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 September 30, 2008





[   ]
            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.     YesX     No.





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 companyX





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





Applicable
only to issuers involved in bankruptcy proceedings during the preceding five
years:





Indicate by check mark whether the
registrant has filed all documents and reports required to be filed by Sections
12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the
distribution of securities under a plan confirmed by a court.  Yes
     No
.








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 November 14, 2008, 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
              11ITEM
      3
              Quantitative
      and Qualitative Disclosures About Market Risk
              14ITEM
      4T
              Controls
      and Procedures
              14PART
      II –
              OTHER
      INFORMATION
              16ITEM
      1
              Legal
      Proceedings
              16ITEM
      1A
              Risk
      Factors
              16ITEM
      2
              Unregistered
      Sales of Equity Securities and Use of Proceeds
              16ITEM
      3
              Defaults
      Upon Senior Securities
              16ITEM
      4
              Submission
      of Matters to a Vote of Security Holders
              16ITEM
      5
              Other
      Information
              16ITEM
      6
              Exhibits
              16






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








September
      30, 2008
            
            
            December
      31, 2007(Unaudited)
            
            
            (Audited)ASSETSCurrent
      AssetsCash
      and cash equivalents
            
            $
            4,812
            
            
            $
            1,971Accounts
      receivable, net
            
            
            -
            
            
            
            5,000Total
      Current Assets
            
            
            4,812
            
            
            
            6,971Fixed
      AssetsComputer
      equipment
            
            
            3,308
            
            
            
            3,308Accumulated
      depreciation
            
            
            (2,646
            )
            
            
            (2,150
            )Total
      Fixed Assets
            
            
            662
            
            
            
            1,158Total
      Assets
            
            $
            5,474
            
            
            $
            8,129LIABILITIES
      AND STOCKHOLDERS' EQUITY(DEFICIT)LiabilitiesCurrent
      LiabilitiesAccrued
      expenses and other payables
            
            $
            2,502
            
            
            $
            9,974Related
      party payable
            
            
            53,542
            
            
            
            6,094Total
      Current Liabilities
            
            
            56,044
            
            
            
            16,068Long
      Term Liabilities
            
            
            -
            
            
            
            -Total
      Long Term Liabilities
            
            
            -
            
            
            
            -Total
      Liabilities
            
            
            56,044
            
            
            
            16,068Stockholders'
      Equity (Deficit)Convertible
      Preferred Stock -- 1,500,000 shares authorized having a par value of $.001
      per share; 0 shares issued and outstandingPreferred
      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
            
            
            
            26,188Retained
      earnings (deficit)
            
            
            (86,758
            )
            
            
            (44,127
            )Total
      Stockholders' Equity(Deficit)
            
            
            (50,570
            )
            
            
            (7,939
            )Total
      Liabilities and Stockholders' Equity (Deficit)
            
            $
            5,474
            
            
            $
            8,129






The
accompanying notes are an integral part of these financial
statements




5









YAFARM
TECHNOLOGIES, INC.


CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS


FOR
THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2008 AND 2007


(Unaudited)








For
      the Three
            
            
            For
      the Three
            
            
            For
      the Nine
            
            
            For
      the NineMonths
      Ended
            
            
            Months
      Ended
            
            
            Months
      Ended
            
            
            Months
      EndedSept
      30, 2008
            
            
            30-Sep-07
            
            
            Sept
      30, 2008
            
            
            30-Sep-07(Unaudited)
            
            
            (Unaudited)
            
            
            (Unaudited)
            
            
            (Unaudited)Revenues,
      net of discounts
            
            $
            -
            
            
            $
            3,167
            
            
            $
            -
            
            
            $
            9,901Operating
      Expenses
            
            
            9,346
            
            
            
            11,920
            
            
            
            41,341
            
            
            
            32,042Net
      Income (Loss) from Operations
            
            
            (9,346
            )
            
            
            (8,753
            )
            
            
            (38,839
            )
            
            
            (22,141
            )Other
      Income (Expense):
            
            
            -
            
            
            
            
            
            
            
            -Interest
      expense
            
            
            (500
            )
            
            
            -
            
            
            
            (1,290
            )
            
            
            -Total
      Other Income (Expense)
            
            
            (500
            )
            
            
            -
            
            
            
            (1,290
            )
            
            
            -Net
      Income (Loss) before taxes
            
            
            (9,846
            )
            
            
            (8,753
            )
            
            
            (42,631
            )
            
            
            (22,141
            )Provision
      for Income Taxes (Benefit)
            
            
            -
            
            
            
            (2,766
            )
            
            
            -
            
            
            
            (4,777
            )Net
      Income (Loss)
            
            $
            (9,846
            )
            
            $
            (5,987
            )
            
            $
            (42,631
            )
            
            $
            (17,364
            )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
            
            
            
            9,912,701








The
accompanying notes are an integral part of these financial
statements






6











YAFARM
TECHNOLOGIES, INC


CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS


FOR
THE NINE MONTHS ENDED SEPTEMBER 30, 2008 AND 2007


(Unaudited)








For
      the Nine
            
            
            For
      the NineMonths
      Ended
            
            
            Months
      EndedSept
      30, 2008
            
            
            30-Sep-07(Unaudited)
            
            
            (Unaudited)Cash
      Flows From Operating ActivitiesNet
      Income (Loss)
            
            $
            (42,631
            )
            
            $
            (17,364
            )Adjustments
      to reconcile net income (loss)to
      net cash from operating activities:Depreciation
      and Amortization
            
            
            496
            
            
            
            268(Increase)/Decrease-Receivables
            
            
            5,000
            
            
            
            (5,000
            )(Increase)/Decrease-Prepaid
      Expenses
            
            
            -
            
            
            
            14,300(Increase)/Decrease-Deferred
      Taxes
            
            
            -
            
            
            
            (4,828
            )Increase/(Decrease)-Accrued
      Expenses
            
            
            (7,472
            )
            
            
            (1,161
            )Increase/(Decrease)-Related
      Party Payables
            
            
            47,448
            
            
            
            (16,099
            )Net
      Cash From Operating Activities
            
            
            2,841
            
            
            
            (29,884
            )Cash
      Flows From Investing ActivitiesPurchase
      of Equipment
            
            
            -
            
            
            
            (1,184
            )Net
      Cash From Investing Activities
            
            
            -
            
            
            
            (1,184
            )Cash
      Flows From Financing ActivitiesIssuance
      of Common Stock
            
            
            -
            
            
            
            40,400Professional
      Fees related to stock offering
            
            
            -
            
            
            
            (36,867
            )Net
      Cash From Financing Activities
            
            
            -
            
            
            
            3,533Net
      Increase (Decrease) in Cash
            
            
            2,841
            
            
            
            (27,535
            )Beginning
      Cash Balance
            
            
            1,971
            
            
            
            35,716Ending
      Cash Balance
            
            $
            4,812
            
            
            $
            8,181







The
accompanying notes are an integral part of these financial
statements





7







YAFARM
TECHNOLOGIES, INC.
 NOTES
TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 September
30, 2008
 (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 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 financial statements be read in
conjunction with the financial statements and notes thereto included in the
Company’s Form 10-KSB for the year ended December 31, 2007.





NOTE B-
RELATED PARTY NOTE 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 are used to pay for certain professional costs such as
legal, accounting and listing services. The Company has accrued $1,290 of
interest on the note during the nine months period ended September 30,
2008.  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.





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 September 30, 2008, the Company had an
accumulated deficit of ($86,758), raising substantial doubt about its ability to
continue as a going concern.





Management’s
plan to address the Company’s ability to continue as a going concern includes:
obtaining additional funding from the sale of the Company’s securities and
establishing revenues.  Although management believes that it will be able
to obtain the necessary funding to allow the Company to remain a going concern
through the methods discussed above, there can be no assurances that such
methods will prove successful. Should we be unsuccessful, the Company may need
to discontinue its operations.






8








YAFARM
TECHNOLOGIES, INC.
 NOTES
TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 September
30, 2008
 (Unaudited)


NOTE D
–NEW ACCOUNTING PRONOUNCEMENTS





In
February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial
Assets and Liabilities – Including an amendment of FASB Statement No. 115
(“SFAS 159”).  SFAS 159 allows entities the option to measure eligible
financial instruments at fair value as of specified dates. Such election, which
may be applied on an instrument by instrument basis, is typically irrevocable
once elected.  The Company elected not to measure any additional
financial assets or liabilities at fair value at the time SFAS 159 was adopted
on January 1, 2008.  As a result, implementation of SFAS 159 had
no impact on the Company’s condensed consolidated financial statements. In
December 2007, the FASB issued SFAS No. 141 (revised 2007), Business
Combinations (“SFAS 141R”) and SFAS No. 160, Noncontrolling Interests in
Consolidated Financial Statements, an amendment of Accounting Research Bulletin
No. 51(“SFAS 160”). SFAS No. 141R requires an acquirer to measure the
identifiable assets acquired, the liabilities assumed and any noncontrolling
interest in the acquiree at their fair values on the acquisition date, with
goodwill being the excess value over the net identifiable assets
acquired.  SFAS No. 160 clarifies that a noncontrolling interest in a
subsidiary should be reported as equity in the consolidated financial
statements. The calculation of earnings per share will continue to be based on
income amounts attributable to the parent. SFAS No. 141R and SFAS No. 160 are
effective for financial statements issued for fiscal years beginning after
December 15, 2008.  Early adoption is prohibited.  The
Company has not yet determined the effect on its consolidated financial
statements, if any, upon adoption of SFAS No. 141R or SFAS No. 160.





In March
2008, the FASB issued Statement of Financial Accounting Standards No. 161,
“Disclosures about Derivative Instruments and Hedging Activities, an amendment
of FASB Statement No. 133” (“FAS 161”), which requires enhanced
disclosures about a company’s derivative and hedging activities. The Company
currently is evaluating the impact of the adoption of the enhanced disclosures
required by FAS 161 which is effective for the Company at the beginning of
its fiscal year 2010.





In May
2008, the FASB issued Statement of Financial Accounting Standards No. 162,
“The Hierarchy of Generally Accepted Accounting Principles (“FAS 162”). The
new standard is intended to improve financial reporting by identifying a
consistent framework, or hierarchy, for selecting accounting principles to be
used in preparing financial statements that are presented in conformity with
generally accepted accounting principles (“GAAP”) for nongovernmental entities
in the United States. FAS 162 is effective 60 days following SEC
approval of the Public Company Accounting Oversight Board Auditing amendments to
AU Section 411, “The Meaning of Present Fairly in Conformity with Generally
Accepted Accounting Principles.” The Company is currently evaluating the impact,
if any, of adopting FAS 162, on its Consolidated Financial
Statements





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 does not expect that the adoption of SFAS 163 will
have a material impact on its financial statements.


9
   YAFARM
TECHNOLOGIES, INC.
 NOTES
TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 September
30, 2008
 (Unaudited)


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.





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.





*  *  *  *  *  *








10






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.






11







We
believe that, if properly capitalized, we can establish ourselves in the
identified niche and capture enough market share to be able to begin to offer
other, to-be-developed cutting edge related Internet services.





Results
of Operations for the Three Months Ended September 30, 2008 and
2007





Introduction





We had no
revenues for the third quarter of 2008, as compared to only $3,167 in revenues
for the third quarter of 2007.





Revenues and Income (Loss)
from Operations







Our revenue, operating expenses and net
income (loss) from operations for the three months ended September 30, 2008, as
compared to the three months ended September 30, 2007, are as
follows:





3
      Months Ended
              September
      30,
              2008
            
            
            3
      Months Ended
              September
      30,
              2007
            
            
            Percentage
              ChangeRevenue
            
            $
            -
            
            
            $
            3,167
            
            
            
            (100
            )
      %Operating
      expenses
            
            
            9,346
            
            
            
            11,920
            
            
            
            (22
            )
      %Net
      loss from operations
            
            $
            (9,346
            )
            
            $
            (8,753
            )
            
            
            (7
            )
      %





Our
revenues were $0 for the three month period ended September 30, 2008, as
compared to $3,167 for the three month period ended September 30,
2007.  During the same time periods, our operating expenses decreased
by 22%.  As a result, we had a net loss from operations of $9,346 for
the three month period ended September 30, 2008, as compared to a net loss from
operations of $8,753 for the three month period ended September 30,
2007.





Liquidity
and Capital Resources





Introduction





During
the nine months ended September 30, 2008, we had a net loss of $42,631 and cash
flow from operating activities of $2,841.  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.






12





Our cash
and cash equivalents, total current assets, total assets, total current
liabilities, and total liabilities as of September 30, 2008, as compared to June
30, 2008, are as follows:





September
      30,
            
            
            June
      30,2008
            
            
            2008Cash
            
            $
            4,812
            
            
            $
            11,597Total
      current assets
            
            
            4,812
            
            
            
            11,597Total
      assets
            
            
            5,474
            
            
            
            12,424Total
      current liabilities
            
            
            56,044
            
            
            
            53,148Total
      liabilities
            
            
            56,044
            
            
            
            53,148





Cash
Requirements





Our cash
requirements are expected to remain consistent with our historical needs over
the next 12 months.  During the nine months ended September 30, 2008,
we received total proceeds of $0 from the issuance of common
stock.  Our cash is utilized primarily for professional fees
associated with being a public, reporting company.




Beyond
the next 12 months, our cash needs are anticipated to increase substantially as
we anticipate making one or more acquisitions.  We anticipate
fulfilling our cash needs primarily through the sale of our common stock,
followed by increased cash flows from operations.  We cannot estimate
what our cash needs will be in the future, other than the approximately $100,000
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 nine months ended September 30, 2008, we generated a positive cash flow of
$2,841.  Net cash from operating activities for the nine months ended
September 30, 2008 and 2007, were $2,841 and $(29,844),
respectively.  Positive operating cash flows during the nine months
ended September 30, 2008 were primarily created by an increase of $47,448 in
related party payables.





Net cash
provided by financing activities for the nine months ended September 30, 2008
and 2007, were $0 and $3,533, respectively.





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





Critical
Accounting Policies





Our
accounting policies are fully described in Note A to our consolidated financial
statements contained in our Annual Report on Form 10-KSB, filed on April 15,
2008.  The following describes the general application of accounting
principles that impact our consolidated financial statements.





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.








13





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.





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





Evaluation of Disclosure
Controls and Procedures





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 September 30, 2008, 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 September 30, 2008, 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 financial statements were prepared
in accordance with generally accepted accounting
principles.  Accordingly, we believe that the 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. 5) or
combination of control deficiencies, such that there is a reasonable possibility
that a material misstatement of the annual or interim financial statements will
not be prevented or detected.  Management has identified the following
three material weaknesses which have caused management to conclude that, as of
September 30, 2008, 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,
2008.  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.








14





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.





3.           We
had a significant number of audit adjustments last fiscal year.  Audit
adjustments are the result of a failure of the internal controls to prevent or
detect misstatements of accounting information.  The failure could be
due to inadequate design of the internal controls or to a misapplication or
override of controls.  Management evaluated the impact of our
significant number of audit adjustments last year 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





To remediate the material weaknesses in
our disclosure controls and procedures identified above, in addition to working
with our independent registered public accounting firm, we have continued to
refine our internal procedures to begin to implement segregation of duties and
to reduce the number of audit adjustments.





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.





This
quarterly report does not include an attestation report of the company’s
registered public accounting firm regarding internal control over financial
reporting. Management’s report was not subject to attestation by our registered
public accounting firm pursuant to temporary rules of the Securities and
Exchange Commission that permit us to provide only management’s report in this
quarterly report.





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






15






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 September 30, 2008.





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
            
            Certificate
      of Designation of Series A Convertible Preferred Stock filed on June 9,
      20083.4
      (1)
            
            Bylaws
      of YaFarm Technologies, Inc.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.








16





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:  November
      17, 2008
            /s/
      Zhiguang ZhangBy:  Zhiguang
      ZhangIts:   Chief
      Executive Officer











17