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

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

|  NEVADA                                                                       | 42-1743094          |
|------------------------------------------------------------------------------------|---------------------|
| (State or other jurisdiction of                                          | (I.R.S. Employer    |
|  incorporation or organization)                                          | Identification No.) |
|                                                                               |                |
| No.40-1, Dama Road, Nanguan District, Changchun city,Jilin Province 130000 , China | 100020              |
| (Address of principal executive offices)                                 | (Zip code)          |

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

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| SPECIAL NOTE REGARDING FORWARD LOOKING STATEMENTS                                                   |   |
|-----------------------------------------------------------------------------------------------------|--------|
|                                                                                                |   |
| PART I.   FINANCIAL IINFORMATION                                                     |   |
|                                                                                                |   |
| Item 1.  FINANCIAL STATEMENTS                                                             |   |
|                                                                                                |   |
| Consolidated Balance Sheets                                                                         | 1      |
|                                                                                                |   |
| Consolidated Statements of Operations and Comprehensive Income                                      | 2      |
|                                                                                                |   |
| Consolidated Statements of Cash Flows                                                               | 3      |
|                                                                                                |   |
| Notes to Consolidated Financial Statements                                                          | 4-11   |
|                                                                                                |   |
| Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS | 12     |
|                                                                                                |   |
| Item 4. CONTROLS AND PROCEDURES                                                                     | 16     |
|                                                                                                |   |
| PART II.    OTHER INFORMATION                                                   |   |
|                                                                                                |   |
| ITEM 1A. RISK FACTORS                                                                               | 16     |
|                                                                                                |   |
| ITEM 6. EXHIBITS                                                                                    | 17     |
|                                                                                                |   |
| SIGNATURES                                                                                          | 18     |

----

| CONTENTS |
|----------|

|                                                                       | Pages  |
|----------------------------------------------------------------------------|--------|
| Consolidated balance sheets (unaudited)                                    | 1      |
|                                                                       |   |
| Consolidated statements of operations and comprehensive income (unaudited) | 2      |
|                                                                       |   |
| Consolidated statements of cash flows (unaudited)                          | 3      |
|                                                                       |   |
| Notes to consolidated financial statements (unaudited)                     | 4      |

----

|                                                                                                                                                                                      |   |          |       |   |              |   |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------|------------|--------|-------------------|--------|
|                                                                                                                                                                                      |   | June 30, 2012 |       |   | December 31, 2011 |   |
|                                                                                                                                                                                      |   |          |       |   |              |   |
|                                                                                                                                                                                      |   | (Unaudited)   |       |   |              |   |
| ASSETS                                                                                                                                                                                    |   |          |       |   |              |   |
| Current assets                                                                                                                                                                            |   |          |       |   |              |   |
| Cash and cash equivalents                                                                                                                                                                 |   | $             | 1,843,631  |   |              | $      | 1,586,158 |   |
| Accounts receivable, net of allowance                                                                                                                                                     |   |          | 781,888    |   |              |   | 999,488 |   |
| Inventories, net                                                                                                                                                                          |   |          | 323,857    |   |              |   | 264,237 |   |
| Other receivables                                                                                                                                                                         |   |          | 47,833     |   |              |   | 21,138 |   |
| Advance to suppliers                                                                                                                                                                      |   |          | 382,284    |   |              |   | 189,149 |   |
| Deferred tax assets                                                                                                                                                                       |   |          | 105,818    |   |              |   | 69,268 |   |
| Deposits & prepayment                                                                                                                                                                 |   |          | 11,004     |   |              |   | 11,090 |   |
| Total current assets                                                                                                                                                                      |   |          | 3,496,315  |   |              |   | 3,140,528 |   |
|                                                                                                                                                                                      |   |          |       |   |              |   |   |   |
| Property and equipment, net                                                                                                                                                               |   |          | 1,992,375  |   |              |   | 1,539,785 |   |
| Prepaid lease                                                                                                                                                                             |   |          | 3,433,445  |   |              |   | 1,548,259 |   |
| Prepaid lease - related party                                                                                                                                                             |   |          | 5,381,488  |   |              |   | 5,994,681 |   |
| Loans to related party                                                                                                                                                                    |   |          | 1,008,444  |   |              |   | 1,016,365 |   |
| Total assets                                                                                                                                                                              |   | $             | 15,312,067 |   |              | $      | 13,239,618 |   |
|                                                                                                                                                                                      |   |          |       |   |              |   |   |   |
| LIABILITIES AND STOCKHOLDERS’ EQUITY                                                                                                                                                |   |          |       |   |              |   |   |   |
|                                                                                                                                                                                      |   |          |       |   |              |   |   |   |
| CURRENT LIABILITIES                                                                                                                                                                       |   |          |       |   |              |   |   |   |
| Customer deposits                                                                                                                                                                         |   | $             | 500        |   |              | $      | 10,912 |   |
| Accounts payable and accrued liabilities                                                                                                                                                  |   |          | 262,227    |   |              |   | 264,453 |   |
| Taxes payable                                                                                                                                                                             |   |          | 595,566    |   |              |   | 305,570 |   |
| Related party payable                                                                                                                                                                     |   |          | 254,990    |   |              |   | 234,860 |   |
| Total current liabilities                                                                                                                                                                 |   |          | 1,113,283  |   |              |   | 815,795 |   |
|                                                                                                                                                                                      |   |          |       |   |              |   |   |   |
| STOCKHOLDERS' EQUITYPreferred stock, 5,000,000 shares authorized, 0 shares outstanding                                                                                                    |   |          |       |   |              |   |   |   |
| Common stock, $0.001 par value; 70,000,000 shares authorized, 13,259,600 shares issued and outstanding at June 30, 2012 and 12,059,600 shares issued and outstanding at December 31, 2011 |   |          | 13,260     |   |              |   | 12,060 |   |
| Additional paid in capital                                                                                                                                                                |   |          | 322,519    |   |              |   | 143,719 |   |
| Retained earnings                                                                                                                                                                         |   |          | 13,273,153 |   |              |   | 11,567,692 |   |
| Accumulated other comprehensive income                                                                                                                                                    |   |          | 589,852    |   |              |   | 700,352 |   |
| Total stockholders' equity                                                                                                                                                                |   |          | 14,198,784 |   |              |   | 12,423,823 |   |
|                                                                                                                                                                                      |   |          |       |   |              |   |   |   |
| Total liabilities and stockholders' equity                                                                                                                                                |   | $             | 15,312,067 |   |              | $      | 13,239,618 |   |
|                                                                                                                                                                                      |   |
| See accompanying notes to consolidated financial statements                                                                                                                               |   |

----

|                                     |   | For the Three Months Ended |      |   | For the Six Months Ended |   |
|------------------------------------------|--------|----------------------------|-----------|--------|--------------------------|--------|
|                                     |   | June 30,                   |      |   | June 30,                 |   |
|                                     |   | 2012                       |      |   | 2011                     |   |   | 2012 |   |   | 2011 |   |
|                                     |   |                       |      |   |                     |   |   |   |   |   |   |   |
| Sales                                    |   | $                          | 4,225,032 |   |                     | $      | 2,931,664 |   |   | $ | 8,306,460 |   |   | $ | 5,630,575 |   |
| Cost of sales                            |   |                       | 1,900,707 |   |                     |   | 1,516,228 |   |   |   | 3,778,483 |   |   |   | 2,813,419 |   |
| Cost of sales - related party            |   |                       | 207,573   |   |                     |   | 40,385 |   |   |   | 415,652 |   |   |   | 80,234 |   |
| Gross profit                             |   |                       | 2,116,752 |   |                     |   | 1,375,051 |   |   |   | 4,112,325 |   |   |   | 2,736,922 |   |
| Operating expenses                       |   |                       |      |   |                     |   |   |   |   |   |   |   |   |   |   |   |
| Selling, general and administrative      |   |                       | 856,884   |   |                     |   | 299,318 |   |   |   | 1,614,207 |   |   |   | 581,021 |   |
| Lease expenses - related party           |   |                       | 77,099    |   |                     |   | 75,000 |   |   |   | 154,386 |   |   |   | 149,006 |   |
| Total operating expenses                 |   |                       | 933,983   |   |                     |   | 374,318 |   |   |   | 1,768,593 |   |   |   | 730,027 |   |
|                                     |   |                       |      |   |                     |   |   |   |   |   |   |   |   |   |   |   |
| Income from operations                   |   |                       | 1,182,769 |   |                     |   | 1,000,733 |   |   |   | 2,343,732 |   |   |   | 2,006,895 |   |
|                                     |   |                       |      |   |                     |   |   |   |   |   |   |   |   |   |   |   |
| Other income                             |   |                       |      |   |                     |   |   |   |   |   |   |   |   |   |   |   |
| Subsidy income                           |   |                       | -         |   |                     |   | 109,231 |   |   |   | - |   |   |   | 109,231 |   |
| Interest income                          |   |                       | 280       |   |                     |   | 37,946 |   |   |   | 878 |   |   |   | 74,771 |   |
| Total other income                       |   |                       | 280       |   |                     |   | 147,177 |   |   |   | 878 |   |   |   | 184,002 |   |
|                                     |   |                       |      |   |                     |   |   |   |   |   |   |   |   |   |   |   |
| Income before income tax expense         |   |                       | 1,183,049 |   |                     |   | 1,147,910 |   |   |   | 2,344,610 |   |   |   | 2,190,897 |   |
| Income tax expense                       |   |                       | (295,371  | )      |                     |   | (254,822 | ) |   |   | (639,149 | ) |   |   | (518,001 | ) |
| Net income                               |   |                       | 887,678   |   |                     |   | 893,088 |   |   |   | 1,705,461 |   |   |   | 1,672,896 |   |
| Other comprehensive income               |   |                       |      |   |                     |   |   |   |   |   |   |   |   |   |   |   |
| Foreign currency translation gain (loss) |   |                       | (131,654  | )      |                     |   | 153,033 |   |   |   | (110,500 | ) |   |   | 165,194 |   |
| Total comprehensive income               |   | $                          | 756,024   |   |                     | $      | 1,046,121 |   |   | $ | 1,594,961 |   |   | $ | 1,838,090 |   |
|                                     |   |                       |      |   |                     |   |   |   |   |   |   |   |   |   |   |   |

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

----

|                                                         |   | For the Six Months Ended June 30, |       |
|--------------------------------------------------------------|--------|-----------------------------------|------------|
|                                                         |   | 2012                              |       |   | 2011 |   |
|                                                         |   |                              |       |   |   |   |
| Cash flows from operating activities                         |   |                              |       |   |   |   |
| Net income                                                   |   | $                                 | 1,705,461  |   |   | $ | 1,672,896 |   |
| Depreciation and amortization                                |   |                              | 690,221    |   |   |   | 121,924 |   |
| Prepaid lease amortization- related party                    |   |                              | 570,037    |   |   |   | 229,242 |   |
| Stock based compensation                                     |   |                              | 180,000    |   |   |   | - |   |
| Accounts receivable                                          |   |                              | 211,130    |   |   |   | 59,507 |   |
| Inventories                                                  |   |                              | (62,067    | ) |   |   | (332,394 | ) |
| Other receivables                                            |   |                              | (27,029    | ) |   |   | (16,613 | ) |
| Advance to suppliers                                         |   |                              | (195,833   | ) |   |   | (46,905 | ) |
| Deferred tax assets                                          |   |                              | (37,323    | ) |   |   | 2,431 |   |
| Accounts payable & accrued expense                       |   |                              | 19,403     |   |   |   | (58,430 | ) |
| Customer deposits                                            |   |                              | (10,392    | ) |   |   | (6,103 | ) |
| Taxes payable                                                |   |                              | 294,217    |   |   |   | (68,400 | ) |
| Prepaid lease                                                |   |                              | (2,387,820 | ) |   |   | - |   |
| Prepayment – related party                             |   |                              | -          |   |   |   | (1,222,623 | ) |
| Net cash provided by operating activities                    |   |                              | 950,005    |   |   |   | 334,532 |   |
|                                                         |   |                              |       |   |   |   |   |   |
| Cash flows from investing activities                         |   |                              |       |   |   |   |   |   |
| Purchase of property and equipment                           |   |                              | (679,106   | ) |   |   | (65,781 | ) |
| Net cash used in investing activities                        |   |                              | (679,106   | ) |   |   | (65,781 | ) |
|                                                         |   |                              |       |   |   |   |   |   |
| Cash flows from financing activities                         |   |                              |       |   |   |   |   |   |
| Increase of shareholder loan                                 |   |                              | -          |   |   |   | 3,511 |   |
| Net cash provided by financing activities                    |   |                              | -          |   |   |   | 3,511 |   |
|                                                         |   |                              |       |   |   |   |   |   |
| Effect of exchange rate changes on cash                      |   |                              | (13,426    | ) |   |   | 23,298 |   |
|                                                         |   |                              |       |   |   |   |   |   |
| Net increase (decrease) in cash and cash equivalents         |   |                              | 257,473    |   |   |   | 295,560 |   |
|   Cash and cash equivalents at beginning of period |   |                              | 1,586,158  |   |   |   | 870,042 |   |
|   Cash and cash equivalents at end of period       |   | $                                 | 1,843,631  |   |   | $ | 1,165,602 |   |
|                                                         |   |                              |       |   |   |   |   |   |
| Supplementary cash flow information:                         |   |                              |       |   |   |   |   |   |
| Cash paid for interest                                       |   | $                                 | -          |   |   | $ | - |   |
| Cash paid for income tax                                     |   | $                                 | 547,296    |   |   | $ | 615,527 |   |
|                                                         |   |                              |       |   |   |   |   |   |

----

| 1. | Basis of presentation |
|----|-----------------------|

| 2. | Organization and principal activities |
|----|---------------------------------------|

----

| 3. | Cash and cash equivalents |
|----|---------------------------|

|         |   | June 30,2012 |      |   | December 31,2011 |   |
|--------------|--------|--------------|-----------|--------|------------------|--------|
|         |   |         |      |   |             |   |
| Cash on hand |   | $            | 464,251   |   |             | $      | 730,399 |   |
| Cash in bank |   |         | 1,379,380 |   |             |   | 855,759 |   |
| Total        |   | $            | 1,843,631 |   |             | $      | 1,586,158 |   |

----

| 4. | Accounts receivable |
|----|---------------------|

|                   |   | June 30,2012 |    |   | December 31,2011 |   |
|------------------------|--------|--------------|---------|--------|------------------|--------|
|                   |   |         |    |   |             |   |
| Due from third parties |   | $            | 781,888 |   |             | $      | 999,488 |   |
| Total                  |   | $            | 781,888 |   |             | $      | 999,488 |   |

| 5. | Related party transactions |
|----|----------------------------|

|   | a) | Loans to (from) related parties are as follows: |
|--------|----|-------------------------------------------------|

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

|   | b) |    Prepaid leases - related party |
|--------|----|--------------------------------------------------|

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

|   | 1) | The Company leases its office building and operating outlets from one of its stockholders. The lease contract is for 5 years starting from January 2008 to December 2012. The total rental of RMB15,000,000 was prepaid in advance. The prepaid leases are amortized equally over the five years using straight line method. The monthly rental is RMB 250,000 (approximately US$38,400). |
|--------|----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 2) | In December 2011, the Company extended the lease contract of the same office building from January 2013 to December 2017. The total rent is RMB30,000,000 (about US$4.76 million), of which RMB15,200,000 (about US$2.4 million) was paid in advance. The remaining rent is due in 2012 and 2013. The prepaid leases will be amortized equally over the five years using straight line method starting January 1, 2013. The monthly rental is RMB 500,000 (approximately US$76,800). |
|--------|----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | 3) | On June 25, 2011, the Company entered into a new lease agreement with one of the Company’s shareholders. According to the new lease agreement, the Company will lease an office building and use it as a new administration, sales and manufacturing facility. The lease contract is for 5 years starting from September 1, 2011 to September 1, 2016 and a total rental of RMB21,000,000 (approximately US$3.1 million) was prepaid in advance. The prepaid leases are amortized equally over the five years using the straight line method. The monthly rental is RMB 350,000 (approximately US$53,800). |
|--------|----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | c) | Related party payable |
|--------|----|-----------------------|

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

| 6. | Inventory |
|----|-----------|

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

| 7. | Property and equipment |
|----|------------------------|

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

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

----

| 8. | Prepaid lease |
|----|---------------|

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

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

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

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

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

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

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

----

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

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

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

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

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

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

| 9. | Taxes payable |
|----|---------------|

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

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| 10. | Shareholder’s Equity and Stock Based Compensation |
|-----|---------------------------------------------------------|

| 11. | Income Tax |
|-----|------------|

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|                              |   | For the six months ended |      |   | For the six months ended |   |
|-----------------------------------|--------|--------------------------|-----------|--------|--------------------------|--------|
|                              |   | June 30, 2012            |      |   | June 30, 2011            |   |
| Income (loss) before income taxes |   |                     |      |   |                     |   |
| United States, BVI, HK            |   | $                        | (249,908  | )      |                     | $      | (17,142 | ) |
| China (Decens)                    |   |                     | 2,594,518 |   |                     |   | 2,208,039 |   |
|                              |   |                     | 2,344,610 |   |                     |   | 2,190,897 |   |
| Provision for Income Taxes        |   |                     |      |   |                     |   |   |   |
| Current income tax                |   |                     | 676,448   |   |                     |   | 515,628 |   |
| Deferred income tax               |   |                     | (37,299   | )      |                     |   | 2,373 |   |
|                              |   |                     | 639,149   |   |                     |   | 518,001 |   |
|                              |   |                     |      |   |                     |   |   |   |
| Net income                        |   | $                        | 1,705,461 |   |                     | $      | 1,672,896 |   |
|                              |   |                     |      |   |                     |   |   |   |
| Worldwide effective rate          |   |                     | 27.26     | %      |                     |   | 23.64 | % |

| 12. | Subsequent events |
|-----|-------------------|

|                                           |   | Three months ended June 30, |      |   | % increase |   |      | Six months ended June 30, |   |   | % increase |   |
|------------------------------------------------|--------|-----------------------------|-----------|--------|------------|--------|-----------|---------------------------|--------|--------|------------|--------|
|                                           |   | 2012                        |      |   | 2011       |   |      | (decrease)                |   |   | 2012       |   |   | 2011 |   |   | (decrease) |   |
|                                           |   |                        |      |   |       |   |      |                      |   |   |       |   |   |   |   |   |   |   |
| Sales                                          |   | $                           | 4,225,032 |   |       | $      | 2,931,664 |                      |   |   | 44         | %      |   | $ | 8,306,460 |   |   | $ | 5,630,575 |   |   |   | 48 | % |
| Cost of sales                                  |   |                        | 1,900,707 |   |       |   | 1,516,228 |                      |   |   | 25         | %      |   |   | 3,778,483 |   |   |   | 2,813,419 |   |   |   | 34 | % |
| Cost of sales – related party            |   |                        | 207,573   |   |       |   | 40,385    |                      |   |   | 414        | %      |   |   | 415,652 |   |   |   | 80,234 |   |   |   | 418 | % |
| Selling, general & administrative expenses |   |                        | 856,884   |   |       |   | 299,318   |                      |   |   | 186        | %      |   |   | 1,614,207 |   |   |   | 581,021 |   |   |   | 178 | % |
| Lease expenses - related party                 |   |                        | 77,099    |   |       |   | 75,000    |                      |   |   | 3          | %      |   |   | 154,386 |   |   |   | 149,006 |   |   |   | 4 | % |
| Income from operations                         |   |                        | 1,182,769 |   |       |   | 1,000,733 |                      |   |   | 18         | %      |   |   | 2,343,732 |   |   |   | 2,006,895 |   |   |   | 17 | % |
| Other income                                   |   |                        | 280       |   |       |   | 147,177   |                      |   |   | (100       | %)     |   |   | 878 |   |   |   | 184,002 |   |   |   | (100 | %) |
| Income before income taxes                     |   |                        | 1,183,049 |   |       |   | 1,147,910 |                      |   |   | 3          | %      |   |   | 2,344,610 |   |   |   | 2,190,897 |   |   |   | 7 | % |
| Income taxes                                   |   |                        | (295,371  | )      |       |   | (254,822  | )                         |   |   | 16         | %      |   |   | (639,149 | ) |   |   | (518,001 | ) |   |   | 23 | % |
| Net income                                     |   | $                           | 887,678   |   |       | $      | 893,088   |                      |   |   | (1         | %)     |   | $ | 1,705,461 |   |   | $ | 1,672,896 |   |   |   | 2 | % |

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

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| 31.1 |   | Certification of the Chief Executive Officer pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as amended. |
|------|--------|---------------------------------------------------------------------------------------------------------------------------------------|

| 31.2 |   | Certification of the Chief Financial Officer pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as amended. |
|------|--------|---------------------------------------------------------------------------------------------------------------------------------------|

| 32.1 |    | Certification of the Chief Executive Officer pursuant to Rule 13a-14(b) or Rule 15d-14(b) of the Securities Exchange Act of 1934, as amended, and 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
|------|--------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 32.2 |   | Certification of the Chief Financial Officer pursuant to Rule 13a-14(b) or Rule 15d-14(b) of the Securities Exchange Act of 1934, as amended, and 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
|------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 101   *         **  |    | The following financial information from our Quarterly Report on Form 10-Q for the quarter ended June 30, 2012 formatted in Extensible Business Reporting Language (XBRL): (i) the Consolidated Statements of Operations and Comprehensive Income for the six and three month periods ended June 30, 2012 and 2011, (ii) the Consolidated Balance Sheets at June 30, 2012 and December 31, 2011, (iii) the Consolidated Statements of Cash Flows for the six and three month periods ended June 30, 2012 and 2011 and (iv) the notes to the Consolidated Financial Statements. |
|----------------------------------------------------------------------------|--------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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|                   | YAKUN INTERNATIONAL INVESTMENT & HOLDING GROUP. |                                       |
|------------------------|-----------------------------------------------------|--------------------------------------------|
|                   |                                                |                                       |   |
| Dated: August 14, 2012 | By:                                                 | /s/ Yakun Song                             |   |
|                   |                                                | Yakun Song                                 |   |
|                   |                                                | Chief Executive Officer and President |   |

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