**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


Washington,
      D.C. 20549





**AMENDMENT
      NO. 1**


**TO**


**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, 2008





**o** **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:   333-83125





**YUHE
      INTERNATIONAL, INC.**


(Exact
      name of Registrant as Specified in its Charter)





Nevada
            
            33-0215298(State
                or other jurisdiction of
            
            (I.R.S.
                Employer Identification. No.)incorporation
                or organization)





**301
      Hailong Street**


**Hanting
      District, Weifang, Shandong Province**


**The
      People’s Republic of China**





(Address
      of principal executive offices)




**86
      536 736 3688**


(Registrant’s
      Telephone Number)





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


Yes x No o


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
      definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of
      the Exchange Act. (Check one)


Large
      accelerated filer o Accelerated filer o Non-accelerated filer o Smaller
      reporting company x





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





The
      number of shares outstanding of each of the issuer’s classes of common equity,
      as of March 31, 2008 is as follows:





Class
                of Securities
            
            Shares
                OutstandingCommon
                Stock, $0.001 par value
            
            15,543,330
                (on a post split basis)











**WEIFANG
          YUHE POULTRY CO., LTD**
 **CONDENSED
          CONSOLIDATED FINANCIAL STATEMENTS**
 
 **FOR
          THE PERIOD FROM JANUARY 1, 2008 TO JANUARY 31, 2008**
 **(Stated
          in US dollars)**
  F-1
  **WEIFANG
          YUHE POULTRY CO., LTD**
 
 PageCondensed
                    Consolidated Balance Sheet – unaudited
                F-3
                    to F-4Condensed
                    Consolidated Statements of Operations and Comprehensive Income
                    (Loss) –
                    unaudited
                F-5Condensed
                    Consolidated Statements of Changes in Stockholders’ Equity –
                    unaudited
                F-6Condensed
                    Consolidated Statements of Cash Flows – unaudited
                F-7
                    to F-8Notes
                    to Condensed Consolidated Financial Statements – unaudited
                F-9
                    to F-23
  F-2
 
 **WEIFANG
          YUHE POULTRY CO., LTD**
 
 **CONDENSED
          CONSOLIDATED BALANCE SHEET – unaudited**
 **AS
          AT JANUARY 31, 2008**
 **(Stated
          in US Dollars)**
 
 ASSETSCurrent
                    assetsCash
                    and cash equivalents
                
                $
                1,051,106Accounts
                    receivable
                
                
                1,475Inventories
                
                
                4,624,425Advances
                    to suppliers
                
                
                305,013Total
                    current assets
                
                $
                5,982,019Deposits
                    paid
                
                
                1,084,265Other
                    receivables, net
                
                
                3,001,699Unlisted
                    investments
                
                
                279,738Plant
                    and equipment, net
                
                
                15,323,245Intangible
                    assets, net
                
                
                2,832,869Due
                    from related companies
                
                
                3,775,469Due
                    from directors
                
                
                233,037Deferred
                    expenses
                
                
                602,918Total
                    assets
                
                $
                33,115,259LIABILITIES
                    AND STOCKHOLDERS’ EQUITYCurrent
                    liabilitiesAccounts
                    payable
                
                $
                4,800,664Current
                    portion of long-term loans
                
                
                4,383,951Loans
                    payable
                
                
                1,770,862Payroll
                    and payroll related liabilities
                
                
                545,565Accrued
                    expenses
                
                
                473,020Advances
                    from customers
                
                
                209,694Tax
                    payables
                
                
                125,645Due
                    to related companies
                
                
                320,913Total
                    current liabilities
                
                $
                12,630,315
 
 See
          accompanying notes to condensed consolidated financial
          statements
  F-3
 
 **WEIFANG
          YUHE POULTRY CO., LTD**
 
 **CONDENSED
          CONSOLIDATED BALANCE SHEET – unaudited (Continued)**
 **AS
          AT JANUARY 31, 2008**
 **(Stated
          in US Dollars)**
 
 Long-term
                    liabilitiesLong-term
                    loans
                
                $
                6,165,365Total
                    liabilities
                
                $
                18,795,680Commitments
                    and contingencies
                
                $
                -Minority
                    interests
                
                $
                278,766STOCKHOLDERS’
                    EQUITYRegistered
                    capital
                
                $
                3,019,003Additional
                    paid-in capital
                
                
                7,009,523Retained
                    earnings
                
                
                3,058,878Accumulated
                    other comprehensive income
                
                
                953,409$
                14,040,813Total
                    liabilities and stockholders’ equity
                
                $
                33,115,259
 
 See
          accompanying notes to condensed consolidated financial
          statements
  F-4
 
 **WEIFANG
          YUHE POULTRY CO., LTD**
 
 **CONDENSED
          CONSOLIDATED STATEMENTS OF OPERATIONS AND**
 **COMPREHENSIVE
          INCOME (LOSS) – unaudited**
 **FOR
          THE PERIOD FROM JANUARY 1, 2008 TO JANUARY 31, 2008**
 **(Stated
          in US Dollars)**
 
 Net
                    revenues
                
                $
                1,491,329Cost
                    of revenues
                
                
                (1,337,438
                )Gross
                    profit
                
                $
                153,891Operating
                    expenses:Selling
                    expenses
                
                
                (28,997
                )General
                    and administrative expenses
                
                
                (122,695
                )Operating
                    income
                
                $
                2,199Other
                    income
                
                
                5,604Bad
                    debts recovery of other receivables
                
                
                219,893Interest
                    income
                
                
                5Interest
                    expenses
                
                
                (86,167
                )Income
                    before income taxes
                
                $
                141,534Income
                    taxes
                
                
                -Net
                    income before minority interests
                
                $
                141,534Minority
                    interests (earnings)
                
                
                (73,398
                )Net
                    income
                
                $
                68,136Other
                    comprehensive income
                
                
                -Foreign
                    currency translation adjustment
                
                
                201,390Comprehensive
                    income
                
                $
                269,526
 
 See
          accompanying notes to condensed consolidated financial
          statements
  F-5
 
 **WEIFANG
          YUHE POULTRY CO., LTD**
 
 **CONDENSED
          CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY –
unaudited**
 **FOR
          THE PERIOD FROM JANUARY 1, 2008 TO JANUARY 31, 2008**
 **(Stated
          in US Dollars)**
 
 AccumulatedAdditional
                
                
                
                OtherRegistered
                
                paid-in
                
                Retained
                
                Comprehensivecapital
                
                capital
                
                earnings
                
                Income
                
                TotalBalance,
                    January 1, 2008
                
                $
                482,713
                
                $
                7,009,523
                
                $
                2,990,742
                
                $
                752,019
                
                $
                11,243,997Net
                    income
                
                
                -
                
                
                -
                
                
                68,136
                
                
                -
                
                
                68,136Injection
                    of additional capital from Bright Stand (Note
                    12)
                
                
                2,536,290
                
                
                -
                
                
                -
                
                
                -
                
                
                2,536,290Foreign
                    currency translation adjustment
                
                
                -
                
                
                -
                
                
                -
                
                
                201,390
                
                
                201,390Balance,
                    January 31, 2008
                
                $
                3,019,003
                
                $
                7,009,523
                
                $
                3,058,878
                
                $
                953,409
                
                $
                14,040,813
 
 See
          accompanying notes to condensed consolidated financial
          statements
  F-6
 
 **WEIFANG
          YUHE POULTRY CO., LTD**
 
 **CONDENSED
          CONSOLIDATED STATEMENTS OF CASH FLOWS**
 **FOR
          THE PERIOD FROM JANUARY 1, 2008 TO JANUARY 31, 2008 –
unaudited**
 **(Stated
          in US Dollars)**
 
 Cash
                    flows from operating activitiesNet
                    income
                
                $
                68,136Adjustments
                    to reconcile net income tonet
                    cash used in operating activitiesDepreciation
                
                
                121,213Amortization
                
                
                5,200Minority
                    interests
                
                
                73,398Change
                    in assets and liabilitiesAdvances
                    to suppliers
                
                
                212,910Prepaid
                    expenses
                
                
                64,556Deposits
                    paid
                
                
                111,147Inventories
                
                
                (607,144
                )Deferred
                    expenses
                
                
                (41,232
                )Accounts
                    payable
                
                
                (768,683
                )Payroll
                    and payroll related liabilities
                
                
                (304,784
                )Accrued
                    expenses
                
                
                104,606Advances
                    from customers
                
                
                15,465Other
                    tax payables
                
                
                (9,266
                )Net
                    cash used in operating activities
                
                $
                (954,478
                )Cash
                    flows from investing activitiesDeposits
                    paid and acquisition of property, plant & equipment
                
                $
                (206,700
                )Decrease
                    in other receivables
                
                
                (238,310
                )Advances
                    from related parties receivables
                
                
                2,321,943Net
                    cash provided by investing activities
                
                $
                1,876,933
  F-7
 
 **WEIFANG
          YUHE POULTRY CO., LTD**
 
 **CONDENSED
          CONSOLIDATED STATEMENTS OF CASH FLOWS** **–
          unaudited** **(Continued)**
 **FOR
          THE PERIOD FROM JANUARY 1, 2008 TO JANUARY 31, 2008**
 **(Stated
          in US Dollars)**
 
 Cash
                    flows from financing activitiesRepayments
                    of loan payables
                
                $
                (1,555,807
                )Proceeds
                    from capital contributions
                
                
                2,536,290Repayment
                    to related parties
                
                
                (900,140
                )Net
                    cash provided by financing activities
                
                $
                80,343Effect
                    of foreign currency translation on cash and
                    cash equivalents
                
                
                853Increase
                    in cash and cash equivalents
                
                
                1,003,651Cash
                    and cash equivalents–beginning of period
                
                
                47,455Cash
                    and cash equivalents–end of period
                
                $
                1,051,106Supplementary
                    cash flow information:Interest
                    paid in cash
                
                $
                180
 
 See
          accompanying notes to condensed consolidated financial
          statements
  F-8
 
 **WEIFANG
          YUHE POULTRY CO., LTD**
 **NOTES
          TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**
 **(Stated
          in US Dollars)**
 
 **1.**
                **Organization
                    and principal activities**
 
 Weifang
          Yuhe Poultry Co., Ltd (the Company) was established in Weifang, Shandong
          of the
          People’s Republic of China (the PRC) as a limited company on March 8, 1996. The
          Company currently operates through itself and one subsidiary located in
          Mainland
          China: Weifang Taihong Feed Co., Ltd. (Taihong).
 
 Taihong
          was established in Weifang, Shandong of the People’s Republic of China (the PRC)
          as a limited company on May 26, 2003. Pursuant to a group reorganization
          on
          September 14, 2007, the Company became the holding company of
          Taihong.
 
 The
          Company and its subsidiary (hereinafter, collectively referred to as “the
          Group”) are engaged in the business of chick and feed production.
 
 **2.**
                **Summary
                    of significant accounting
                    policies**
 
 (a)
                Method
                    of Accounting
 
 The
          accompanying consolidated financial statements have been prepared in conformity
          with accounting principles generally accepted in the United States of America.
          The Company's functional currency is the Chinese Renminbi; however the
          accompanying consolidated financial statements have been translated and
          presented in United States Dollars ($).
 
 (b)
                Principles
                    of consolidation
 
 The
          consolidated financial statements are presented in US Dollars and include
          the
          accounts of the Company, Taihong, a subsidiary which the company has a
          56.25%
          ownership. All significant inter-company balances and transactions are
          eliminated in consolidation.
 
 The
          Company acquired its subsidiary on September 14, 2007 through a reorganization
          between entities under common control. Accordingly, the transaction was
          accounted for similar to a pooling of interests in accordance with SFAS
          141
“Business Combination” Appendix D and is presented as if it had occurred at the
          beginning of the first period presented. The following table depicts the
          identity of the subsidiary:
 
 ***Name
                    of Company***
                
                ***Place & date of***
                  ***Incorporation***
                
                ***Attributable Equity***
                  ***Interest %***
                
                ***Registered***
                  ***Capital***Weifang
                    Taihong Feed Co., Ltd.
                
                
                PRC/
                  May
                    26 2003
                
                
                56.25
                
                $
                965,379
                
                
                (RMB8,000,000
                )
 
 (c)
                Use
                    of estimates
 
 The
          preparation of the financial statements in conformity with generally accepted
          accounting principles in the United States of America requires management
          to
          make estimates and assumptions that affect the reported amounts of assets
          and
          liabilities and disclosure of contingent assets and liabilities at the
          date of
          the financial statements and the reported amounts of revenues and expenses
          during the reporting periods. Management makes these estimates using the
          best
          information available at the time the estimates are made; however actual
          results
          could differ materially from those estimates.
  F-9
  **WEIFANG
          YUHE POULTRY CO., LTD**
 **NOTES
          TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**
 **(Stated
          in US Dollars)**
 
 **2.**
                **Summary
                    of significant accounting policies
                    (Continued)**
 
 (d)
                Economic
                    and political risks
 
 The
          Company’s operations are conducted in the PRC. Accordingly, the Company’s
          business, financial condition and results of operations may be influenced
          by the
          political, economic and legal environment in the PRC, and by the general
          state
          of the PRC economy.
  The
          Company’s operations in the PRC are subject to special considerations and
          significant risks not typically associated with companies in North America
          and
          Western Europe. These include risks associated with, among others, the
          political, economic and legal environment and foreign currency exchange.
          The
          Company’s results may be adversely affected by changes in the political and
          social conditions in the PRC, and by changes in governmental policies with
          respect to laws and regulations, anti-inflationary measures, currency
          conversion, remittances abroad, and rates and methods of taxation, among
          other
          things.
 
 (e)
                Plant
                    and equipment
 
 Plant
          and
          equipment are carried at cost less accumulated depreciation. Depreciation
          is
          provided over their estimated useful lives, using the straight-line method.
          Estimated useful lives of the plant and equipment are as follows:
 
 Buildings
                20
                    yearsMachinery
                10
                    yearsVehicle
                5
                    yearsFurniture
                    and equipment
                3
                    years
 
 The
          cost
          and related accumulated depreciation of assets sold or otherwise retired
          are
          eliminated from the accounts and any gain or loss is included in the statement
          of income. The cost of maintenance and repairs is charged to income as
          incurred,
          whereas significant renewals and betterments are capitalized.
 
 (f)
                Intangible
                    assets
 
 Intangible
          assets represent land use rights in the PRC. Land use rights are carried
          at cost
          and amortized on a straight-line basis over the period of rights of 50
          years
          commencing from the date of acquisition of equitable interest. According
          to the
          laws of the PRC, the government owns all of the land in the PRC. Companies
          or
          individual are authorized to possess and use the land only through land
          usage
          rights approved by the PRC government.
  F-10
  **WEIFANG
          YUHE POULTRY CO., LTD**
 **NOTES
          TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**
 **(Stated
          in US Dollars)**
 
 **2.**
                **Summary
                    of significant accounting policies
                    (Continued)**
 
 (g)
                Guarantee
                    Expense
 
 The
          Company accounts for its liability for product guaranteed in accordance
          with
          FASB Interpretation No. 45 (FIN 45), “Guarantor’s Accounting and Disclosure
          Requirements for Guarantees, Including Indirect Guarantees of Indebtedness
          of
          Others.” Under FIN 45, the aggregate changes in the liability for accruals
          related to product warranties issued during the reporting period must be
          charged
          to expense as incurred.
 
 The
          Company guarantees a 98% survival rate of its product by delivering additional
          2% of the product. The guarantee expires seven days after delivery. If
          the
          survival rate falls below 96%, the Company provides additional guarantee
          compensation to customers. Based on historical experience, the likelihood
          that
          survival rate falls below 96% is remote and therefore no accrued guarantee
          liability was recorded at period end. The Company records guarantee expense
          as
          incurred. There was no guarantee expense for the period from January 1,
          2008 to
          January 31, 2008.
 
 (h)  Accounting
          for the impairment of long-lived assets
 
 The
          long-lived assets held and used by the Company are reviewed for impairment
          whenever events or changes in circumstances indicate that the carrying
          amount of
          assets may not be recoverable. It is reasonably possible that these assets
          could
          become impaired as a result of technology or other industry changes.
          Determination of recoverability of assets to be held and used is done by
          comparing the carrying amount of an asset to future net undiscounted cash
          flows
          to be generated by the assets.
 
 If
          such
          assets are considered to be impaired, the impairment to be recognized is
          measured as the amount by which the carrying amount of the assets exceeds
          the
          fair value of the assets. Assets to be disposed of are reported at the
          lower of
          the carrying amount or fair value less costs to sell. During the reporting
          periods, there was no impairment loss.
 
 (i)  Inventories
 
 Inventories
          consisting of raw materials, work in progress and finished goods are stated
          at
          lower of cost or net realizable value. The cost of inventories is determined
          using weighted average cost method, and includes expenditure incurred in
          acquiring the inventories and bringing them to their existing location
          and
          condition. Net realizable value is the estimated selling price in the ordinary
          course of business less any applicable selling expenses. Finished goods
          are
          comprised of direct materials, direct labor and an appropriate proportion
          of
          overhead. At each balance sheet date, inventories that are worth less than
          cost
          are written down to their net realizable value, and the difference is charged
          to
          the cost of revenues of that period.
 
 (j)  Trade
          receivables
 
 Trade
          receivables are recognized and carried at the original invoice amount less
          allowance for any uncollectible amounts. An estimate for doubtful accounts
          is
          made when collection of the full amount is no longer probable. Bad debts
          are
          written off as incurred. It is a common industry practice in the PRC that
          customers pay in advance before delivery of the products. As a result,
          the
          Company maintains a low level of trade receivables.
  F-11
  **WEIFANG
          YUHE POULTRY CO., LTD**
 **NOTES
          TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**
 **(Stated
          in US Dollars)**
 
 **2.**
                **Summary
                    of significant accounting policies
                    (Continued)**
 
 (k)
                Cash
                    and cash equivalents
 
 The
          Company considers all highly liquid investments purchased with original
          maturities of three months or less to be cash equivalents. The Company
          maintains
          bank accounts only in the PRC. The Company does not maintain any bank accounts
          in the United States of America. Cash deposits in PRC banks are not insured
          by
          any government agency or entity.
 
 (l)
                Revenue
                    recognition
 
 Net
          revenue is recognized when the third-party distributors and larger producers
          take delivery and acceptance of products. The Company treats both the
          distributors and larger producers as end users. The price is fixed or
          determinable as stated in the sales contract, and the collectibility is
          reasonably assured. Customers do not have a general right of return on
          products
          delivered.
 
 (m)
                Cost
                    of revenues
 
 Cost
          of
          revenues consists primarily of material costs, employee compensation,
          depreciation and related expenses, which are directly attributable to the
          production of products. Write-down of inventory to lower of cost or market
          is
          also recorded in cost of revenues.
 
 (n)
                Advertising
 
 The
          Group
          expensed all advertising costs as incurred. There was no advertising expenses
          for the period from January 1, 2008 to January 31, 2008.
 
 (o)
                Retirement
                    benefit plans
 
 The
          employees of the Group are members of a state-managed retirement benefit
          plan
          operated by the government of the PRC. The Group is required to contribute
          a
          specified percentage of payroll costs to the retirement benefit scheme
          to fund
          the benefits. The only obligation of the Group with respect to the retirement
          benefit plan is to make the specified contributions.
 
 Retirement
          benefits in the form of contributions under defined contribution retirement
          plans to the relevant authorities are charged to the statements of income
          as
          incurred. The retirement benefit expenses for the period from January 1,
          2008 to
          January 31, 2008 were $5,843.
  F-12
  **WEIFANG
          YUHE POULTRY CO., LTD**
 **NOTES
          TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**
 **(Stated
          in US Dollars)**
 
 **2.**
                **Summary
                    of significant accounting policies
                    (Continued)**
 
 (p)
                Income
                    tax
 
 The
          Company accounts for income taxes using an asset and liability approach
          and
          allows for recognition of deferred tax benefits in future years. Under
          the asset
          and liability approach, deferred taxes are provided for the net tax effects
          of
          temporary differences between the carrying amounts of assets and liabilities
          for
          financial reporting purposes and the amounts used for income tax purposes.
          A
          valuation allowance is provided for deferred tax assets if it is more likely
          than not these items will either expire before the Company is able to realize
          their benefits, or that future realization is uncertain.
 
 The
          Company is operating in the PRC, and in accordance with the relevant tax
          laws
          and regulations of PRC, the corporation income tax rate is 25%. However,
          the
          Company is a poultry company, and in accordance with the relevant regulations
          regarding the favorable tax treatment for an outstanding poultry company,
          the
          Company is entitled to a tax free treatment until January 31, 2008.
 
 The
          corporate income tax for the subsidiary, Weifang Taihong Feed Co., Ltd
          is 25%.
 
 (q)
                Shipping
                    and handling fees
 
 Shipping
          and handling fees are expensed when incurred. Shipping and handling charges
          included in the selling expenses for the period from January 1, 2008 to
          January
          31, 2008 was $5,330.
 
 (r)
                Minority
                    interests
 
 Minority
          interests refer to the 43.75% investment by third parties in the equity
          of
          Taihong and are not held by the Company.
 
 (s)
                Foreign
                    currency translation
 
 The
          accompanying financial statements are presented in United States dollars.
          The
          functional currency of the Company is the Renminbi (RMB). The financial
          statements are translated into United States dollars from RMB at year-end
          exchange rates as to assets and liabilities and average exchange rates
          as to
          revenues and expenses. Capital accounts are translated at their historical
          exchange rates when the capital transactions occurred.
 
 January
                    31, 2008Balance
                    sheet
                RMB
                    7.20180 to US$1.00Statement
                    of income and comprehensive income
                RMB
                    7.25883 to US$1.00
 
 The
          RMB
          is not freely convertible into foreign currency and all foreign exchange
          transactions must take place through authorized institutions. No representation
          is made that the RMB amounts could have been, or could be, converted into
          US$ at
          the rates used in translation.
  F-13
  **WEIFANG
          YUHE POULTRY CO., LTD**
 **NOTES
          TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**
 **(Stated
          in US Dollars)**
 
 **2.**
                **Summary
                    of significant accounting policies
                    (Continued)**
  (t)
                Comprehensive
                    income
 
 Comprehensive
          income is defined to include all changes in equity except those resulting
          from
          investments by owners and distributions to owners. Among other disclosures,
          all
          items that are required to be recognized under current accounting standards
          as
          components of comprehensive income are required to be reported in a financial
          statement that is presented with the same prominence as other financial
          statements. The Company’s current component of comprehensive income is the
          foreign currency translation adjustment.
 
 (u)
                Fair
                    value of financial instruments
  SFAS
          No.
          107, “Disclosures about Fair Value of Financial Instruments” (“SFAS 107”)
          requires entities to disclose the fair values of financial instruments
          except
          when it is not practicable to do so. Under SFAS No. 107, it is not practicable
          to make this disclosure when the costs of formulating the estimated values
          exceed the benefit when considering how meaningful the information would
          be to
          financial statement users.
 
 The
          fair
          values of all assets and liabilities do not differ materially from their
          carrying amounts. None of the financial instruments held are derivative
          financial instruments and none were acquired or held for trading purposes
          during
          the period for January 1, 2008 to January 31, 2008.
 
 **2.**
                **Summary
                    of significant accounting policies
                    (Continued)**
 
 (v)
                Recent
                    accounting pronouncements
 
 In
          December 2007, the FASB issued SFAS No. 141R, “Business Combinations” (“SFAS No.
          141R”). SFAS No. 141R amends SFAS 141 and provides revised guidance for
          recognizing and measuring identifiable assets and goodwill acquired, liabilities
          assumed, and any noncontrolling interest in the acquiree. It also provides
          disclosure requirements to enable users of the financial statements to
          evaluate
          the nature and financial effects of the business combination. It is effective
          for fiscal years beginning on or after December 15, 2008 and will be applied
          prospectively. We are currently evaluating the impact of adopting SFAS
          No. 141R
          on our consolidated financial statements.
 
 In
          December 2007, the Financial Accounting Standards Board (“FASB”) issued SFAS No.
          160, “Noncontrolling Interests in Consolidated Financial Statements — an
          amendment of ARB No. 51” (“SFAS No. 160”). SFAS No. 160 requires that ownership
          interests in subsidiaries held by parties other than the parent, and the
          amount
          of consolidated net income, be clearly identified, labeled, and presented
          in the
          consolidated financial statements. It also requires once a subsidiary is
          deconsolidated, any retained noncontrolling equity investment in the former
          subsidiary be initially measured at fair value. Sufficient disclosures
          are
          required to clearly identify and distinguish between the interests of the
          parent
          and the interests of the noncontrolling owners. It is effective for fiscal
          years
          beginning on or after December 15, 2008 and requires retroactive adoption
          of the
          presentation and disclosure requirements for existing minority interests.
          All
          other requirements shall be applied prospectively. We are currently evaluating
          the impact of adopting SFAS No. 160 on our consolidated financial statements.
  F-14
  **WEIFANG
          YUHE POULTRY CO., LTD**
 **NOTES
          TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**
 **(Stated
          in US Dollars)**
 
 **3.**
                **Inventories**
 
 Inventories
          consist of the following:
 
 Raw
                    materials
                
                $
                706,405Work
                    in progress
                
                
                3,870,136Finished
                    goods
                
                
                47,884$
                4,624,425
  **4.**
                **Other
                    receivables, net**
 
 Other
          receivables, net consist of the following:
 
 Loan
                    receivables
                
                $
                3,234,413Other
                    receivables
                
                
                230,459Less:
                    Allowances
                
                
                (436,173
                )$
                3,001,699
 
 Other
          receivables are unsecured, interest free and have no fixed repayment
          date.
 
 Recovery
          of bad debts of other receivable for the period ended January 31 2008 included
          in other income $61,368.
 
 Allowance
          is made when collection of the full amount is no longer probable. Management
          reviews and adjusts this allowance periodically based on historical experience,
          current economic climate as well as its evaluation of the collectibility
          of
          outstanding accounts. The Group evaluates the credit risks of its customers
          utilizing historical data and estimates of future performance.
  F-15
  **WEIFANG
          YUHE POULTRY CO., LTD**
 **NOTES
          TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**
 **(Stated
          in US Dollars)**
 
 **5.**
                **Unlisted
                    investments**
 
 Unlisted
          investments at January 31, 2008 are the 3% investments in Hanting Rural
          Credit
          Cooperative (“Hanting”). It is stated at cost because the Group does not have
          significant influence or control over this investment. The management of
          the
          Company has reviewed the investment in Hanting for any impairment and determined
          there is no indication that the carrying amount of Hanting may not be
          recoverable.
 
 **6.**
                **Plant
                    and equipments, net**
 
 Plant
          and
          equipment consists of the following:
 
 At
                    costBuildings
                
                $
                9,849,070Machinery
                
                
                5,408,153Motor
                    vehicles
                
                
                432,291Furniture
                    and equipment
                
                
                276,570$
                15,966,084Less:
                    accumulated depreciation
                
                
                (5,063,219
                )Construction
                    in progress
                
                
                4,420,380$
                15,323,245
 
 Depreciation
          expenses included in the cost of sales during the period from January 1,
          2008 to
          January 31, 2008 was $83,448, and included in the general and administrative
          expenses for the period ended January 31, 2008 was $37,765.
 
 As
          of
          January 31, 2008, buildings and machinery of the Group were pledged as
          collateral under certain loan arrangements.
 
 There
          was
          no interest capitalized for the construction in progress during the period
          from
          January 1, 2008 to January 31, 2008.
  F-16
 
 **WEIFANG
          YUHE POULTRY CO., LTD**
 **NOTES
          TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**
 **(Stated
          in US Dollars)**
 
 **7.**
                **Intangible
                    assets, net**
 
 Intangible
          assets consist of the following:
 
 Land
                    use rights, at cost
                
                $
                3,117,798Less:
                    accumulated amortization
                
                
                284,929$
                2,832,869
 
 As
          of
          January 31, 2008, land use rights of the Group were pledged as collateral
          under
          certain loan arrangements.
 
 Amortization
          expense included in the cost of revenues during the period from January
          1, 2008
          to January 31, 2008 was $5,200.
 
 **8.**
                **Due
                    from related companies**
 
 Hexing
                    Green Agriculture Co., Ltd – Mr. Gao Zhentao, the director of the
                    company is also the director
                
                $
                72,263Shandong
                    Yuhe Food Co., Ltd – Mr. Gao Zhentao, the director of the company is also
                    the director
                
                
                3,653,930Shandong
                    Yuhe New Agriculture Academy of Sciences – Mr. Gao Zhentao, the director
                    of the company is also the director
                
                
                49,251Weifang
                    Jiaweike Food Co., Ltd – Mr. Gao Zhentao, the director of the company is
                    also the director
                
                
                25$
                3,775,469
 
 The
          amounts due from related companies are unsecured, interest free and have
          no
          fixed repayment date.
  F-17
 
 **WEIFANG
          YUHE POULTRY CO., LTD**
 **NOTES
          TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**
 **(Stated
          in US Dollars)**
 
 **9.**
                **Due
                    from directors**
 
 Details
          of due from directors are as follows:
 
 Mr.
                    Tan Yi
                
                $
                79,491Mr.
                    Gao Zhenbo
                
                
                78,091Mr.
                    Gao Zhentao
                
                
                75,455$
                233,037
 
 The
          amounts due from directors are unsecured, interest free and have no fixed
          repayment date.
 
 **10.**
                **Loan
                    payable**
 
 Loans
          payable are loans from unrelated companies for temporary fund for operation
          purposes. They are unsecured, interest free and have no fixed repayment
          date.
 
 **11.**
                **Due
                    to related companies**
 
 Weifang
                    Hexing Breeding Co., Ltd – Mr. Gao Zhentao, the director of the
                    company is also the director
                
                $
                301,965Shandong
                    Yuhe Food Co., Ltd – Mr. Gao Zhentao, the director of the company is also
                    the director
                
                
                18,948$
                320,913
 
 The
          amounts due to related companies are unsecured, interest free and have
          no fixed
          repayment date. These loans are used for working capital purposes.
  Bright
          Stand is the legal and accounting acquirer of the Group. Bright Stand becomes
          the sole shareholder of the company after January 31, 2008 business
          combination.
  F-18
  **WEIFANG
          YUHE POULTRY CO., LTD**
 **NOTES
          TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**
 **(Stated
          in US Dollars)**
 
 **12.**
                **Registered
                    capital**
 
 As
          of
          January 31, 2008, capital contributions paid-up amounted to $3,019,003
          (RMB
          22,224,004).
 Prior
            to
            the effective closing date of the acquisition transaction as discussed
            in Note
            19, Bright Stand International Limited contributed $2,536,290 additional
            capital
            to the Company for working capital purposes.
 **13.**
                **Long-term
                    liabilities**
 
 Loans
                    from Nansun Rural Credit,
                
                $
                8,350,383interest
                    rate at 9.22% to 10.51%per
                    annum, due from Nov 28, 08 toMay
                    17, 10Loans
                    from Shuangyang Rural Credit
                
                
                904,625interest
                    rate at 9.33% per annum,due
                    on Oct 12, 08Loans
                    from Hanting Kaiyuan Rural
                
                
                1,015,963Credit
                    Cooperative, interest rate at9.22%
                    to 13.31% per annum,due
                    from Nov 28, 08 to Jan 10, 09Loans
                    from Hanting Rural
                
                
                278,345Credit
                    Cooperative, interest rate at8.19%
                    per annum, due from Nov 8, 0910,549,316Less:
                    current portion of long-term
                
                
                (4,383,951
                )liabilities6,165,365
 
 Future
          maturities of long-term loans as at January 31, 2008 are as follows:
 
 Remainder
                    of 2008
                
                $
                4,383,9512009
                
                
                2,686,0402010
                
                
                3,479,326$
                10,549,317
  F-19
  **WEIFANG
          YUHE POULTRY CO., LTD**
 **NOTES
          TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**
 **(Stated
          in US Dollars)**
 
 **14.**
                **Income
                    tax**
 
 The
          Company is operating in the PRC, and in accordance with the relevant tax
          laws
          and regulations of PRC, the corporation income tax rate is 25%. However,
          the
          Company is an agricultural company, and in accordance with the relevant
          regulations regarding the tax exemption, the Company is tax-exempt as long
          as it
          is registered as an agricultural entity.
 
 Taihong
          is operating in the PRC, and in accordance with the relevant tax laws and
          regulations of PRC, the corporation income tax rate is 25%. No provision
          for
          income tax is made as Taihong has no taxable income for the period for
          the
          period from January 1, 2008 to January 31, 2008.
 
 The
          Group
          uses the asset and liability method, where deferred tax assets and liabilities
          are determined based on the expected future tax consequences of temporary
          differences between the carrying amounts of assets and liabilities for
          financial
          and income tax reporting purposes. There are no material timing differences
          and
          therefore no deferred tax asset or liability at January 31, 2008
 
 The
          provision for income taxes consists of the following:
 
 Current
                    tax-PRC
                
                $
                --Deferral
                    tax provision
                
                
                -$
                -
 
 All
          of
          the Group’s income (loss) before income taxes is from PRC sources. Actual income
          tax expenses reported in the consolidated statements of income and comprehensive
          income differ from the amounts computed by applying the PRC statutory income
          tax
          rate of 25% to income (loss) before income taxes during the period from
          January
          1, 2008 to January 31, 2008 for the following reasons:
 
 Income
                    before income taxes
                
                $
                141,534Computed
                    “expected” income tax expense at 25%
                
                $
                35,384Tax
                    effect on net taxable temporary differences
                
                
                (41,942
                )Effect
                    of cumulative tax losses and tax holiday
                
                
                6,558$
                -
  F-20
  **WEIFANG
          YUHE POULTRY CO., LTD**
 **NOTES
          TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**
 **(Stated
          in US Dollars)**
 
 **15.**
                **Related
                    parties transactions**
 
 The
          following material transactions with related parties during the years were
          in
          the opinion of the directors, carried out in the ordinary course of business
          and
          on normal commercial terms:
  Sales
                    of goods to a related company
                
                $
                695,851
 
 Sales
          to
          Weifang Hexing Breeding Co., Ltd, a related company, during the period
          from
          January 1, 2008 to January 31, 2008.
 
 During
          2008, Jiaweike was disposed of to the Weifang Hexing Breeding Co., Ltd,
          a
          related company where Mr. Gao Zhentao, the director of the Company is also
          the
          director. (note 5)
 
 **16.**
                **Significant
                    concentrations and risk**
 
 (a)  Customer
          Concentrations
 
 The
          Group
          has the following concentrations of business with each customer constituting
          greater than 10% of the Company’s gross sales:
 
 Wang
                    Jianbo
                
                
                24.89
                %Wei
                    Yunchao
                
                
                22.10
                %Li
                    Yubo
                
                
                18.03
                %
 The
          Group
          has not experienced any significant difficulty in collecting its accounts
          receivable in the past and is not aware of any financial difficulties being
          experienced by its major customers.
 
 The
          Group
          has the following concentrations of business with each supplier constituting
          greater than 10% of the Company’s gross purchases:
 
 Ma
                    Suping
                
                
                15.94
                %Lu
                    Xingzhong
                
                
                10.20
                %
 
 (b)  Credit
          Risk
 
 Financial
          instruments that potentially subject the Group to significant concentration
          of
          credit risk consist primarily of cash and cash equivalents. As of January
          31,
          2008, substantially all of the Group’s cash and cash equivalents were held by
          major financial institutions located in the PRC, which management believes
          are
          of high credit quality.
  F-21


**WEIFANG
      YUHE POULTRY CO., LTD**


**NOTES
      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**


**(Stated
      in US Dollars)**





**16.**
            **Significant
                concentrations and risk
                (Continued)**





(c)  Group’s
      operations are in China





All
      of
      the Group’s products are produced in China. The Group’s operations are subject
      to various political, economic, and other risks and uncertainties inherent
      in
      China. Among other risks, the Group’s operations are subject to the risks of
      transfer of funds; domestic and international customs and tariffs; changing
      taxation policies; foreign exchange restrictions; and political conditions
      and
      governmental regulations.





**17.**
            **Business
                and geographical segments**





The
      Company’s operations are classified into two principal reportable segments that
      provide different products or services.  Weifang is engaged in the business
      of chick while Taihong is engaged in the business of feed production, in which
      most of the product were used internally.  Separate management of each
      segment is required because each business unit is subject to different
      production and technology strategies.





**Reportable
      Segments**


Production
                of chick
              
              Production
                of feeds
              
              TotalExternal
                  revenue
              
              
              1,443,425
              
              
              47,904
              
              
              1,491,329Intersegment
                  revenue
              
              
              
              
              
              737,602
              
              
              737,602Interest
                  income
              
              
              5
              
              
              -
              
              
              5Interest
                  expense
              
              
              (34,819
              )
              
              (51,348
              )
              
              (86,167
              )Depreciation
                  and amortization
              
              
              116,071
              
              
              10,342
              
              
              126,413Net
                  profit (loss) after tax
              
              
              (26,232
              )
              
              167,766
              
              
              141,534AssetsExpenditures
                  for long-lived assets
              
              
              206,176
              
              
              524
              
              
              206,700





Note:
      Intersegment revenue of $737,602 was eliminated in
      consolidation.


F-22


**WEIFANG
      YUHE POULTRY CO., LTD**


**NOTES
      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**


**(Stated
      in US Dollars)**





**18.**
            **Commitments
                and contingencies**





Operating
      Leases - In the normal course of business, Weifang Yuhe leases the
      land for hen house under operating lease agreements. Weifang Yuhe rents land,
      primarily for the feeding of the chickens. The operating lease agreements
      generally contain renewal options that may be exercised at Weifang Yuhe
      discretion after the completion of the base rental terms. Weifang Yuhe was
      obligated under operating leases requiring minimum rentals as
      follows:





Up
                to January 31,2008
            
            $
            134,3192009
            
            
            146,5302010
            
            
            135,0492011
            
            
            77,6482012
            
            
            77,648Thereafter
            
            
            1,444,031Total
                minimum lease payments
            
            $
            2,015,225




During
      the period for January 1, 2008 to January 31, 2008, rent expenses amounted
      to
      $22,432 was recorded as cost of sales.





**19.**
            **Subsequent
                Events**





In
      January 31, 2008, Bright Stand International Limited, Bright Stand, a company
      incorporated in the British Virgin Islands, acquired 100% equity ownership
      of Weifang Yuhe and 43.75% equity ownership of Taihong for cash
      consideration equal to the appraised fair market value of Weifang Yuhe in
      the amount of $11,306,522, or RMB 81,450,000, and $312,530, or RMB
      2,244,000. As a result, Weifang Yuhe and Taihong became wholly-owned
      subsidiaries of Bright Stand.


F-23





**YUHE
      INTERNATIONAL INC.**


**(Formerly
      known as First Growth Investors Inc.)**





**CONDENSED
      CONSOLIDATED FINANCIAL STATEMENTS**


**FOR
      THE THREE MONTHS ENDED MARCH 31, 2008 AND 2007**


F-24


**YUHE
      INTERNATIONAL INC.**


**(Formerly
      known as First Growth Investors Inc.)**





**CONDENSED
      CONSOLIDATED FINANCIAL STATEMENTS**


**FOR
      THE THREE MONTHS ENDED MARCH 31, 2008 AND 2007**





Index
      to
      condensed consolidated financial statements





PageCondensed
                Consolidated Balance Sheets - unaudited
            F-26Condensed
                Consolidated Statements of Operations and Comprehensive Income -
                unaudited
            F-27Condensed
                Consolidated Statements of Changes in Stockholders’ Equity -
                unaudited
            F-28Condensed
                Consolidated Statements of Cash Flows - unaudited
            F-29Notes
                to Unaudited Condensed Consolidated Financial Statements
            F-30 to
                F-56




F-25


**YUHE
      INTERNATIONAL INC.**


**(Formerly
      known as First Growth Investors Inc.)**





**CONDENSED
      CONSOLIDATED BALANCE SHEETS - Unaudited**


**(Stated
      in US Dollars)**





March 31,
              2008
            
            December 31,
              2007(unaudited)
            
            (audited)ASSETSCurrent
                assets:Cash
                and cash equivalents
            
            
            2,988,595
            
            $
            1,050,168Restricted
                cash
            
            
            1,750,000
            
            
            -Accounts
                receivables, net of allowances of $17,677
            
            
            1,510
            
            
            -Prepaid
                expenses
            
            
            38,577
            
            
            -Inventories
            
            
            7,149,839
            
            
            -Note
                receivables, net
            
            
            11,338,839
            
            
            -Advances
                to suppliers
            
            
            862,088
            
            
            -Total
                current assets
            
            
            24,129,448
            
            
            1,050,168Deposits
                paid
            
            
            1,144,790
            
            
            -Other
                receivables, net
            
            
            266,406
            
            
            -Unlisted
                investments
            
            
            286,235
            
            
            -Plant
                and equipment, net
            
            
            15,531,164
            
            
            -Intangible
                assets, net
            
            
            2,888,025
            
            
            -Due
                from related companies
            
            
            4,314,623
            
            
            1,000,000Due
                from shareholder
            
            
            15,000
            
            
            -Deferred
                expenses
            
            
            588,903
            
            
            -Total
                assets
            
            
            49,164,594
            
            $
            2,050,168LIABILITIES
                AND STOCKHOLDERS’ EQUITYCurrent
                liabilities:Accounts
                payable
            
            
            4,685,185
            
            $
            -Current
                portion of long term loans
            
            
            4,485,774
            
            
            -Loan
                payable
            
            
            2,408,464
            
            
            -Payroll
                and payroll related liabilities
            
            
            664,840
            
            
            -Accrued
                expenses
            
            
            1,066,098
            
            
            70Advances
                from customers
            
            
            156,340
            
            
            -Other
                tax payables
            
            
            138,152
            
            
            -Due
                to related companies
            
            
            953,507
            
            
            2,210Total
                current liabilities
            
            
            14,558,360
            
            
            2,280Non-current
                liabilitiesLong-term
                loans
            
            
            6,308,564
            
            
            -Total
                liabilities
            
            
            20,866,924
            
            
            2,280Shareholders'
                EquityPreferred
                stock, $.001 par value, 1,000,000 shares authorized,
              no
                shares issued and outstanding
            
            
            -Common
                stock at $.001 par value; authorized 500,000,000 shares authorized,
                15,543,330 and 8,626,318equivalent shares issued and
                outstanding
            
            
            15,543
            
            
            8,626Additional
                paid-in capital
            
            
            29,542,836
            
            
            2,041,474Stock
                Subscription Receivable
            
            
            (1,403,937
            )
            
            -Accumulated
                deficits
            
            
            (274,693
            )
            
            (2,212
            )Accumulated
                other comprehensive income
            
            
            417,921
            
            
            -Total
                stockholders’ equity
            
            
            28,297,670
            
            
            2,047,888Total
                liabilities and stockholders’ equity
            
            
            49,164,594
            
            $
            2,050,168





See
      accompanying notes to condensed consolidated financial
      statements


F-26





**YUHE
      INTERNATIONAL INC.**


**(Formerly
      known as First Growth Investors Inc.)**





**CONDENSED
      CONSOLIDATED STATEMENTS OF** **INCOME
      AND**


**COMPREHENSIVE
      INCOME – Unaudited**


**(Stated
      in US Dollars)**




For The Three Months EndedMarch 312008
            
            2007Net
                revenues
            
            $
            1,103,551
            
            $
            -Cost
                of revenue
            
            
            (874,707
            )
            
            -Gross
                profit
            
            
            228,844
            
            
            -Operating
                ExpensesSelling
                expenses
            
            
            (48,540
            )
            
            -General
                and administrative expenses
            
            
            (247,824
            )
            
            -Total
                operating expenses
            
            
            (296,364
            )
            
            -Loss
                from operations
            
            
            (67,520
            )
            
            -Non-operating
                incomeInterest
                income
            
            
            158
            
            
            -Other
                income
            
            
            5,900
            
            
            -Interest
                expenses
            
            
            (180,474
            )
            
            -Other
                expenses
            
            
            (30,545
            )
            
            -Total
                other expenses
            
            
            (204,961
            )
            
            -Net
                loss before income taxes
            
            
            (272,481
            )
            
            -Income
                taxes
            
            
            -
            
            
            -Net
                loss
            
            $
            (272,481
            )
            $
            -Other
                comprehensive incomeForeign
                currency translation
            
            
            417,921
            
            
            -Comprehensive
                income
            
            $
            145,440
            
            $
            -Loss
                per share
            
            $
            (0.01
            )
            $
            -Weighted
                average shares outstanding
            
            
            10,146,353
            
            
            8,626,318





See
      accompanying notes to condensed consolidated financial
      statements


F-27


**YUHE
      INTERNATIONAL INC.**


**(Formerly
      known as First Growth Investors Inc.)**





**CONDENSED
      CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY –
unaudited**




**(Stated
      in US Dollars)**




**Common stock****Shares**
              **outstanding**
            
            **Amount**
            
            **Additional**
              **paid-in capital**
            
            **Stock**
              **subscription**
              **receivable**
            
            **Retained**
              **Earnings**
            
            **Accumulated**
              **other**
              **comprehensive**
              **income**
            
            **Total**
              **shareholders’**
              **Equity**Balance at December 31, 2007
            
            
            8,626,318
            
            $
            8,626
            
            $
            2,041,474
            
            $
            
            
            $
            (2,212
            )
            $
            
            
            $
            2,047,888Additional
                capital contribution
            
            
            
            
            
            
            
            
            12,149,750
            
            
            
            
            
            
            
            
            
            
            
            12,149,750Recapitalization
            
            
            1,087,994
            
            
            1,088
            
            
            (2,082
            )
            
            
            
            
            
            
            
            
            
            
            (994
            )Share
                issued in private placement at $3.088 per share
            
            
            5,829,018
            
            
            5,829
            
            
            17,994,171
            
            
            
            
            
            
            
            
            
            
            
            18,000,000Cost
                of raising capital
            
            
            
            
            
            
            
            
            (2,640,477
            )
            
            
            
            
            
            
            
            
            
            
            (2,640,477
            )Stock
                subscription receivable
            
            
            
            
            
            
            
            
            
            
            
            (1,403,937
            )
            
            
            
            
            
            
            
            (1,403,937
            )Warrants
                issued in connection with private placement
            
            
            
            
            
            
            
            
            2,398,975
            
            
            
            
            
            
            
            
            
            
            
            2,398,975Cost
                of issuance of warrants
            
            
            
            
            
            
            
            
            (2,398,975
            )
            
            
            
            
            
            
            
            
            
            
            (2,398,975
            )Net
                loss for the period
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            (272,481
            )
            
            
            
            
            (272,481
            )Foreign
                currency translation adjustment
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            417,921
            
            
            417,921Balance
                at March 31, 2008
            
            
            15,543,330
            
            $
            15,543
            
            $
            29,542,836
            
            $
            (1,403,937
            )
            $
            (274,693
            )
            $
            417,921
            
            $
            28,297,670




F-28





**YUHE
      INTERNATIONAL INC.**


**(Formerly
      known as First Growth Investors Inc.)**





**CONDENSED
      CONSOLIDATED STATEMENTS OF CASH FLOWS – Unaudited**


**(Stated
      in US Dollars)**





For The Three Months EndedMarch 312008
            
            2007Cash
                flows from operating activitiesNet
                loss
            
            $
            (272,481
            )
            $
            -Adjustments
                to reconcile net income to net cash used in operating
                activities:Depreciation
            
            
            244,464
            
            
            -Amortization
            
            
            10,414
            
            
            -Bad
                debts recovery of other receive bales
            
            
            (13,145
            )
            
            -Changes
                in operating assets and liabilities:Advances
                to suppliers
            
            
            (538,226
            )
            
            -Prepaid
                expenses
            
            
            (10,333
            )
            
            -Deposits
                paid
            
            
            (2,801
            )
            
            -Inventories
            
            
            (2,366,280
            )
            
            -Accounts
                payable
            
            
            (222,125
            )
            
            -Payroll
                and payroll related liabilities
            
            
            104,323
            
            
            -Accrued
                expenses
            
            
            569,571
            
            
            -Advances
                from customers
            
            
            (56,979
            )
            
            -Other
                tax payables
            
            
            9,383
            
            
            -Net
                cash used in operating activities
            
            
            (2,544,215
            )
            
            -Cash
                flows from investing activitiesDeposits
                paid and acquisition of property, plant and equipment
            
            
            (248,616
            )
            
            -Acquisition
                of subsidiaries
            
            
            (10,567,946
            )
            
            -Advances
                to notes receivables
            
            
            (11,036,697
            )
            
            -Advances
                to related parties receivables
            
            
            (208,458
            )
            
            -Net
                cash used in investing activities
            
            
            (22,061,717
            )
            
            -


Cash
                flows from financing activitiesProceeds
                from loan payable
            
            
            778,870
            
            
            -Proceeds
                from related party
            
            
            1,285,168
            
            
            -Capital
                contribution by shareholder
            
            
            12,149,750
            
            
            -Proceeds
                from common stock sale - net of offering costs
            
            
            12,205,586
            
            
            -Net
                cash flows provided by financing activities:
            
            
            26,419,374
            
            
            -Effect
                of foreign currency translation on cash and cash
                equivalents
            
            
            124,985
            
            
            -Net
                increase in cash
            
            
            1,938,427
            
            
            -Cash-
                beginning of period
            
            
            1,050,168
            
            
            -Cash-
                end of period
            
            $
            2,988,595
            
            $
            -Supplemental
                disclosure of non cash investing and financing activities:Interest
                paid
            
            $
            181,474
            
            $
            -Income
                taxes paid
            
            $
            -
            
            $
            -




See
      accompanying notes to condensed consolidated financial
      statements


F-29


**1.**
                **Basis
                    of
                    presentation**





The
      interim condensed consolidated financial statements included herein, presented
      in accordance with United States generally accepted accounting principles and
      stated in US dollars, have been prepared by the Company, without audit, pursuant
      to the rules and regulations of the Securities and Exchange Commission. Certain
      information and footnote disclosures normally included in financial statements
      prepared in accordance with generally accepted accounting principles have been
      condensed or omitted pursuant to such rules and regulations, although the
      Company believes that the disclosures are adequate to make the information
      presented not misleading. These statements reflect all adjustments, consisting
      of normal recurring adjustments, which, in the opinion of management, are
      necessary for fair presentation of the information contained therein. It is
      suggested that these interim condensed consolidated financial statements be
      read
      in conjunction with the financial statements of the Company for the year ended
      December 31, 2007 and notes thereto included in S-1 of Yuhe International Inc.
      (Formerly known as First Growth Investors Inc.) filed on May 12, 2008. The
      Company follows the same accounting policies in the preparation of interim
      reports.





Results
      of operations for the interim periods are not indicative of annual
      results.





**2.**
            **Organization
                and Basis of Preparation of Financial
                Statements**





**Yuhe
      International Inc.**





Yuhe
      International Inc. (formerly known as First Growth Investors Inc.) (“Yuhe” or
“the Company”) was originally organized under the laws of the State of Nevada on
      September 9, 1997. The Company was not presently engaged in any business
      activities and had no operations, income producing assets or significant
      operating capital. At December 31, 2007, the Company was at development stage
      until its business combination with Bright Stand on March 12,
      2008.


F-30


**2.**
            **Organization
                and Basis of Preparation of Financial Statements -
                continued**





On
      March
      12, 2008, the Company completed a reverse acquisition transaction with Bright
      Stand International Co., Ltd., “ Bright
      Stand ” ,
      and
      Kunio Yamamoto, a Japanese person and the sole former shareholder of Bright
      Stand. Pursuant to the terms of the Equity Transfer Agreement, the Company
      acquired all of the outstanding capital stock of Bright Stand from Mr. Yamamoto
      in exchange for 126,857,134 shares (equivalent to 8,626,236 post –split shares)
      of its common stock. As a result of the transaction, Mr. Yamamoto held
      126,857,134 shares (equivalent to 8,626,236 post –split shares), or 88.8 % of
      our 142,857,134 shares (equivalent to 9,714,230 post –split shares), of common
      stock then outstanding following the completion of all matters referred to
      above. At the closing, Bright Stand became a wholly-owned subsidiary of the
      Company. Accordingly, all references to common shares of Bright Stand’s common
      stock have been restated to reflect the equivalent numbers of Yuhe International
      Inc. equivalent shares. Bright Stand thereby became the Company’s wholly owned
      subsidiary and the former shareholders of Bright Stand became the Company’s
      controlling stockholders.





This
      share exchange transaction resulted in Bright Stand former shareholders
      obtaining a majority voting interest in the Company. Generally accepted
      accounting principles require that the company whose shareholders retain the
      majority interest in a combined business be treated as the acquirer for
      accounting purposes, resulting in a reverse acquisition with Bright Stand as
      the
      accounting acquiror and Yuhe International Inc. as the acquired party.
      Accordingly, the share exchange transaction has been accounted for as a
      recapitalization of the Company. The equity section of the accompanying
      financial statements have been restated to reflect the recapitalization of
      the
      Company due to the reverse acquisition as of the first day of the first period
      presented. The assets and liabilities acquired that, for accounting purposes,
      were deemed to have been acquired by Bright Stand were not
      significant.





On
      March
      12, 2008, the Company closed a Securities Purchase Agreement with certain
      investors, the “ Financing ” .
      Pursuant to the terms of such Securities Purchase Agreement, such investors
      collectively invested $18,000,000 into Yuhe at the price of $0.21 ($3.088
      post-split) per share in exchange for our issuance of 85,714,282 (equivalent
      to
      approximately 5,829,018 post –split shares) shares to such investors. Mr.
      Yamamoto also sold 14,285,710 (equivalent to 971,423 post –split shares) shares
      of common stock to such investors for $3,000,000. Immediately following the
      closing of the Securities Purchase Agreement, Mr. Yamamoto owned 112,571,424
      (equivalent to 7,654,815 post –split shares) shares of our common stock, and the
      investors owned 99,999,992 shares equivalent to 6,799,962 post –split shares) of
      our common stock.


F-31


**2.**
            **Organization
                and Basis of Preparation of Financial Statements -
                continued**





In
      connection with this private placement on March 12, 2008, as part of the
      compensation to the placement agent, Roth Capital Partners, LLC, in connection
      with their services under the Securities Purchase Agreement, the Company issued
      to Roth Capital Partners, LLC and WLT Brothers Capital, Inc. warrants to acquire
      an aggregate of 6,999,999 shares (equivalent to 476,014 post-split shares)
      of
      common stock, exercisable at any time after the date falling 6 months after
      their issuance. The warrants have a strike price equal to $0.252 ($3.705
      post-split), have a term of three years starting from March 12, 2008 and permit
      cashless or cash exercise at all times after they are exercisable until they
      expire on March 12, 2011. The shares of common stock issuable upon the exercise
      of the warrants have registration rights. In addition, Roth Capital Partners,
      LLC and WLT Brothers Capital, Inc. received cash compensation in the amount
      of
      $1.47 million.





From
      the
      private placement arrangement, the Company raised gross proceeds of
      $18,000,000.





Also,
      on
      March 12, 2008, our majority stockholder, Mr. Yamamoto, entered into an escrow
      agreement with the private placement investors. Mr. Yamamoto will deliver a
      certain number of shares of our common stock owned by him to the investors
      pro-rata in accordance with their respective investment amount for no additional
      consideration if:





(i)
            our
                after tax net income for our fiscal year ending on December 31, 2008
                is
                less than $9,000,000 and fiscal year ending on December 31, 2009
                is less
                than 95% of $13,000,000; and


(ii)
            our
                earnings per share reported in the fiscal year ending on December
                31, 2009
                is less than $0.74 on a fully diluted basis (the “Low Performance
                Events”).





Mr.
      Yamamoto has placed an aggregate of 49,411,763 shares (equivalent to 3,359,889
      post-split shares) of common stock (“Make Good Shares”) into an escrow account
      pursuant to the terms of the Make Good Escrow Agreement by and among us, Mr.
      Yamamoto, the Investors and the escrow agent named therein. In the event we
      do
      not achieve the Targets in 2008 and 2009, Make Good Shares will be conveyed
      to
      the Investors pro-rata in accordance with their respective investment amount
      for
      no additional consideration. In the event that the foregoing Low Performance
      Events do not occur, the Make Good Shares will be transferred to Mr.
      Yamamoto.





After
      the
      reverse acquisition, the total common stock issued and outstanding of the
      Company is 15,543,330 post-split shares.





The
      Company amended its articles of incorporation on April 4, 2008 and changed
      its
      name into Yuhe International Inc.


F-32


**2.**
            **Organization
                and Basis of Preparation of Financial Statements -
                continued**





**Bright
      Stand International Limited (“Bright Stand”)**





On
      August
      3, 2007, Bright Stand International Limited (“Bright Stand”) was incorporated
      with limited liability in the British Virgin Islands. On January 31, 2008,
      Bright Stand International Limited completed the acquisition (note 4) of 100%
      common stock of Weifang Yuhe Poultry Co., Limited (“Weifang”) and 43.75% of
      Weifang Taihong Feed Co., Ltd. (Taihong). As a result, Bright Stand owned 100%
      of Weifang and owned 43.75% direct interest of Taihong and 56.25% indirect
      interest of Taihong through Weifang. Weifang and Taihong became the wholly-owned
      subsidiaries of Bright Stand.





**Weifang
      Yuhe Poultry Co., Ltd (“Weifang”)**





Weifang
      Yuhe Poultry Co., Ltd (“Weifang”) was established in Weifang, Shandong of the
      People’s Republic of China (the PRC) as a limited company on March 8, 1996. The
      Company currently operates through itself and owned 56.25% of Weifang Taihong
      Feed Co., Ltd. Weifang is a supplier of day-old chickens raised for meat
      production, or broilers, in the People’s Republic of China.





**Weifang
      Taihong Feed Co., Ltd. (“Taihong”)**





Weifang
      Taihong Feed Co., Ltd. was established in Weifang, Shandong of the People’s
      Republic of China (the PRC) as a limited company on May 26, 2003. Taihong is
      a
      feed stock company whose primary purpose is to supply feed stock for Weifang’s
      breeder chickens.





The
      Company’s operations are conducted through its subsidiaries in the People’s
      Republic of China, Weifang Yuhe Poultry Co. Ltd. (“Weifang”), and Weifang
      Taihong Feed Co. Ltd. (“Taihong”). The Company and its subsidiary (hereinafter,
      collectively referred to as “the Group”) are engaged in the business of chick
      and feed production.


F-33


**3.**
            **Summary
                of significant accounting
                policies**





(a)  Principles
      of consolidation





The
      condensed consolidated financial statements, prepared in accordance with
      generally accepted accounting principles in the United States of America,
      include the assets, liabilities, revenues, expenses and cash flows of the
      Company and all its subsidiaries. This basis of accounting differs in certain
      material respects from that used for the preparation of the books and records of
      the Company’s principal subsidiaries, which are prepared in accordance with the
      accounting principles and the relevant financial regulations applicable to
      enterprises with limited liabilities established in the PRC (“PRC GAAP”) the
      accounting standards used in the place of their domicile.  The accompanying
      consolidated financial statements reflect necessary adjustments not recorded
      in
      the books and records of the Company’s subsidiaries to present them in
      conformity with US GAAP.





The
      condensed consolidated financial statements of the Company include the accounts
      of Yuhe International Inc, Bright Stand International Limited, Weifang Yuhe
      Poultry Co., Ltd and Weifang Taihong Feed Co., Ltd. after the date of
      acquisitions. All significant intercompany accounts, transactions and cash
      flows
      are eliminated on consolidation.





The
      following table depicts the identity of the subsidiary:





***Name of Company***
            
            ***Place & date***
              ***of***
              ***Incorporation***
            
            ***Attributable***
              ***Equity Interest %***
            
            ***Registered***
              ***Capital***Weifang Yuhe Poultry Co., Ltd
            
            
            PRC/
              March 8, 1996
            
            
            100
            %
            $
            11,045,467
            
            
            (equivalent
                to RMB77,563,481
            )Weifang
                Taihong Feed Co., Ltd.
            
            
            PRC/
              May
                26 2003
            
            
            100
            %
            $
            965,379
            
            
            (equivalent
                to RMB8,000,000
            )





(b)  Use
      of
      estimates





The
      preparation of the financial statements in conformity with generally accepted
      accounting principles in the United States of America requires management to
      make estimates and assumptions that affect the reported amounts of assets and
      liabilities and disclosure of contingent assets and liabilities at the date
      of
      the financial statements and the reported amounts of revenues and expenses
      during the reporting periods. Management makes these estimates using the best
      information available at the time the estimates are made; however actual results
      could differ materially from those estimates.


F-34


**3.**
            **Summary
                of significant accounting policies -
                continued**





(c)  Intangible
      assets





Intangible
      assets represent land use rights in the PRC. Land use rights are carried at
      cost
      and amortized on a straight-line basis over the period of rights of 50 years
      commencing from the date of acquisition of equitable interest. According to
      the
      laws of PRC, the government owns all of the land in PRC. Companies or individual
      are authorized to possess and use the land only through land usage rights
      approved by the PRC government.





(d)  Economic
      and political risks





The
      Company’s operations are conducted in the PRC. Accordingly, the Company’s
      business, financial condition and results of operations may be influenced by
      the
      political, economic and legal environment in the PRC, and by the general state
      of the PRC economy.




The
      Company’s operations in the PRC are subject to special considerations and
      significant risks not typically associated with companies in North America
      and
      Western Europe. These include risks associated with, among others, the
      political, economic and legal environment and foreign currency exchange. The
      Company’s results may be adversely affected by changes in the political and
      social conditions in the PRC, and by changes in governmental policies with
      respect to laws and regulations, anti-inflationary measures, currency
      conversion, remittances abroad, and rates and methods of taxation, among other
      things.





(e)  Plant
      and
      equipment





Plant
      and
      equipment are carried at cost less accumulated depreciation. Depreciation is
      provided over their estimated useful lives, using the straight-line method.
      Estimated useful lives of the plant and equipment are as follows:





Buildings
            20
                yearsMachinery
            10
                yearsVehicle
            5
                yearsFurniture
                and equipment
            3
                years





The
      cost
      and related accumulated depreciation of assets sold or otherwise retired are
      eliminated from the accounts and any gain or loss is included in the statement
      of income. The cost of maintenance and repairs is charged to income as incurred,
      whereas significant renewals and betterments are capitalized.


F-35


**3.**
            **Summary
                of significant accounting policies -
                continued**





(f)  Intangible
      assets





Intangible
      assets represent land use rights in the PRC. Land use rights are carried at
      cost
      and amortized on a straight-line basis over the period of rights of 50 years
      commencing from the date of acquisition of equitable interest. According to
      the
      laws of the PRC, the government owns all of the land in the PRC. Companies
      or
      individual are authorized to possess and use the land only through land usage
      rights approved by the PRC government.





(g)  Guarantee
      Expense





The
      Company accounts for its liability for product guaranteed in accordance with
      FASB Interpretation No. 45 (FIN 45), “Guarantor’s Accounting and Disclosure
      Requirements for Guarantees, Including Indirect Guarantees of Indebtedness
      of
      Others.” Under FIN 45, the aggregate changes in the liability for accruals
      related to product warranties issued during the reporting period must be charged
      to expense as incurred.





The
      Company guarantees a 98% survival rate of its product by delivering additional
      2% of the product. The guarantee expires seven days after delivery. If the
      survival rate falls below 96%, the Company provides additional guarantee
      compensation to customers. Based on historical experience, the likelihood that
      survival rate falls below 96% is remote and therefore no accrued guarantee
      liability was recorded at year-end. The Company records guarantee expense as
      incurred. Guarantee expense for the three months ended March 31, 2008 and 2007
      were $0 and $0, respectively.





(h)  Accounting
      for the impairment of long-lived assets





The
      long-lived assets held and used by the Company are reviewed for impairment
      whenever events or changes in circumstances indicate that the carrying amount
      of
      assets may not be recoverable. It is reasonably possible that these assets
      could
      become impaired as a result of technology or other industry changes.
      Determination of recoverability of assets to be held and used is done by
      comparing the carrying amount of an asset to future net undiscounted cash flows
      to be generated by the assets.





If
      such
      assets are considered to be impaired, the impairment to be recognized is
      measured as the amount by which the carrying amount of the assets exceeds the
      fair value of the assets. Assets to be disposed of are reported at the lower
      of
      the carrying amount or fair value less costs to sell. During the reporting
      periods, there was no impairment loss.


F-36


**3.**
            **Summary
                of significant accounting policies -
                continued**





(i)  Inventories





Inventories
      consisting of raw materials, work in progress and finished goods are stated
      at
      lower of cost or net realizable value. The cost of inventories is determined
      using weighted average cost method, and includes expenditure incurred in
      acquiring the inventories and bringing them to their existing location and
      condition. Net realizable value is the estimated selling price in the ordinary
      course of business less any applicable selling expenses. Finished goods are
      comprised of direct materials, direct labor and an appropriate proportion of
      overhead. At each balance sheet date, inventories that are worth less than
      cost
      are written down to their net realizable value, and the difference is charged
      to
      the cost of revenues of that period.





(j)  Trade
      receivables





Trade
      receivables are recognized and carried at the original invoice amount less
      allowance for any uncollectible amounts. An estimate for doubtful accounts
      is
      made when collection of the full amount is no longer probable. Bad debts are
      written off as incurred. It is a common industry practice in the PRC that
      customers pay in advance prior to delivery of the products. As a result, the
      Company maintains a low level of trade receivables.





(k)  Cash
      and
      cash equivalents





The
      Company considers all highly liquid investments purchased with original
      maturities of three months or less to be cash equivalents. The Company maintains
      bank accounts only in the PRC. The Company does not maintain any bank accounts
      in the United States of America. Cash deposits in PRC banks are not insured
      by
      any government agency or entity.





(l)  Revenue
      recognition





Revenue
      from sales of the Company’s products is recognized when the significant risks
      and rewards of ownership have been transferred to the third-party distributors
      and broiler farms and integrated chicken companies at the time when
      the products are delivered to and accepted by them, the sales price is fixed
      or
      determinable as stated in the sales contract, and collection is reasonably
      assured.





Customers
      do not have a general right of return on products delivered.





(m)  Cost
      of
      revenues





Cost
      of
      revenues consists primarily of material costs, employee compensation,
      depreciation and related expenses, which are directly attributable to the
      production of products. Write-down of inventory to lower of cost or market
      is
      also recorded in cost of revenues.


F-37


**3.**
            **Summary
                of significant accounting policies -
                continued**





(n)  Advertising





The
      Group
      expensed all advertising costs as incurred. Advertising expenses for the three
      months ended March 31, 2008 and 2007 were $0 and $0 respectively.





(o)  Retirement
      benefit plans





The
      employees of the Group are members of a state-managed retirement benefit plan
      operated by the government of the PRC. The Group is required to contribute
      a
      specified percentage of payroll costs to the retirement benefit scheme to fund
      the benefits. The only obligation of the Group with respect to the retirement
      benefit plan is to make the specified contributions.





Retirement
      benefits in the form of contributions under defined contribution retirement
      plans to the relevant authorities are charged to the statements of income as
      incurred. The retirement benefit expenses for the three months ended March
      31,
      2008 and 2007 were $13,345 and $0 respectively.





(p)  Income
      tax





The
      Company accounts for income taxes using an asset and liability approach and
      allows for recognition of deferred tax benefits in future years. Under the
      asset
      and liability approach, deferred taxes are provided for the net tax effects
      of
      temporary differences between the carrying amounts of assets and liabilities
      for
      financial reporting purposes and the amounts used for income tax purposes.
      A
      valuation allowance is provided for deferred tax assets if it is more likely
      than not these items will either expire before the Company is able to realize
      their benefits, or that future realization is uncertain.





The
      Company is operating in the PRC, and in accordance with the relevant tax laws
      and regulations of PRC, the corporation income tax rate is 33%. However, the
      Company is a poultry company, and in accordance with the relevant regulations
      regarding the favorable tax treatment for an outstanding poultry company, the
      Company is entitled to a tax free treatment until March 31, 2008.





The
      corporate income tax for the subsidiary, Weifang Taihong Feed Co., Ltd is 33%.





(q)  Shipping
      and handling fees





Shipping
      and handling fees are expensed when incurred. Shipping and handling charges
      included in the selling expenses for the three months ended March 31, 2008
      and
      2007 were $1,861 and $0 respectively.


F-38


**3.**
            **Summary
                of significant accounting policies -
                continued**





(r)  Foreign
      currency translation





The
      accompanying financial statements are presented in United States dollars. The
      functional currency of the Company is the Renminbi (RMB). The financial
      statements are translated into United States dollars from RMB at year-end
      exchange rates as to assets and liabilities and average exchange rates as to
      revenues and expenses. Capital accounts are translated at their historical
      exchange rates when the capital transactions occurred.





March
                31, 2008Balance
                sheet
            
            
            RMB 7.0222 to US$1.00Statement of income and comprehensive income
            
            
            RMB 7.1757 to US$1.00December
                31, 2007Balance
                sheet
            
            
            RMB 7.31410 to US$1.00Statement
                of income and comprehensive income
            
            
            RMB 7.61720 to US$1.00




The
      RMB
      is not freely convertible into foreign currency and all foreign exchange
      transactions must take place through authorized institutions. No representation
      is made that the RMB amounts could have been, or could be, converted into US$
      at
      the rates used in translation.





(s)  Comprehensive
      income





Comprehensive
      income is defined to include all changes in equity except those resulting from
      investments by owners and distributions to owners. Among other disclosures,
      all
      items that are required to be recognized under current accounting standards
      as
      components of comprehensive income are required to be reported in a financial
      statement that is presented with the same prominence as other financial
      statements. The component of comprehensive income includes foreign currency
      translation adjustment.





(t)  Fair
      value of financial instruments




SFAS
      No.
      107, “Disclosures about Fair Value of Financial Instruments” (“SFAS 107”)
      requires entities to disclose the fair values of financial instruments except
      when it is not practicable to do so. Under SFAS No. 107, it is not practicable
      to make this disclosure when the costs of formulating the estimated values
      exceed the benefit when considering how meaningful the information would be
      to
      financial statement users.





The
      fair
      values of all assets and liabilities do not differ materially from their
      carrying amounts. None of the financial instruments held are derivative
      financial instruments and none were acquired or held for trading purposes during
      the years ended December 31, 2007 or 2006.


F-39


**3.**
            **Summary
                of significant accounting policies -
                continued**





(u)  Basic
      and
      diluted earnings per share





The
      Company reports basic earnings per share in accordance with SFAS No. 128, “ Earnings
      Per Share ” .
      Basic
      earnings per share is computed using the weighted average number of shares
      outstanding during the periods presented. The weighted average number of shares
      of the Company represents the common stock outstanding during the reporting
      periods.





Diluted
      earning per share is based on the assumption that all dilutive options were
      converted or exercised. Dilution is computed by applying the treasury stock
      method. Under this method, options are assumed to be exercised at the time
      of
      issuance, and as if funds obtained thereby were used to purchase common stock
      at
      the average market price during the year.





(v)  Recent
      accounting pronouncements





In
      December 2007, the FASB issued SFAS No. 141R, “Business Combinations” (“SFAS No.
      141R”). SFAS No. 141R amends SFAS 141 and provides revised guidance for
      recognizing and measuring identifiable assets and goodwill acquired, liabilities
      assumed, and any noncontrolling interest in the acquiree. It also provides
      disclosure requirements to enable users of the financial statements to evaluate
      the nature and financial effects of the business combination. It is effective
      for fiscal years beginning on or after December 15, 2008 and will be applied
      prospectively. We are currently evaluating the impact of adopting SFAS No.
      141R
      on our consolidated financial statements.





In
      December 2007, the Financial Accounting Standards Board (“FASB”) issued SFAS No.
      160, “Noncontrolling Interests in Consolidated Financial Statements — an
      amendment of ARB No. 51” (“SFAS No. 160”). SFAS No. 160 requires that ownership
      interests in subsidiaries held by parties other than the parent, and the amount
      of consolidated net income, be clearly identified, labeled, and presented in
      the
      consolidated financial statements. It also requires once a subsidiary is
      deconsolidated, any retained noncontrolling equity investment in the former
      subsidiary be initially measured at fair value. Sufficient disclosures are
      required to clearly identify and distinguish between the interests of the parent
      and the interests of the noncontrolling owners. It is effective for fiscal
      years
      beginning on or after December 15, 2008 and requires retroactive adoption of
      the
      presentation and disclosure requirements for existing minority interests. All
      other requirements shall be applied prospectively. We are currently evaluating
      the impact of adopting SFAS No. 160 on our consolidated financial
      statements.


F-40


**4.**
            **Acquisition
                of subsidaries**





Acquisition
      of 100% Weifang Yuhe Poultry Co., Limited and 43.75% of Weifang Taihong Feed
      Co., Ltd





On
      January 31, 2008, Bright Stand acquired 100% common stock of Weifang
      Yuhe Poultry Co., Limited for $11,306,522 (RMB 81,450,000) and 43.75% of Weifang
      Taihong Feed Co., Ltd for $312,530 (RMB 2,244,000) and total amount is
      $11,619,052.





The
      Company adopted SFAS No. 141, Business Combinations, which requires the use
      of
      the purchase method of accounting for any business combinations initiated after
      June 30, 2002 The results of Weifang and Taihong and the estimated fair market
      values of the assets and liabilities have been included in our consolidated
      financial statements from the date of acquisition. The purchase price for
      Weifang and Taihong was allocated to the assets acquired and liabilities assumed
      of Weifang and Taihong. All assets and liabilities assumed, based on their
      fair
      values.





Accounts
                receivables
            
            $
            1,475Other
                receivables
            
            
            3,001,699Deposits
                paid
            
            
            1,084,265Deferred
                expenses
            
            
            602,918Advance
                to suppliers
            
            
            305,013Inventories
            
            
            4,624,425Due
                from related companies
            
            
            4,008,506Unlisted
                investment
            
            
            279,738Plant
                and equipment
            
            
            15,323,245Intangible
                assets
            
            
            2,832,869Accounts
                payable
            
            
            (4,800,664
            )Accrued
                expenses
            
            
            (473,020
            )Payroll
                and related liabilities
            
            
            (545,565
            )Other
                tax payable
            
            
            (125,645
            )Advances
                from customers
            
            
            (209,694
            )Loan payables
            
            
            (1,770,862
            )Due
                to related co.
            
            
            (320,913
            )Notes
                payables
            
            
            (10,549,316
            )Other
                assumed liabilities
            
            
            (2,520,531
            )Net
                assets acquired-net of cash acquired $1,051,106
            
            $
            10,747,943Less
                : Purchase Consideration (net of cash)
            
            
            (10,567,946
            )Negative
                goodwill being transferred to construction in progress
            
            $
            179,997




F-41


**4.**
            **Acquisition
                of subsidiaries -
                continued**





The
      following table presents the unaudited results of operations of the Company
      as
      if the Yuhe acquisitions had been consummated as of January 1, 2008 and 2007
      and
      the results are shown for the three months ended March 31, 2008 and 2007
      includes certain pro forma adjustments, including depreciation and amortization
      on the assets acquired, and other adjustments.





For the three months endedPro forma Information:
            
            2008
            
            2007Revenues
            
            $
            2,594,880
            
            $
            2,835,087Net
                (loss)
            
            $
            (130,947
            )
            $
            (650,266
            )Net
                (loss) per share - basic and diluted
            
            $
            (0.01
            )
            $
            (0.01
            )Shares
                used for computing earnings per share
            
            
            10,146,353
            
            
            8,626,318





**5.**
            **Inventories**





Inventories
      consist of the following:




March 31
            
            December 312008
            
            2007Raw
                materials
            
            $
            599,787
            
            $
            -Work
                in progress
            
            
            6,447,593
            
            
            -Finished
                goods
            
            
            102,459
            
            
            -$
            7,149,839
            
            $
            -




F-42


**6.**
            **Other
                receivables, net**





Other
      receivables, net consist of the following:


March 31
            
            December 312008
            
            2007Other
                receivables
            
            $
            304,033
            
            $
            -Less:
                Allowances
            
            
            (37,627
            )
            
            -$
            266,406
            
            $
            -




Other
      receivables are unsecured, interest free and have no fixed repayment
      date.





Recovery
      of bad debts for the three months ended March 31, 2008 and 2007 included in
      the
      general and administrative expenses was $13,145.





Allowance
      is made when collection of the full amount is no longer probable. Management
      reviews and adjusts this allowance periodically based on historical experience,
      current economic climate as well as its evaluation of the collectibility of
      outstanding accounts. The Group evaluates the credit risks of its customers
      utilizing historical data and estimates of future performance.





**7.**
            **Note
                receivables, net**





Note
      receivables, net consist of the following:




March 31
            
            December 312008
            
            2007Weifang
                Shanhe Zhuzho Diecasting Material Co. Ltd.
            
            $
            10,042,815
            
            $
            -Shangdong
                Dingxin Biotechnology Co. Ltd.
            
            
            1,220,252
            
            
            -Others
            
            
            549,808
            
            
            -11,812,875
            
            
            -Less
                : Allowances
            
            
            (474,036
            )
            
            -$
            11,338,839
            
            $
            -





Note
      receivables to unrelated third parties are temporary arrangement which is
      unsecured, interest free and repaid in June, 2008 which is recorded under
      current assets.


F-43


**8.**
            **Unlisted
                investments**





Unlisted
      investments at March 31, 2008 are the 3% investments in Hanting Rural Credit
      Cooperative (“Hanting”). It is stated at cost because the Group does not have
      significant influence or control over this investment. The management of the
      Company has reviewed the investment in Hanting for any impairment and determined
      there is no indication that the carrying amount of Hanting may not be
      recoverable.





**9.**
            **Plant
                and equipment, net**





***Plant
      and equipment consists of the following:***




March 31
            
            December 312008
            
            2007At
                costBuildings
            
            $
            7,653,530
            
            $
            -Machinery
            
            
            3,335,347
            
            
            -Motor
                vehicles
            
            
            153,399
            
            
            -Furniture
                and equipment
            
            
            69,285
            
            
            -$
            11,211,561
            
            $
            -Less:
                accumulated depreciation
            
            
            (249,808
            )
            
            -Construction
                in progress
            
            
            4,569,411
            
            
            -$
            15,531,164
            
            $
            -





Depreciation
      expenses amounting to $244,464 included in the cost of sales for the months
      ended March 31, 2008 and 2007 were $169,311 and $0 respectively, and included
      in
      the general and administrative expenses for the months ended March 31, 2008
      and
      2007 were, $ 75,153 and $ 0 respectively.





As
      of
      March 31, 2008, buildings and machinery of the Group were pledged as collateral
      under certain loan arrangements.


F-44


**10.**
            **Intangible
                assets, net**





Intangible
      assets consist of the following:




March 31
            
            December 312008
            
            2007Land
                use rights, at cost
            
            $
            2,898,666
            
            $
            -Less:
                accumulated amortization
            
            
            (10,641
            )
            
            -$
            2,888,025
            
            $
            -





As
      of
      March 31, 2008, land use rights of the Group were pledged as collateral under
      certain loan arrangements.





Amortization
      expenses included in the cost of revenues for the months ended March 31, 2008
      and 2007 were $10,414 and $0 respectively.





**11.**
            **Due
                from related companies**





March 31
            
            December 312008
            
            2007Hexing
                Green Agriculture Co., Ltd – Mr. Gao Zhentao, the director of the company
                is also the director
            
            $
            73,942
            
            $
            -Shandong
                Yuhe Food Co., Ltd – Mr. Gao Zhentao, the director of the company is also
                the director
            
            
            4,190,261
            
            
            -Shangdong
                Yuhe New Agriculture Academy of Sciences – Mr. Gao Zhentao, the director
                of the company is also the director
            
            
            50,395
            
            
            -Weifang
                Jiaweike Food Co.,Ltd – Mr. Gao Zhentao, the director of the company is
                also the director
            
            
            25
            
            
            -Weifang
                Yuhe Poultry Co., Ltd- Gao Zhentao, the director of the company is
                also
                the director
            
            
            -
            
            
            1,000,000$
            4,314,623
            
            $
            1,000,000




The
      amounts due from related companies are unsecured, interest free and have no
      fixed repayment date.


F-45


**12.**
            **Due
                from shareholder**





As
      of
      March 31, 2008, amount due from shareholder consists of $15,000 due from Mr.
      Yamamoto. There was no amount due from shareholder as of December 31,
      2007.





The
      amounts due from shareholder are unsecured, interest free and have no fixed
      repayment date.





**13.**
            **Loans
                payable**





Loans
      payable are loans from unrelated companies for temporary operation purposes.
      They are unsecured, interest free and have no fixed repayment date.





**14.**
            **Due
                to related companies**





March
                31
            
            December
                312008
            
            2007Weifang
                Hexing Breeding Co.,Ltd – Mr. Gao Zhentao, the director of the company is
                also the director
            
            $
            756,655
            
            $
            -Guangli
                International Limited – Mr. Gao Zhentao, the director of the company is
                also the director
            
            
            19,863
            
            
            -Others
            
            
            176,989
            
            
            -$
            953,507
            
            $
            -





The
      amounts due to related companies are unsecured, interest free and have no fixed
      repayment date. These loans are used for working capital purposes.


F-46


**15.**
            **Long-term
                liabilities**




March
                  31
              
              December
                  312008
              
              2007Loans
                  from Nansun Rural Credit, interest rate at 9.22% to 10.51% per
                  Annum, due
                  from November 28, 08 to May 17, 10
              
              $
              8,544,331
              
              
              -Loans
                  from Shuangyang Rural Credit interest rate at 9.33% per annum,
                  due on
                  October 12, 08
              
              
              925,636
              
              
              -Loans
                  from Hanting Kaiyuan Rural Credit Cooperative, interest rate at
                  9.22% to
                  13.31% per annum, due from November 28, 08 to January 10,
                  09
              
              
              1,039,560
              
              
              -Loans
                  from Hanting Rural Credit Cooperative, interest rate at 8.19% per
                  annum,
                  due from November 8, 09
              
              
              284,811
              
              
              -$
              10,794,338
              
              
              -Less:
                  current portion of long-termLiabilities
              
              
              (4,485,774
              )
              
              -$
              6,308,564
              
              
              -





Future
      maturities of long-term loans as at March 31, 2008 are as follows:





March 3120082008
            
            $
            4,485,7742009
            
            
            2,748,4262010
            
            
            3,560,138$
            10,794,338




F-47


**16.**
            **Income
                tax******





The
      Company is operating in the PRC, and in accordance with the relevant tax laws
      and regulations of PRC, the corporation income tax rate is 33%. However, the
      Company is an agricultural company, and in accordance with the relevant
      regulations regarding the tax exemption, the Company is tax-exempt as long
      as it
      is registered as an agricultural entity.





Taihong
      is operating in the PRC, and in accordance with the relevant tax laws and
      regulations of PRC, the corporation income tax rate is 33%. Taihong has net
      operating losses of $49,570 for the three months ended March 31, 2008, resulting
      in a deferred tax asset of $16,358 which has been fully reserved.





The
      Group
      uses the asset and liability method, where deferred tax assets and liabilities
      are determined based on the expected future tax consequences of temporary
      differences between the carrying amounts of assets and liabilities for financial
      and income tax reporting purposes. There are no material timing differences
      and
      therefore no deferred tax asset or liability at March 31, 2008.





The
      provision for income taxes consists of the following:





2008
            
            2007Current
                tax-PRC
            
            $
            -
            
            $
            --Deferral
                tax provision
            
            
            -
            
            
            -$
            -
            
            $
            -




F-48


**16.**
            **Income
                tax - continued**





All
      of
      the Group’s income (loss) before income taxes is from PRC sources. Actual income
      tax expenses reported in the consolidated statements of income and comprehensive
      income differ from the amounts computed by applying the PRC statutory income
      tax
      rate of 25% and 33% for the fiscal year of 2008 and 2007 respectively to income
      (loss) before income taxes for the three months ended March 31, 2008 and 2007
      for the following reasons:





2008
            
            2007Income
                (loss) before income taxes
            
            $
            (272,481
            )
            $
            -Computed
                    “expected” income tax asset at 25%
            
            $
            68,120
            
            $
            -Valuation
                allowance for deferred taxAssets
            
            
            -
            
            
            -Effect
                of cumulative tax losses
            
            
            -
            
            
            -Tax
                holiday
            
            
            (68,120
            )
            
            -$
            -
            
            $
            -





**17.**
            **Fair
                value of financial
                instruments**




The
      fair
      value of a financial instrument is the amount at which the instrument could
      be
      exchanged in a current transaction between willing parties. The carrying amounts
      of financial assets and liabilities, such as cash and cash equivalents, trade
      accounts receivable, other receivables, accounts payable, and other payables,
      approximate their fair values because of the short maturity of these instruments
      and market rates of interest.


F-49


**18.**
            **Common
                stock, warrants and additional paid-in
                capital**





(a)
            Common
                Stock





On
      March
      12, 2008, the Company issued 126,857,134 shares (equivalent to approximately
      8,626,318 post –split shares) of its common stock., par value $0.001 per share,
      to the sole stockholder of Bright Stand to effect the Reverse Merger
      Acquisition. At the same time, the Company issued 85,714,282 (equivalent to
      approximately 5,829,018 post –split shares) shares of common stock to the
      investors for gross proceeds of $18 million in the private
      placement.





The
      Company's issued and outstanding number of common stock immediately prior to
      the
      Reverse Merger Acquisition is 16,000,000 shares (equivalent to 1,087,994 post
      –split shares) shares.





Effective
      on April 4, 2008, the Company effected a 1-for-14.70596492 reverse stock split
      of our common stock.





After
      the
      reverse acquisition, the total common stock issued and outstanding of the
      Company is 15,543,330 post-split shares.





(b)
            Warrants





The
      Company granted warrants to acquire and aggregate of 6,999,999 shares
      (equivalent to 476,014 post-split shares) of common stock to Roth Capital
      Partners, LLC and WLT Brothers Capital, Inc., for the services in connection
      with the private placement on March 12, 2008. The warrants have a strike price
      equal to $3.706, have a term of three years starting from March 12, 2008 and
      permit cashless or cash exercise at all times that they are exercisable. The
      warrants are exercisable at any time 6 months after their issuance. There are
      no
      diluted effects for the three months ended March, 2008 since those warrants
      are
      exercisable after September 11, 2008.




The
      total
      number of warrants outstanding as at March 31, 2008 was 476,014
      shares




(c)
            Additional paid-in
                capital




Prior
      to
      the Reverse Merger, the shareholder of Bright Stand contributed additional
      capital of $12,149,766 to Bright Stand for the acquisition of PRC Yuhe.
      Subsequent to the contribution of capital, Bright Stand entered into a reverse
      acquisition with Yuhe International and raised $18 million gross proceeds in
      the
      private placement as described in Note 18(a).


F-50


**19.**
            **Stock
                Subscription Receivable**





On
      March
      12, 2008, the Company issued 85,714,282 (equivalent to approximately 5,829,018
      post –split shares) shares of common stock to the investors for gross proceeds
      of $18 million in the private placement. Under the placement, the Company has
      deposited an aggregate of $1,750,000 as restricted cash (Note 20) and the
      Company paid $ 2,262,934 in cash as compensation to the related party involved
      in this private placement. As at March 31, 2008, the Company has not received
      the funds amounting to $1,403,937 and has recorded the amounts due under the
      caption “Stock Subscription Receivable” in the accompanying balance sheet.





During
      the three months ended March 31, 2008, the Company received the funds amounting
      to $12,205,586 and has recorded the proceeds from common stock sale in the
      accompanying statements of cash flows.





**20.**
            **Restricted
                cash**





March 31
            
            December 312008
            
            2007Cash
                held by escrow agents
            
            $
            1,750,000
            
            $
            -




On
      March
      12, 2008, the Company consummated with certain accredited investors (the
“Investors”) a private placement of 85,714,282 shares (equivalent to
      approximately 5,829,018 post-split shares) of the common stock for an aggregate
      purchase price of approximately $18,000,000. Under this private placement
      arrangement, the Company signed three covenants with investors.


F-51





**20.**
            **Restricted
                cash**





Covenants:
      The Securities Purchase Agreement contains certain covenants on our part,
      including the following:





(a)
      Board
      of Directors. Within 180 days following the closing, the Company is required
      to
      nominate a minimum of five members to our Board of Directors, a majority of
      which must be “independent,” as defined under the Nasdaq Marketplace Rules, and
      to take all actions and obtain all authorizations, consents and approvals as
      are
      required to be obtained in order to effect the election of those
      nominees.





(b)
      Chief
      Financial Officer. Within 180 days following the closing, the Company is
      required to hire a chief financial officer (“CFO”) who is a certified public
      accountant, fluent in English and familiar with US GAAP and auditing procedures
      and compliance for US public companies.





(c)
      Investor Relations Firm. Within 60 days following the closing, the Company
      is
      required to hire one of the following investor relations firms: CCG Elite,
      Hayden Communications or Integrated Corporate Relations.





In
      connection with the above three post-closing covenants, the Company has
      deposited an aggregate of $1,750,000 ($750,000 as board holdback escrow amount,
      $750,000 as CFO holdback escrow amount, and $250,000 as investor relations
      firm
      holdback amount) from the gross proceeds of the private placement in the escrow
      account pursuant to the Holdback Escrow Agreement by and among us, the investors
      and the escrow agent named therein. In the event the Company fail to comply
      with
      any of the above covenants in a timely fashion, we will incur liquidated damages
      of 1% on a daily pro-rata basis for any portion of a month of the gross proceeds
      of the private placement, or 2% if we suffer a holdback event relating to Board
      of Directors or CFO in a 30-day period, to be subtracted from the holdback
      escrow fund, until its compliance with such covenants.





The
      Company is required to fulfill the above covenants within 60 days to 180days,
      therefore, the deposit of $1,7500,000 to escrow accounts recorded as restricted
      cash under current assets.


F-52


**21.**
            **Stock-Based
                Compensation**





The
      Company estimated the fair value of each warrant award on the date of grant
      using the Black-Scholes option-pricing model and the assumption noted in the
      following table. Expected volatility is based on the historical and implied
      volatility of a peer group of publicly traded entities. The expected term of
      options gave consideration to historical exercises, post-vesting cancellations
      and the options’ contractual term. The risk-free rate for the expected term of
      the option is based on the U.S. Treasury Constant Maturity at the time of grant.
      The assumptions used to value options granted during the three months ended
      March 31, 2008 were as follows:





**Three Months Ended**
              **March 31, 2008**Risk
                free interest rate
            
            
            3
            %Expected
                volatility
            
            
            109
            %Expected
                life (years)
            
            
            3





Stock
      Compensation-The Company granted warrants to acquire and aggregate of 6,999,999
      shares (equivalent to 476,014 post-split shares) of common stock to Roth Capital
      Partners, LLC and WLT Brothers Capital, Inc., for the services in connection
      with the private placement on March 12, 2008. The Company valued the options
      by
      Black-Scholes option-pricing model with the amount of $2,398,975 which recorded
      as cost of raising capital against additional paid-in capital.


F-53


**22.**
            **Significant
                concentrations and risk**





(d)  Customer
      Concentrations





The
      Company has the following concentrations of business with each customers
      constituting greater than 10% of the Company’s gross sales:





March 31
            
            March 312008
            
            2007Wang
                Jianbo
            
            
            18.98
            %
            $
            -Tin
                Lizhiu
            
            
            11.85
            %
            
            -Wei
                Yunchao
            
            
            17.38
            %
            
            -




The
      Group
      has not experienced any significant difficulty in collecting its accounts
      receivable in the past and is not aware of any financial difficulties being
      experienced by its major customers.





The
      Company has the following concentrations of business with each suppliers
      constituting greater than 10% of the Company’s purchase:





March 31
            
            March 312008
            
            2007Ma
                Zhuping
            
            
            27.57
            %
            $
            -Shangdong
                Yikshang Poultry Limited
            
            
            17.24
            %
            
            -Sin
                Yupin
            
            
            10.60
            %
            
            -




(e)  Credit
      Risk





Financial
      instruments that potentially subject the Group to significant concentration
      of
      credit risk consist primarily of cash and cash equivalents. As of March 31,
      2008, substantially all of the Group’s cash and cash equivalents were held by
      major financial institutions located in the PRC, which management believes
      are
      of high credit quality.





(f)  Group’s
      operations are in China





All
      of
      the Group’s products are produced in China. The Group’s operations are subject
      to various political, economic, and other risks and uncertainties inherent
      in
      China. Among other risks, the Group’s operations are subject to the risks of
      transfer of funds; domestic and international customs and tariffs; changing
      taxation policies; foreign exchange restrictions; and political conditions
      and
      governmental regulations.





**23.**
            **Business
                and geographical segments-**





The
      Company’s operations are classified into two principal reportable segments that
      provide different products or services.  Weifang is engaged in the business
      of breeding chick while Taihong is engaged in the business of feed production,
      in which most of the product were used internally.  Separate management of
      each segment is required because each business unit is subject to different
      production and technology strategies.





F-54




**Reportable
      Segments**





Production
              of
              chicks
            
            Production
              of
              feeds
            
            Corporate
            
            Production
              of
              chicks
            
            Production
              of
              feeds
            
            Corporate
            
            TotalFor the three months ended
              March 31, 2008
            
            For the three months ended
              March 31, 2007
            
            For the three
              months ended
              March 31,
              2008
            
            For the three
              months ended
              March 31,
              2007External
                revenue
            
            $
            1,028,997
            
            $
            74,554
            
            $
            -
            
            $
            -
            
            $
            -
            
            $
            -
            
            $
            1,103,551
            
            $
            -Intersegment
                revenue
            
            
            
            
            
            1,296,335
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            1,296,335
            
            
            -Interest
                income
            
            
            157
            
            
            1
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            158
            
            
            -Interest
                expense
            
            
            (77,640
            )
            
            (102,834
            )
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            (180,474
            )
            
            -Depreciation
                and amortization
            
            
            
            
            
            
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -Net
                profit/(loss) after tax
            
            
            (241,973
            )
            
            (28,801
            )
            
            (1,707
            )
            
            -
            
            
            -
            
            
            -
            
            
            (272,481
            )
            
            -AssetsExpenditures
                for long-lived assets
            
            $
            248,081
            
            $
            535
            
            $
            -
            
            $
            -
            
            $
            -
            
            $
            -
            
            $
            248,616
            
            $
            -





Note:
      Intersegment revenue of $1,296,335 was eliminated in consolidation.





The
      Group’s operations are located in the PRC. All revenue is from customers in the
      PRC. All of the company’s assets are located in the PRC. Accordingly, no
      analysis of the Group's sales and assets by geographical market is
      presented.


F-55


**24.**
            **Commitments
                and contingencies**





Operating
      Leases - In the normal course of business, the Group leases the land for hen
      house under operating lease agreements. The Group rents land, primarily for
      the
      feeding of the chickens. The operating lease agreements generally contain
      renewal options that may be exercised at the Groups discretion after the
      completion of the base rental terms. The Group was obligated under operating
      leases requiring minimum rentals as follows:





Up
                to December 31,2008
            
            $
            111,1712009
            
            
            148,2272010
            
            
            136,6142011
            
            
            78,5482012
            
            
            78,548Thereafter
            
            
            1,460,764Total
                minimum lease payments
            
            $
            2,013,872




During
      the three months ended March 31, 2008, rent expenses amounted to $21,705 was
      recorded as cost of sales.


F-56









**ITEM
      2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
      OPERATION**





***Special
      Note Regarding Forward Looking Statements***





This
      Quarterly Report on Form 10-Q, including the following “Management’s Discussion
      and Analysis of Financial Condition and Results of Operations,” contains
      forward-looking statements that are based on the beliefs of the Company’s
      management and involve risks and uncertainties, as well as assumptions that,
      if
      they ever materialize or prove incorrect, could cause the results of the Company
      to differ materially from those expressed or implied by such forward-looking
      statements. The words “believe,” “expect,” “anticipate,” “project,” “targets,”
“optimistic,” “intend,” “aim,” “will” or similar expressions are intended to
      identify forward-looking statements. All statements other than statements of
      historical fact are statements that could be deemed forward-looking statements,
      including statements regarding new and existing products, technologies and
      opportunities; statements regarding market and industry segment growth and
      demand and acceptance of new and existing products; any projections of sales,
      earnings, revenue, margins or other financial items; any statements of the
      plans, strategies and objectives of management for future operations; any
      statements regarding future economic conditions or performance; uncertainties
      related to conducting business in China; any statements of belief or intention;
      any of the factors mentioned in the “Risk Factors” section of the Company’s S-1
      or annual report on Form 10-K; and any statements of assumptions underlying
      any
      of the foregoing. Except as otherwise indicated by the context, references
      in
      this report to “the Company,” “Yuhe International,” “we,” “us,” or “our,” are
      references to the combined business of Yuhe International, Inc. and its
      subsidiaries.





***Overview***





We
      are in
      the middle of the broiler chicken supply chain. We purchase baby parent breeding
      stocks from primary breeder farms, raise them for hatching eggs and sell live
      day-old broilers to the market. Our business segment along the broiler supply
      chain has the highest margin along the supply chain. We produce high quality
      day-old broilers supported by our know-how in feed ingredient composition,
      immunization system and breeding techniques gained through over a decade
      experience.





Unless
      otherwise noted, all dollar figures provided herein are translated into United
      States Dollars from Renminbi at year-end exchange rates as to assets and
      liabilities and average exchange rates as to revenues and expenses. Capital
      accounts are translated at their historical exchange rates when the capital
      transactions occurred.




Unless
      otherwise noted, all historical financial information prior to March 12, 2008
      refers to PRC Yuhe, which includes the accounts of Taihong.





***Our
      Company History***





Our
      company has an offshore holding structure commonly used by foreign investors
      with operations in China. We are a Nevada corporation which directly owns 100%
      of the securities of Bright Stand International Limited, or “Bright Stand”, an
      international business company incorporated in the British Virgin Islands.
      Bright Stand directly owns 100% of the securities of Weifang Yuhe Poultry
      Co. Ltd., or “Weifang”, a wholly foreign-owned enterprise established under the
      laws of the PRC, and directly owns 43.75% and indirectly owns, through PRC
      Yuhe,
      the remaining 56.25% of the securities of Weifang Taihong Feed Co. Ltd., or
      “Taihong,” a foreign invested enterprise established under the laws of the
      PRC.




Mr.
      Kunio
      Yamamoto, Pinnacle Fund, L.P., Black River Small Capitalization Fund Ltd.,
      Ardsley Partners Fund II, LP and Halter Financial Investments, L.P. are our
      significant shareholders. As of May 8, 2008, Mr. Yamamoto owned 49.2%, Pinnacle
      Fund, L.P. owned 15.6%, Black River Small Capitalization Fund Ltd. owned 14.6%,
      Ardsley Partners Fund II, LP owned 7.3% and Halter Financial Investments, L.P.
      owned 6.1% of the total outstanding shares of our common stock.




1




The
      following chart depicts our organizational structure:









We
      did
      not become engaged in the day-old broiler business until March 12, 2008.
      Effective March 12, 2008, we closed an Exchange Agreement with Bright Stand
      and
      Kunio Yamamoto, a citizen of Japan, the sole former shareholder of Bright Stand.
      Pursuant to the terms of the Exchange Agreement we acquired all of the
      outstanding capital stock of Bright Stand from Mr. Yamamoto in exchange for
      126,857,134 shares, equivalent to 8,626,236 post-split shares, of our common
      stock. At the closing, Bright Stand became our wholly-owned subsidiary.
      Immediately following the closing of the Exchange Agreement, Mr. Yamamoto owned
      126,857,134 shares, equivalent to 8,626,236 post-split shares, of our common
      stock.





Upon
      the
      closing of the Exchange Agreement we gained operating control over Weifang
      and
      Taihong. Weifang has been owned by Bright Stand since January 31, 2008. Taihong
      has been owned by Weifang and Bright Stand since January 31, 2008. Before the
      closing of the Exchange Agreement, we were known as First Growth Investors,
      Inc., and were originally formed for the purposes of buying, selling and
      investing in vintage wines, which was our business from 1997 through December
      31, 2003. We had no operations from January 1, 2004 until the closing of the
      Exchange Agreement.





Effective
      April 4, 2008, we amended our articles of incorporation to (i) change our name
      from “First Growth Investors, Inc.” to “Yuhe International, Inc.”, and (ii)
      effect a 1-for-14.70596492 reverse stock split of our common stock. Our Board
      of
      Directors and shareholders approved the name change and the reverse stock split
      pursuant to the Nevada Revised Statutes. The name change became effective with
      NASDAQ’s Over-the-Counter Bulletin Board at the opening for trading on April 7,
      2008, under the new stock symbol of “YUII.OB”.





On
      April
      20, 2008, we appointed CCG Elite Investor Relations as our investor relations
      firm effective on May 1, 2008.





***Our
      Business Operations***





Our
      business is part of the commercial broiler supply chain.





Day-old
      broilers are one-day-old broilers that are sold to broiler raisers. Day-old
      broilers sold by our wholly owned subsidiary, Weifang, are our primary source
      of
      revenue.





We
      purchase parent breeding chickens from grandparent breeder farms and raise
      them
      to maturity. Once these parent breeding chickens have matured, they produce
      hatching eggs that we incubate and then sell the resulting day-old broilers
      chicks to our customers.





Under
      normal circumstances, female parent breeder chickens become productive from
      the
      26th week, and are no longer commercially productive after the 66th week.
      Typically a breeder is capable of producing approximately 167 eggs which
      will be hatched to 137 broilers over its production lifetime and the breeders
      are maintained by us for a period of 420 days. We source our parent breeder
      chickens from licensed suppliers located in Beijing, and Shandong and Jiangsu
      provinces and these suppliers are required to have a vaccination certificate
      and
      a breeder production certificate for the sale of the breeders. Our hatching
      eggs
      typically must be incubated for a period of 21 days. At least 28 weeks usually
      pass from our receipt of a day-old parent breeder to our sale of the first
      day-old broiler.




2




We
      operate in two elements of the broiler supply chain: day-old broiler production
      and feed production. These activities are operated under two separate
      subsidiaries, Weifang and Taihong, respectively.





***Competition***





The
      market for day-old broilers in China is highly fragmented. Shandong Province
      has
      the highest number of day-old broilers in China.





Day-old
      broilers are very weak physically and need to be transported in closely
      controlled temperature conditions during delivery. Therefore, producers of
      broiler chicks usually only sell locally or to surrounding areas, which limits
      our current effective sales market and competition to North China.





Shandong
      Minhe Animal Husbandry Co., Ltd., also located in Shandong Province, is one
      of
      our major competitors for sales of day-old broilers. They are slightly larger
      than us in terms of their annual day-old broiler production volume. Another
      regional competitor of ours is Jilin Deda, which is located in Jilin Province
      in
      north-eastern China and is smaller than us in terms of annual day-old broiler
      production volume. However, Jilin Deda is an integrated chicken company, so
      it
      does not generally sell day-old broilers to unaffiliated third
      parties.


***Results
        of Operations***
 
 We
        have
        provided below a discussion of our results of operations, as a result of
        our
        control and ownership of our subsidiaries, Weifang and Taihong, and other
        factors. We have consolidated the results of Weifang and Taihong into our
        Consolidated Financial Statements from February 1, 2008 to March 31, 2008.
        For
        comparison purposes, we have provided a Consolidated Statement of Operations
        for
        both three months ended March 31, 2008 and 2007 to provide comparable
        presentation to our reported results for the three months ended March 31,
        2008
        and 2007. We believe that providing this financial statement as if we had
        consolidated Weifang and Taihong may assist investors in assessing performance
        between periods and in developing expectations of future performance. We
        use
        these items in internal performance measures to analyze performance between
        periods, develop internal projections and measure management performance.
 
 All amounts,
                other than
                percentage, in
                U.S. dollars
              
              As a
                percentage of
                net revenues
              
              All amounts, other than
                percentage, in U.S. dollars
              
              Increase/
                (Decrease)
                Dollar ($)
              
              Increase/
                (Decrease)
                PercentageFor the three
                months ended
                March 31
              
              For the three
                months ended
                March 31
              
              For the three
                months ended
                March 31
              
              For the three
                months ended
                March 31
              
              For the three
                months ended
                March 31
              
              For the three
                months ended
                March 312008
              
              2008
              
              2008
              
              2007
              
              2008
              
              2007(As reported)
              
              
              
              (Pro forma)
              
              (Pro forma)Sales
                  revenue
              
              
              1,103,551
              
              
              100.00
              %
              
              2,596,883
              
              
              2,978,138
              
              
              (381,255
              )
              
              -12.80
              %Costs
                  of goods sold
              
              
              874,707
              
              
              79.26
              %
              
              2,213,940
              
              
              3,052,796
              
              
              (838,856
              )
              
              -27.48
              %Gross
                  profit (loss)
              
              
              228,844
              
              
              20.74
              %
              
              382,943
              
              
              (74,658
              )
              
              457,601
              
              
              -612.93
              %Selling
                  expenses
              
              
              48,540
              
              
              4.40
              %
              
              77,576
              
              
              62,160
              
              
              15,416
              
              
              24.80
              %General
                  and administrative expenses
              
              
              247,824
              
              
              22.46
              %
              
              143,178
              
              
              204,847
              
              
              61,669
              
              
              -30.10
              %Operating
                  (loss) income
              
              
              (67,520
              )
              
              -6.12
              %
              
              162,189
              
              
              (341,665
              )
              
              503,854
              
              
              -147.47
              %Interest
                  income
              
              
              158
              
              
              0.01
              %
              
              162
              
              
              16
              
              
              146
              
              
              912.50
              %Other
                  income
              
              
              5,900
              
              
              0.53
              %
              
              5,900
              
              
              -
              
              
              5,900
              
              
              0
              %Interest
                  expenses
              
              
              180,474
              
              
              16.35
              %
              
              266,757
              
              
              271,279
              
              
              (4,522
              )
              
              -1.67
              %Other
                  expenses
              
              
              30,545
              
              
              2.77
              %
              
              30,545
              
              
              37,338
              
              
              (6,793
              )
              
              0
              %Income
                  taxes
              
              
              -
              
              
              0.00
              %
              
              -
              
              
              -
              
              
              -
              
              
              0
              %Net
                  income (loss)
              
              
              (272,481
              )
              
              -24.69
              %
              
              (129,051
              )
              
              (650,266
              )
              
              521,215
              
              
              -80.15
              %
 
 3
  *Net
        revenue (As reported).*Sales
        revenue of $1.1 million represents sales of 1.6 million day-old broilers
        from
        the period February 1, 2008 to March 31, 2008.
 
 Day-old
        broiler are one-day old chickens which are specially bred for meat production
        and sold to broiler farms.
 
 *Net
        revenue (Pro forma).* Sales
        revenue decreased by $0.38 million, or 12.8%, to $2.60 million for the three
        months ended March 31, 2008 from $2.98 million for the three months ended
        March
        31, 2007. The decrease was driven by the decrease in sales volume of our
        day-old
        broilers by 4.00 million birds, or 58.95%, from 8.77 million birds for the
        three
        months ended March 31, 2007 to 4.77 million birds for the year ended March
        31,
        2008. The decrease in sales volume was a result of low productivity level
        of the
        breeder stock, which had not grown up to reach maturity level in the first
        quarter of 2008, therefore, the breeder stock could not produce as much eggs
        as
        the breeder stock in the first quarter in 2007. However, the selling price
        of
        day-old broilers saw a steady rise from $0.3165 per bird for the three months
        ended March 31, 2007 to approximately $0.63 per bird for the three months
        ended
        March 31, 2008. The price growth was primarily the result of an increase
        in the
        general demand for high-grade day-old broilers in North China, which in turn
        was
        largely driven by the substantial economic growth that China continued to
        experience for the three month ended March 31, 2008, and the consequent shortage
        of broilers in the market. The outbreak of avian flu in 2006 hit the poultry
        industry badly and the market started to rebound at the beginning of 2007,
        resulting in a huge demand for our day old broilers. The third generation
        stock
        was imported and its import volume was closely controlled by the PRC government.
        We have not seen an increase in the trend of the import volume. Therefore,
        while
        there was a slight decrease of 12.8% in revenue, there was a significant
        decrease in the sales volume of 58.98%.
 
 In
        response to these recent increases in consumer demand, we increased our maximum
        parent breeder stock manufacturing capacity to approximately 0.72 million
        sets
        by December 2007. We anticipate that North China’s strong economic growth will
        continue in 2008 and believe that this growth will drive a strong demand
        for
        high-grade, day-old broilers. In response to this strong demand in the market,
        we hope to increase our market share by increasing our capacity in the next
        couple of years.
 
 Sales
        of
        retired breeder stocks increased $0.18 million, or 337.47%, from $0.051 million
        for the year ended March 31, 2007 to $0.23 million for the three months ended
        March 31, 2008. The sales quantity of retired breeder stocks increased 0.13
        million kilograms, or 128.02% while the average unit price increased by 92.01%.
        The increase of revenue from the sale of retired breeder stocks during the
        three
        months ended March 31, 2008 was in response to the breeder stock is old enough
        and the productivity is decreased. As a results, the new breeder stock is
        growing up which is in early stage and maintain a low productivity level
        of day
        old broiler.
 
 Since
        almost all the products of Taihong were supplied to its parent, Weifang,
        revenue
        contributed from Taihong’s external sales comprised only approximately 7% of our
        total revenues for the three months ended March 31, 2008, and are expected
        to
        constitute less than 10% of our annual revenues in the future.
 
 *Cost
        of revenues (As reported).* Our
        cost
        of revenues amounted to approximately $875,000, or representing approximately
        79% of our sales revenue for the three months ended March 31, 2008.
 
 *Cost
        of revenues (Pro forma).* Our
        cost
        of revenues decreased by $0.84 million, or 27.84%, to $2.21 million for the
        three months ended March 31, 2008 from $3.05 million for the three months
        ended
        March 31, 2007. The main reason for a decrease in the cost of revenues was
        a
        decrease in sales volume as we sold 3.6 million birds for the three months
        ended
        March 31, 2008 compared with 8.77 million birds for the same period of 2007.
        As
        a percentage of net revenues, the cost of revenues decreased by 17.26%, from
        102.51% for the three months ended March 31, 2007, to 85.25% for the three
        months ended March 31, 2008. The decrease in cost of revenues as a percentage
        of
        net revenues was mainly due to an increase in the average selling price which
        we
        discussed above for the three months ended March 31, 2008.
 
 *Gross
        profits (As reported).* Our
        gross
        profit amounted to approximately $0.23 million for the three months ended
        March
        31, 2008.   Gross profit as a percentage of net revenues was approximately
        21% for the three months ended March 31, 2008.
 
 *Gross
        profit (Pro forma).* Our
        gross
        profit increased by $0.50 million to $0.38 million for the three months ended
        March 31, 2008 from gross loss of $0.75 million for the three months ended
        March
        31, 2007.   Gross profit as a percentage of net revenues was 14.75% for the
        three months ended March 31, 2008, as compared to (2.5%) for the three months
        ended March 31, 2007. The   increase was mainly attributable to the rise in
        average selling price of our day-old broilers which we discussed above for
        the
        three months ended March 31, 2008.
  4
  Both
        three month periods ended March 31, 2008 and 2007 were unstable periods which
        saw a low in gross profit margin and gross loss respectively. For the three
        months ended March 31, 2007, it was the retirement stage of the breeder stock
        which got old and had low production rate. As the life cycle of the breeder
        is
        66 weeks, one year later for the three months ended March 31, 2008, we are
        waiting at an early age stage for the breeder stock to grow up. Hence, the
        breeder stock had lower egg production rates, lower production rates of day-old
        broilers and consequently comparatively higher absorption of fixed hatching
        costs.
  *General
        and administrative expenses (As reported).* Our
        General and administrative expenses amounted to approximately $248,000 for
        the
        three months ended March 31, 2008. It comprised mainly of human resources
        and
        related expenses of approximately $70,600—representing 28.5% of total general
        and administrative expenses, pension costs of $12,400—5.02% of total general and
        administrative expenses, motor delivery expenses of $17,000—6.84% of total
        general and administrative expenses, travel expenses of $11,300—4.55% of total
        general and administrative expenses, entertainment of $19,000—7.64% of total
        general and administrative expenses, bank charges of $20,500—8.26% of total
        general and administrative expenses, office expenses of $15,000—5.9% of total
        general and administrative expenses, and other tax expenses of $9,400—3.79% of
        total general and administrative expenses.
 
 *General
        and administrative expenses (Pro forma).*  *Our
        General and administrative* expenses
        decreased $0.06 million, or 30.10%, to $0.14 million for the three months
        ended
        March 31, 2008 from $0.20 million for the three months ended March 31, 2007.
        The
        decrease in general and administrative expenses was mainly due to the
        management’s more efficient control of the general and administrative expenses.
        As a percentage of net revenues, administrative expenses decreased to 5.51%
        for
        the three months ended March 31, 2008 as compared to 6.88% for the three
        months
        ended March 31, 2007.
 
 *Selling
        Expenses (As reported).* Our
        selling expenses amounted to approximately $49,000 for the three months ended
        March 31, 2008. It comprised mainly of human resources and related expenses
        of
        approximately $14,200—representing 29.2% of total selling expenses, travel
        expense of $11,000—22.67% of total selling expenses, quarantine fee of
        $8,200—16.8% of total selling expenses, and packing expenses of $8,000—16.39% of
        total selling expenses.
 
 *Selling
        Expenses (Pro forma).* Our
        selling expenses increased by $0.02 million, or 24.80%, to $0.08 million
        for the three months ended March 31, 2008 from $0.06 million for the same
        period
        in 2007. Selling expenses consisted of packaging expenses, payroll and traveling
        expenses. The increase in selling expenses was primarily due to an additional
        of
        inspection fee amounting to $0.01 million for the day-old broiler incurred
        for
        the three months ended March 31, 2008, which had been exempted by the government
        in 2007 after the outbreak of avian influenza in China. Also, there is an
        increase in $0.01 million of traveling expenses for the staff in our marketing
        department for the three months ended March 31, 2008.
 
 *Interest
        expenses (As reported).* Interest
        expenses amounted to approximately $180,000 for the three months ended March
        31,
        2008. Interest expenses consisted primarily of interest on bank loans. As
        we
        expect to extend or roll over the loans as they come due in the near future,
        the
        interest on bank loans will remain steady in the near future.
 
 *Interest
        expenses (Pro forma).* Interest
        expenses decreased $0.01 million to $0.26 million for the three months ended
        March 31, 2008 from $0.27 million for the three months ended March 31, 2007.
        Interest expenses consisted primarily of interest on bank loans. As we continued
        to roll over the loans as they come due in the past two years, interest on
        bank
        loans for the year ended March 31, 2008 stayed almost at the same level as
        that
        for the same period of 2007. The minor difference in interest expenses was
        mainly due to a small amount of loan having been repaid compared with the
        period
        ended March 31, 2007.
 
 *Interest
        income (As reported).* Interest
        income amounted to approximately $200 for the three months ended March 31,
        2008
        Interest income consisted mainly of interest on cash deposited with banks.
 
 *Pro
        forma- Interest income (Pro forma).* Interest
        income increased by approximately $146 to $162 for the three months ended
        March
        31, 2008 from $16 for the three months ended March 31, 2007. The increase
        was
        commensurable with an increase in cash and cash equivalent of approximately
        $2.99 million as of March 31, 2008 to approximately $72,024 as of March 31,
        2007. Interest income consisted mainly of interest on cash deposited with
        banks.
  *Provision
        for Income Taxes.* Weifang
        was entitled to an exemption from Chinese enterprises income tax (EIT), due
        to
        the fact that Weifang has been recognized as “the national leading agricultural
        enterprise”. In accordance with the relevant regulations regarding the tax
        exemption, Weifang is tax-exempt as long as it is recognized as “the national
        leading agricultural enterprise”. As a result, Weifang incurred no income tax
        expense for the three months ended March 31, 2008 and 2007.
  5
  In
        December of 2007, the PRC government announced the elimination of income
        taxes
        on poultry producers, effective as of January 1,  2008.
 
 In
        accordance with the relevant tax laws and regulations of PRC, our other PRC
        subsidiary Taihong is subject to the enterprise income tax rate of 25%. Since
        Taihong has been operating at a loss, there was no tax expense incurred for
        the
        three months ended March 31, 2008.
 
 *Net
        loss*  *(As
        reported).* Net
        loss
        amounted to approximately $272,000 for the three months ended March 31, 2008,
        as
        a result of the factors described above .
 
 *Net
        Loss*  *(Pro
        forma).* Net
        loss
        decreased by $0.52 million to $0.13 million for the three months ended March
        31,
        2008 from net loss of $0.65 million for the three months ended March 31,
        2007,
        as a result of the factors described above .
 
 ***Liquidity
        and Capital Resources***
 
 We
        expect
        that our present working capital will meet our foreseeable working capital
        needs
        for the next 12 months from the date of this filing.
 
 In
        support of our long-term business plan, we already arranged a private placement
        on March 12, 2008 of $18,000,000 with net amount of $12,583,129 that received
        up
        to March 31, 2008. We believed that this fund will be used for our foreseeable
        expansion in 2008 and 2009.
 
 *General*
 As
        of
        March 31, 2008, we had cash and cash equivalents of approximately $2,990,000.
        The following table provides detailed information about our net cash flow
        for
        all financial statements periods presented in this report.
 
 Three months ended
                March 31, 2008Net
                  cash (used in) operating activities
              
              
              (2,544,215
              )Net
                  cash (used in) investing activities
              
              
              (22,061,717
              )Net
                  cash provided by financing activities
              
              
              26,419,374Effect
                  of foreign currency translation on cash and cash equivalents
              
              
              124,985Net
                  cash inflow
              
              
              1,938,427Cash
                  and cash equivalents at beginning of period
              
              
              1,050,168Cash
                  and cash equivalents at end of period
              
              
              2,988,595
 
 *Operating
        Activities.* Net
        cash
        used in operating activities was $2.5 million for the three months ended
        March
        31, 2008. Net cash used in operating activities was primarily attributable
        to
        increase in inventory of $2.39 million. The increase was a result of an increase in parent breeder stock
        manufacturing capacity in response to strong consumer demand and the purchase
        of
        breeder stocks to replace retired breeder stocks.
  *Investing
        Activities.* Net
        cash
        used in investing activities for the three months ended March 31, 2008 was
        $22.06 million. Net cash used in investing activities was mainly due to the
        acquisition of 100% common stock of Weifang and 43.75% of  Taihong for
        approximately $10.57 million cash in January 2008. In addition, the Company
        provided two unsecured, interest free notes receivable totaled approximately
        $11.81 million to two unrelated third parties as temporary
        arrangement.
  *Financing
        Activities.* Net
        cash
        from financing activities totaled $26.42 million for the three months ended
        March 31, 2008. The significant cash flows provided  by financing
        activities was primarily a result of the business combination occurred duting
        the period ended March 31, 2008. Bright Stand received $12.15 million
        capital contribution from its shareholder to use for acquisition of PRC Yuhe.
        In
        addition, $12.21 million of net proceeds was raised in the sale of the Company's
        common stock. The Company also had net cash proceeds of $1.29 million from
        receipt of receivables from and payments to related parties. Moreover, the
        Company had additional borrowings of $0.78 million during the period ended
        March
        31, 2008.
  6
  *Loan
        Facilities*
 
 As
        of
        March 31, 2008, maturities of our bank loans are as follows:
 
 As at March 31,
                20082008
              
              $
              4,485,7742009
              
              
              2,748,4262010
              
              
              3,560,138$
              10,794,338
 
 All
        amounts, other than percentages, are in U.S. dollars
 
 No
              
              Type
              
              Contracting
                  Party
              
              Valid
                  Date
              
              Duration
              
              Amount1
              
              
              Bank
                  loan
              
              
              Nansun
                  Rural Credit
              
              
              Nov
                  28, 2005 –
                May
                  17, 2010
              
              
              54
                  months
              
              $
              8,544,3312
              
              
              Bank
                  loan
              
              
              Shuangyang
                  Rural Credit
              
              
              May
                  12, 2007 –
                Oct
                  12, 2008
              
              
              17
                  months
              
              $
              925,6363
              
              
              Bank
                  loan
              
              
              Hanting
                  Kaiyuan Rural Credit Cooperative
              
              
              July
                  1, 2007 –
                Jan
                  1, 2009
              
              
              18
                  months
              
              $
              1,039,5604
              
              
              Bank
                  loan
              
              
              Hanting
                  Rural Credit Cooperative
              
              
              Nov
                  10, 2006 –
                Nov
                  8, 2009
              
              
              36
                  months
              
              $
              284,811$
              10,794,338
  We
          have
          loan facilities from four institutions and the following are the material
          terms
          of such bank loans
 
 Loans
          from Nansun Rural Credit.
 
 PRC
          Yuhe
          entered into three loan agreements with Nansun Rural Credit on November
          28 2005,
          May 17, 2007 and March 23, 2007. Interest rates for the loan agreements
          range
          form 9.22% to 10.51% per annum. Nansun Rural Credit also provided four
          loans to
          Taihong from November 28, 2005 to December 5, 2007 at interest rates ranging
          from 9.22% to 10.51% per annum. Loan from Nansun Rural Credit had a total
          outstanding principal balance of $8,544,331 as of March 31, 2008. PRC Yuhe
          and
          Taihong are obligated under these loan agreements to pay interest monthly
          and
          repay the laoans on their maturity dates from November 28, 2008 to May
          17, 2010.
          The loans are used for financing of working capital. All loans are secured
          by
          the land use right and building of PRC Yuhe and Taihong with a net book
          of
          $12,204,202 as of March 31, 2008.
 
 Loan
          from
          Shuangyang Rural Credit.
 
 On
          May
          12, 2007. Taihong entered into a loan agreement with Shuangyang Rural Credit.
          Pursuant to such loan agreement, Shuangyang Rural Credit loaned Taihong
          $925,636
          at an interest rate of 9.33% per annum on all outstanding principal. Taihong
          is
          obligated under such loan agreement to pay interest monthly and repay the
          loan
          on its maturity date, October 12, 2008. We use the loan to finance the
          purchase
          of raw materials. The loan is secured by the plant and equipment of Taihong
          with
          a net book of $1,214,733 as of March 31, 2008.
 
 Loan
          from
          Hanting Kaiyuan Rural Credit Cooperative.
 
 On
          July
          1, 2007, PRC Yuhe entered into a loan agreement with Hanting Kaiyuan Rural
          Credit Cooperative. Pursuant to the loan agreement, Hanting Kaiyuan Rural
          Credit
          Cooperative loaned PRC Yuhe $1,039,560 at interest rate of 11.088% per
          annum.
          PRC Yuhe is obligated under such loan agreement to pay interest monthly
          and
          repay the loan on its maturity date, January 1, 2009. PRC Yuhe uses the
          loan to
          finance the purchase of raw materials. The loan is secured by the plant
          and
          equipment of PRC Yuhe with a net book of $1,399,552 as of March 31,
          2008.
 
 Loan
          from
          Hanting Rural Credit Cooperative.
 
 On
          November 10, 2006, PRC Yuhe entered into a loan agreement with Hanting
          Rural
          Credit Cooperative, for a loan in the principal amount of $284,811. The
          interest
          rate for this loan is 8.19% per annum and the loan has a maturity date of
          November 8, 2009. PRC Yuhe uses the loan to finance working capital. There
          is no
          collateral requirement for this loan.
 ***Obligations
        Under Material Contracts***
 
 Below
        is
        a table setting forth our material contractual obligations as of March 31,
        2008:
 
 Payment
                  due by periodContractual
                  Obligations
              
              Total
              
              Less
                  than 1
                year
              
              1-3
                  years
              
              3-5
                  years
              
              More
                  than
                5
                  yearsLong-Term
                  Debt Obligations
              
              $
              10,794,338
              
              $
              4,485,774
              
              $
              6,308,564
              
              
              -
              
              
              -Operating
                  Lease Obligations
              
              $
              2,013,872
              
              $
              111,171
              
              $
              284,841
              
              $
              157,096
              
              $
              1,460,764Capital
                  Lease Obligations
              
              
              —
              
              
              —
              
              
              —
              
              
              —
              
              
              —Purchase
                  Obligations
              
              
              —
              
              
              —
              
              
              —
              
              
              —
              
              
              —Other
                  Long-Term Liabilities Reflected on the Registrant’s Balance Sheet under
                  GAAP
              
              
              —
              
              
              —
              
              
              —
              
              
              —
              
              
              —Total
              
              $
              12,808,210
              
              $
              4,596,945
              
              $
              6,593,405
              
              $
              157,096
              
              $
              1,460,764






7





***Critical
      Accounting Policies***





The
      preparation of financial statements in conformity with accounting principles
      generally accepted in the United States requires our management to make
      assumptions, estimates and judgments that affect the amounts reported in the
      financial statements, including the notes thereto, and related disclosures
      of
      commitments and contingencies, if any. We consider our critical accounting
      policies to be those that require the more significant judgments and estimates
      in the preparation of financial statements, including the
      following:





·
            *Inventory*-
                Inventories consisting of raw materials, work in progress and finished
                goods are stated at lower of cost and net realizable value. The cost
                of
                inventories is determined using weighted average cost method, and
                includes
                expenditure incurred in acquiring the inventories and bringing them
                to
                their existing location and condition. Net realizable value is the
                estimated selling price in the ordinary course of business less any
                applicable selling expenses. Finished goods are comprised of direct
                materials, direct labor and an appropriate proportion of overhead.
                At each
                balance sheet date, inventories that are worth less than cost are
                written
                down to their net realizable value, and the difference is charged
                to the
                cost of revenues of that period.





·
            *Trade
                receivable*–
                Trade receivables are recognized and carried at the original invoice
                amount less allowance for any uncollectible amounts. An estimate
                for
                doubtful accounts is made when collection of the full amount is no
                longer
                probable. Bad debts are written off as
                incurred.





·
            *Plant
                and equipment*-
                Plant and equipment are carried at cost less accumulated depreciation.
                Depreciation is provided over their estimated useful lives, using
                the
                straight-line method. Estimated useful lives of the plant and equipment
                are as follows:






Buildings
            20
                yearsMachinery
            1 –
                10 yearsVehicle
            5
                yearsFurniture
                and equipment
            3
                years





The
                cost and related accumulated depreciation of assets sold or otherwise
                retired are eliminated from the accounts and any gain or loss is
                included
                in the statement of income. The cost of maintenance and repairs is
                charged
                to income as incurred, whereas significant renewals and betterments
                are
                capitalized.





·
            *Valuation
                of long-lived assets*-
                Long-lived assets held and used by the Company are reviewed for impairment
                whenever events or changes in circumstances indicate that the carrying
                amount of assets may not be recoverable. It is reasonably possible
                that
                these assets could become impaired as a result of technology or other
                industry changes. Determination of recoverability of assets to be
                held and
                used is by comparing the carrying amount of an asset to future net
                undiscounted cash flows to be generated by the
                assets.





If
      such
      assets are considered to be impaired, the impairment to be recognized is
      measured as the amount by which the carrying amount of the assets exceeds the
      fair value of the assets. Assets to be disposed of are reported at the lower
      of
      the carrying amount or fair value less costs to sell. During the reporting
      periods, there was no impairment loss.





·
            *Intangible
                assets*-
                Intangible assets represent land use rights in the PRC. Land use
                rights
                are carried at cost and amortized on a straight-line basis over the
                period
                of rights of 50 years commencing from the date of acquisition of
                equitable
                interest. According to the laws of PRC, the government owns all of
                the
                land in PRC. Companies or individual are authorized to possess and
                use the
                land only through land usage rights approved by the PRC
                government.




·
            *Guarantee
                Expense*-
                The Company accounts for its liability for product guaranteed in
                accordance with FASB Interpretation No. 45 (FIN 45), "Guarantor's
                Accounting and Disclosure Requirements for Guarantees, Including
                Indirect
                Guarantees of Indebtedness of Others."  Under FIN 45, the aggregate
                changes in the liability for accruals related to product warranties
                issued
                during the reporting period must be charged to expense as incurred.
              
              The
                company guarantees a 98% survival rate of
                its product by delivering additional 2% of the product.  The
                guarantee expires seven days after delivery.  If the survival rate
                falls below 98%, the Company provides additional guarantee compensation
                to
                customers.  Based on historical experience, the likelihood that
                survival rate falls below 96% is remote and therefore no accrued
                guarantee
                liability was recorded at year-end.  The Company records guarantee
                expense as incurred.




8




·
            *Revenue
                recognition*-
                Net revenue is recognized when the third-party distributors and broiler
                farms and integrated chicken companies take delivery and acceptance
                of
                products.  The Company treats both the distributors and broiler farms
                and integrated chicken companies as end customers.  The price is
                fixed or determinable as stated in the sales contract, and the
                collectibility is reasonably assured.  Customers do not have a
                general right of return on products
                delivered.





·
            *Use
                of estimates-*The preparation of the Company’s financial statements in conformity with
                accounting principles generally accepted in the United States of
                America
                (“GAAP”) requires management to make estimates and assumptions that affect
                reported amounts of assets and liabilities and disclosure of contingent
                assets and liabilities at the date of the financial statements and
                the
                reported amounts of revenues and expenses during the reporting period.
                Actual results could differ from those estimates. The financial statements
                include some amounts that are based on management’s best estimates and
                judgments. These accounts and estimates include, but are not limited
                to,
                the valuation of accounts receivable, other receivables, inventories,
                deferred income taxes, and the estimation on useful lives of plant
                and
                equipment. These estimates may be adjusted as more current information
                becomes available, and any adjustment could be
                significant.




·
            *Significant
                  Estimates -*Relating to Specific Financial Statement Accounts and
                  Transactions Are Identified -The financial statements include some amounts that are based on
                  management’s best estimates and judgments. The most significant estimates
                  relate to allowance for uncollectible accounts receivable, inventory
                  work
                  in process valuation and obsolescence, depreciation, useful lives,
                  taxes,
                  and contingencies. These estimates may be adjusted as more current
                  information becomes available, and any adjustment could be
                  significant*.*





***Effects
      of Inflation***





Inflation
      and changing prices have not had a material effect on our business and we do
      not
      expect that inflation or changing prices will materially affect our business
      in
      the foreseeable future. However, the impact of inflation on Weifang and Taihong
      may not be readily recoverable in the prices of our products.





***Off
      Balance Sheet Arrangements***




We
      do not
      have any off balance sheet arrangements that have or 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 or capital
      expenditures or capital resources that is material to an investor in our
      securities.




***Seasonality***




Our
      business has been subject to material seasonal variations in operations for
      the
      normal life cycle of 66 weeks of the breeder stock. Breeder stock produced
      eggs
      at their mature stage, around weeks 28 - 60 and therefore, our business will
      have seasonal variation on the early and aged stage of the breeder stock. In
      addition, we normally raised a new batch of breeder stock after the aged breeder
      stock retires and is sold. This impact of seasonality can be resolved when
      we
      expand our batches of breeder stocks.





**ITEM
      3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
      RISK**





Not
      required for a smaller reporting company.





**ITEM
      4. CONTROLS AND PROCEDURES**





Our
      management, with the participation of our chief executive officer and chief
      financial officer, Messrs. Gao Zhentao and Hu Gang, respectively evaluated
      the
      effectiveness of our disclosure controls and procedures. The term “disclosure
      controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the
      Exchange Act, means controls and other procedures of a company that are designed
      to ensure that information required to be disclosed by a company in the reports,
      such as this 10-Q, that it files or submits under the Exchange Act is recorded,
      processed, summarized and reported, within the time periods specified in the
      SEC’s rules and forms. Disclosure controls and procedures include, without
      limitation, controls and procedures designed to ensure that information required
      to be disclosed by a company in the reports that it files or submits under
      the
      Exchange Act is accumulated and communicated to the company’s management,
      including its principal executive and principal financial officers, as
      appropriate to allow timely decisions regarding required disclosure. Our
      disclosure controls and procedures are designed to provide reasonable assurance
      of achieving our objectives, and management necessarily applies its judgment
      in
      evaluating the cost-benefit relationship of possible controls and procedures.
      Based on that evaluation, Messrs. Gao and Hu concluded that as of March 31,
      2008, our disclosure controls and procedures were effective at that reasonable
      assurance level.




9




There
      were no changes in our internal control over financial reporting identified
      in
      connection with the evaluation performed that occurred during the quarter
      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**





From
      time
      to time, we may become involved in various lawsuits and legal proceedings that
      arise in the ordinary course of business. However, litigation is subject to
      inherent uncertainties, and an adverse result in these or other matters may
      arise from time to time that may harm our business.





We
      are
      currently not aware of any such legal proceedings or claims that we believe
      will
      have a material adverse affect on our business, financial condition or operating
      results.





To
      our
      knowledge, no director, officer or affiliate of ours, and no owner of record
      or
      beneficial owner of more than five percent, 5%, of our securities, or any
      associate of any such director, officer or security holder is a party adverse
      to
      us or has a material interest adverse to us in reference to pending
      litigation.




**ITEM
      1A. RISK FACTORS**





There
      have been no material changes to the risk factors previously discussed in our
      Registration Statement on Form S-1 filed on May 12, 2008.




**ITEM
      2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF
      PROCEEDS**





Since
      January 1, 2005, we have issued unregistered securities to a limited
      number of accredited investors as described below:





(1)
        On November 16, 2007, we issued 14,000,000 shares of our common stock,
      equivalent to 951,996 post-split shares, to Halter Financial Investments, L.P.,
      an accredited inventor, for aggregate proceeds of $425,000. The issuance
      and sales of these securities were deemed to be exempt from registration
      pursuant to Section 4(2) of the Securities Act. We declared and paid a special
      cash dividend of $0.21 per share, equivalent to $3,088 per share
      post-split, to our shareholders on November 19, 2007. Halter Financial
      Investments, L.P. did not participate in such dividend. The dividend was payable
      to shareholders of record on November 15, 2007. The dividend payment date was
      November 19, 2007. The dividend was payable to our shareholders who held
      2,000,000 shares, equivalent to 135,995 post-split shares, of its common
      stock and resulted in a total dividend distribution of $420,000. The funds
      for
      the dividend came from the $425,000 proceeds received from the sale of common
      stock to Halter Financial Investments, L.P.





(2)
        On March 12, 2008 in connection with transactions related to the
      acquisition of Bright Stand International Limited, we issued 126,857,134 shares,
      equivalent to 8,626,236 post-split shares, of our common stock to Kunio
      Yamamoto, an accredited inventor. The issuance and sales of these securities
      were deemed to be exempt from registration pursuant to Section 4(2) of the
      Securities Act.





(3)
        On March 12, 2008 we issued 85,714,282 shares, equivalent to 5,829,018
      post-split shares, of our common stock to twenty-five
      accredited investors for aggregate proceeds of approximately $18,000,000.
      The issuance and sales of these securities were deemed to be exempt from
      registration pursuant to Rule 506 under the Securities Act. We plan to use
      part of the proceeds to build new chicken farm and purchase new equipment for
      the expansion of our production capacity.




10




There
      were no underwritten offerings employed in connection with any of the
      transactions set forth above.




**ITEM
      3. DEFAULTS UPON SENIOR SECURITIES**





None.




**ITEM
      4. SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS**





None.




**ITEM
      5. OTHER INFORMATION**





None.




**ITEM
      6. INDEX TO EXHIBITS**




31.1
            Certification
                of Principal Executive Officer filed pursuant to Section 302 of the
                Sarbanes-Oxley Act of 2002. *





31.2
            Certification
                of Principal Financial Officer filed pursuant to Section 302 of the
                Sarbanes-Oxley Act of 2002. *





32.1
            Certification
                of Principal Executive Officer furnished pursuant to 18 U.S.C. Section
                1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act
                of
                2002. *





32.2
            Certification
                of Principal Financial Officer furnished pursuant to 18 U.S.C. Section
                1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act
                of
                2002. *







*
      filed herewith




11




**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.





DATED:
      July 10, 2008





**YUHE
      INTERNATIONAL, INC.**





By:
            /s/
                Gao ZhentaoGao
                ZhentaoChief
                Executive Officer(On
                behalf of the Registrant and as Principal Executive
                Officer)By:
            /s/
                Hu GangHu
                GangChief
                Financial Officer(On
                behalf of the Registrant and as Principal Financial
                Officer)




12




**EXHIBIT
      INDEX**




ExhibitNumber
            Description31.1
            Certification
                of Principal Executive Officer filed pursuant to Section 302 of the
                Sarbanes-Oxley Act of 2002.*31.2
            Certification
                of Principal Financial Officer filed pursuant to Section 302 of the
                Sarbanes-Oxley Act of 2002.*32.1
            Certification
                of Principal Executive Officer furnished pursuant to 18 U.S.C. Section
                1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act
                of
                2002.*32.2
            Certification
                of Principal Financial Officer furnished pursuant to 18 U.S.C. Section
                1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act
                of
                2002.*







*
      filed
      herewith




13