UNITED STATES
 SECURITIES AND EXCHANGE
COMMISSION
 Washington, D.C.
20549
 _____________________
 Amendment
No. 2 to Form 10-QSB
  (Mark
One)
  x
              Quarterly Report Pursuant to
      Section 13 or 15(d) of the Securities Exchange Act of
      1934.
  For the quarter ended September 30,
2007
  o
              Transition Report Pursuant to
      Section 13 or 15(d) of the Securities Exchange Act of
      1934.
  Commission
File Number: 000-30790
 
 CHINA YINGXIA INTERNATIONAL,
INC.
 (Exact
name of small business issuer as specified in its charter)
  Florida
              65-0664961(State
      or other jurisdiction of incorporation or organization)
              (IRS
      Employee Identification No.)
 
 Harbin Yingxia Industrial Co.,
      Ltd, No.300, Xidazhi Street Nangang, Harbin Heilongjiang China
      150001(Address
      of principal executive offices)
 
 86 451
      86310948(Issuer's
      telephone number)
 
 c/o American Union Securities
      100 Wall Street 15th Floor New York, NY 10005(Address
      of principal agent offices)
 
 (212)
      232-0120(Agent's
      telephone number)
 
 (Former
name, former address and former fiscal year, if changed since last
report)
 
 Check whether the issuer (1) filed all
reports required to be filed by Section 13 or 15(d) of the Exchange Act during
the past 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days.
 Yes
              [ x
      ]
              No
      [  ]
 
 Indicate by check mark whether the
registrant is a shell company (as defined in Rule 12b-2 of the Exchange
Act).
 Yes
              [  ]
              No
      [ x ]
 
 
 The
number of shares outstanding of each of the issuer's classes of common equity,
as of November 15, 2007 is 44,333,987 shares of common
stock.














CHINA YINGXIA INTERNATIONAL,
INC.


FORM 10-QSB





TABLE OF CONTENTS










PART I - FINANCIAL
      INFORMATION
            2Item
      1. Financial Statements
            3Item
      2. Management's Discussion and Analysis or Plan of
    Operation
            11Item
      3. Controls and Procedures
            12PART II - OTHER
      INFORMATION
            13Item
      1. Legal Proceedings
            13Item
      2. Unregistered Sales of Equity Securities and Use of
    Proceeds
            13Item
      3. Defaults Upon Senior Securities
            13Item
      4. Submission of Matters to a Vote of Security Holders
            13Item
      5. Other Information
            13Item
      6. Exhibits
            13SIGNATURES
            14






Except as otherwise required by the
context, all references in this report to "we", "us”, "our",
“CYXI”, “China
Yingxia” or "Company" refer to the consolidated operations of China Yingxia
International, Inc., a Florida corporation, and its wholly owned
subsidiaries.




2





PART I - FINANCIAL
INFORMATION











Item 1.   Financial
Statements.


CHINA YINGXIA INTERNATIONAL,
INC.
 CONDENSED CONSOLIDATED BALANCE SHEET
(UNAUDITED)
 SEPTEMBER 30,
2007


ASSETSCurrent
      assets:Cash
      and cash equivalents
            
            
            
            $
            1,501,901Account
      receivables
            
            
            
            
            
            440,448Inventory
            
            
            
            
            
            
            1,982,501Other
      receivables
            
            
            
            
            
            3,347,094Advances
      to suppliers
            
            
            
            
            
            4,254,468Advance
      to affiliate
            
            
            
            
            
            6,657,858Loans
      to related party
            
            
            
            
            
            1,432,218Total
      Current Assets
            
            
            
            
            19,616,487Property
      and equipment, net of accumulated depreciationof
      $2,996,681
            
            
            
            
            
            16,675,349Land
      use right, net
            
            
            
            
            
            400,602Total
      Assets
            
            
            
            
            $
            36,692,438LIABILITIES AND STOCKHOLDERS'
      EQUITYCurrent
      liabilities:Accounts
      payable
            
            
            
            
            $
            1,622,516Unearned
      revenue
            
            
            
            
            
            3,337Taxes
      payable
            
            
            
            
            
            29,427Accrued
      expenses and other payables
            
            
            
            788,618Total
      Current Liabilities
            
            
            
            2,443,898Total
      Liabilities
            
            
            
            
            
            2,443,898Stockholders'
      EquityPreferred
      stock, $0.001 par value, 10,000,000 shares authroized; - 0 -
      sharesoutstanding
      at June 30, 2007
            
            
            
            
            -Common
      stock, $0.001 par value, 100,000,000 shares authorized;44,333,987
      shares outstanding at September 30, 2007
            
            
            44,334Additional
      paid in capital
            
            
            
            
            
            16,620,790Accumulated
      other comprehensive income
            
            
            
            1,933,256Statutory
      reserves
            
            
            
            
            
            901,463Retained
      earnings
            
            
            
            
            
            14,748,696Total
      Shareholders' Equity
            
            
            
            34,248,539Total
      Liabilities and Stockholders' Equity
            
            
            $
            36,692,438




The
accompanying notes are an integral part of the condensed consolidated
statements




F-1




CHINA YINGXIA INTERNATIONAL,
INC.


CONDENSED CONSOLIDATED STATEMENTS OF
INCOME


(UNAUDITED)




Nine-Month
      Ended
              
              
              Three-Month
      EndedSeptember
      30,
              
              
              September
      30,2007
              
              
              2006
              
              
              2007
              
              
              2006Sales
              
              
              $
              10,380,713
              
              
              $
              5,308,352
              
              
              
              3,513,674
              
              
              $
              1,857,392Cost
      of Sales
              
              
              4,003,789
              
              
              
              2,194,473
              
              
              
              904,605
              
              
              
              918,481Gross
      Profit
              
              
              6,376,924
              
              
              
              3,113,879
              
              
              
              2,609,069
              
              
              
              938,911Operating
      ExpensesResearch
      & Development Expense
              
              
              279,286
              
              
              
              -
              
              
              
              144,547
              
              
              
              -Selling,
      general and administrative
              
              
              1,381,388
              
              
              
              404,655
              
              
              
              753,153
              
              
              
              196,712Operating
      income
              
              
              4,716,250
              
              
              
              2,709,224
              
              
              
              1,711,370
              
              
              
              742,199Other
      Income and Expenses
              
              
              2,898
              
              
              
              (25,245
              )
              
              
              2,412
              
              
              
              52Income
      Before Income Taxes
              
              
              4,719,148
              
              
              
              2,683,979
              
              
              
              1,713,782
              
              
              
              742,251(Benefit)
      provision for Income Taxes
              
              
              -
              
              
              
              (1,984,590
              )
              
              
              -
              
              
              
              (2,216,535
              )Net
      Income
              
              $
              4,719,148
              
              
              $
              4,668,569
              
              
              $
              1,713,782
              
              
              $
              2,958,786Income
      per common shareBasic
              
              $
              0.13
              
              
              $
              0.41
              
              
              $
              0.04
              
              
              $
              0.26Diluted
              
              $
              0.13
              
              
              $
              0.41
              
              
              $
              0.04
              
              
              $
              0.26Weighted
      average common share outstandingBasic
              
              
              35,866,849
              
              
              
              11,418,877
              
              
              
              40,309,204
              
              
              
              11,418,877Diluted
              
              
              36,995,845
              
              
              
              11,418,877
              
              
              
              43,659,377
              
              
              
              11,418,877


The
accompanying notes are an integral part of the condensed consolidated
statements
    F-2
 CHINA YINGXIA INTERNATIONAL,
INC.
 CONDENSED CONSOLIDATED STATEMENTS OF
CASH FLOWS
 For the nine months ended September
30, 2007 and 2006
 2007
                  
                  
                  2006(Unaudited)
                  
                  
                  (Unaudited)Cash
      Flows From Operating Activities:Net
      income
                  
                  
                  $
                  4,719,148
                  
                  
                  $
                  4,668,569Adjustments
      to reconcile net income to net cashprovided
      by (used in) operating activities:Depreciation
      and amortization
                  
                  
                  
                  522,675
                  
                  
                  
                  387,978Changes
      in operating assets and liabilities:Accounts
      receivable
                  
                  
                  
                  (439,134
                  )
                  
                  
                  386,795Inventory
                  
                  
                  
                  (870,399
                  )
                  
                  
                  (836,895
                  )Other
      receivable
                  
                  
                  
                  (3,000,319
                  )
                  
                  
                  (1,185,098
                  )Advances
      to suppliers
                  
                  
                  
                  (3,809,214
                  )
                  
                  
                  (1,818,199
                  )Prepaid
      expenses
                  
                  
                  
                  95,479
                  
                  
                  
                  (6,664
                  )Accounts
      payable
                  
                  
                  
                  1,273,018
                  
                  
                  
                  (130,199
                  )Unearned
      revenue
                  
                  
                  
                  3,337
                  
                  
                  
                  -Taxes
      payable
                  
                  
                  
                  29,427
                  
                  
                  
                  (1,872,900
                  )Accrued
      expenses and other payables
                  
                  
                  
                  228,153
                  
                  
                  
                  1,268,462Cash
      provided by (used in) operating activities
                  
                  
                  
                  (1,247,829
                  )
                  
                  
                  861,849Cash
      Flows From Investing Activities:Purchase
      of property and equipment
                  
                  
                  
                  (1,170,900
                  )
                  
                  
                  (224,972
                  )Purchase
      of land use right
                  
                  
                  
                  (106,523
                  )
                  
                  
                  -Advance
      to affiliate
                  
                  
                  
                  (6,657,858
                  )
                  
                  
                  -Collections
      on loans to related party
                  
                  
                  
                  1,332,381
                  
                  
                  
                  -Additions
      to construction in process
                  
                  
                  
                  (761,145
                  )
                  
                  
                  (695,237
                  )Cash
      used in investing activities
                  
                  
                  
                  (7,364,044
                  )
                  
                  
                  (920,209
                  )Cash
      Flows From Financing Activities:Net
      proceeds from issuance of common stock
                  
                  
                  
                  9,306,743
                  
                  
                  
                  -Payment
      of notes payable
                  
                  
                  
                  -
                  
                  
                  
                  (110,854
                  )Cash
      provided by (used in) financing activities
                  
                  
                  
                  9,306,743
                  
                  
                  
                  (110,854
                  )Effect
      of exchange rate changes on cash and cash equivalents
                  
                  
                  
                  729,164
                  
                  
                  
                  202,261Increase
      in cash and cash equivalents
                  
                  
                  
                  1,424,034
                  
                  
                  
                  33,047Cash
      and Cash Equivalents - Beginning of period
                  
                  
                  
                  77,867
                  
                  
                  
                  34,903Cash
      and Cash Equivalents - End of period
                  
                  
                  $
                  1,501,901
                  
                  
                  $
                  67,950Supplemental
      disclosures of cash flow information:1 Interest
      paid
                  
                  
                  $
                  -
                  
                  
                  $
                  25,5952 Income
      Taxes paid
                  
                  
                  $
                  -
                  
                  
                  $
                  -
 
 The
accompanying notes are an integral part of the condensed consolidated
statements
 
 F-3




CHINA YINGXIA INTERNATIONAL,
INC.
 CONDENSED CONSOLIDATED NOTES TO
FINANCIAL STATEMENTS  (UNAUDITED)
 FOR THE NINE MONTHS ENDED SEPTEMBER
30, 2007 AND 2006


1.  ORGANIZATION AND BASIS
OF PRESENTATION
 
 China
Yingxia International, Inc. (the “Company” or “China Yingxia”) was incorporated
under the laws of State of Florida on May 6, 1996 and formerly known as Agronix,
Inc. (“Agronix”).
 
 The
Company operates its business through its wholly-owned subsidiary Harbin Yingxia
Business Group Co., Ltd. (“Harbin Yingxia”), a Chinese company primarily engaged
in the development, production and sales of organic agricultural by-products and
nutritional health food products. Harbin Yingxia has several lines of products
including organic food and produce, nutritional supplements, health care
products and skin and beauty care products.
 
 The
accompanying financial statements and footnotes have been condensed and
therefore do not contain all disclosures required by generally accepted
accounting principles. The interim financial statements are unaudited; however,
in the opinion of China Yingxia, the interim financial statements include all
adjustments, consisting only of normal recurring adjustments, necessary for a
fair statement of the results for the interim periods. Results for interim
periods are not necessarily indicative of those to be expected for the full
year. It is suggested that these condensed financial statements be read in
conjunction with the December 31, 2006 audited financial statements and the
accompanying notes thereto. While management believes that the procedures
followed in preparing these condensed consolidated financial statements are
reasonable, the accuracy of the amounts are in some respects dependent upon the
facts that will exist, and procedures that will be accomplished by the Company
later in the year.
 
 2. SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES
  MANAGEMENT
ESTIMATES
  The
preparation of financial statements in conformity with generally accepted
accounting principals requires management to make estimates and assumptions that
effect the reported amounts of assets and liabilities and the disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
 
 F-4
  CHINA YINGXIA INTERNATIONAL,
INC.
 CONDENSED CONSOLIDATED NOTES TO
FINANCIAL STATEMENTS  (UNAUDITED)
 FOR THE NINE MONTHS ENDED SEPTEMBER
30, 2007 AND 2006
  2. SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES (Continued)
 PRINCIPLES OF
CONSOLIDATION
  The
accompanying consolidated Financial Statements include the accounts of the
Company and its wholly owned subsidiaries, Warner Nutraceutical International,
Inc. and Harbin Yingxia Business Group Co., Ltd. All significant inter-company
transactions and balances have been eliminated in consolidation.
  INVENTORIES
 
 Inventories
are valued at the lower of cost or market with cost determined on a first-in
first-out basis. Cost of work in progress and finished goods comprises direct
material, direct production cost and an allocated portion of production
overheads.
  ADVANCE TO
SUPPLIERS
 
 Advance
to suppliers represent the payments made and recorded in advance for goods and
services. Advances were also made for the purchase of the materials and
equipment of the Company’s construction in progress. The final phase of the
construction is not completed. As such, no amortization was made.
  REVENUE
RECOGNITION
 
 The
Company recognizes revenue on product sales when products are delivered and the
title passes to the customers and collection is reasonably assured.
  RESEARCH AND
DEVELOPMENT
 
 Research
and development costs are related primarily to the Company developing its
intellectual property. Research and development costs are expenses as
incurred.
  CONCENTRATION OF CREDIT
RISK
 
 Financial
instruments that potentially subject the Company to concentration of credit risk
consist primarily of accounts receivable and other receivables. The Company does
not require collateral or other security to support these receivables. The
Company conducts periodic reviews of its clients' financial condition and
customer payment practices to minimize collection risk on accounts
receivable.
 
 The
operations of the Company are located in the People’s Republic of China (“PRC”).
Accordingly, the Company's business, financial condition, and results of
operations may be influenced by the political, economic, and legal environments
in the PRC, as well as by the general state of the PRC
economy.
  
 F-5
  CHINA YINGXIA INTERNATIONAL,
INC.
 CONDENSED CONSOLIDATED NOTES TO
FINANCIAL STATEMENTS  (UNAUDITED)
 FOR THE NINE MONTHS ENDED SEPTEMBER
30, 2007 AND 2006
  2. SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES (Continued)
  INCOME TAXES
 
 The
Company accounts for income tax under the provisions of SFAS No.109 "Accounting
for Income Taxes", which requires recognition of deferred tax assets and
liabilities for the expected future tax consequences of the events that have
been included in the financial statements or tax returns. Deferred income taxes
are recognized for all significant temporary differences between tax and
financial statements bases of assets and liabilities. Valuation allowances are
established against net deferred tax assets when it is more likely than not that
some portion or all of the deferred tax asset will not be realized.
 
 According
to the Provisional Regulations of the People’s Republic of China on Income Tax,
the Document of Reductions and Exemptions of Income Tax for the Company has been
approved by the local tax bureau and the Management Regulation of Harbin
Economic and Technological Development Zone for the reporting period. The
Company was granted the status of wholly foreign-owned entity (“WFOE”) and
therefore is exempt from income tax from January 1, 2004 through December 31,
2007. The Company has also been approved to have its tax rate reduced by 50%
from January 1, 2008 to December 31, 2010. As a result of this tax exemption, no
income tax was accrued for the three and nine months ended September 30,
2007.
  FOREIGN CURRENCY
TRANSLATION
 
 The
functional currency for the Company’s operations in China is the Renminbi
(“RMB”). Foreign currency transactions are translated at the applicable rates of
exchange in effect at the transaction dates. Monetary assets and liabilities
denominated in foreign currencies at the balance sheet date are translated at
the applicable rates of exchange in effect at that date. Revenues and expenses
are translated at the average exchange rates in effect during the reporting
period.
 
 Translation
adjustments arising from the use of different exchange rates from period to
period are included as a component of stockholders' equity as "Accumulated Other
Comprehensive Income".  Gains and losses resulting from foreign
currency translations are included in Accumulated Other Comprehensive
Income.
 F-6
   CHINA YINGXIA INTERNATIONAL,
INC.
 CONDENSED CONSOLIDATED NOTES TO
FINANCIAL STATEMENTS  (UNAUDITED)
 FOR THE NINE MONTHS ENDED SEPTEMBER
30, 2007 AND 2006
 2. SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES (Continued)
 NEW ACCOUNTING
PRONOUNCEMENTS
 
 In
September 2006, the FASB issued Statement of Financial Accounting Standards No.
157, Fair Value Measurements, (“FAS 157”). This Standard defines fair value,
establishes a framework for measuring fair value in generally accepted
accounting principles and expands disclosures about fair value measurements. FAS
157 is effective for financial statements issued for fiscal years beginning
after November 15, 2007 and interim periods within those fiscal years. The
adoption of FAS 157 is not expected to have a material impact on the Company’s
financial position, results of operations or cash flows.
 
 In September 2006, the Securities and Exchange
Commission (“SEC”) issued Staff Accounting Bulletin (“SAB”) No. 108,
“Quantifying Misstatements.” SAB 108 provides interpretative guidance on how
public companies quantify financial statement misstatements. There have been two
common approaches used to quantify such errors. Under an income statement
approach, the “roll-over” method, the error is quantified as the amount by which
the current year income statement is misstated. Alternatively, under a
balance sheet approach, the “iron curtain” method, the error is quantified as
the cumulative amount by which the current year balance sheet is misstated. In
SAB 108, the SEC established an approach that requires quantification of
financial statement misstatements based on the effects of the misstatements on
each of the company’s financial statements and the related financial statement
disclosures. This model is commonly referred to as a “dual approach” because it
requires quantification of errors under both the roll-over and iron curtain
methods. SAB 108 is effective for the first fiscal year ending after
November 15, 2006. The adoption of SAB 108 did not have a material impact
on the Company’s consolidated financial position and results of
operations.
 
 In
February 2007, the FASB issued SFAS No. 159, “The Fair Value Option
for Financial Assets and Financial Liabilities — Including an Amendment of
FASB Statement No. 115,” which is effective for fiscal years beginning
after November 15, 2007. This statement permits an entity to choose to
measure many financial instruments and certain other items at fair value at
specified election dates. Subsequent unrealized gains and losses on items for
which the fair value option has been elected will be reported in earnings.
We are currently evaluating the potential impact of this
statement.
   F-7
  CHINA YINGXIA INTERNATIONAL,
INC.
 CONDENSED CONSOLIDATED NOTES TO
FINANCIAL STATEMENTS  (UNAUDITED)
 FOR THE NINE MONTHS ENDED SEPTEMBER
30, 2007 AND 2006
 3. PROPERTY, PLANT AND EQUIPMENT,
NET
 
 Property,
plant and equipment consist of the following at September 30, 2007:
  Machinery
      & Equipment
                
                
                $
                2,535,173Automobiles
                
                
                
                394,339Cactus
      Seedlings
                
                
                
                6,402,319Buildings
                
                
                
                1,067,69210,399,523Sub
      totalLess:
      Accumulated Depreciation
                
                
                
                (2,996,681
                )Construction
      in progress
                
                
                
                9,272,507Total
      property, plant & Equipment, net
                
                
                $
                16,675,349
  
 Depreciation
expense for the nine months ended September 30, 2007 and 2006 was $516,480 and
$387,978, respectively.
 
 Construction
in progress represents direct costs of construction or acquisition and design
fees incurred for the Company’s new plant and new office building project. All
construction costs associated with this project are accumulated and capitalized
as construction in progress. The construction in progress is closed out to the
appropriate asset classification when the project is substantially complete,
occupied, or placed into services.  No depreciation is provided until
it is completed and ready for its intended use. As of September 30, 2007, the
costs involved with construction in progress amounted to
$9,272,507.
 
 4. RELATED PARTY LOANS
  As of
September 30, 2007, the Company has loans receivable from related parties in the
amount of $1,432,218. All related party loans are provided to the affiliated
retail stores or companies to facilitate the initial establishment of their
businesses for selling the Company’s products. These loans are interest free and
unsecured and have no fixed repayment dates. All these loans are expected to be
fully repaid upon demand.
 
 The
management of the Company has been making the efforts to collect these loans.
During the nine months ended September 30, 2007, a net amount of $1,332,381 has
been collected and the remaining balance is expected to be fully repaid by the
end of 2007. No allowance is considered necessary at this time.
 F-8
  CHINA YINGXIA INTERNATIONAL,
INC.
 CONDENSED CONSOLIDATED NOTES TO
FINANCIAL STATEMENTS  (UNAUDITED)
 FOR THE NINE MONTHS ENDED SEPTEMBER
30, 2007 AND 2006
  5. ADVANCE TO
AFFILIATE
  During
the period, the Company advanced approximately $6.7 million to an affiliated
company for the purpose of establishing two subsidiaries to secure the
agricultural supplies and land holdings that will be used to plant and harvest
its natural products such as cactus, soy beans and specialty rice. As of
September 30, 2007, the Company was awaiting local government approval. As of
today, the Company received the approval and formed the subsidiaries as planned.
The money advanced on their behalf is the process of being transferred over to
the subsidiaries.
  F-9
  CHINA YINGXIA INTERNATIONAL,
INC.
 CONDENSED CONSOLIDATED NOTES TO
FINANCIAL STATEMENTS  (UNAUDITED)
 FOR THE NINE MONTHS ENDED SEPTEMBER
30, 2007 AND 2006
   6. SEGMENT
INFORMATION
 
 The
Company has five different operating segments. Summarized financial information
concerning the Company’s revenues from its external customers for each of the
product categories for the nine months period ended September 30, 2007 are as
follows:
 
 
 Green
      Food Products
                
                $
                2,280,803Longgu
      golden millet and other dietary products
                
                
                2,081,675Cosmetic
      Products
                
                
                471,638Cactus-based
      powders and herbal supplements
                
                
                4,572,760Others
      – Organic rice product
                
                
                973,837Total
                
                $
                10,380,713
 
 
 Majority
of the Company’s revenue were generated in China, which accounts for
approximately 99.5% of the Company’s total revenue. Our sales in foreign nations
represent pilot programs that as of yet have not become full-scale
operations.
 7. STOCKHOLDERS'
EQUITY
 
 A. Issuance of Common
Stock
 
 July 2007 Private
Placement
 
 On July
16, 2007, the Company entered into a stock subscription and warrant agreement,
(“Subscription Agreement”), with three (3) accredited investors. Pursuant to the
Subscription Agreement, the investors purchased 1,000,000 units, each unit
consisting of (a) two shares of common stock and (b) one common stock purchase
warrant, at a purchase price of $2.00 per unit. The Company received net
proceeds of $1,980,000 in connection with this private
placement.
   F-10
 CHINA YINGXIA INTERNATIONAL,
INC.
 CONDENSED CONSOLIDATED NOTES TO
FINANCIAL STATEMENTS  (UNAUDITED)
 FOR THE NINE MONTHS ENDED SEPTEMBER
30, 2007 AND 2006
 7. STOCKHOLDERS' EQUITY
(Continued)
 
 With the
warrants attached to the units sold in the private placement, the investors are
entitled to purchase an aggregate of 1,000,000 shares of common stock at an
exercise price of $1.50 per share. All these warrants are exercisable for five
years from the effective date of registration statement.
 
 Upon
completion of the placement, the Company incurred approximately $20,000 in legal
and other expenses.
 
 August 2007 Private
Placement
 
 On August
9, 2007, the Company completed another private placement of its securities to
accredited investors pursuant to Regulation D under the Securities Act of 1933,
as amended. The Company entered into a stock subscription agreement and warrant
agreement (“Subscription Agreement”), with twenty (20) accredited investors.
Pursuant to the Subscription Agreement, the investors purchased 34.90052 units,
each unit consisting of (a) 250,000 shares of common stock and (b) a 5-year
stock purchase warrant to purchase 125,000 shares of common stock exercisable at
$2.00 per share. The units were sold for a price of $250,000 per unit, yielding
gross proceeds of $8,725,130 from the sale of the units. The Company paid fees
and commissions in the aggregate amount of $1,398,387 in connection with this
offering.
 
 As a
result of these two offerings, the Company issued a total of 10,725,130 shares
of its common stock. As of September 30, 2007, there are 44,333,987 shares of
common stock outstanding and no preferred stock.
 
 Warrants
 
 Upon the
execution of the both Subscription Agreements, the Company issued to the
investors (i) 1,000,000 warrants under July 2007 Private Placement and
(ii)4,362,565 warrants under August 2007 Private Placement. All warrants do not
contain a cashless exercise provision. Accordingly, in accordance with EITF
00-19, the warrants are classified as equity.
 
 The fair
value of the warrants was calculated using the Black-Scholes options pricing
model using the following assumptions: Volatility 63%, risk free interest rate
5.050% for July 2007 Placement and 4.790% for August 2007 Placement, and
expected term of 5 years.
 F-11
   CHINA YINGXIA INTERNATIONAL,
INC.
 CONDENSED CONSOLIDATED NOTES TO
FINANCIAL STATEMENTS  (UNAUDITED)
 FOR THE NINE MONTHS ENDED SEPTEMBER
30, 2007 AND 2006
 7. STOCKHOLDERS' EQUITY
(Continued)
 
 Following
is a summary of the status of warrants outstanding as of September 30,
2007:
 
 Oustanding
      WarrantsExercise
                    Price
                  
                  
                  Number
                  
                  
                  Average
      Remaining
                    Life$
                  1.50
                  
                  
                  
                  1,000,000
                  
                  
                  
                  4.79$
                  2.00
                  
                  
                  
                  4,362,565
                  
                  
                  
                  4.925,362,565
  8. COMMITMENTS AND
CONTINGENCIES
  The
Company’s operations in the PRC are subject to specific considerations and
significant risks not typically associated with companies in the North America
and Western Europe. These include risks associated with, among others, the
political, economic and legal environments and foreign currency exchange. The
Company’s results may be adversely affected by changes in governmental policies
with respect to laws and regulations, anti-inflationary measures, currency
conversion and remittance abroad, and rates and methods of taxation, among other
things.
  The
Company’s sales, purchases and expenses transactions are denominated in RMB and
all of the Company’s assets and liabilities are also denominated in RMB. The RMB
is not freely convertible into foreign currencies under the current law. In
China, foreign exchange transactions are required by law to be transacted only
by authorized financial institutions at exchange rates set by the People’s Bank
of China, the central bank of China. Remittances in currencies other than RMB
may require certain supporting documentation in order to affect the
remittance.
 9. SUBSEQUENT
EVENT
 
 On
October 15, 2007, the Company filed Form DEF 14C with the Securities and
Exchange Commission and notified its shareholders that the Company has (i)
authorized the Company’s Board of Directors to (a) amend and restate its bylaws
to increase the number of directors to nine (9), providing that a majority of
directors may amend the Bylaws; and (ii) to adopt the 2007 Equity Incentive
Plan.


F-12




Item 2.  Management's Discussion
and Analysis or Plan of Operation.
  The following discussion should be
read in conjunction with the Financial Statements and Notes thereto appearing
elsewhere in this Form 10-QSB.
 
  Safe Harbor Regarding
Forward-Looking Statements
  The following discussion contains
forward-looking statements within the meaning of Section 27A of the Securities
Act of 1933 and Section 21E of the Securities Exchange Act of 1934 relating to
future events or our future performance. Actual results may materially differ
from those projected in the forward-looking statements as a result of certain
risks and uncertainties set forth in this prospectus. Although management
believes that the assumptions made and expectations reflected in the
forward-looking statements are reasonable, there is no assurance that the
underlying assumptions will, in fact, prove to be correct or that actual results
will not be different from expectations expressed in this
report.
 
 Results of
Operations
 
 Results
of Operations for the Nine and Three Months Ended September 30, 2007
compared to the Nine and Three Months Ended September 30, 2006
 
 Revenue
  For the
nine months ended September 30, 2007, net sales totaled $10,380,713, an increase
of $5,072,361 or 95.5% as compared to revenues of$5,308,352 for the nine
months ended September 30, 2006.
  There
were two major factors driving the doubling of sales: 1) A shift in our business
model to focus on smaller franchisees which resulted in a large increase in the
number of our distributors and 2) greater product mix.
 
 In the
same nine-month period last year, the Company’s sales were primarily directly to
large franchisees, however in the last year the Company has executed a strategy
of increasing the number of smaller franchisees to promote sales and awareness
of the Company’s products. These are franchisees who purchase our products and
sell them on an exclusive basis in store fronts or market kiosks. Our initial
franchise fee also includes discounted inventory and the designation of an
exclusive regional territory to the individual. Franchises are granted on
provincial, regional, and township levels.
 
 Additionally,
our product mix also increased to include personal care products, cosmetics, and
nutritional foods including Nestle cereals and drinks.
  Third Quarter 2007 Sales vs. Second
Quarter 2007 Sales
 
 Sales in the third quarter
of 2007 decreased from the second quarter of 2007 primarily due to the
seasonality associated with the Company’s major product, cactus. The second
quarter of the year is both the primary growing and harvesting season for cactus
so the Company recorded a major increase in sales during this period. The same
seasonality occurred last year..
 
 3
 
 
 During
the nine months ended September 30, 2007, our products were sold through
approximately 750 franchisees, as compared to 400 during the same period in the
prior year. These are franchisees who purchase our products and sell them on an
exclusive basis in store fronts or market kiosks. Our initial franchise fee also
includes discounted inventory and the designation of an exclusive regional
territory to the individual. Franchises are granted on provincial, regional, and
township levels.
 
 Our
product mix also increased to include personal care products, cosmetics, and
nutritional foods including Nestle cereals and drinks. During the same period in
2006, our product mix was limited to cactus based supplements and millet and
rice products.
  
 Three Months Ended September 30, 2007
vs. Three Months Ended September 30, 2006
 
 For the
three months ended September 30, 2007, net sales totaled $3,513,674, an increase
of $1,656,282 or 89.1% as compared to revenues of $1,857,392 for the three
months ended September 30, 2006.
 
 During
this period, we launched our soybean product lines which led to an additional
stream of revenue.
 
 We saw
overall revenues decrease from $5,227,933 for the three month period ended June
30, 2007 to $3,513,674 for the three month period ended September 30, 2007 or
approximately a 32.8% decrease.
 This
decrease is due to the seasonality of our sales. During the summer months of
July and August, we have historically seen a slowdown in sales despite increases
in the number of franchisees. For the three month period ended September 30,
2006, we generated $1,857,392, a 43.2% decrease in net sales as compared to
$3,270,876 for the three month period ended June 30, 2006.
 
 This
seasonality factor is due to a general summer lull in existing franchisee sales.
Another factor is due to significant jump in sales in the second quarter.
Historically, our first quarter sales have always been the lowest of the four
quarters due to the fact of the calendar and Lunar New Year holiday seasons. As
a result, the slowdown in the first quarter leads to heavily sales in the second
quarter.
  Cost of
Sales
  Nine Months ended September 30, 2007
vs. Nine Months ended September 30 2006
 
 The cost
of revenue was $4,003,789 for the nine months ended September 30, 2007, an
increase of
 $1,809,316
or 82.3% as compared to the cost of revenue of $2,194,473 for the nine months
ended September 30, 2006.
 
 The cost
of goods sold increased accordingly with our increase in revenues during the
entire nine month period.
 
 Three Months ended September 30, 2007
vs. three months ended September 30, 2006
 
 The cost
of revenue was $904,605 for the three months ended September 30, 2007, a
decrease of $13,876 or 1.5% as compared to $918,481 for the three months ended
September 30, 2006.
 
 Our cost
of sales decreased due to the diminished overhead costs associated with our
cactus seedlings.
 Generally,
we book the costs of heating the greenhouses where we grow the cactus seedlings
as part of cost of goods sold. During the third quarter of 2007, we did not book
any costs associated with heating and upkeep of the greenhouses. These costs
were all accounted for in the second quarter of 2007.
 
 4
 
 Total Operating
Expenses
  Total
operating expenses were $1,660,674 for the nine months ended September 30, 2007,
an increase of $1,256,019 or 310.4% as compared to total operating expenses of
$404,655 for the nine months ended September 30, 2006.
 
 Overall,
selling and general and administrative expenses increased in correlation with
the increase in revenue, the increase in the number of franchisees, and with the
increased expenditures associated with the launch of new products in the second
half of the year.
  We added
an additional 34 sales and marketing team members to promote our new organic
rice and soybean milk and yogurt products. Salaries for new staff personnel and
their travel expenses totaled approximately $110,000. Internal product
inspection costs totaled $50,000. The fees associated with the investor
relations firm engaged in March totaled $59,500 for the nine month period. In
addition, we opened an office in the US in June 2007. The costs associated with
office rental and staff totaled $39,000. Advertising costs for products to be
introduced in the second half of the year included TV commercials and internet
advertising. These expenses approximately totaled $181,000. Depreciation and
amortization expenses totaled $522,676 or about 37.2% of total operating
expenses in the nine month period. Research and development expenses totaled
$279,286 or about 19.8% of total operating expenses in the nine month period in
2007 as compared to nil in the same period in 2006.
 
 Total
operating expenses were $897,700 for the three months ended September 30, 2007,
an increase of     $700,988 or 356.3% as compared to
total operating expenses of $196,712 for the three months ended September 30,
2006.
  Our
operating expenses are divided into research and development expenses and
selling and general and administrative expenses. Research and development
expenses were associated with our in-house testing and analysis of current
supplement products and the application of tests toward new health related
products. In the same period in 2006, we did not conduct any in-house research
and development. Research and development expenses in the three month period
ended September 30, 2007 totaled $144,547 compared to nil in the same period in
2006. The fees associated with the investor relations firm totaled $25,500 for
the three month period. Costs associated with the US office and staff totaled
$39,000.
 
  Net
Income
 
 Net
income from operations before income taxes (benefit) for the nine months ended
September 30, 2007 increased by $2,035,169 or 75.83% to $4,719,148 from
$2,683,979 for the nine months ended September 30, 2006. However, since we were
able to realize an one time benefit for income taxes in the amount of 1,984,590
due to our achievement of wholly foreign owned entity (WOFE) status, our net
income from the nine months ended September 30, 2006 totaled $4,668,569.
Therefore, period on period, our net income increased only by $50,579 or
1%.
  In the
nine months ended September 30, 2007, our net income increased as a result of
our increase in the number of franchisees and due to the seasonal decrease in
our cost of goods sold. Our cactus seedlings make up approximately 60% of our
net sales in the third quarter. Due to the lack of need for heating in our
greenhouses during the warmer summer months of July and August, in the third
quarter, we were able to realize higher net margins of 64.5% as compared to
43.7% for the first six months of the year.
 
 Net
income for the three months ended September 30, 2007 decreased by $1,245,004 or
42% to $1,713,782 from $2,958,786 for the three months ended September 30,
2006. Again,  the decrease is primarily due to the one time
$2,216,535 income tax benefit we realized during the third quarter of 2006.
Without accounting this income tax benefit,  our net income for the
nine months period  actually increased by $971,531 from $742,251 in
2006 to $1,713,782 in 2007.
 
 Net
income in the three month period ended September 30, 2007 increased as a result
of the addition of new franchisees and the continued activity of the existing
franchisees.
  5
  Liquidity and Capital
Resources
  As of
September 30, 2007, the Company had cash and cash equivalents of $1,501,901, as
compared to $67,950 during the corresponding period in 2006. As of September 30,
2007, the Company had working capital of $17,172,589, as compared to $3,504,435
as of September 30, 2006.
 
 Net cash flowused inoperating activities totaled
$1,247,829 for the nine months ended September 30, 2007, as compared to cash
provided by operating activities of $861,849 for the nine months ended September
30, 2006.
 During
the nine months end September 30, 2007, we underwent a major shift in the scale
of our operations. As of May 2007, the Company completed the phase of
construction of its new 54,000 square meter campus in Harbin which includes
office spaces, manufacturing facilities for its nutritional food products, and
its research and development center.
  The
Company during this period had significant expenditures in preparation for the
official launch of its two new products: organic rice aimed at diabetics
and soybean yogurt and milk products in the second half of 2007.
  The
increase in other receivables by $3,000,319 is due to the establishment of sales
and marketing companies for our soybean products and the payment toward the
acquisition of the patent a new strain of organic rice. Approximately $789,000
was spent on the creation of sales centers for our soybean milk (Shenzhen Wang
Zhan You milk sales center) and organic rice (Jiangsu East River Town Rice sales
center). These sales centers are responsible for the management and control of
operations for the distribution of these new products. The Shenzhen sales center
required approximately $393,000 for the leasing of office space, equipment,
working capital, and personnel to establish the Company's main management center
in the southern region for its soybean milk products. The Jiangsu sales center
oversees the planting and harvesting of the organic rice along with the
marketing force behind the product. The Company expects to realize revenues for
these expenditures by the end of 2007.
  The
increase in inventory by $870,399 is mostly due to the raw materials needed for
the processing and packaging of soybean yogurt and milk
products.
  An
additional $657,000 was paid to Nanjing Agricultural University as part of
the acquisition of the patent of the W3660 strain of organic rice with lower
levels of soluble albumins aimed at diabetics. This patent gives the Company
exclusive rights in the marketing and use of the new strain of
rice.
  The
increase in advances to suppliers of $3,809,214 is comprised of prepayments we
made to farmers to plant and harvest soybeans and rice and other various millet
and grains for our nutritional food products, ongoing additions to production
lines at our new campus, and investments made to organic foods
projects.
 Approximately
$400,000 was paid as a deposit to acquire land rights in Anhui province for
future development and construction of production lines for our organic soybean
products. $721,700 was paid toward the construction of sales center in
Heilongjiang province. Approximately $1,460,000 was used as registered capital
for Hulan Company.
  The
increase in accounts payables of $1,273,018 are due in part to the increase in
the added needs of the Company to have third party companies provided the
packaging and manufacture of our prepared foods.
   6
  Specifically,
approximately $450,000 was paid to Yatai Food Company for the processing and
packaging of grain noodles and millet crackers.  In general, the
Company has the capability to manufacture products with its own equipment for
raw goods including the packaging of grains and millet. However, for the
preparation of foods including noodles, crackers, wafers and other sorts of
processed foods, the Company still heavily depends on third party contractors.
Given the major increase in sales and the total number units of products shipped
to franchisees, the Company's account payables increased
accordingly.
  Net cash used in investing activitiestotaled $7,364,044 for the nine months ended September 30, 2007, as
compared to net cash used in investing activities of $920,209 for the nine
months ended September 30, 2006.
  Among the
cash used in investing activities, $1,170,900 was paid to acquire property and
equipment, including a new office space in Beijing, which will serve as our
flagship store in Beijing. Also, $6,657,858 was advanced to an affiliate in
preparation of setting up our Hulan subsidiary and paying local farmers to
purchase the raw materials and irrigation fixtures associated with our organic
crops project.
 During
the nine months ended September 30, 2007, we were able to collect $1,332,381 in
loans from various related parties. These parties included loans to individual
franchisees who we financed to support their business on a startup level. As
part of the terms of the recent capital raised from investors in August 2007, we
are required to fully collect these loans to related parties by the end of the
calendar year.
  Net cash provided by financing
activities were $9,306,743 for the nine months ended September 30, 2007,
as compared to $110,854 used for the nine months ended September 30,
2006.  In August 2007, we raised capital by selling shares of our
common stock. The net proceeds we received totaled $9,306,743. This $110,854
used in financing activities for the nine month period in 2006 was attributed to
the payment of the principal balance of a three-year loan from the local
government.
 
 Off-Balance Sheet
Arrangements
 
 We do not
have off-balance sheet arrangements, financings, or other relationships with
unconsolidated entities or other persons, also known as “special purpose
entities” (SPEs).
 
 Item 3.  Controls and
Procedures
  Evaluation of Disclosure
Controls and Procedures
 
 Under the
supervision and with the participation of our management, including our
principal executive officer and principal financial officer, we conducted an
evaluation of our disclosure controls and procedures, as such term is defined
under Rule 13a-15(e) and Rule 15d-15(e) promulgated under the Securities
Exchange Act of 1934, as amended (Exchange Act), as of September 30, 2007. Based
on this evaluation, our principal executive officer and principal financial
officer have concluded that our disclosure controls and procedures are effective
to ensure that information required to be disclosed by us in the reports we file
or submit under the Exchange Act is recorded, processed, summarized, and
reported within the time periods specified in the Securities and Exchange
Commission's rules and forms and that our disclosure and controls are designed
to ensure that information required to be disclosed by us in the reports that we
file or submit under the Exchange Act is accumulated and communicated to our
management, including our principal executive officer and principal financial
officer, or persons performing similar functions, as appropriate to allow timely
decisions regarding required disclosure.
   Changes in Internal
Controls
 
 There
were no changes (including corrective actions with regard to significant
deficiencies or material weaknesses) in our internal controls over financial
reporting that occurred during the fiscal quarter ended September 30, 2007 that
has materially affected, or is reasonably likely to materially affect, our
internal control over financial reporting.
 
 7
  
 PART II - OTHER
INFORMATION
  Item 1.    Legal
Proceedings.
  To the
best of our knowledge, neither the Company nor any of its subsidiaries is a
party to any pending or threatened legal proceedings.
  
 
 
 Item 2.    Changes in
Securities and Small Business Issuer Purchase of Equity
Securities
 
 (c)
Unregistered Sales of Equity Securities and Use of Proceeds.
 
 On July 16, 2007 China Yingxia
completed the sale of 1,000,000 Units of securities to a total of 3 investors.
Each "Unit" included two shares of common stock and one common stock purchase
warrants exercisable at $1.50.The sale of the Units was exempt from
the registration requirements of the Securities Act pursuant to Section 4(2) of
the Act, because each of the investors was an Accredited Investor and there was
no advertising or public solicitation performed in connection with the offering.
The sale of the Units was also exempt from registration pursuant to Rule 506 of
the Securities and Exchange Commission, since the sales satisfied all of the
conditions specified in SEC Rules 501 and 502 and each of the investors had such
knowledge and experience in financial and business matters that the investor was
capable of evaluating the merits and risks of the
investment.
 
 On August
9, 2007 China Yingxia International, Inc. completed the sale of 34.90052 Units
of securities to a total of twenty investors. Each Unit consisted of 250,000
shares of common stock and warrants to purchase 125,000 shares of common stock,
exercisable at $2.00 per share. The sale of the Units was exempt from the
registration requirements of the Securities Act pursuant to Section 4(2) of the
Act, because each of the investors was an Accredited Investor and there was no
advertising or public solicitation performed in connection with the offering.
The sale of the Units was also exempt from registration pursuant to Regulation
D, Rule 506 of the Securities and Exchange Commission, since the sales satisfied
all of the conditions specified in SEC Rules 501 and 502 and each of the
investors had such knowledge and experience in financial and business matters
that the investor was capable of evaluating the merits and risks of the
investment.
  Item 3.    Defaults
Upon Senior Securities.
  None.
  Item 4.   Submission of
Matters to a Vote of Security Holders.
  None.
  Item 5.   Other
Information.
  None.
  8
 Item 6.  
Exhibits.
  Exhibit No.
              
              Title of
      Document31.1
              
              Certification
      pursuant to Section 302 of Sarbanes Oxley Act of 200232.1
              
              Certification
      pursuant to Section 906 of Sarbanes Oxley Act of
  2002
  
  SIGNATURES
  In
accordance with the requirements of the Exchange Act, the registrant caused this
report to be signed on its behalf by the undersigned, there unto duly
authorized.
   CHINA YINGXIA INTERNATIONAL,
      INC.Date:
      February
      11, 2008
              By:
              /s/ Yingxia
      JiaoYingxia
      JiaoChief
      Executive Officer,
                Chief
      Financial Officer
      9