mr. Miao graduated
from Beijing University with a degree of Bachelor of Arts and obtained a MBA
from University of Aberdeen.




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.





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




-46-




Board
Composition and Committees:




Our Board
has four (4) members. We have not engaged any independent directors
yet.





Audit Committee Financial
Expert





Our board
of directors currently acts as our audit committee.  Because we only
recently consummated the Share Exchange Agreement and the Share Purchase
Agreement, our board of directors is still in the process of finding an “audit
committee financial expert” as defined in Item 401(e) of Regulation S-B and is
“independent” as that term is used in Item 7(d)(3)(iv) of Schedule 14A under the
Securities Exchange Act.





Audit
Committee





We have
not yet formed an audit committee.  At the present time, we believe
that the members of board of directors are collectively capable of analyzing and
evaluating our financial statements and understanding internal controls and
procedures for financial reporting.  We, however, recognize the importance
of good corporate governance and intend to appoint an audit committee comprised
entirely of independent directors, including at least one financial expert in
the near future.





Compensation
Committee





We
do not presently have a Compensation Committee. Our board of directors
presently acts as the Compensation Committee.





Nominating
Committee





We
do not presently have a Nominating Committee. Our board of directors
presently acts as the Nominating Committee.





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, Zhongtai Guo and Yang Miao has not filed their form 3 in a
timely manner.





Code
of Ethics





We
currently do not have a Code of Ethics and the Board intends to adopt one in the
near future.





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 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
year of 2007 and 2006. We did not engage in any benchmarking of compensation to
set the compensation to our executive officers.





-47-




Compensation
Table





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





(1)
              The
      relevant exchange rates for financial years 2007 and 2006 are $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.




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 private 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.





We will
also consider forming a Compensation Committee comprising predominantly of
independent directors to 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 2007.





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 2007.





-48-




Option
Exercises and Stock Vested





No
options were exercised and no shares of stock were vested in 2007.





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 2007.





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 up
till now.





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 December 2, 2008.





-49-


Name and Address of Beneficial Owner
                                
                                Amount and Nature of Beneficial
                                  Ownership (1)
                                
                                Percentage of
                                  Class (1)Series A
                                
                                Series B
                                
                                Common
                                  StockOwner
      of More than 5% of ClassVision
      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 OfficersShulin
      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 December 2, 2008, (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 December 2, 2008.. 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 December 2, 2008, (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 December 2, 2008, (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.
 
 -50-
 
 (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, 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) 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 December 2, 2008, below is
      a breakdown of the current holdings
of:
  -51-
 
 Name
                  
                  Amount and Nature of Beneficial OwnershipPreferred Stock
                  
                  Common
                    Stock
                  
                  WarrantsSeries A
                  
                  Series B
                  
                  
                  
                  A
                  
                  B
                  
                  J
                  
                  C
                  
                  DVision
      Opportunity Master Fund Ltd
                  
                  
                  3,720,930
                  
                  —
                  
                  
                  525,000
                  
                  3,720,930
                  
                  
                  1,860,465
                  
                  3,382,664
                  
                  
                  3,382,664
                  
                  1,691,332Sansar
      Capital Special Opportunity Master Fund, LP (Cayman
Master)
                  
                  
                  2,767,442
                  
                  —
                  
                  
                  —
                  
                  2,767,442
                  
                  
                  1,383,721
                  
                  2,515,856
                  
                  
                  2,515,856
                  
                  1,257,928Vicis
      Capital Master Fund
                  
                  
                  2,093,023
                  
                  —
                  
                  
                  —
                  
                  2,093,023
                  
                  
                  1,046,512
                  
                  1,902,748
                  
                  
                  1,902,748
                  
                  951,374
  As of
December 2, 2008, 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
 
 Consulting
Agreement
  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.
  Share Exchange
Agreement
 
 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. Both Faith Winner
(BVI) and Winner State (BVI) are companies incorporated in the British Virgin
Islands. Winner State (BVI), Fang Chen, Yang Miao and Ying Zhang were
collectively the owners of 100% of the outstanding voting stock of Faith Winner
(BVI) (such shares, the “Faith Shares”; and such transaction, the “Share
Exchange”).
 
 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 $0.001 par value common stock. The
Share Exchange was effected pursuant to the terms of an agreement among us and
Winner State (BVI), Fang Chen, Yang Miao and Ying Zhang executed on the date of
the Share Exchange (the “Share Exchange Agreement”).
 
 As a
result of the consummation of the Share Exchange Agreement, (i) we ceased to be
a shell company as that term is defined in Rule 12b-2 under the Exchange Act,
(ii) Faith Winner (BVI) is now our wholly-owned subsidiary, and (iii) through
its newly-acquired subsidiary, Faith Winner (Jixian) Agriculture Development
Company or WFOE, we now indirectly control, through a series of contractual
arrangements, the business of Yanglin.
  -52-
  Mass Harmony Financial
Consulting Agreement
 
 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 RMB300,000
(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 includes 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.
 
 MHA and
Yanglin has fully performed according to the Agreement and it has no further
force and effect.
 
 Contractual Arrangements
between WFOE and Yanglin, or, PRC Restructuring
Arrangements.
  Winner
State (BVI) (jointly owned by our CEO, Mr. Shulin Liu and his wife, Huanqin
Ding), Yang Miao, a director of the Company, and other minor shareholders own
100% of the Company. The Company, in turn, owns 100% of Faith Winner (BVI) after
the share exchange occurred on October 3, 2007. Faith Winner (BVI) owns 100% of
Faith Winner (Jixian) Agriculture Development Company or WFOE. Shulin Liu
together with his wife, Huanqin Ding, own 18,200,000 shares of common stock of
the Company, or 91%. Because the Company is the 100% owner of Faith Winner
(BVI), Shulin Liu and Huanqin Ding own 91% of Faith Winner (BVI). The same is
true for WFOE. Yang Miao owns 100,000 shares of common stock of the Company, or
0.5%.
 
 In
connection with the share exchange transactions, WFOE executed a series of
agreements with Yanglin, and as a result, WFOE acquired control over Yanglin’s
business, personnel and finances as if it were a wholly owned subsidiary of WFOE
(collectively, the "Restructuring Agreements").
 
 In
addition, the executive officers for WFOE and Yanglin are identical.
Furthermore, Winner State (BVI), the Company, Faith Winner (BVI) and WFOE are
holding companies. The actual business operation is carried out by
Yanglin.
 
 Consignment
Agreements
 
 Each of
Yanglin’s two shareholders (our CEO Shulin Liu and his wife Huanqin Ding)
holding in the aggregate 100% of Yanglin’s equity interests (collectively, the
“Yanglin Shareholders”), entered into a Consignment Agreement with Faith Winner
(BVI) (each a “Consignment Agreement” and collectively, the “Consignment
Agreements”). Pursuant to these Consignment Agreements, each such Yanglin
Shareholder consigned all its rights and interests as a shareholder of Yanglin
to Faith Winner (BVI), including without limitation, its right to elect
directors and officers, obtain information about Yanglin, dispose of the
consigned equity interests and other shareholder rights and interests. These
agreements will remain effective until Faith Winner (BVI) or its designees have
acquired 100% of the equity interest of Yanglin or substantially all assets of
Yanglin. Prior to the termination of the Consignment Agreements, the Yanglin
Shareholders are prohibited from disposing, encumbering, consigning or
restructuring the consigned interests without the prior written consent of Faith
Winner (BVI).
 
 Exclusive
Purchase Option Agreement
 
 Under the
Exclusive Purchase Option Agreement, the Yanglin Shareholders granted WFOE an
exclusive option to purchase all or part of the Yanglin Shareholders’ equity
interest in Yanglin and Yanglin granted WFOE an exclusive option to purchase all
Yanglin’s assets, when and as permitted under PRC laws and regulations. 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 the lowest price permitted under the PRC laws and
regulations.
 
 Prior to
the termination of the Exclusive Purchase Option Agreement, without the prior
written consent of WFOE, Yanglin is restricted from, among other things, (i)
supplementing or amending its articles of association or rules of the company in
any manner, and changing its registered capital or shareholding structure in any
manner, (ii) transferring, mortgaging or otherwise disposing of the lawful
rights and interests to and in its assets or income, or encumbering its assets
and income in any way that would affect WFOE’s security interest, (iii)
incurring, assuming or guaranteeing any debts except those that are incurred
during its normal business operation or agreed to by WFOE in advance, (iv)
entering into any material contract (exceeding RMB5,000,000 in value), unless it
is necessary for the company’s normal business operation; (v) providing any loan
or guarantee to any third party; (vi) acquiring or consolidating with any third
party, or investing in any third party; (vii) distributing any dividends to the
shareholders in any manner, and, at WFOE’s request, shall promptly distribute
all distributable dividends to the Yanglin Shareholders (collectively, the
“restrictive provisions”).
 
 The
agreement will remain effective until WFOE or its designees have acquired 100%
of the equity interests of Yanglin or substantially all assets of
Yanglin.
 
 Registered
Trademark Transfer Agreement
 
 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.
 
 Trademark
Licensing Agreement
  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.
 
 Consigned
Management Agreement
 
 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 acquires all equity or substantially all the assets of Yanglin (as more
fully described in the Exclusive Purchase Option Agreement description above).
Under the Consigned Management Agreement, WFOE will provide financial, technical
and human resources management services to Yanglin which will enable WFOE to
control Yanglin's operations, assets and cash flow. In turn, it will be entitled
to 5% of Yanglin’s revenue on a yearly basis.
 
 Loan
Agreement
 
 Under the
Loan Agreement, WFOE agreed to provide a loan to Yanglin in the principal amount
of $17,000,000 to be used as working capital for its business operations.
Repayment should be made in its entirety or in part, at WFOE’s option and upon
10 days written notice, either (i) in cash, or (ii) by a transfer of equity
interests of Yanglin or all its assets (at the minimum price allowed under PRC
law with any excess over such price continuing to be subjected to the repayment
obligation under the Loan Agreement). The Loan Agreement also provides
restrictive provisions substantially similar to those provided under the
Exclusive Purchase Option Agreement as described above under “Exclusive Purchase
Option Agreement” in this Section. As of August 10, 2008, no amount of the loan
principal, or any interest has been paid to WFOE. The loan carries no interest
rate.
  The
source of funds for WFOE to make payment under the Intellectual Property
Transfer Agreement and to fund the Loan Agreement is the proceeds of the Private
Placement offering described in this prospectus.
 
 The
Supplier of “Yanglin” Soybean Seeds by Heilongjiang Yanglin Group Seed Co, Ltd.
owned and managed by Mr. Shulin Liu, our chief executive officer.
 
 We have
been using a unique type of 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.
 
 However,
we do not have direct relationship with and we do not make payment to Yangiln
Group Seed Co. Ltd., other than it is owned by Mr. Liu.
  To
further ensure a consistent and supply of soybeans and to increase its volume,
we intend to enter into similar supply agreements with other soybean farmers in
the PRC.
 
 Procedures for Approval of Related
Party Transactions
  Our
policy is that our board of directors is charged with reviewing and approving
all potential related party transactions.   All such related party
transactions are then required to be reported under applicable SEC rules. Our
procedures for approval of related party transactions are in
writing.
  Item
14. Principal Accounting Fees And Services
 
 October
1, 2007, we retained Samuel H. Wong & Company, LLP as the new independent
accountant, as approved by our board of directors. 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. Samuel H. Wong & Company, LLP also
reviewed the interim financial statements of Heilongjiang Yanglin Soybean Group
Co., Ltd. for the three months ended March 31, 2007 and the six months ended
June 30, 2007, and the proforma balance sheet of Victory Divide Mining Company
as of June 30, 2007, which were also included in our current report on Form 8-K
filed on October 10, 2007. Samuel H. Wong & Company, LLP also reviewed the
interim financial statements of Victory Divide Company for the nine months ended
September 30, 2007 which were included in our quarterly report on Form 10-Q
filed on November 29, 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 three years ended
December 31, 2004, December 31, 2005, and 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
four years ended December 31, 2004, December 31, 2005, December 31, 2006 and
December 31, 2007 are $90,000.
 
 Audit-Related Fees. There were
no fees for assurance and related services by Samuel H. Wong & Company, LLP
or Albert Wong & Company, LLP.
 
 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.
 
 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.
  -53-
 
 PART
IV
  Item
15. Exhibits And Financial Statement Schedules
 
 (a)
(1) Financial Statements
 
 (2) Financial
Statement Schedules
  None
  -54-
  YANGLIN
SOYBEAN INC. (FORMERLY KNOWN AS VICTORY DIVIDE MINING COMPANY)
 
 CONSOLIDATED
FINANCIAL STATEMENTS
 DECEMBER
31, 2007, 2006, 2005 AND 2004
 (Stated
in US dollars)
  
 
 YANGLIN
SOYBEAN INC. F/K/A VICTORY DIVIDE MINING COMPANY
 
 CONTENTS
                      
                      PAGESREPORT
      OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
                      
                      1CONSOLIDATED
      BALANCE SHEETS
                      
                      2 –
      3CONSOLIDATED
      STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
                      
                      4CONSOLIDATED
      STATEMENTS OF STOCKHOLDERS’ EQUITY
                      
                      5CONSOLIDATED
      STATEMENTS OF CASH FLOWS
                      
                      6NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS
                      
                      7 –
      32
  
  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, 2007, 2006, 2005 and 2004 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.
 
 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, 2007, 2006, 2005 and 2004 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.
 
 Since our
previous report dated March 29, 2008, it was determined that the consolidated
financial statements needed restatement to make corrections as described in note
21.
 
 Hong Kong, ChinaMarch 29, 2008,
                      Albert Wong & Co.except for note 21, as to which the date is August 20, 2008
                      Certified Public Accountants
  1
 
 YANGLIN
SOYBEAN INC. F/K/A VICTORY DIVIDE MINING COMPANY
 
 CONSOLIDATED
BALANCE SHEETS
 AS
AT DECEMBER 31, 2007, 2006, 2005 AND 2004
 (Stated
in US Dollars)
 
 Notes
                                  
                                  2007
                                  
                                  
                                  2006
                                  
                                  
                                  2005
                                  
                                  
                                  2004ASSETSCurrent
      assetsCash
      and cash equivalents
                                  
                                  2(j)
                                  
                                  $
                                  9,210,121
                                  
                                  
                                  $
                                  3,013,520
                                  
                                  
                                  $
                                  2,946,423
                                  
                                  
                                  $
                                  8,435,453Pledged
      deposits
                                  
                                  4
                                  
                                  
                                  500,000
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -Trade
      receivables
                                  
                                  2(i)&5
                                  
                                  
                                  13,854
                                  
                                  
                                  
                                  190,989
                                  
                                  
                                  
                                  534,866
                                  
                                  
                                  
                                  536,452Inventories
                                  
                                  2(h)&7
                                  
                                  
                                  17,883,652
                                  
                                  
                                  
                                  7,268,594
                                  
                                  
                                  
                                  5,244,189
                                  
                                  
                                  
                                  3,256,755Advances
      to suppliers
                                  
                                  
                                  
                                  
                                  5,736,267
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  1,526
                                  
                                  
                                  
                                  5,584Prepaid
      VAT and other taxes
                                  
                                  
                                  
                                  
                                  2,457,137
                                  
                                  
                                  
                                  674,184
                                  
                                  
                                  
                                  607,383
                                  
                                  
                                  
                                  314,680Other
      receivables
                                  
                                  6
                                  
                                  
                                  27,896
                                  
                                  
                                  
                                  124,767
                                  
                                  
                                  
                                  577,496
                                  
                                  
                                  
                                  520,554Total
      current assets
                                  
                                  
                                  
                                  $
                                  35,828,927
                                  
                                  
                                  $
                                  11,272,054
                                  
                                  
                                  $
                                  9,911,883
                                  
                                  
                                  $
                                  13,069,478Property,
      plant and equipment, net
                                  
                                  2(f)&8
                                  
                                  
                                  22,563,196
                                  
                                  
                                  
                                  20,557,531
                                  
                                  
                                  
                                  15,646,165
                                  
                                  
                                  
                                  6,177,618Land
      use rights, net
                                  
                                  2(e)&9
                                  
                                  
                                  3,444,081
                                  
                                  
                                  
                                  3,416,162
                                  
                                  
                                  
                                  1,118,471
                                  
                                  
                                  
                                  1,117,938Prepaid
      deposits for equipment andconstruction
                                  
                                  
                                  
                                  
                                  8,896,327
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  414,314
                                  
                                  
                                  
                                  89,164TOTAL
      ASSETS
                                  
                                  
                                  
                                  $
                                  70,732,531
                                  
                                  
                                  $
                                  35,245,747
                                  
                                  
                                  $
                                  27,090,833
                                  
                                  
                                  $
                                  20,454,198LIABILITIES AND STOCKHOLDERS’
      EQUITYCurrent
      liabilitiesShort-term
      bank loans
                                  
                                  10
                                  
                                  $
                                  12,305,000
                                  
                                  
                                  $
                                  6,523,825
                                  
                                  
                                  $
                                  4,335,235
                                  
                                  
                                  $
                                  2,425,479Current
      portion of long-term bankloans
                                  
                                  12
                                  
                                  
                                  47,433
                                  
                                  
                                  
                                  51,309
                                  
                                  
                                  
                                  27,390
                                  
                                  
                                  
                                  29,149Accounts
      payable
                                  
                                  
                                  
                                  
                                  12,921
                                  
                                  
                                  
                                  723,506
                                  
                                  
                                  
                                  535,715
                                  
                                  
                                  
                                  1,754,410Amounts
      due to construction
                                  
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  885,811
                                  
                                  
                                  
                                  2,736,888
                                  
                                  
                                  
                                  -Other
      payables
                                  
                                  11
                                  
                                  
                                  44,380
                                  
                                  
                                  
                                  24,763
                                  
                                  
                                  
                                  93,940
                                  
                                  
                                  
                                  150,972Customers
      deposits
                                  
                                  
                                  
                                  
                                  2,656,777
                                  
                                  
                                  
                                  2,337,371
                                  
                                  
                                  
                                  2,404,180
                                  
                                  
                                  
                                  1,774,682Accrued
      liabilities
                                  
                                  
                                  
                                  
                                  521,114
                                  
                                  
                                  
                                  503,734
                                  
                                  
                                  
                                  501,288
                                  
                                  
                                  
                                  215,412Total
      current liabilities
                                  
                                  
                                  
                                  $
                                  15,587,625
                                  
                                  
                                  $
                                  11,050,319
                                  
                                  
                                  $
                                  10,634,636
                                  
                                  
                                  $
                                  6,350,104Long-term
      liabilitiesLong-term
      bank loans
                                  
                                  12
                                  
                                  
                                  457,107
                                  
                                  
                                  
                                  461,777
                                  
                                  
                                  
                                  273,897
                                  
                                  
                                  
                                  320,625TOTAL
      LIABILITIES
                                  
                                  
                                  
                                  $
                                  16,044,732
                                  
                                  
                                  $
                                  11,512,096
                                  
                                  
                                  $
                                  10,908,533
                                  
                                  
                                  $
                                  6,670,729
 
 See notes
to consolidated financial statements
  2
 
 YANGLIN
SOYBEAN INC. F/K/A VICTORY DIVIDE MINING COMPANY
 
 CONSOLIDATED
BALANCE SHEETS (Continued)
 AS
AT DECEMBER 31, 2007, 2006, 2005 AND 2004
 (Stated
in US Dollars)
 
 Notes
                          
                          2007
                          
                          
                          2006
                          
                          
                          2005
                          
                          
                          2004STOCKHOLDERS’
      EQUITYPreferred
      Stock – $0.001 par value 50,000,000 share authorized
      ;  9,999,999, none, none, and none issued and outstanding as
      of  December 31, 2007, 2006, 2005, and 2004 respectively.
      (Restated)
                          
                          13
                          
                          $
                          10,000
                          
                          
                          $
                          -
                          
                          
                          $
                          -
                          
                          
                          $
                          -Common
      stock - $0.001 par value 100,000,000 shares authorized; 20,000,003,
      18,500,000, 18,500,000,  and 18,500,000 shares issued and
      outstanding as of December 31, 2007, 2006, 2005, and
      2004  respectively. (Restated)
                          
                          14
                          
                          
                          20,000
                          
                          
                          
                          18,500
                          
                          
                          
                          18,500
                          
                          
                          
                          18,500Additional
      paid-in capital (Restated)
                          
                          14
                          
                          
                          38,389,635
                          
                          
                          
                          12,248,936
                          
                          
                          
                          12,228,936
                          
                          
                          
                          12,228,936Statutory
      reserves
                          
                          2(t)
                          
                          
                          3,490,834
                          
                          
                          
                          1,716,827
                          
                          
                          
                          643,236
                          
                          
                          
                          270,697Retained
      earnings (Restated)
                          
                          
                          
                          
                          9,421,860
                          
                          
                          
                          8,860,198
                          
                          
                          
                          3,077,899
                          
                          
                          
                          1,449,363Accumulated
      other comprehensive income (Restated)
                          
                          2(u)
                          
                          
                          3,355,470
                          
                          
                          
                          889,190
                          
                          
                          
                          213,729
                          
                          
                          
                          (184,027
                          )$
                          54,687,799
                          
                          
                          $
                          23,733,651
                          
                          
                          $
                          16,182,300
                          
                          
                          $
                          13,783,469TOTAL
      LIABILITIES AND STOCKHOLDERS’ EQUITY
                          
                          
                          
                          $
                          70,732,531
                          
                          
                          $
                          35,245,747
                          
                          
                          $
                          27,090,833
                          
                          
                          $
                          20,454,198
 
 See notes
to consolidated financial statements
  3
  
 YANGLIN
SOYBEAN INC. F/K/A VICTORY DIVIDE MINING COMPANY
 
 CONSOLIDATED
STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
 FOR
THE YEARS ENDED DECEMBER 31, 2007, 2006, 2005 AND 2004
 (Stated
in US Dollars)
 
 2007
                                  
                                  
                                  2006
                                  
                                  
                                  2005
                                  
                                  
                                  2004NotesNet
      sales (Restated)
                                  
                                  2(l)&19
                                  
                                  $
                                  155,206,867
                                  
                                  
                                  $
                                  88,078,494
                                  
                                  
                                  $
                                  38,430,465
                                  
                                  
                                  $
                                  26,325,611Cost
      of sales
                                  
                                  2(m)&19
                                  
                                  
                                  (142,568,658
                                  )
                                  
                                  
                                  (79,862,179
                                  )
                                  
                                  
                                  (35,132,664
                                  )
                                  
                                  
                                  (24,557,296
                                  )Gross
      profit
                                  
                                  
                                  
                                  $
                                  12,638,209
                                  
                                  
                                  $
                                  8,216,315
                                  
                                  
                                  $
                                  3,297,801
                                  
                                  
                                  $
                                  1,768,315Selling
      expenses
                                  
                                  
                                  
                                  
                                  (146,411
                                  )
                                  
                                  
                                  (63,209
                                  )
                                  
                                  
                                  (43,094
                                  )
                                  
                                  
                                  (54,553
                                  )General
      and administrative expenses (Restated)
                                  
                                  
                                  
                                  
                                  (1,812,450
                                  )
                                  
                                  
                                  (1,078,184
                                  )
                                  
                                  
                                  (1,103,262
                                  )
                                  
                                  
                                  (902,258
                                  )Income
      from continuing operations (Restated)
                                  
                                  
                                  
                                  $
                                  10,679,348
                                  
                                  
                                  $
                                  7,074,922
                                  
                                  
                                  $
                                  2,151,445
                                  
                                  
                                  $
                                  811,504Interest
      expenses, net
                                  
                                  16
                                  
                                  
                                  (394,705
                                  )
                                  
                                  
                                  (219,032
                                  )
                                  
                                  
                                  (150,370
                                  )
                                  
                                  
                                  (100,455
                                  )Other
      income-government grant
                                  
                                  
                                  
                                  
                                  39,385
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  211,168Income
      before taxation
                                  
                                  
                                  
                                  $
                                  10,324,028
                                  
                                  
                                  $
                                  6,855,890
                                  
                                  
                                  $
                                  2,001,075
                                  
                                  
                                  $
                                  922,217Income
      tax
                                  
                                  2(s)&17
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -Net
      income
                                  
                                  
                                  
                                  $
                                  10,324,028
                                  
                                  
                                  $
                                  6,855,890
                                  
                                  
                                  $
                                  2,001,075
                                  
                                  
                                  $
                                  922,217Beneficial
      conversion feature on Series A preferred stock
                                  
                                  
                                  
                                  
                                  (7,988,359
                                  )
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -Net
      income attributable to common shareholders
                                  
                                  
                                  
                                  $
                                  2,335,669
                                  
                                  
                                  $
                                  6,855,890
                                  
                                  
                                  $
                                  2,001,075
                                  
                                  
                                  $
                                  922,217Foreign
      currency translation adjustment (Restated)
                                  
                                  
                                  
                                  
                                  2,466,280
                                  
                                  
                                  
                                  675,461
                                  
                                  
                                  
                                  397,756
                                  
                                  
                                  
                                  398Comprehensive
      income (Restated)
                                  
                                  
                                  
                                  $
                                  4,801,949
                                  
                                  
                                  
                                  7,531,351
                                  
                                  
                                  
                                  2,398,831
                                  
                                  
                                  
                                  922,615Basic
      earnings per share
                                  
                                  15
                                  
                                  $
                                  0.12
                                  
                                  
                                  $
                                  0.34
                                  
                                  
                                  $
                                  0.10
                                  
                                  
                                  $
                                  0.05Diluted
      earnings per share (Restated)
                                  
                                  15
                                  
                                  $
                                  0.07
                                  
                                  
                                  
                                  0.34
                                  
                                  
                                  
                                  0.10
                                  
                                  
                                  
                                  0.05Basic
      weighted average share outstanding
                                  
                                  15
                                  
                                  
                                  19,998,473
                                  
                                  
                                  
                                  19,998,473
                                  
                                  
                                  
                                  19,998,473
                                  
                                  
                                  
                                  19,998,473Diluted
      weighted average share outstanding (Restated)
                                  
                                  15
                                  
                                  
                                  34,003,038
                                  
                                  
                                  
                                  19,998,473
                                  
                                  
                                  
                                  19,998,473
                                  
                                  
                                  
                                  19,998,473
 
 See notes
to consolidated financial statements
  4
 
 YANGLIN
SOYBEAN INC. F/K/A VICTORY DIVIDE MINING COMPANY
 
 CONSOLIDATED
STATEMENTS OF STOCKHOLDERS’ EQUITY
 FOR
THE YEARS ENDED DECEMBER 31, 2007, 2006, 2005 AND 2004
 (Stated
in US Dollars)
 
 AccumulatedCommon stock
                      
                      
                      Additional
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      otherNumber
                      
                      
                      
                      
                      
                      Preferred
                      
                      
                      paid-in
                      
                      
                      Statutory
                      
                      
                      Retained
                      
                      
                      comprehensiveof share
                      
                      
                      Amount
                      
                      
                      stock
                      
                      
                      capital
                      
                      
                      reserves
                      
                      
                      earnings
                      
                      
                      income
                      
                      
                      TotalBal.,
      1/1/2004
                      
                      
                      18,500,000
                      
                      
                      $
                      18,500
                      
                      
                      
                      -
                      
                      
                      
                      12,049,027
                      
                      
                      
                      119,636
                      
                      
                      
                      678,207
                      
                      
                      
                      (184,425
                      )
                      
                      
                      12,680,945Net
      income
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      922,217
                      
                      
                      
                      -
                      
                      
                      
                      922,217Addition
      of capital
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      179,909
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      179,909Appropriations
      to surplus reserves
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      151,061
                      
                      
                      
                      (151,061
                      )
                      
                      
                      -
                      
                      
                      
                      -Foreign
      currency adjustment
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      398
                      
                      
                      
                      398Bal.,
      12/31/2004
                      
                      
                      18,500,000
                      
                      
                      $
                      18,500
                      
                      
                      
                      -
                      
                      
                      
                      12,228,936
                      
                      
                      
                      270,697
                      
                      
                      
                      1,449,363
                      
                      
                      
                      (184,027
                      )
                      
                      
                      13,783,469Bal.,
      1/1/2005
                      
                      
                      18,500,000
                      
                      
                      $
                      18,500
                      
                      
                      
                      -
                      
                      
                      
                      12,228,936
                      
                      
                      
                      270,697
                      
                      
                      
                      1,449,363
                      
                      
                      
                      (184,027
                      )
                      
                      
                      13,783,469Net
      income
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      2,001,075
                      
                      
                      
                      -
                      
                      
                      
                      2,001,075Appropriations
      to surplus reserves
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      372,539
                      
                      
                      
                      (372,539
                      )
                      
                      
                      -
                      
                      
                      
                      -Foreign
      currency adjustment
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      397,756
                      
                      
                      
                      397,756Bal.,
      12/31/2005
                      
                      
                      18,500,000
                      
                      
                      $
                      18,500
                      
                      
                      
                      -
                      
                      
                      
                      12,228,936
                      
                      
                      
                      643,236
                      
                      
                      
                      3,077,899
                      
                      
                      
                      213,729
                      
                      
                      
                      16,182,300Bal.,
      1/1/2006
                      
                      
                      18,500,000
                      
                      
                      $
                      18,500
                      
                      
                      
                      -
                      
                      
                      
                      12,228,936
                      
                      
                      
                      643,236
                      
                      
                      
                      3,077,899
                      
                      
                      
                      213,729
                      
                      
                      
                      16,182,300Net
      income
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      6,855,890
                      
                      
                      
                      -
                      
                      
                      
                      6,855,890Addition
      of capital
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      20,000
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      20,000Appropriations
      to surplus reserves
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      1,073,591
                      
                      
                      
                      (1,073,591
                      )
                      
                      
                      -
                      
                      
                      
                      -Foreign
      currency adjustment
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      675,461
                      
                      
                      
                      675,461Bal.,
      12/31/2006
                      
                      
                      18,500,000
                      
                      
                      $
                      18,500
                      
                      
                      
                      -
                      
                      
                      
                      12,248,936
                      
                      
                      
                      1,716,827
                      
                      
                      
                      8,860,198
                      
                      
                      
                      889,190
                      
                      
                      
                      23,733,651Bal.,
      1/1/2007
                      
                      
                      18,500,000
                      
                      
                      $
                      18,500
                      
                      
                      
                      -
                      
                      
                      
                      12,248,936
                      
                      
                      
                      1,716,827
                      
                      
                      
                      8,860,198
                      
                      
                      
                      889,190
                      
                      
                      
                      23,733,651Net
      income
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      10,324,028
                      
                      
                      
                      -
                      
                      
                      
                      10,324,028Reverse
      acquisition
                      
                      
                      1,497,608
                      
                      
                      
                      1,498
                      
                      
                      
                      -
                      
                      
                      
                      (88
                      )
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      1,410Addition
      of capital
                      
                      
                      2,395
                      
                      
                      
                      2
                      
                      
                      
                      10,000
                      
                      
                      
                      26,140,787
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      26,150,789Beneficial
      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
                      
                      
                      
                      2,466,280Bal.,
      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
 
 See notes
to consolidated financial statements
  5
 
 YANGLIN
SOYBEAN INC. F/K/A VICTORY DIVIDE MINING COMPANY
 
 CONSOLIDATED
STATEMENTS OF CASH FLOWS
 FOR
THE YEARS ENDED DECEMBER 31, 2007, 2006, 2005 AND 2004
 (Stated
in US Dollars)
 
 2007
                                  
                                  
                                  2006
                                  
                                  
                                  2005
                                  
                                  
                                  2004Cash
      flows from operating activitiesNet
      income
                                  
                                  $
                                  10,324,028
                                  
                                  
                                  $
                                  6,855,890
                                  
                                  
                                  $
                                  2,001,075
                                  
                                  
                                  $
                                  922,217Depreciation
                                  
                                  
                                  2,028,313
                                  
                                  
                                  
                                  1,461,597
                                  
                                  
                                  
                                  512,370
                                  
                                  
                                  
                                  503,092Amortization
                                  
                                  
                                  78,397
                                  
                                  
                                  
                                  52,827
                                  
                                  
                                  
                                  32,542
                                  
                                  
                                  
                                  27,061Gain
      on disposal of fixed assets
                                  
                                  
                                  (13,048
                                  )
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -Adjustments
      to reconcile net income to netcash
      (used in) provided by operating activities:Accounts
      receivable
                                  
                                  
                                  182,708
                                  
                                  
                                  
                                  353,941
                                  
                                  
                                  
                                  15,498
                                  
                                  
                                  
                                  (77,589
                                  )Inventories
                                  
                                  
                                  (9,712,307
                                  )
                                  
                                  
                                  (1,814,596
                                  )
                                  
                                  
                                  (1,871,350
                                  )
                                  
                                  
                                  3,068,939Advances
      to suppliers
                                  
                                  
                                  (5,508,012
                                  )
                                  
                                  
                                  1,544
                                  
                                  
                                  
                                  4,139
                                  
                                  
                                  
                                  (5,584
                                  )Prepaid
      VAT and other taxes
                                  
                                  
                                  (1,667,452
                                  )
                                  
                                  
                                  (45,954
                                  )
                                  
                                  
                                  (279,892
                                  )
                                  
                                  
                                  470,583Other
      receivables
                                  
                                  
                                  714,295
                                  
                                  
                                  
                                  463,017
                                  
                                  
                                  
                                  (40,972
                                  )
                                  
                                  
                                  35,130Accounts
      payable
                                  
                                  
                                  (730,106
                                  )
                                  
                                  
                                  166,753
                                  
                                  
                                  
                                  (1,244,928
                                  )
                                  
                                  
                                  (1,747,811
                                  )Other
      payables
                                  
                                  
                                  (698,636
                                  )
                                  
                                  
                                  (70,762
                                  )
                                  
                                  
                                  (60,051
                                  )
                                  
                                  
                                  (414,050
                                  )Customers
      deposits
                                  
                                  
                                  152,225
                                  
                                  
                                  
                                  (142,442
                                  )
                                  
                                  
                                  573,510
                                  
                                  
                                  
                                  1,592,010Accrued
      liabilities
                                  
                                  
                                  (16,561
                                  )
                                  
                                  
                                  (13,664
                                  )
                                  
                                  
                                  275,752
                                  
                                  
                                  
                                  (39,553
                                  )Net
      cash provided by/(used in) operating activities
                                  
                                  $
                                  (4,866,156
                                  )
                                  
                                  $
                                  7,268,151
                                  
                                  
                                  $
                                  (82,307
                                  )
                                  
                                  $
                                  4,334,445Cash
      flows from investing activitiesPayment
      of plant and equipment
                                  
                                  
                                  (386,260
                                  )
                                  
                                  
                                  (7,251,862
                                  )
                                  
                                  
                                  (6,578,076
                                  )
                                  
                                  
                                  (199,502
                                  )Sales
      proceeds of plant and equipment
                                  
                                  
                                  55,138
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -Payment
      of construction in progress
                                  
                                  
                                  (11,702,842
                                  )
                                  
                                  
                                  -
                                  
                                  
                                  
                                  (716,540
                                  )
                                  
                                  
                                  (709,226
                                  )Payment
      of land use right
                                  
                                  
                                  120,560
                                  
                                  
                                  
                                  (2,267,341
                                  )
                                  
                                  
                                  (4,023
                                  )
                                  
                                  
                                  (144,784
                                  )Increase
      in restricted cash
                                  
                                  
                                  (500,000
                                  )
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -Net
      cash used in investing activities
                                  
                                  $
                                  (12,413,404
                                  )
                                  
                                  $
                                  (9,519,203
                                  )
                                  
                                  $
                                  (7,298,639
                                  )
                                  
                                  $
                                  (1,053,512
                                  )Cash
      flows from financing activitiesIssue
      of share capital and warrants
                                  
                                  
                                  17,849,093
                                  
                                  
                                  
                                  20,000
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  179,906Bank
      borrowings
                                  
                                  
                                  11,815,365
                                  
                                  
                                  
                                  6,898,366
                                  
                                  
                                  
                                  6,473,013
                                  
                                  
                                  
                                  2,385,598Bank
      loan repayments
                                  
                                  
                                  (6,737,488
                                  )
                                  
                                  
                                  (4,696,050
                                  )
                                  
                                  
                                  (4,713,320
                                  )
                                  
                                  
                                  (2,400,296
                                  )Net
      cash provided by financing activities
                                  
                                  $
                                  22,926,970
                                  
                                  
                                  $
                                  2,222,316
                                  
                                  
                                  $
                                  1,759,693
                                  
                                  
                                  $
                                  165,208Net
      in cash and cash equivalents (used)/sourced
                                  
                                  
                                  5,647,410
                                  
                                  
                                  
                                  (28,736
                                  )
                                  
                                  
                                  (5,621,253
                                  )
                                  
                                  
                                  3,446,141Effect
      of foreign currency translation on cash andcash
      equivalents
                                  
                                  
                                  549,091
                                  
                                  
                                  
                                  95,833
                                  
                                  
                                  
                                  132,223
                                  
                                  
                                  
                                  425Cash
      and cash equivalents–beginning of year
                                  
                                  
                                  3,013,520
                                  
                                  
                                  
                                  2,946,423
                                  
                                  
                                  
                                  8,435,453
                                  
                                  
                                  
                                  4,988,887Cash
      and cash equivalents–end of year
                                  
                                  $
                                  9,210,121
                                  
                                  
                                  $
                                  3,013,520
                                  
                                  
                                  $
                                  2,946,423
                                  
                                  
                                  $
                                  8,435,453Supplementary
      cash flow information:Interest
      received
                                  
                                  $
                                  64,277
                                  
                                  
                                  $
                                  26,715
                                  
                                  
                                  $
                                  5,721
                                  
                                  
                                  $
                                  2,686Interest
      paid
                                  
                                  
                                  457,647
                                  
                                  
                                  
                                  244,723
                                  
                                  
                                  
                                  155,925
                                  
                                  
                                  
                                  103,057
 
 See notes
to consolidated financial statements
  6
 
 YANGLIN
SOYBEAN INC. F/K/A VICTORY DIVIDE MINING COMPANY
 
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 (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 has 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.
 
 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 $210,496. 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, 2006, 2005, and 2004.
 
 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”) including but not
limited to management, loan, purchase option, consignment, trademark licensing,
non-competition, etc. The Consignment Agreements was entered on September 1,
2007, and the other agreements were all signed on September 24, 2007. As a
result of entering the abovementioned agreements, WFOE  deem to
control Yanglin as a Variable Interest Entity as required by FASB Interpretation
No. 46 (revised December 2003) Consolidated 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 oil, soybean salad
oil, and soybean meal throughout the Province of Heilongjiang,
China.
  7
 
 YANGLIN
SOYBEAN INC. F/K/A VICTORY DIVIDE MINING COMPANY
 
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 (Stated
in US Dollars)
 
 2.
                  SUMMARY
      OF SIGNIFICANT ACCOUNTING POLICIES
 
 (a)
                  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 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 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.
 
 The
company owned the three subsidiaries since its reverse-merger on October 3,
2007. Retroactively restated as of December 31, 2006, 2005, and 2004, the
detailed identities of the consolidating subsidiaries would have been as
follows:
 
 Name of Company
                      
                      Place of
                        incorporation
                      
                      Attributable
                        interestFaith
      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
  8
 
 YANGLIN
SOYBEAN INC. F/K/A VICTORY DIVIDE MINING COMPANY
 
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 (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 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 are arranging from 22 to 50
years.
  9
 
 YANGLIN
SOYBEAN INC. F/K/A VICTORY DIVIDE MINING COMPANY
 
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 (Stated
in US Dollars)
 
 2.
                  SUMMARY
      OF SIGNIFICANT ACCOUNTING POLICIES
(Continued)
 
 (f)
                    Property,
      plant and equipment
 
 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
      yearsMachinery
      and equipment
                            
                            3.5
      - 30 yearsOffice
      equipment
                            
                            4 -
      20 yearsMotor
      vehicles
                            
                            10
      years
 
 The
      cost 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 as incurred, whereas significant renewals and betterments are
      capitalized.
 
 (g)
                  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 technology or other
      industry changes.  Determination of recoverability of assets to
      be held and used is by comparing the carrying amount of an asset to future
      net undiscounted cash flows to be generated by the
  assets.
 
 If
      such assets are considered to be impaired, the impairment 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 costs to
      dispose.
 
 During
      the reporting years, there was no known impairment
  loss.
 
 (h)
                  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
      overhead.
  10
 
 YANGLIN
SOYBEAN INC. F/K/A VICTORY DIVIDE MINING COMPANY
 
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 (Stated
in US Dollars)
 
 2.
                  SUMMARY
      OF SIGNIFICANT ACCOUNTING POLICIES
(Continued)
 
 (i)
                    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 in considering with a variety of
      factors, including the length of  past due, significant one-time
      events and the company’s historical experience.  Bad debts are
      written off as incurred.
 
 (j)
                    Cash
      and cash equivalents
 
 The
      Company considers all highly liquidate investments purchased with original
      maturities of three months or less to be cash equivalents. The Company
      maintains bank accounts only in the PRC. The Company does not maintain any
      bank accounts in the United States of
America.
 
 2007
                          
                          
                          2006
                          
                          
                          2005
                          
                          
                          2004Cash
      on hand
                          
                          
                          18,362
                          
                          
                          
                          13,808
                          
                          
                          
                          39,661
                          
                          
                          
                          16,048Industrial
      And Commercial Bank of China
                          
                          
                          -
                          
                          
                          
                          229
                          
                          
                          
                          2,034
                          
                          
                          
                          33,098Agricultural
      Development Bank of China
                          
                          
                          1,362,651
                          
                          
                          
                          448,935
                          
                          
                          
                          371,592
                          
                          
                          
                          -Agricultural
      Bank of China
                          
                          
                          7,829,108
                          
                          
                          
                          2,550,548
                          
                          
                          
                          2,532,726
                          
                          
                          
                          8,385,907Bank
      of China
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          410
                          
                          
                          
                          400
 
 (k)
                  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:
 
 2007
                        
                        
                        2006
                        
                        
                        2005
                        
                        
                        2004Year
      end RMB : USD exchange rate
                        
                        
                        7.31410
                        
                        
                        
                        7.81750
                        
                        
                        
                        8.07340
                        
                        
                        
                        8.28650Average
      yearly RMB : USD exchange rate
                        
                        
                        7.61720
                        
                        
                        
                        7.98189
                        
                        
                        
                        8.20329
                        
                        
                        
                        8.28723
  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.
  11
 
 YANGLIN
SOYBEAN INC. F/K/A VICTORY DIVIDE MINING COMPANY
 
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 (Stated
in US Dollars)
 
 2.
                  SUMMARY
      OF SIGNIFICANT ACCOUNTING POLICIES
(Continued)
 
 (l)
                    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.
 
 (m)
                  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 of inventory to lower of cost or market is
also reflected in cost of revenues.
 
 (n)
                  Leases
 
 The Group
did not have lease which met the criteria of capital lease. Leases which do not
qualify as capital lease are classified as operating lease. Operating lease
rental payment included in general and administrative expenses were nil,$123,822, $113,369 and
$142,388 for the years ended December 31, 2007, 2006, 2005 and 2004
respectively.
 
 (o)
                  Advertising
 
 The Group
expensed all advertising costs as incurred.  Advertising expenses
included in selling expenses were $9,167, $501, $291 and $5,015 for the years
ended December 31, 2007, 2006, 2005 and 2004 respectively.
 
 (p)
                  Shipping
      and handling
 
 All
shipping and handling are expensed as incurred.  Shipping and handling
expenses included in selling expenses were $75,347, $50,446, $28,746, and
$26,055 for the years ended December 31, 2007, 2006, 2005 and 2004
respectively.
 
 (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 $11,815,
nil, nil, and nil for the years ended December 31, 2007, 2006, 2005, and 2004
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 funding included in general and administrative
expenses were $168,535, $72,129, $27,073 and $24,742 for the years ended
December 31, 2007, 2006, 2005 and 2004 respectively.
  12
 
 YANGLIN
SOYBEAN INC. F/K/A VICTORY DIVIDE MINING COMPANY
 
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 (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 income after tax, 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
$2,327,222 and common welfare fund of $1,163,612 as of December 31,
2007.
 
 (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.
  13
  YANGLIN
SOYBEAN INC. F/K/A VICTORY DIVIDE MINING COMPANY
 
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 (Stated
in US Dollars)
 
 2.
                  SUMMARY
      OF SIGNIFICANT ACCOUNTING POLICIES
(Continued)
 
 (v)
                  Recent
      accounting pronouncements
 
 In
September 2006, the FASB issued SFAS 157, Fair Value Measurements, which defines
fair value, establishes a framework for measuring fair value in generally
accepted accounting principles, and expands disclosures about fair value
measurements. SFAS 157 applies under other accounting pronouncements that
require or permit fair value measurements, where fair value is the relevant
measurement attribute. The standard does not require any new fair value
measurements. SFAS 157 is effective for financial statements issued for fiscal
year beginning after November 15, 2007, and interim periods within that fiscal
year. The Company is currently evaluating the impact of SFAS 157 on its
operation and financial conditions.
 
 In
September 2006, the SEC issued SAB No. 108, which provides guidance on the
process of quantifying financial statement misstatements. In SAB No. 108, the
SEC staff establishes an approach that requires quantification of financial
statement errors, under both the iron-curtain and the roll-over methods, based
on the effects of the error on each of the Company’s financial statements and
the related financial statement disclosures. SAB No.108 is generally effective
for annual financial statements in the first fiscal year ending after November
15, 2006. The transition provisions of SAB No. 108 permit existing public
companies to record the cumulative effect in the first year ending after
November 15, 2006 by recording correcting adjustments to the carrying values of
assets and liabilities as of the beginning of that year with the offsetting
adjustment recorded to the opening balance of retained earnings. The Company
does not anticipate that the adoption of this standard will have a material
impact on these consolidated financial statements
 
 In
February 2007, FASB issued Statement of Financial Accounting Standards No.
(“SFAS”) 159, “The Fair Value Option for Financial Assets and Financial
Liabilities - Including an Amendment of FASB Statement No. 115” (“SFAS 159”).
SFAS 159 permits entities to choose to measure many financial instruments and
certain other items at fair value. Entities that elect the fair value option
will report unrealized gains and losses in earnings at each subsequent reporting
date. The fair value option may be elected on an instrument-by-instrument basis,
with a few exceptions. SFAS 159 also establishes presentation and disclosure
requirements to facilitate comparisons between entities that choose different
measurement attributes for similar assets and liabilities. The requirements of
SFAS 159 are effective for our fiscal year beginning on January 1,
2008.
 The
Company does not anticipate that the adoption of this standard will have a
material impact on these consolidated financial statements.
 
 In
December 2007, the SEC issued Staff Accounting Bulletin No. 110 (“SAB
110”).   SAB 110 permits companies to continue to use the
simplified method, under certain circumstances, in estimating the expected term
of “plain vanilla” options beyond December 31, 2007.  SAB 110 updates
guidance provided in SAB 107 that previously stated that the Staff would not
expect a company to use the simplified method for share option grants after
December 31, 2007. Adoption of SAB 110 is not expected to have a material impact
on the Company’s consolidated financial statements
  14
  YANGLIN
SOYBEAN INC. F/K/A VICTORY DIVIDE MINING COMPANY
 
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 (Stated
in US Dollars)
 
 2.
                  SUMMARY
      OF SIGNIFICANT ACCOUNTING POLICIES
(Continued)
 
 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.
  15
 
 YANGLIN
SOYBEAN INC. F/K/A VICTORY DIVIDE MINING COMPANY
 
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 (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, 2007, 2006, 2005,
and 2004. 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, 2007, 2006, 2005, and 2004, 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, 2007, 2006, 2005, and 2004, all of the Group’s sales
were generated from the PRC. In addition, all accounts receivable as of December
31, 2007, 2006, 2005, and 2004 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.
 
 Details
of the customer account for 10% or more of the Group’s revenue are as
follows:
 
 Year ended December 31,2007
                          
                          
                          2006
                          
                          
                          2005
                          
                          
                          2004Customer
      A
                          
                          $
                          9,067,445
                          
                          
                          $
                          -
                          
                          
                          $
                          -
                          
                          
                          $
                          -
 
 Details
of customer account for 10% or more of the Group’s accounts receivable are as
follows:
 
 December 31,2007
                          
                          
                          2006
                          
                          
                          2005
                          
                          
                          2004Customer
      B
                          
                          $
                          7,928
                          
                          
                          $
                          -
                          
                          
                          $
                          -
                          
                          
                          $
                          -Customer
      C
                          
                          
                          7,140
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          -Customer
      D
                          
                          
                          -
                          
                          
                          
                          81,361
                          
                          
                          
                          -
                          
                          
                          
                          -Customer
      E
                          
                          
                          -
                          
                          
                          
                          111,317
                          
                          
                          
                          -
                          
                          
                          
                          -Customer
      F
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          63,631
                          
                          
                          
                          -Customer
      G
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          363,146
                          
                          
                          
                          358,222
 
 4.
                  PLEDGED
      DEPOSITS
 
 Pledged
deposits are restricted cash with banks for operating security
purpose.
  16
 
 YANGLIN
SOYBEAN INC. F/K/A VICTORY DIVIDE MINING COMPANY
 
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 (Stated
in US Dollars)
 
 5.
                  TRADE
      RECEIVABLES, NET
 
 Details
of trade receivables are as follows:
 2007
                          
                          
                          2006
                          
                          
                          2005
                          
                          
                          2004Trade
      receivables, gross
                          
                          $
                          15,067
                          
                          
                          $
                          192,678
                          
                          
                          $
                          537,336
                          
                          
                          $
                          539,000Provision
      for doubtful debts
                          
                          
                          (1,213
                          )
                          
                          
                          (1,689
                          )
                          
                          
                          (2,470
                          )
                          
                          
                          (2,548
                          )$
                          13,854
                          
                          
                          $
                          190,989
                          
                          
                          $
                          534,866
                          
                          
                          $
                          536,452
 
 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,
2007, 2006, 2005 and 2004 is as follows:
 2007
                        
                        
                        2006
                        
                        
                        2005
                        
                        
                        2004Balance
      at beginning of year
                        
                        $
                        1,689
                        
                        
                        $
                        2,470
                        
                        
                        $
                        2,548
                        
                        
                        $
                        2,306Addition/(reduction)
      of bad debt expense
                        
                        
                        (569
                        )
                        
                        
                        (844
                        )
                        
                        
                        (143
                        )
                        
                        
                        242Foreign
      exchange adjustment
                        
                        
                        93
                        
                        
                        
                        63
                        
                        
                        
                        65
                        
                        
                        
                        -Balance
      at end of year
                        
                        $
                        1,213
                        
                        
                        $
                        1,689
                        
                        
                        
                        2,470
                        
                        
                        
                        2,548
  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.
 
 6.
                  OTHER
      RECEIVABLES
 
 Details
of other receivables are as follows:
  2007
                                
                                
                                2006
                                
                                
                                2005
                                
                                
                                2004Advances
      to employees for purchasing materials
                                
                                $
                                14,108
                                
                                
                                $
                                89,570
                                
                                
                                $
                                492,088
                                
                                
                                $
                                258,527Advances
      for traveling
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                54,820
                                
                                
                                
                                44,627Loans
      to employees
                                
                                
                                9,777
                                
                                
                                
                                14,176
                                
                                
                                
                                10,163
                                
                                
                                
                                213,550Sundry
                                
                                
                                4,011
                                
                                
                                
                                21,021
                                
                                
                                
                                20,425
                                
                                
                                
                                3,850$
                                27,896
                                
                                
                                $
                                124,767
                                
                                
                                $
                                577,496
                                
                                
                                $
                                520,554
  Loans to
employees are unsecured, interest-free, and repayable on demand.
 
 7.
                  INVENTORIES
 
 Inventories
comprise the followings:
 2007
                        
                        
                        2006
                        
                        
                        2005
                        
                        
                        2004Finished
      goods
                        
                        $
                        537,360
                        
                        
                        $
                        3,106,642
                        
                        
                        $
                        718,697
                        
                        
                        $
                        1,318,048Raw
      materials
                        
                        
                        17,346,292
                        
                        
                        
                        4,161,952
                        
                        
                        
                        4,525,492
                        
                        
                        
                        1,938,707$
                        17,883,652
                        
                        
                        $
                        7,268,594
                        
                        
                        $
                        5,244,189
                        
                        
                        $
                        3,256,755
  17
 
 YANGLIN
SOYBEAN INC. F/K/A VICTORY DIVIDE MINING COMPANY
 
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 (Stated
in US Dollars)
 
 8.     PROPERTY,
PLANT AND EQUIPMENT, NET
 
 Property,
plant and equipment comprise the followings:
  2007
                                
                                
                                2006
                                
                                
                                2005
                                
                                
                                2004At
      costBuilding
                                
                                $
                                7,060,690
                                
                                
                                $
                                6,602,826
                                
                                
                                $
                                1,679,186
                                
                                
                                $
                                1,620,385Machinery
      and equipment
                                
                                
                                17,900,662
                                
                                
                                
                                16,709,858
                                
                                
                                
                                11,179,178
                                
                                
                                
                                4,548,975Office
      equipment
                                
                                
                                134,060
                                
                                
                                
                                110,394
                                
                                
                                
                                106,896
                                
                                
                                
                                91,942Motor
      vehicles
                                
                                
                                1,054,995
                                
                                
                                
                                708,048
                                
                                
                                
                                638,389
                                
                                
                                
                                480,454$
                                26,150,407
                                
                                
                                $
                                24,131,126
                                
                                
                                $
                                13,603,649
                                
                                
                                $
                                6,741,756Less:
      accumulateddepreciation
                                
                                
                                (5,931,919
                                )
                                
                                
                                (3,573,595
                                )
                                
                                
                                (2,015,299
                                )
                                
                                
                                (1,456,242
                                )$
                                20,218,488
                                
                                
                                $
                                20,557,531
                                
                                
                                $
                                11,588,350
                                
                                
                                $
                                5,285,514Construction
      in progress
                                
                                
                                2,344,708
                                
                                
                                
                                -
                                
                                
                                
                                4,057,815
                                
                                
                                
                                892,104$
                                22,563,196
                                
                                
                                $
                                20,557,531
                                
                                
                                $
                                15,646,165
                                
                                
                                $
                                6,177,618
 
 As of
December 31, 2007, building with net book value of $3,135,292 and machinery and
equipment with net book value of $5,190,309 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:
  2007
                                
                                
                                2006
                                
                                
                                2005
                                
                                
                                2004Cost
      of sales
                                
                                $
                                1,686,129
                                
                                
                                $
                                1,158,120
                                
                                
                                $
                                420,381
                                
                                
                                $
                                430,279General
      and administrativeexpenses
                                
                                
                                342,184
                                
                                
                                
                                303,477
                                
                                
                                
                                91,989
                                
                                
                                
                                72,813$
                                2,028,313
                                
                                
                                $
                                1,461,597
                                
                                
                                $
                                512,370
                                
                                
                                $
                                503,092
 
 Construction
in progress 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.  Capital commitments in respect of these projects are $6,199,515
at December 31, 2007.
 
 Construction
in progress mainly comprises capital expenditures for construction of the
Group’s corporate campus, including offices, factories and staff
dormitories.
  18
 
 YANGLIN
SOYBEAN INC. F/K/A VICTORY DIVIDE MINING COMPANY
 
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 (Stated
in US Dollars)
 
 9.     INTANGIBLE
ASSETS, NET
 
 Intangible
assets are as follows:
  2007
                        
                        
                        2006
                        
                        
                        2005
                        
                        
                        2004Land
      use rights, at cost
                        
                        $
                        3,743,422
                        
                        
                        $
                        3,619,839
                        
                        
                        $
                        1,263,465
                        
                        
                        $
                        1,230,970Less:
      accumulated amortization
                        
                        
                        (299,341
                        )
                        
                        
                        (203,677
                        )
                        
                        
                        (144,994
                        )
                        
                        
                        (113,032
                        )$
                        3,444,081
                        
                        
                        $
                        3,416,162
                        
                        
                        $
                        1,118,471
                        
                        
                        $
                        1,117,938
 
 Amortization
expenses included in the costs of sales for the years ended December 31, 2007,
2006, 2005, and 2004 were $78,397, $52,827, $32,542, and $27,061, respectively.
Estimated amortization expense for the next five years is approximately $81,646
each year.
 
 As of
December 31, 2007, land use rights with net book value of $1,233,393 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:
  2007
                                              
                                              
                                              2006
                                              
                                              
                                              2005
                                              
                                              
                                              2004Loans
      from Agricultural DevelopmentBank
      of China, interest rates at 7.02%per
      annum, due August 29, 2008
                                              
                                              $
                                              8,203,333
                                              
                                              
                                              $
                                              -
                                              
                                              
                                              $
                                              -
                                              
                                              
                                              $
                                              -Loans
      from Agricultural DevelopmentBank
      of China, interest rates at 7.29%per
      annum, due November 21, 2008
                                              
                                              
                                              4,101,667
                                              
                                              
                                              
                                              -
                                              
                                              
                                              
                                              -
                                              
                                              
                                              
                                              -Loans
      from Agricultural DevelopmentBank
      of China, interest rates at 6.12%per
      annum, due June 29, 2007
                                              
                                              
                                              -
                                              
                                              
                                              
                                              6,523,825Loans
      from Industrial AndCommercial
      Bank of China, interestrates
      at 7.25% per annum, dueSeptember
      18, 2006
                                              
                                              
                                              -
                                              
                                              
                                              
                                              -
                                              
                                              
                                              
                                              619,319
                                              
                                              
                                              
                                              2,353,226Loans
      from County Deposit Centre
                                                interest
      rates at 7.25% per annum,due
      November 9, 2005
                                              
                                              
                                              -
                                              
                                              
                                              
                                              -
                                              
                                              
                                              
                                              -
                                              
                                              
                                              
                                              32,583
  19
  YANGLIN
SOYBEAN INC. F/K/A VICTORY DIVIDE MINING COMPANY
 
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 (Stated
in US Dollars)
 
 10.  SHORT-TERM
BANK LOANS (Continued)
 
 2007
                                  
                                  
                                  2006
                                  
                                  
                                  2005
                                  
                                  
                                  2004Loans
      from Industrial AndCommercial
      Bank of China, interestrates
      at 5.58% per annum, dueDecember
      1, 2006
                                  
                                  $
                                  -
                                  
                                  
                                  $
                                  -
                                  
                                  
                                  $
                                  -
                                  
                                  
                                  $
                                  39,670Loans
      from Agricultural DevelopmentBank
      of China, interest rates at 5.22%per
      annum, due April 12, 2006
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  3,715,916
                                  
                                  
                                  
                                  -$
                                  12,305,000
                                  
                                  
                                  $
                                  6,523,825
                                  
                                  
                                  $
                                  4,335,235
                                  
                                  
                                  $
                                  2,425,479
 
 Interest
paid for the years ended December 31, 2007, 2006, 2005, and 2004 were $415,632,
$223,296, $142,951, and $92,918, respectively.
 
 11. 
OTHER PAYABLES
 
 Other
payables are as follows:
 
 2007
                        
                        
                        2006
                        
                        
                        2005
                        
                        
                        2004Due
      for employees
                        
                        $
                        10,670
                        
                        
                        $
                        9,982
                        
                        
                        $
                        67,889
                        
                        
                        $
                        54,545Subsidy
      loan from government
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        69,993Sundry
                        
                        
                        33,710
                        
                        
                        
                        14,781
                        
                        
                        
                        26,051
                        
                        
                        
                        26,434$
                        44,380
                        
                        
                        $
                        24,763
                        
                        
                        $
                        93,940
                        
                        
                        $
                        150,972
 
 Due for
employees are unsecured, interest-free, and repayable on demand. They are travel
and expenses reimbursements.
 
 Subsidy
loan from government are unsecured, interest-free and due on April 30,
2005.
  20
  
 YANGLIN
SOYBEAN INC. F/K/A VICTORY DIVIDE MINING COMPANY
 
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 (Stated
in US Dollars)
 
 12.  LONG-TERM
BANK LOANS
 
 Long-term
bank loans are as follows:
 2007
                                    
                                    
                                    2006
                                    
                                    
                                    2005
                                    
                                    
                                    2004Loans
      from IndustrialAnd
      Commercial Bank of China,interest
      rates at 8.892% per annum,with
      various installments, finaldue
      October 28, 2016
                                    
                                    $
                                    504,540
                                    
                                    
                                    $
                                    513,086
                                    
                                    
                                    $
                                    301,287
                                    
                                    
                                    $
                                    349,774Current
      portion due within one year
                                    
                                    
                                    (47,433
                                    )
                                    
                                    
                                    (51,309
                                    )
                                    
                                    
                                    (27,390
                                    )
                                    
                                    
                                    (29,149
                                    )$
                                    457,107
                                    
                                    
                                    $
                                    461,777
                                    
                                    
                                    $
                                    273,897
                                    
                                    
                                    $
                                    320,625
 
 All of
the installments due in 2007 were paid on their due dates.  Interest
paid for the years ended December 31, 2007, 2006, 2005, and 2004 were $42,015,
$21,427, $12,974, and $10,139, respectively.
 
 The
future principal payments under the bank loans as of December 31, 2007 are as
follows:
 
 Year2008
                        
                        $
                        47,4332009
                        
                        
                        50,9792010
                        
                        
                        54,5232011
                        
                        
                        58,0672012
                        
                        
                        61,611Thereafter
                        
                        
                        231,927$
                        504,540
  21
 
 YANGLIN
SOYBEAN INC. F/K/A VICTORY DIVIDE MINING COMPANY
 
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 (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
      termSeries
      A
                      
                      10,000,000
                      
                      $
                      2.75
                      
                      5.00
      yearsSeries
      B
                      
                      5,000,000
                      
                      $
                      3.50
                      
                      5.00
      yearsSeries
      J
                      
                      7,801,268
                      
                      $
                      2.37
                      
                      1.50
      yearsSeries
      C
                      
                      7,801,268
                      
                      $
                      3.03
                      
                      5.00
      yearsSeries
      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. F/K/A VICTORY DIVIDE MINING COMPANY
 
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 (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.
The new capital structure will be retroactively restated in the consolidated
balance sheet as of December 31, 2007, 2006, 2005 and 2004.
  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:
 
 2007
                                                
                                                
                                                2006
                                                
                                                
                                                2005
                                                
                                                
                                                2004Earnings:Net
      income
                                                
                                                $
                                                10,324,028
                                                
                                                
                                                $
                                                6,855,890
                                                
                                                
                                                $
                                                2,001,075
                                                
                                                
                                                $
                                                922,217Beneficial
      conversion feature on Series Apreferred
      stock
                                                
                                                
                                                (7,988,359
                                                )
                                                
                                                
                                                -
                                                
                                                
                                                
                                                -
                                                
                                                
                                                
                                                -Net
      income attributable to commonshareholders
                                                
                                                $
                                                2,335,669
                                                
                                                
                                                $
                                                6,855,890
                                                
                                                
                                                $
                                                2,001,075
                                                
                                                
                                                $
                                                922,217Number
      of shares:Weighted
      average number ofcommon
      stock for the purpose of basicearnings
      per share
                                                
                                                
                                                19,998,473
                                                
                                                
                                                
                                                19,998,473
                                                
                                                
                                                
                                                19,998,473
                                                
                                                
                                                
                                                19,998,473Effect
      of dilutive potential commonstock
      - conversion of convertiblepreferred
      stock
                                                
                                                
                                                9,999,999
                                                
                                                
                                                
                                                -
                                                
                                                
                                                
                                                -
                                                
                                                
                                                
                                                -Effect
      of dilutive potential commonstock
      - conversion of warrants
                                                
                                                
                                                4,004,566
                                                
                                                
                                                
                                                -
                                                
                                                
                                                
                                                -
                                                
                                                
                                                
                                                -Weighted
      average number of commonstock
      for the purpose of dilutiveearnings
      per share
                                                
                                                
                                                34,003,038
                                                
                                                
                                                
                                                19,998,473
                                                
                                                
                                                
                                                19,998,473
                                                
                                                
                                                
                                                19,998,473Earnings
      per shareBasic
      earnings per share
                                                
                                                
                                                0.12
                                                
                                                
                                                
                                                0.34
                                                
                                                
                                                
                                                0.10
                                                
                                                
                                                
                                                0.05Dilutive
      earnings per share
                                                
                                                
                                                0.07
                                                
                                                
                                                
                                                0.34
                                                
                                                
                                                
                                                0.10
                                                
                                                
                                                
                                                0.05
  23
 
 YANGLIN
SOYBEAN INC. F/K/A VICTORY DIVIDE MINING COMPANY
 
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 (Stated
in US Dollars)
 
 16.  INTEREST
EXPENSES, NET
 
 Interest
expenses, net for the years ended December 31, 2007, 2006, 2005 and 2004 are as
follows:
 
 2007
                                      
                                      
                                      2006
                                      
                                      
                                      2005
                                      
                                      
                                      2004Interests
      on bank borrowings
                                      
                                      $
                                      457,647
                                      
                                      
                                      $
                                      244,723
                                      
                                      
                                      $
                                      155,925
                                      
                                      
                                      $
                                      103,057Bank
      charges
                                      
                                      
                                      1,335
                                      
                                      
                                      
                                      1,024
                                      
                                      
                                      
                                      166
                                      
                                      
                                      
                                      84Bank
      deposit interest income
                                      
                                      
                                      (64,277
                                      )
                                      
                                      
                                      (26,715
                                      )
                                      
                                      
                                      (5,721
                                      )
                                      
                                      
                                      (2,686
                                      )$
                                      394,705
                                      
                                      
                                      $
                                      219,032
                                      
                                      
                                      $
                                      150,370
                                      
                                      
                                      $
                                      100,455
 
 17.
 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. Pursuant to the PRC Income Tax Laws, Enterprise Income
Taxes (“EIT”) is generally imposed at a statutory rate of 33%, which comprises
30% national income tax and 3% local income tax.
 
 However,
Yanglin has been named as a leading enterprise in the agricultural area and
awarded with a tax exemption for the years up to 2008.  After 2008,
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:
 
 2007
                            
                            
                            2006
                            
                            
                            2005
                            
                            
                            2004U.S.
      statutory rate
                            
                            
                            34
                            %
                            
                            
                            34
                            %
                            
                            
                            34
                            %
                            
                            
                            34
                            %Foreign
      income not recognized in the U.S.
                            
                            
                            (34
                            )%
                            
                            
                            (34
                            )%
                            
                            
                            (34
                            )%
                            
                            
                            (34
                            )%PRC
      Enterprise Income Tax
                            
                            
                            33
                            %
                            
                            
                            33
                            %
                            
                            
                            33
                            %
                            
                            
                            33
                            %Tax
      exemption
                            
                            
                            (33
                            )%
                            
                            
                            (33
                            )%
                            
                            
                            (33
                            )%
                            
                            
                            (33
                            )%Provision
      for income tax
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            -
 
 (b)
                  For
      2004 to 2007, the PRC corporate income tax rate was 33%. Heilongjiang
      Yanglin Soybean Group Co., Ltd are entitled to tax exemptions (tax
      holidays) for 2004 to 2007.
 
 Income
before income tax expenses of $10,324,028, $6,855,890, $2,001,075, and $922,217
for 2007, 2006, 2005, and 2004 respectively, was attributed to subsidiaries with
operations in China. Income tax (benefit) expense related to China income for
2007, 2006, 2005, and 2004 are nil, nil, nil, and nil,
respectively.
  24
 
 YANGLIN
SOYBEAN INC. F/K/A VICTORY DIVIDE MINING COMPANY
 
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 (Stated
in US Dollars)
 
 17.  INCOME
TAXES (Continued)
 
 The
combined effects of the income tax expense exemptions and reductions available
to the Company for the years ended December 31, 2007, 2006, 2005, and 2004 are
as follows:
 
 2007
                        
                        
                        2006
                        
                        
                        2005
                        
                        
                        2004Tax
      holiday effect
                        
                        $
                        3,406,929
                        
                        
                        
                        2,262,444
                        
                        
                        
                        660,355
                        
                        
                        
                        304,332Basic
      net income per share effect
                        
                        
                        0.17
                        
                        
                        
                        0.12
                        
                        
                        
                        0.04
                        
                        
                        
                        0.02
 
 18.  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.
  25
 
 YANGLIN
SOYBEAN INC. F/K/A VICTORY DIVIDE MINING COMPANY
 
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 (Stated
in US Dollars)
 
 19.  SALES
BY PRODUCTS
 
 The
Company operates in one business segment, manufacturing, distribution, and
selling of non-genetically modified soybean oil, soybean salad oil, and soybean
meal throughout the Province of Heilongjiang, China.
 
 Originally,
the Group has four product types. Since 2006, Soybean trading was ceased. For
the years ended December 31, 2007, 2006, 2005 and 2004, the Group’s net sales
and cost of sales from these four product types, soybean meal, soybean oil,
soybean and salad oil products are shown as follows:
 
 2007
                            
                            Soybean
                            
                            
                            Soybeanmeal
                            
                            
                            oil
                            
                            
                            Soybean
                            
                            
                            Salad
      oil
                            
                            
                            ConsolidatedNet
      sales
                            
                            
                            92,563,442
                            
                            
                            
                            47,071,641
                            
                            
                            
                            -
                            
                            
                            
                            15,571,784
                            
                            
                            
                            155,206,867Cost
      of sales
                            
                            
                            (86,654,275
                            )
                            
                            
                            (42,075,631
                            )
                            
                            
                            -
                            
                            
                            
                            (13,838,752
                            )
                            
                            
                            (142,568,658
                            )Segment
      result
                            
                            
                            5,909,167
                            
                            
                            
                            4,996,010
                            
                            
                            
                            -
                            
                            
                            
                            1,733,032
                            
                            
                            
                            12,638,209
 
 2006
                        
                        Soybean
                        
                        
                        Soybeanmeal
                        
                        
                        oil
                        
                        
                        Soybean
                        
                        
                        Salad
      oil
                        
                        
                        ConsolidatedNet
      sales
                        
                        
                        58,770,932
                        
                        
                        
                        22,149,399
                        
                        
                        
                        -
                        
                        
                        
                        7,158,163
                        
                        
                        
                        88,078,494Cost
      of sales
                        
                        
                        (53,256,342
                        )
                        
                        
                        (20,080,631
                        )
                        
                        
                        -
                        
                        
                        
                        (6,525,206
                        )
                        
                        
                        (79,862,179
                        )Segment
      result
                        
                        
                        5,514,590
                        
                        
                        
                        2,068,768
                        
                        
                        
                        -
                        
                        
                        
                        632,957
                        
                        
                        
                        8,216,315
 
 2005
                          
                          Soybean
                          
                          
                          Soybeanmeal
                          
                          
                          oil
                          
                          
                          Soybean
                          
                          
                          Salad
      oil
                          
                          
                          ConsolidatedNet
      sales
                          
                          
                          25,762,803
                          
                          
                          
                          11,420,786
                          
                          
                          
                          194,008
                          
                          
                          
                          1,052,868
                          
                          
                          
                          38,430,465Cost
      of sales
                          
                          
                          (23,541,691
                          )
                          
                          
                          (10,409,603
                          )
                          
                          
                          (197,274
                          )
                          
                          
                          (984,096
                          )
                          
                          
                          (35,132,664
                          )Segment
      result
                          
                          
                          2,221,112
                          
                          
                          
                          1,011,183
                          
                          
                          
                          (3,266
                          )
                          
                          
                          68,772
                          
                          
                          
                          3,297,801
 
 2004
                        
                        Soybean
                        
                        
                        Soybeanmeal
                        
                        
                        oil
                        
                        
                        Soybean
                        
                        
                        Salad
      oil
                        
                        
                        ConsolidatedNet
      sales
                        
                        
                        17,069,225
                        
                        
                        
                        7,153,854
                        
                        
                        
                        834,659
                        
                        
                        
                        1,267,873
                        
                        
                        
                        26,325,611Cost
      of sales
                        
                        
                        (15,849,872
                        )
                        
                        
                        (6,980,263
                        )
                        
                        
                        (728,516
                        )
                        
                        
                        (998,645
                        )
                        
                        
                        (24,557,296
                        )Segment
      result
                        
                        
                        1,219,353
                        
                        
                        
                        173,591
                        
                        
                        
                        106,143
                        
                        
                        
                        269,228
                        
                        
                        
                        1,768,315
  26
 
 YANGLIN
SOYBEAN INC. F/K/A VICTORY DIVIDE MINING COMPANY
 
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 (Stated
in US Dollars)
 
 20.  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 includes 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. F/K/A VICTORY DIVIDE MINING COMPANY
 
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 (Stated
in US Dollars)
 
 21.  RESTATEMENT
 
 In the
course of the SEC review of registration statements on Form S-1 and Form S-1/A
(File Nos. 333-150822), we restated our annual report on March 29, 2008 for the
fiscal years ended December 31, 2007, 2006, 2005, and 2004. Our consolidated
balance sheets as of December 31, 2007, 2006, 2005, and 2004, our consolidated
statements of income, our consolidated statements of cash flows and our
consolidated statements of changes in shareholders’ equity for the fiscal years
ended December 31, 2007, 2006, 2005, and 2004, and also extended or modified
certain notes to here consolidated financial statements. This restatement arose
relating to: (1) the incorrect accounting treatment on the reverse acquisition
including incorrect number of shares recorded as exchange for all the shares of
Faith Winner Investments Limited, and the accumulated deficits had not been put
into the additional paid-in capital. The impacts of the above have made the
changes in figures as of December 31, 2007 by a decrease in additional paid-in
capital by $88, and an increase of accumulated other comprehensive income by
$88. The impacts of the above have made the changes in figures as of December
31, 2006, 2005, and 2004, by a decrease in share capital by $1,500, and an
increase of additional paid-in capital by $1,500. (2) the inappropriate
classification of the gain on disposal of fixed assets as other income. The
impacts of the above have made the changes in figures as of December 31, 2007 by
a decrease in other income by $13,048, and a decrease of general &
administrative expenses by $13,048. (3) the omission of recognition of the
beneficial conversion feature of convertible preferred stock as dividends. The
impacts of the above have made the changes in figures as of December 31, 2007 by
an increase in additional paid in capital and decrease in retained earnings by
$7,988,359. Also the amount of earnings for purpose of basic earnings per share
decreased as $2,335,669. (4) the omission of recognition of the effect of
dilutive potential common stock by conversion of warrants. The impacts of the
above have made the changes in figures as of December 31, 2007 by an increase in
weighted average number of common stock for the purpose of dilutive earnings per
share by 4,006,096, and a decrease of dilutive earnings per share by $0.275.
(5)  the amount of preferred stock was not stated at par value. The
impacts of the above have made the changes in figures as of December 31, 2007 by
an increase in additional paid-in capital and decrease in preferred stock by
$2,913,815.
  28
 
 YANGLIN SOYBEAN
INC.
 
 BALANCE
SHEETS
 
 Original
                            
                            
                            RestatedDecember 31,2007
                            
                            
                            2007STOCKHOLDERS’
      EQUITYPreferred
      stock – $0.001 par value50,000,000
      share authorized ; 9,999,999 issuedand
      outstanding as of December 31, 2007
                            
                            $
                            2,923,815
                            
                            
                            $
                            10,000Additional
      paid-in capital
                            
                            
                            27,487,549
                            
                            
                            
                            38,389,635Retained
      earnings
                            
                            
                            17,410,219
                            
                            
                            
                            9,421,860Accumulated
      other comprehensive income
                            
                            
                            3,355,382
                            
                            
                            
                            3,355,470
 
 Original
                              
                              
                              RestatedDecember
      31,2006
                              
                              
                              2006STOCKHOLDERS’
      EQUITYCommon
      stock - $0.001 par value100,000,000
      shares authorized; 18,500,000shares
      issued and outstanding as of December 31,2006
                              
                              $
                              20,000
                              
                              
                              $
                              18,500Additional
      paid-in capital
                              
                              
                              12,247,436
                              
                              
                              
                              12,248,936
  29
 
 YANGLIN SOYBEAN
INC.
 
 BALANCE SHEETS
(Continued)
 
 Original
                                    
                                    
                                    RestatedDecember
      31,2005
                                    
                                    
                                    2005STOCKHOLDERS’
      EQUITYCommon
      stock - $0.001 par value100,000,000
      shares authorized; 18,500,000shares
      issued and outstanding as of December 31,2005
                                    
                                    $
                                    20,000
                                    
                                    
                                    $
                                    18,500Additional
      paid-in capital
                                    
                                    
                                    12,227,436
                                    
                                    
                                    
                                    12,228,936
 
 Original
                                            
                                            
                                            RestatedDecember
      31,2004
                                            
                                            
                                            2004STOCKHOLDERS’
      EQUITYCommon
      stock - $0.001 par value100,000,000
      shares authorized; 18,500,000shares
      issued and outstanding as of December 31,2004
                                            
                                            $
                                            20,000
                                            
                                            
                                            $
                                            18,500Additional
      paid-in capital
                                            
                                            
                                            12,227,436
                                            
                                            
                                            
                                            12,228,936
 
  30
 
 YANGLIN SOYBEAN
INC.
 
 STATEMENTS OF
INCOME
 
 Original
                      
                      
                      RestatedFor Year Ended December 31,2007
                      
                      
                      2007General
      and administrative expenses
                      
                      $
                      (1,825,498
                      )
                      
                      $
                      (1,812,450
                      )Income
      from continuing operations
                      
                      
                      10,666,300
                      
                      
                      
                      10,679,348Other
      income-gain on disposal of fixed assets
                      
                      
                      13,048
                      
                      
                      
                      -Foreign
      currency translation adjustment
                      
                      
                      2,466,192
                      
                      
                      
                      2,466,280Comprehensive
      income
                      
                      
                      12,790,220
                      
                      
                      
                      4,801,949Basic
      earnings per share
                      
                      
                      -
                      
                      
                      
                      0.12Diluted
      earnings per share
                      
                      
                      0.34
                      
                      
                      
                      0.07Diluted
      weighted average share outstanding
                      
                      
                      29,998,472
                      
                      
                      
                      34,004,568
  31
 
 YANGLIN SOYBEAN
INC.
 
 STATEMENTS OF
INCOME
 
 Original
                      
                      
                      RestatedFor Year Ended December 31,2005
                      
                      
                      2005Net
      sales
                      
                      $
                      38,107,145
                      
                      
                      $
                      38,430,465Other
      sales
                      
                      
                      323,320
                      
                      
                      
                      -
 
 Original
                      
                      
                      RestatedFor Year Ended December 31,2004
                      
                      
                      2004Net
      sales
                      
                      $
                      26,046,389
                      
                      
                      $
                      26,325,611Other
      sales
                      
                      
                      279,222
                      
                      
                      
                      -
  32
 (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:
      February 17, 2009
                    
                    /s/ Shulin LiuShulin
      LiuChief
      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,
                
                February
      17, 2009Shulin Liu
                
                
                Chairman of the Board/s/ Shaocheng Xu
                
                
                Chief Financial Officer
                
                February
      17, 2009Shaocheng Xu/s/ Yang Miao
                
                
                Director
                
                February
      17, 2009Yang Miao/s/ Zongtai Guo
                
                
                Director
                
                February
      17, 2009Zongtai Guo
  
 
 EXHIBIT INDEX
  3.1
                Articles of
      Incorporation of the registrant filed with the British Virgin Islands
      Registrar of Corporate Affairs on July 6, 2006, incorporated by reference
      to the exhibit of the same number to our report on Form 10-SB filed with
      the SEC on July 12, 2007.3.2
                Bylaws
      incorporated by reference to the exhibit of the same number to our report
      on Form 10-SB filed with the SEC on July 12, 2007.3.3
                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
                  Mass
      Harmony Financial Consulting Agreement (MHA Agreement), dated November 2,
      2006 by and between Yanglin and Mass Harmony Asset Management Limited,
      incorporated by reference to the exhibit of 10.6 to our report on Form 8-k
      filed with the SEC on October 10, 2007.10.4
                  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 contract10.11
                Form
      of sales contract for soybean product10.12
                Employment
      Contract-Shulin Liu as of Sept. 24, 200710.13
                Employment
      Contract-Shaocheng Xu as of Sept. 24, 200710.14
                Employment
      Contract-Zongtai Guo as of Sept. 24, 200716.1
                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,
      200731.1*
                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.