UNITED STATES


SECURITIES AND EXCHANGE COMMISSION


Washington, D.C.  20549





Form 10-Q





(Mark One)





[X]
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934





For the quarterly period ended June 30, 2009





[   ]
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934





For the transition period from _______________ to _______________.





Commission file number:  000-52739





YAFARM TECHNOLOGIES, INC.


(Exact name of registrant as specified in its charter)





Delaware
(State or other jurisdiction of
incorporation or organization)
20-5156305
(I.R.S. Employer
Identification No.)197 Route 18 South,
Suite 3000, PMB 4157
East Brunswick, NJ
(Address of principal executive offices)
08816
(Zip Code)(732) 658-4280
(Registrant’s telephone number, including area code)(Former name, former address and former fiscal year, if changed since last report.)








Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject
to such filing requirements for the past 90 days.    Yes  xNo o





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





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





Large accelerated filer  ___                                                                                               Accelerated
filer  ____





Non-accelerated filer                                                  Smaller
reporting company x


(Do not check if a smaller reporting company)





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




1





Applicable only to corporate issuers:





Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.  As of August 14, 2009, there were 10,000,000 shares of common stock, $0.001 par value, issued and outstanding.








2




YAFARM TECHNOLOGIES, INC.


TABLE OF CONTENTS







PART I – FINANCIAL INFORMATION
4ITEM 1
Financial Statements
4ITEM 2
Management’s Discussion and Analysis of Financial Condition and Results of Operations
12ITEM 3
Quantitative and Qualitative Disclosures About Market Risk
16ITEM 4T
Controls and Procedures
16PART II – OTHER INFORMATION
18ITEM 1
Legal Proceedings
18ITEM 1A
Risk Factors
18ITEM 2
Unregistered Sales of Equity Securities and Use of Proceeds
18ITEM 3
Defaults Upon Senior Securities
18ITEM 4
Submission of Matters to a Vote of Security Holders
18ITEM 5
Other Information
18ITEM 6
Exhibits
18


3





PART I – FINANCIAL INFORMATION





This Quarterly Report includes forward-looking statements within the meaning of the Securities Exchange Act of 1934 (the “Exchange Act”).  These statements are based on management’s beliefs and assumptions, and on information currently available to management.  Forward-looking
statements include the information concerning our possible or assumed future results of operations set forth under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”  Forward-looking statements also include statements in which words such as “expect,” “anticipate,” “intend,” “plan,” “believe,” “estimate,” “consider” or similar expressions are used.





Forward-looking statements are not guarantees of future performance.  They involve risks, uncertainties and assumptions.  Our future results and shareholder values may differ materially from those expressed in these forward-looking statements.  Readers are cautioned
not to put undue reliance on any forward-looking statements.




ITEM 1                      Financial Statements





4





YAFARM TECHNOLOGIES, INC.


CONDENSED CONSOLIDATED BALANCE SHEET


AS OF JUNE 30, 2009





June 30, 2009


December 31, 2008(Unaudited)


(Audited)ASSETSCurrent AssetsCash and cash equivalents

$
10,657


$
9,132Total Current Assets


10,657



9,132Property and EquipmentComputer equipment


3,308



3,308Accumulated depreciation


(3,070
)


(2,739
)Total Property and Equipment


238



569Total Assets

$
10,895


$
9,701LIABILITIES AND STOCKHOLDERS' EQUITY(DEFICIT)LiabilitiesCurrent LiabilitiesAccrued expenses and other payables

$
3,282


$
3,248Related party payable


81,036



64,568Total Current Liabilities


84,318



67,816Long Term Liabilities


-



-Total Long Term Liabilities


-



-Total Liabilities


84,318



67,816Stockholders' Equity (Deficit)Convertible Preferred Stock -- 1,500,000 shares authorizedhaving a par value of $.001 per share; 0 shares issued andoutstandingPreferred stock -- 10,000,000 shares authorized having apar value of $.001 per share; 0 shares issued andoutstandingCommon stock -- 100,000,000 shares authorized having apar value of $.001 per share; 10,000,000 shares issuedand outstanding


10,000



10,000Additional paid-in capital


26,188



26,188Accumulated deficit


(109,611
)


(94,303
)Total Stockholders' Equity (Deficit)


(73,423
)


(58,115
)Total Liabilities and Stockholders' Equity (Deficit)

$
10,895


$
9,701






The accompanying notes are an integral part of these interim financial statements




5





YAFARM TECHNOLOGIES, INC.


CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS


FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2009 AND 2008


(Unaudited)





For the Three


For the Three


For the Six


For the SixMonths Ended


Months Ended


Months Ended


Months EndedJune 30, 2009


June 30, 2008


June 30, 2009


June 30, 2008(Unaudited)


(Unaudited)


(Unaudited)


(Unaudited)Revenues, net of discounts

$
-


$
-


$
-


$
-Operating Expenses


4,581



16,806



11,896



31,995Net Income (Loss) from Operations


(4,581
)


(16,806
)


(11,896
)


(31,995
)Other Income (Expense):


-



-



-



-Interest expense


(1,798
)


(500
)


(3,412
)


(790
)Total Other Income (Expense)


(1,798
)


(500
)


(3,412
)


(790
)Net Income (Loss) before taxes


(6,379
)


(17,306
)


(15,308
)


(32,785
)Provision for Income Taxes (Benefit)


-



-



-



-Net Income (Loss)

$
(6,379
)

$
(17,306
)

$
(15,308
)

$
(32,785
)Income (Loss) Per Share Basic and Fully Diluted

$
(0.01
)

$
(0.01
)

$
(0.01
)

$
(0.01
)Weighted Average Shares Outstanding Basic and Fully Diluted


10,000,000



10,000,000



10,000,000



10,000,000







The accompanying notes are an integral part of these interim financial statements




6





YAFARM TECHNOLOGIES, INC


CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS


FOR THE SIX MONTHS ENDED JUNE 30, 2009 AND 2008


(Unaudited)








For the Six
Months Ended
June 30, 2009
(Unaudited)


For the Six
Months Ended
June 30, 2008
(Unaudited)Cash Flows From Operating ActivitiesNet Income (Loss)

$
(15,308
)

$
(32,785
)Adjustments to reconcile net income (loss)to net cash from operating activities:Depreciation and Amortization


331



331(Increase)/Decrease-Receivables


-



5,000Increase/(Decrease)-Accrued Expenses


34



(6,683
)Expenses Paid By Shareholder


3,412



43,763Net Cash From Operating Activities


(11,531
)


9,626Cash Flows From Financing ActivitiesProceeds from related party note payable


13,056



-Net Cash From Financing Activities


13,056



-Net Increase (Decrease) in Cash


1,525



9,626Beginning Cash Balance


9,132



1,971Ending Cash Balance

$
10,657


$
11,597Supplemental Disclosure of Cash Flow information:Cash paid during the period for interest

$
-


$
-Cash paid during the period for income taxes

$
-


$
-







The accompanying notes are an integral part of these interim financial statements





7





YAFARM TECHNOLOGIES, INC.
 Notes to the Condensed Consolidated Financial Statements
 June 30, 2009
 (Unaudited)





NOTE A – PRELIMINARY NOTE





The accompanying condensed consolidated financial statements have been prepared without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. In the opinion of management, the interim condensed financial statements reflect all adjustments, consisting of normal recurring accruals, which are necessary for
a fair statement of the results for the period. Certain information and disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted. It is suggested that these condensed interim financial statements be read in conjunction with the financial statements and notes thereto included in the Company’s Form 10-K for the year ended December 31, 2008.





YaFarm Technologies, Inc. was formed as a corporation under the laws of the State of Delaware on June 16, 2006. On July 31, 2006, YaFarm Technologies, Inc. acquired YaFarm Group, LLC, a limited liability company formed under the laws of the State of New Jersey on November 13, 2003. The acquisition was accounted for as a reverse merger.





NOTE B – NEW ACCOUNTING PRONOUNCEMENTS





In December 2007, the FASB issued Statement of Financial Accounting Standards ("SFAS") No. 141(R), "Business Combinations." SFAS No. 141(R) changes the accounting for and reporting of business combination transactions in the following way: Recognition with certain exceptions, of 100% of the fair values of assets acquired, liabilities assumed,
and non controlling interests of acquired businesses; measurement of all acquirer shares issued in consideration for a business combination at fair value on the acquisition date; recognition of contingent consideration arrangements at their acquisition date fair values, with subsequent changes in fair value generally reflected in earnings; recognition of pre-acquisition gain and loss contingencies at their acquisition date fair value; capitalization of in-process research and development (IPR&D) assets acquired
at acquisition date fair value; recognition of acquisition-related transaction costs as expense when incurred; recognition of acquisition-related restructuring cost accruals in acquisition accounting only if the criteria in Statement No. 146 are met as of the acquisition date; and recognition of changes in the acquirer’s income tax valuation allowance resulting from the business combination separately from the business combination as adjustments to income tax expense. SFAS No. 141(R) is effective for the
first annual reporting period beginning on or after December 15, 2008 with earlier adoption prohibited. The adoption of SFAS No. 141(R) will affect valuation of business acquisitions made in 2009 and forward. The Company adopted SFAS No. 141(R) on January 1, 2009, with no impact to the financial results.





In December 2007, the FASB issued SFAS No. 160 "Noncontrolling Interest in Consolidated Financial Statements - an Amendment of ARB 51" (SFAS 160). SFAS 160 clarifies that a noncontrolling interest in a subsidiary is an ownership interest in the consolidated entity that should be reported as equity in the consolidated financial statements.
It also requires consolidated net income to be reported at amounts that include the amounts attributable to both the parent and the noncontrolling interest, and requires disclosure, on the face of the consolidated statement of income, of the amounts of consolidated net income attributable to the parent and to the noncontrolling interest. SFAS 160 is effective for fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2008. Earlier adoption is prohibited. The Company adopted
SFAS No. 160 on January 1, 2009, with no impact to the financial results.




8


YAFARM TECHNOLOGIES, INC.
 Notes to the Condensed Consolidated Financial Statements
 June 30, 2009
 (Unaudited)




In March 2008, the FASB issued SFAS No. 161, "Disclosures about Derivative Instruments and Hedging Activities." SFAS 161 is intended to improve financial reporting about derivative instruments and hedging activities by requiring enhanced disclosures to enable investors to better understand their effects on an entity's financial position,
financial performance, and cash flows. SFAS 161 is effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008, with early application encouraged. Pursuant to the transition provisions of the Statement, the Company adopted SFAS No. 161 on January 1, 2009. This Statement does not impact the financial results as it is disclosure-only in nature.





In May 2008, the FASB issued SFAS No. 163, Accounting for Financial Guarantee Insurance Contracts – an Interpretation of FASB Statement No. 60 (“SFAS 163”).  SFAS 163 clarifies how Statement 60 applies to financial guarantee insurance contracts, including the recognition and measurement of premium revenue and
claim liabilities.  This Statement also requires expanded disclosures about financial guarantee insurance contracts.  SFAS 163 is effective for fiscal years beginning on or after December 15, 2008, and interim periods within those fiscal years.  The Company adopted SFAS No. 163 on January 1, 2009, with no impact to the financial results.





In May 2009, the FASB issued SFAS No. 165, “Subsequent Events” (SFAS No. 165). SFAS No. 165 provides guidance on management’s assessment of subsequent events and incorporates this guidance into accounting literature. SFAS No. 165 is effective prospectively for interim and annual periods ending after June 15, 2009. The
implementation of this standard did not have a material impact on the Company’s financial position and results of operations. The Company has evaluated subsequent events through August 14, 2009, the date of issuance of the Company’s financial position and results of operations.





In June 2009, the FASB issued Statement of Financial Accounting Standards No. 168, The FASB Accounting Standards CodificationTM and the Hierarchy of Generally Accepted Accounting Principles, a replacement of FASB Statement No. 162 (“FAS 168”).
Under FAS 168, the FASB Accounting Standards CodificationTM (the “Codification”) will become the exclusive source of authoritative U.S. generally accepted accounting principles (“U.S. GAAP”) recognized by the FASB to be applied by nongovernmental entities. Rules and interpretive releases of the Securities and Exchange Commission (“SEC”) under authority of federal securities laws are also sources
of authoritative GAAP for SEC registrants. The Codification will supersede all then-existing non-SEC accounting and reporting standards, with the exception of certain non-SEC accounting literature which will become nonauthoritative. FAS 168 is effective for the Company’s 2009 third fiscal quarter. The adoption of FAS 168 will not have a material impact on the Company’s Financial Statements. All references to U.S. GAAP provided in the notes to the Financial Statements will be updated to conform to
the Codification.





NOTE C- GOING CONCERN





The Company’s financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. As of June 30, 2009, the Company had an accumulated deficit of ($109,611), raising substantial doubt about its ability to continue as a going
concern.











9


YAFARM TECHNOLOGIES, INC.
 Notes to the Condensed Consolidated Financial Statements
 June 30, 2009
 (Unaudited)











NOTE D-RELATED PARTY PAYABLE




On February 8, 2008, the Company borrowed $20,000 through the issuance of a Note to Columbia China Capital Group, Inc., an affiliated party and a shareholder of the Company. The Note carries 10% interest per annum for a term of one year. The proceeds of the Note were used to pay for certain professional costs such as legal, accounting and
listing services.  On November 1, 2008, the Company signed a $32,252 Note to Columbia China Capital Group, Inc., an affiliated party and a shareholder of the Company. The Note carries 10% interest per annum for a term of one year. The Note was exchanged for related party payables to Columbia China Capital Group as a result of professional fees paid by Columbia and cash injection made by Columbia. On December 31, 2008, the Company signed a $9,994 Note to Columbia China Capital Group, Inc., an affiliated
party and a shareholder of the Company. The Note carries 10% interest per annum for a term of one year. The Note was exchanged for related party payables to Columbia China Capital Group as a result of professional fees paid by Columbia and cash injection made by Columbia. On May 20, 2009, the Company signed a $13,056 Note to Columbia China Capital Group, Inc., an affiliated party and a shareholder of the Company. The Note carries 10% interest per annum for a term of one year and the proceeds from the note issuance
was deposited into the Company’s bank account. For the quarter ended on June 30, 2009, the Company accrued a total of $1,798 in accrued interest related to the notes payable to Columbia.  The balance due to this party, including accrued interest, as of June 30, 2009 was $81,036.





NOTE E – AMENDMENT TO ARTICLES OF INCORPORATION





On June 9, 2008, the Company amended its Certificate of Incorporation with a Certificate of Designation of the Rights, Preferences, Privileges, and Restrictions, which had not been set forth in the Certificate of Incorporation or in any amendment thereto, of the Series A Convertible Preferred Stock of YaFarm Technologies, Inc.  The
Certificate of Designation created a new series of preferred stock, consisting of 1,500,000 shares, each with an original issue price of $3.25 per share.   Each share of Series A Convertible Preferred Stock will automatically convert, without any action on the part of the holder into (i) twenty (20) shares of common stock of the Company, and (ii) three (3) warrants to purchase common stock of the Company, exercisable for a period of five (5) years, at an exercise price of $0.1875 per share, upon
the closing of an acquisition of a company by the Company that (a) has net income of at least $2.4 million for the fiscal year immediately preceding the year of acquisition, and (b) results in the shareholders of the Company immediately prior to the closing of the acquisition owning less than 50% of the voting power of the Company immediately following the acquisition.  The holders of a majority of the Series A Convertible Preferred Stock may require that the Corporation redeem the Series A Convertible
Preferred Stock at the original issue price of $3.25 if the acquisition transaction described above does not close on or before the date which is ninety (90) days from the date on which the first share of Series A Convertible Preferred Stock is issued by the Company.  Each outstanding share of Series A Convertible Preferred Stock is entitled to one (1) vote per share on all matters to which the shareholders of the Company are entitled or required to vote.  No shares of Series A Convertible
Preferred Stock have been issued as of June 30, 2009.




10


YAFARM TECHNOLOGIES, INC.
 Notes to the Condensed Consolidated Financial Statements
 June 30, 2009
 (Unaudited)







NOTE F – APPROVAL OF PROSPECTIVE REVERSE STOCK SPLIT





On June 13, 2008, the holders of a majority of the issued and outstanding shares of common stock of the Company approved a prospective amendment to the Certificate of Incorporation of the Company to effectuate a 1-for-4 reverse stock split of the issued and outstanding shares of common stock of the Company.  The purpose of the
reverse stock split is to attract additional capital and to reduce the time involved and provide the Company with flexibility with respect to creating an optimal capital structure to complete an acquisition or merger with a future, as yet unidentified, company or companies.  The Company anticipates effectuating the reverse stock split shortly before or after the consummation of an acquisition or merger with a future, as yet unidentified, company or companies.  On July 7, 2008, the Company
filed a Definitive Information Statement Pursuant to Section 14(c) of the Securities Exchange Act of 1934 to inform the Company’s stockholders of the above action.  As of June 30, 2009 no acquisition or merger has occurred and no reverse stock split has been effectuated.





*  *  *  *  *  *




11




ITEM 2
Management’s Discussion and Analysis of Financial Condition and Results of Operations





Our Management’s Discussion and Analysis contains not only statements that are historical facts, but also statements that are forward-looking (within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934).  Forward-looking statements are, by their very nature, uncertain
and risky.  These risks and uncertainties include international, national and local general economic and market conditions; demographic changes; our ability to sustain, manage, or forecast growth; our ability to successfully make and integrate acquisitions; raw material costs and availability; new product development and introduction; existing government regulations and changes in, or the failure to comply with, government regulations; adverse publicity; competition; the loss of significant customers
or suppliers; fluctuations and difficulty in forecasting operating results; changes in business strategy or development plans; business disruptions; the ability to attract and retain qualified personnel; the ability to protect technology; and other risks that might be detailed from time to time in our filings with the Securities and Exchange Commission.





Although the forward-looking statements in this Quarterly Statement reflect the good faith judgment of our management, such statements can only be based on facts and factors currently known by them.  Consequently, and because forward-looking statements are inherently subject to risks and uncertainties, the actual results and
outcomes may differ materially from the results and outcomes discussed in the forward-looking statements.  You are urged to carefully review and consider the various disclosures made by us in this report and in our other reports as we attempt to advise interested parties of the risks and factors that may affect our business, financial condition, and results of operations and prospects.





The following discussion and analysis of financial condition and results of operations of the Company is based upon, and should be read in conjunction with, its unaudited financial statements and related notes elsewhere in this Form 10-Q, which have been prepared in accordance with accounting principles generally accepted in the United
States.





Overview





We are a web development and web hosting company.  Our wholly-owned subsidiary, YaFarm Group, LLC, offers a broad range of business-class website development and web hosting products and services for small and medium-sized businesses.  Our goal is to help many traditional businesses go online to tap into the market
potential offered by the Internet.





We face many challenges in meeting our goal.  The market for Internet services is large, but fragmented, and constantly changing.  In the short-term, we are focused on establishing ourselves in the web development and web hosting niche by providing quality service at a reasonable cost.  In order to manage
anticipated growth, we will rely on independent contractors to provide many of the services we intend to offer, which comes at the risk of losing quality when compared to having a large staff of employees.  In addition, we will initially contract out web hosting services at a cost of approximately $100 plus $20 per month, per site, as opposed to spending approximately $100,000 to purchase and maintain the equipment necessary to do it in-house.  In the long-term, intense competition is anticipated
to reduce the price we can charge for our services and thus our profit margins.




12





Prospective Reverse Split





On June 13, 2008, the holders of a majority of our issued and outstanding shares of common stock approved a prospective amendment to our Certificate of Incorporation to effectuate a 1-for-4 reverse stock split of our issued and outstanding shares of common stock.  The purpose of
the reverse stock split is to attract additional capital and to reduce the time involved and provide us with flexibility with respect to creating an optimal capital structure to complete an acquisition or merger with a future, as yet unidentified, company or companies.  We anticipate effectuating the reverse stock split shortly before or after the consummation of an acquisition or merger with a future, as yet unidentified, company or companies.  On July 7, 2008, we filed a Definitive Information
Statement Pursuant to Section 14(c) of the Securities Exchange Act of 1934 to inform the Company’s stockholders of the above action.  As of June 30, 2009, no acquisition or merger has occurred and no reverse stock split has been effectuated.





Series A Convertible Preferred Stock





On June 9, 2008, we amended our Certificate of Incorporation with a Certificate of Designation of the Rights, Preferences, Privileges, and Restrictions, which had not been set forth in the Certificate of Incorporation or in any amendment thereto, of the Series A Convertible Preferred Stock of YaFarm Technologies, Inc.  The Certificate
of Designation created a new series of preferred stock, consisting of 1,500,000 shares, each with an original issue price of $3.25 per share.   Each share of Series A Convertible Preferred Stock will automatically convert, without any action on the part of the holder into (i) twenty (20) shares of our common stock, and (ii) three (3) warrants to purchase our common stock, exercisable for a period of five (5) years, at an exercise price of $0.1875 per share, upon the closing of an acquisition of
a company by us that (a) has net income of at least $2.4 million for the fiscal year immediately preceding the year of acquisition, and (b) results in our shareholders immediately prior to the closing of the acquisition owning less than 50% of our voting power immediately following the acquisition.  The holders of a majority of the Series A Convertible Preferred Stock may require that we redeem the Series A Convertible Preferred Stock at the original issue price of $3.25 if the acquisition transaction
described above does not close on or before the date which is ninety (90) days from the date on which the first share of Series A Convertible Preferred Stock is issued by us.  Each outstanding share of Series A Convertible Preferred Stock is entitled to one (1) vote per share on all matters to which our shareholders are entitled or required to vote.  No shares of Series A Convertible Preferred Stock have been issued as of June 30, 2009.





Results of Operations for the Three Months Ended June 30, 2009 and 2008





Introduction





We generated no revenues during the second quarters of 2009 and 2008, while our operating expenses during the second quarter of 2009 were substantially lower, as compared to the second quarter of 2008.  As a result, our net loss for the second quarter of 2009 was less than our net loss for the second quarter of 2008.




13





Revenues and Income (Loss) from Operations




Our revenue, operating expenses and net income (loss) from operations for the three months ended June 30, 2009, as compared to the three months ended June 30, 2008, are as follows:





3 Months Ended
June 30,
2009


3 Months Ended
June 30,
2008


Percentage
ChangeRevenue

$
-


$
-



-
%Operating expenses


4,581



16,806



(72.7
) %Net loss from operations

$
(4,581
)

$
(16,806
)


(72.7
) %





We generated no revenues during the three month periods ended June 30, 2009 and 2008 because of the loss of a key employee.  During the same time periods, our operating expenses decreased by 72.7%.  As a result, we had net loss from operations of $4,581 for the three month period ended June 30, 2009, as compared to
net loss from operations of $16,806 for the three month period ended June 30, 2008.





Liquidity and Capital Resources





Introduction





During the six months ended June 30, 2009, we had a net loss of $15,308 and net cash used in operations of $11,531.  Because our revenues are small, almost any change in our revenues or operating expenses has a material effect, and we anticipate that our net profit or loss, and operating profit or loss, will continue to
vary widely from time period to time period.





Our cash and cash equivalents, total current assets, total assets, total current liabilities, and total liabilities as of June 30, 2009, as compared to March 31, 2009, are as follows:





June 30,


March 31,2009


2009Cash

$
10,657


$
3,440Total current assets


10,657



3,440Total assets


10,895



3,844Total current liabilities


84,318



70,888Total liabilities


84,318



70,888





Cash Requirements





Our cash requirements are expected to remain consistent with our historical needs over the next 12 months.  Our cash is utilized primarily for professional fees associated with operating as a fully reporting public company.





On February 8, 2008, the Company borrowed $20,000 through the issuance of a Note to Columbia China Capital Group, Inc., an affiliated party and the majority shareholder of the Company. The Note carries 10% interest per annum for a term of one year.





On November 1, 2008, the Company issued a $32,252 Note to Columbia China Capital Group, Inc., which Note carries 10% interest per annum for a term of one year.  In addition, on December 31, 2008, the Company issued a $9,994 Note to Columbia China Capital Group, Inc., which Note carries 10% interest per annum for a term of one
year.  These Notes were issued to Columbia China Capital Group, Inc. for a cash injection into the Company and for expenses paid by Columbia China Capital Group, Inc. in behalf of the Company.  The proceeds of the Notes were used to pay for certain professional costs such as legal, accounting and listing services.  Total cash received by the Company was $21,994, whereas expenses paid directly by Columbia China Capital Group, Inc. on behalf of the Company comprise the remaining balance.




14





On May 20, 2009, the Company borrowed $13,056 through the issuance of a Note to Columbia China Capital Group, Inc., an affiliated party and the majority shareholder of the Company. The Note carries 10% interest per annum for a term of one year.





Beyond the next 12 months, our cash needs are anticipated to remain relatively constant.  We anticipate fulfilling our cash needs primarily through the sale of our common stock or the issuance of debt securities.  We cannot estimate what our cash needs will be in the future, other than the approximately $50,000 annually
we anticipate spending on the cost of being a publicly registered company, and we have not entered into any discussions concerning the sale of our common stock in the future.





Sources and Uses of Cash





Operations and Financing





During the six months ended June 30, 2009, we generated cash flow of $1,525.  Net cash provided by (used in) operating activities for the six months ended June 30, 2009 and 2008, were $(11,531) and $9,626, respectively.  The principal component of the net cash used in operations during the six months ended June 30,
2009 was a net loss of $15,308, which was partially offset by expenses of $3,412 which were paid by a shareholder.


We anticipate that we will continue to operate at a loss until we are able to obtain substantial financing or acquire a profitable business.





Critical Accounting Policies





Our accounting policies are fully described in Note A to our consolidated financial statements within the 10-K.





Our results of operations are based upon our consolidated financial statements, which have been prepared in accordance with accounting principals generally accepted in the United States.  The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities,
revenues and expenses, and related disclosure of contingent assets and liabilities.  On an on-going basis, we evaluate our estimates, including those related to bad debt, inventories, investments, intangible assets, income taxes, financing operations, and contingencies and litigation.





We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources.  Actual results may differ from
these estimates under different assumptions or conditions.




15




Off-balance Sheet Arrangements





We have no off-balance sheet arrangements that are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is deemed by our management
to be material to investors.





ITEM 3
Quantitative and Qualitative Disclosures About Market Risk





As a smaller reporting company, we are not required to provide the information required by this Item.





ITEM 4T
Controls and Procedures





We believe our disclosure controls and procedures are designed to provide reasonable assurance of achieving their objectives.  However, we conducted an evaluation, with the participation of our Chief Executive Officer
and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended, or the Exchange Act, as of June 30, 2009, to ensure that information required to be disclosed by us in the reports filed or submitted by us under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Securities Exchange Commission’s rules
and forms, including to ensure that information required to be disclosed by us in the reports filed or submitted by us under the Exchange Act is accumulated and communicated to our management, including our principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.  Based on that evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that as of June 30, 2009, our disclosure
controls and procedures were not effective at the reasonable assurance level due to the material weaknesses described below.





In light of the material weaknesses described below, we performed additional analysis and other post-closing procedures to ensure our consolidated financial statements were prepared in accordance with generally accepted accounting principles.  Accordingly, we believe that the consolidated
financial statements included in this report fairly present, in all material respects, our financial condition, results of operations and cash flows for the periods presented.





A material weakness is a control deficiency (within the meaning of the Public Company Accounting Oversight Board (PCAOB) Auditing Standard No. 2) or combination of control deficiencies, that result in more than a remote likelihood that a material misstatement of the annual or interim financial
statements will not be prevented or detected.  Management has identified the following material weaknesses which have caused management to conclude that, as of June 30, 2009, our disclosure controls and procedures were not effective at the reasonable assurance level:





1.           We do not have written documentation of our internal control policies and procedures.  Written documentation of key internal controls over financial reporting is a requirement of Section 404 of the Sarbanes-Oxley
Act and will be applicable to us for the year ending December 31, 2009.  Management evaluated the impact of our failure to have written documentation of our internal controls and procedures on our assessment of our disclosure controls and procedures and has concluded that the control deficiency that resulted represented a material weakness.




16




2.           We do not have sufficient segregation of duties within accounting functions, which is a basic internal control.  Due to our size and nature, segregation of all conflicting duties may not always be possible and may
not be economically feasible.  However, to the extent possible, the initiation of transactions, the custody of assets and the recording of transactions should be performed by separate individuals.  Management evaluated the impact of our failure to have segregation of duties on our assessment of our disclosure controls and procedures and has concluded that the control deficiency that resulted represented a material weakness.





To address these material weaknesses, management performed additional analyses and other procedures to ensure that the financial statements included herein fairly present, in all material respects, our financial position, results of operations and cash flows for the periods presented.





Remediation of Material Weaknesses





We have attempted to remediate the material weaknesses in our disclosure controls and procedures identified above by working with our independent registered public accounting firm and refining our internal procedures.  We intend to prepare written documentation of our internal control
policies and procedures and intend to complete such documentation by the filing date of our Annual Report on Form 10-K for the fiscal year ended December 31, 2009.  This process will include identifying the risks to reliable financial and nonfinancial reporting by us and developing and documenting the nature, timing, and extent of the controls and procedures that we believe are necessary to adequately address these risks.





Changes in Internal Control over Financial Reporting





Except as noted above, there were no changes in our internal control over financial reporting, as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act, during our most recently completed fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.





Auditor’s Attestation Report on Internal Control over Financial Reporting





In accordance with current SEC guidelines, our external auditors are required to provide their initial attestation report on our internal control over financial reporting in our Annual Report on Form 10-K for the fiscal year ending December 31, 2009.




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PART II – OTHER INFORMATION









ITEM 1
Legal Proceedings




In the ordinary course of business, we may be from time to time involved in various pending or threatened legal actions.  The litigation process is inherently uncertain and it is possible that the resolution of such matters might have a material adverse effect upon our financial condition and/or results of operations.  However,
in the opinion of our management, matters currently pending or threatened against us are not expected to have a material adverse effect on our financial position or results of operations.




ITEM 1A
Risk Factors




As a smaller reporting company, we are not required to provide the information required by this Item.




ITEM 2
Unregistered Sales of Equity Securities and Use of Proceeds




There were no unregistered sales of equity securities by the Company during the three month period ended June 30, 2009.




ITEM 3
Defaults Upon Senior Securities


There have been no events which are required to be reported under this Item.




ITEM 4
Submission of Matters to a Vote of Security Holders





There have been no events which are required to be reported under this Item.




ITEM 5
Other Information
 None.




ITEM 6
Exhibits







(a)           Exhibits





2.1 (1)

Reorganization and Stock Purchase Agreement dated as of July 31, 2006, between the Company and YaFarm Group, LLC3.1 (1)

Certificate of Incorporation of YaFarm Technologies, Inc., filed on June 16, 20063.2 (1)

Certificate of Amendment of Certificate of Incorporation of YaFarm Technologies, Inc., filed on June 28, 20063.3 (2)

Certificate of Designation of Series A Convertible Preferred Stock filed on June 9, 20083.4 (1)

Bylaws of YaFarm Technologies, Inc.   18
  31.1

Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer31.2

Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer32.1

Chief Executive Officer Certification Pursuant to 18 USC, Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.32.2

Chief Financial Officer Certification Pursuant to 18 USC, Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.





(1)           Incorporated by reference from our registration statement on Form SB-2, filed with theCommission on February 16, 2007.





(2)           Incorporated by reference from our quarterly report on Form 10-Q, filed with theCommission on November 19, 2008.








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SIGNATURES





In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.








YaFarm Technologies, Inc.Dated: August 14, 2009
/s/ Zhiguang ZhangBy: Zhiguang ZhangIts: Chief Executive Officer and Director