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 March 31, 2011





[   ]
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:  000-54267





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)





Registrant’s telephone number, including area code    (732) 658-4280








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





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      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 companyX


(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 X     No .





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





Indicate by check mark whether the registrant filed all documents and reports required to be filed by Sections 12, 18 or 15(d) of the Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.   YesNo





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 May 23, 2011, there were 10,000,000 shares of common stock, $0.001 par value, issued and outstanding.








1











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
10ITEM 3
Quantitative and Qualitative Disclosures About Market Risk
13ITEM 4
Controls and Procedures
13PART II – OTHER INFORMATION
15ITEM 1
Legal Proceedings
15ITEM 1A
Risk Factors
15ITEM 2
Unregistered Sales of Equity Securities and Use of Proceeds
15ITEM 3
Defaults Upon Senior Securities
15ITEM 4
(Removed and Reserved)
15ITEM 5
Other Information
15ITEM 6
Exhibits
15





2








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














3






YAFARM TECHNOLOGIES, INC.Condensed Consolidated Balance SheetsMarch 31, 2011


December 31, 2010(Unaudited)


(Audited)ASSETSCurrent AssetsCash and cash equivalents

$
1,051


$
1,051Total Current Assets


1,051



1,051Total Assets

$
1,051


$
1,051LIABILITIES AND STOCKHOLDERS’ DEFICITLiabilitiesCurrent LiabilitiesAccrued expenses and other payables

$
2,843


$
3,343Related party payable


84,080



83,080Related party note payable


34,452



-Total Current Liabilities


121,375



86,423Long Term LiabilitiesRelated party note payable


-



32,018Total Long Term Liabilities


-



32,018Total Liabilities


121,375



118,441Stockholders’ DeficitConvertible Preferred Stock -- 1,500,000 shares authorized, par value $.001 per share; 0 shares issued and outstanding


-



-Preferred stock -- 10,000,000 shares authorized, par value $.001 per share; 0 shares issued and outstanding


-



-Common stock -- 100,000,000 shares authorized, par value $.001 per share; 10,000,000 shares issued and outstanding


10,000



10,000Additional paid-in capital


26,188



26,188Accumulated Deficit


(156,512
)


(153,577
)Total Stockholders’ Deficit


(120,324
)


(117,389
)Total Liabilities and Stockholders’ Deficit

$
1,051


$
1,051




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






4











YAFARM TECHNOLOGIES, INC.Condensed Consolidated Statements of OperationsFor the Three


For the ThreeMonths Ended


Months EndedMarch 31, 2011


March 31, 2010(Unaudited)


(Unaudited)Revenues, net of discounts

$
-


$
-Operating Expenses


500



5,373Net Loss from Operations


(500
)


(5,373
)Other Income (Expense):Interest expense


(2,434
)


(2,122
)Total Other Income (Expense)


(2,434
)


(2,122
)Net Loss before taxes


(2,934
)


(7,495
)Provision for Income Taxes (Benefit)


-



-Net Loss

$
(2,934
)

$
(7,495
)Loss Per Share Basic and Fully Diluted

$
(0.01
)

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


10,000,000



10,000,000





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








5







YAFARM TECHNOLOGIES, INC.Condensed Consolidated Statements of Cash FlowsFor the Three


For the ThreeMonths Ended


Months EndedMarch 31, 2011


March 31, 2010(Unaudited)


(Unaudited)Cash Flows From Operating ActivitiesNet Loss

$
(2,934
)

$
(7,495
)Adjustments to reconcile net loss to net cash from   operating activities:Depreciation and Amortization


-



165Increase in Accrued Expenses


500



5,208Increase in Accrued Interest


2,434



-Increase in Related Party Payables


-



2,122Net Cash From Operating Activities


-



-Net Decrease in Cash


-



-Beginning Cash Balance


1,051



2,993Ending Cash Balance

$
1,051


$
2,993Supplemental Disclosure of Cash Flow InformationCash Paid During the Year for Interest

$
-


$
-Cash Paid During the Year for Income Taxes

$
-


$
-





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








6





YaFarm Technologies, Inc.
 Notes to the Consolidated Financial Statements
 March 31, 2011
 (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, 2010.





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 April 2010, the FASB issued ASU 2010-13, “Compensation - Stock Compensation (Topic 718) - Effect of Denominating the Exercise Price of a Share-Based Payment Award in the Currency of the Market in Which the Underlying Equity Security Trades.” ASU 2010-13 provides amendments to Topic 718 to clarify that an employee share-based payment award with an exercise price denominated in the currency of a market in which a substantial portion of the entity’s equity securities trades should not be considered to contain a condition that is not a market, performance, or service condition. Therefore, an entity would not classify such an award as a liability if it otherwise qualifies as equity. The amendments in ASU 2010-13 are effective for fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2010. The adoption of this standard did not have an effect on the Company’s results of operations or financial position.





From time to time, new accounting pronouncements are issued by FASB that are adopted by the Company as of the specified effective date.  If not discussed, management believes that the impact of recently issued standards, which are not yet effective, will not have a material impact on the Company’s financial statements upon adoption.





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 March 31, 2011, the Company had an accumulated deficit of ($156,512) and had generated no revenues, 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 equity 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.




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. (“the Group”), an affiliated party and a shareholder of the Company. The note accrued interest at 10% per annum for a term of one year. On February 7, 2009, the principle balance ($20,000) and accrued interest ($2,000) on the original note were combined into a new note. The new note accrues interest at 10% per annum for a term of two years. The proceeds of the original note were used to pay for certain professional costs such as legal, accounting and listing services. The Company has accrued interest of $4,171 and $4,713 on the new note as of December 31, 2010 and the three month period ended March 31, 2011, respectively. The new note is now due, however, no demand for payment has been made by the note holder. The Company intends to negotiate an extension of the term for payment of the new note with the note holder.






7






YaFarm Technologies, Inc.
 Notes to the Consolidated Financial Statements
 March 31, 2011
 (Unaudited)


On November 1, 2008, the Company entered into a $32,252 note with the Group. The note accrued interest at 10% per annum for a term of one year. On November 1, 2009, the principle balance ($32,252) and accrued interest ($3,225) on the original note were combined into a new note. The new note accrues interest at 10% per annum for a term of two years. The original note was exchanged for related party payables to the Group as a result of professional fees paid by the Group and a cash injection made by the Group. The Company has accrued interest of $4,131 and $5,006on the new note as of December 31, 2010 and the three month period ended March 31, 2011, respectively. The new note is now due, however, no demand for payment has been made by the note holder. The Company intends to negotiate an extension of the term for payment of the new note with the note holder.





On December 31, 2008, the Company entered into a $9,994 note with the Group. The note accrued interest at 10% per annum for a term of one year. On December 31, 2009, the principle balance ($9,994) and accrued interest ($999) on the original note were combined into a new note. The new note accrues interest at 10% per annum for a term of two years. The original note was exchanged for related party payables to the Group as a result of professional fees paid by the Group and a cash injection made by the Group. The Company has accrued interest of $1,099 and $1,370 on the new note as of December 31, 2010 and the three month period ended March 31, 2011, respectively. The new note is now due, however, no demand for payment has been made by the note holder. The Company intends to negotiate an extension of the term for payment of the new note with the note holder.





On May 20, 2009, the Company entered into a $13,056 note with the Group. The note accrues interest at 10% per annum for a term of one year, and the proceeds from the note issuance were used to pay for certain professional costs such as legal, accounting and listing services. The Company has accrued interest of $844 on the note during the year ended December 31, 2010. On May 20, 2010, the principle balance $13,056 and accrued interest ($1,306) on the original note were combined into a new note. The new note accrues interest at 10% per annum for a term of two years. The original note was exchanged for related party payables to the Group as a result of professional fees paid by the Group and a cash injection made by the Group. The Company has accrued interest of $885 and $1,239 on the new note during the year ended December 31, 2010 and the three month period ended March 31, 2011, respectively. The new note is now due, however, no demand for payment has been made by the note holder. The Company intends to negotiate an extension of the term for payment of the new note with the note holder .





On April 30 2010, the Company entered into a $12,060 note with the Group. The note accrues interest at 10% per annum for a term of one year, and the proceeds from the note issuance were used to pay for certain professional costs such as legal, accounting and listing services. The Company has accrued interest of $810 and $1,107 on the note during the year ended December 31, 2010 and the three month period ended March 31, 2011, respectively.





On September 30, 2010, the Company entered into a $3,806 note with the Group. The note accrues interest at 10% per annum for a term of one year, and the proceeds from the note issuance were used to pay for certain professional costs such as legal, accounting and listing services. The Company has accrued interest of $96 and $190 on the note during the year ended December 31, 2010 and the three month period ended March 31,2011, respectively.





Additionally, during 2010 the Group has advanced funds totaling $5,207 to YaFarm Technologies, Inc. without a formal note agreement. These funds have been accrued as short-term payables and accrued in the financial statements.  Interest has not been imputed on these funds as it is not significant.




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 March 31, 2011.






8




YaFarm Technologies, Inc.
 Notes to the Consolidated Financial Statements
 March 31, 2011
 (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 March 31, 2011 no acquisition or merger has occurred and no reverse stock split has been effectuated.





NOTE G – SUBSEQUENT EVENTS





The Company has evaluated subsequent events and has concluded that no recognized or non-recognized subsequent events have occurred since the period ended March 31, 2011.








9








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





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





We faced many challenges in meeting our goal, and were ultimately unsuccessful.  The market for Internet services is large, but fragmented, and constantly changing.





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 March 31, 2011, 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 March 31, 2011.






10







Results of Operations for the Three Months Ended March 31, 2011 Compared to the Three Months Ended March 31, 2010





Introduction





We had no revenues for the three month periods ended March 31, 2011 and 2010, while our operating expenses during the reporting period decreased slightly as compared to 2010.





Revenues and Income (Loss) from Operations







Our revenues, costs and expenses, and net loss from operations for the three months ended March 31, 2011, as compared to the three months ended March 31, 2010 and December 31, 2010 (the immediately preceding quarter), are as follows:





3 Months Ended

March 31, 2011


3 Months Ended

March 31, 2010


3 Months Ended

December 31, 2010Revenue

$
-0-


$
-0-


$
-0-Operating expenses

$
500


$
5,373


$
16,016Net Loss

$
2,934


$
7,495


$
16,016





Liquidity and Capital Resources





During the three month period ended March 31, 2011, we had a net loss of $2,934 and no cash flow from operations.  Because we had no revenues, 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, current assets, total assets, current liabilities, and total liabilities as of March 31, 2011 and December 31, 2010, respectively, are as follows:





(Unaudited)

March 31, 2011


December 31, 2010Cash

$
1,051


$
1,051Total Current Assets


1,051



1,051Total Assets


1,051



1,051Total Current Liabilities


121,375



86,423Total Liabilities

$
121,375


$
118,441








11




Our current assets, which consists solely of cash and cash equivalents did not change at March 31, 2011 as compared to December 31, 2010, because we did not pay any expenses and accrued all liabilities incurred during the reporting period. However, several promissory notes became due during the reporting period and the related liabilities have now been classified as current. As a result, our current liabilities increased by $34,952 as of March 31, 2011 as compared to December 31, 2010.


Our total liabilities increased by $2,934 as of March 31, 2011 as compared to December 31, 2010, due to the $500 increase in liabilities as described above and $2,434 of accrued interest expenses associated with related party note payables.





In order to repay our obligations in full or in part when due, we will be required to raise significant capital from other sources.  There is no assurance, however, that we will be successful in these efforts.





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 May 20, 2009, the Company entered into a $13,056 note with Columbia China Capital Group, Inc. (“the Group”), an affiliated party and a shareholder of the Company. The note accrues interest at 10% per annum for a term of one year, and the proceeds from the note issuance were used to pay for certain professional costs such as legal, accounting and listing services.  The Company has accrued interest of $1,306 on the note during the year ended December 31, 2010.  On May 20, 2010, the principle balance of $13,056 and accrued interest of $1,306 on the original note were combined into a new note.  The new note accrues interest at 10% per annum for a term of two years.  The original note was exchanged for related party payables to the Group as a result of professional fees paid by the Group and a cash injection made by the Group.  The Company has accrued interest of $885 and $1,239 on the new note for the year ended December 31, 2010 and the three month period ended March 31, 2011, respectively. The note is now due, however, no demand for payment has been made by the note holder. The Company intends to negotiate an extension of the term for payment of the note with the note holder .





On April 30 2010, the Company entered into a $12,060 note with the Group. The note accrues interest at 10% per annum for a term of one year, and the proceeds from the note issuance were used to pay for certain professional costs such as legal, accounting and listing services. The Company has accrued interest of $810 and $1,107 on the note for the year ended December 31, 2010 and the three month period ended March 31, 2011, respectively. The note is now due, however, no demand for payment has been made by the note holder. The Company intends to negotiate an extension of the term for payment of the note with the note holder .





On September 30, 2010, the Company entered into a $3,806 note with the Group. The note accrues interest at 10% per annum for a term of one year, and the proceeds from the note issuance were used to pay for certain professional costs such as legal, accounting and listing services. The Company has accrued interest of $96 and $190 on the note for the year ended December 31, 2010 and the three month period ended March 31, 2011, respectively.





Additionally, during 2010 the Group has advanced funds totaling $5,207 to YaFarm Technologies, Inc. without a formal note agreement. These funds have been accrued as short-term payables and accrued in the financial statements.  Interest has not been imputed on these funds as it is not significant.





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 $25,000 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.








12





Sources and Uses of Cash





Operations, Investing and Financing





For the three month period ended March 31, 2011, our net cash from operating activities was $0.  The principal component of the net cash used in operating activities was a net loss of $(2,934), which was offset by an increase in accrued expenses of $500 and an increase in related party payables of $2,434.  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.





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 4
Controls and Procedures





(a)            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 March 31, 2011, 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 officer, 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 March 31, 2011, our disclosure controls and procedures were not effective at the reasonable assurance level due to the material weaknesses identified and described in Item 4(b) below.






13







(b)           Management Report on Internal Control Over Financial Reporting





Our management is responsible for establishing and maintaining adequate internal control over financial reporting.  Internal control over financial reporting is defined in Rules 13a-15(f) and 15d-15(f) promulgated under the Exchange Act, as amended, as a process designed by, or under the supervision of, our principal executive and principal financial officer and effected by our board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles in the United States and includes those policies and procedures that:





•
Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect our transactions and any disposition of our assets;


•
Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with authorizations of our management and directors; and





•
Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements.





Because of its inherent limitations, internal control over financial reporting may not prevent or detect all misstatements.  Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.





A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis.  Our management assessed the effectiveness of our internal control over financial reporting as of March 31, 2011. In making this assessment, our management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control-Integrated Framework.  Based on this assessment, Management identified the following two material weaknesses that have caused management to conclude that, as of March 31, 2011, our disclosure controls and procedures, and our internal control over financial reporting, 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 as of the year ending March 31, 2011.  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.





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.  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.






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(c)           Remediation of Material Weaknesses





To remediate the material weakness in our documentation, evaluation and testing of internal controls we plan to engage a third-party firm to assist us in remedying this material weakness.





(d)           Changes in Internal Control over Financial Reporting





No change in our system of internal control over financial reporting occurred during the period covered by this report that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.





PART II – OTHER INFORMATION





ITEM 1
Legal Proceedings





We are not a party to or otherwise involved in any legal proceedings.





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 March 31, 2011.





ITEM 3
Defaults Upon Senior Securities





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





ITEM 4
(Removed and Reserved)








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 (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.





*
Filed herewith.





(1)           Incorporated by reference from our Registration Statement on Form SB-2, filed with the Commission on February 16, 2007.











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SIGNATURES





Pursuant to the requirements of the Securities Exchange Act of 9134, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.








YaFarm Technologies, Inc.Dated:           May 23, 2011
/s/  Zhiguang ZhangBy:           Zhiguang ZhangIts:           Chief Executive Officer