UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


Washington,
D.C.  20549





Form
10-K





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





For
the fiscal year ended December 31, 2008





OR





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





For the
transition period from_____________ to _____________.





Commission
file number: 000-52739








YaFarm
Technologies, Inc.


(Exact
name of registrant as specified in its charter)





Delaware
              (State
      or other jurisdiction of
              incorporation
      or organization)
            20-5156305
              (I.R.S.
      Employer
              Identification
      No.)197
      Route 18 South,
              Suite
      3000, PMB 4157
              East
      Brunswick, NJ
              (Address of principal executive
      offices)
            08816
              (Zip
      Code)





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





Securities
registered pursuant to Section 12(b) of the Act:





Title
      of each class
            
            Name
      of each exchange on which registeredNone
            
            None





Securities
registered pursuant to Section 12(g) of the Act:





Common
Stock, par value $0.001


(Title of
class)





Indicate by check mark if the
registrant is a well-known seasoned issuer, as defined in Rule 405 of the
Securities
Act.  Yes  ____      No  X





Indicate by check mark if the
registrant is not required to file reports pursuant to Section 13 or 15(d) of
the Act.  Yes X     No  ______





Indicate by check mark whether the
registrant (1) has filed all reports required to be filed by Section 13 or 15(d)
of the Securities Exchange Act of 1934 during the preceding 12 months (or for
such shorter period that the registrant was required to file such reports), and
(2) has been subject to such filing requirements for the past 90
days.     Yes X     No
_____














Indicate by check mark if disclosure of
delinquent filers pursuant to Item 405 of Regulation S-K is not contained
herein, and will not be contained, to the best of registrant’'s knowledge, in
definitive proxy or information statements incorporated by reference in Part III
of this Form 10-K or any amendment to this Form 10-K.  [  
]





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 definitions of “large
accelerated filer,” “accelerated filer” and “smaller reporting
company” in Rule 12b-2 of the Exchange Act. (Check one):





Large accelerated
filer  _______                                                                                              Accelerated
filer  ________





Non-accelerated
filer                                                  Smaller reporting companyX





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





Aggregate market value of the voting
stock held by non-affiliates: $70,000 as based on last reported sales price of
such stock.  The voting stock held by non-affiliates on that date consisted
of 2,333,330 shares of common stock.





Applicable
Only to Registrants Involved in Bankruptcy Proceedings During the Preceding
Five Years:





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





Applicable
Only to Corporate Registrants





Indicate the number of shares
outstanding of each of the registrant’s classes of common stock, as of the
latest practicable date.  As of March 31, 2009, there were 10,000,000
shares of common stock, par value $0.001, issued and outstanding.





Documents
Incorporated by Reference





List hereunder the following documents
if incorporated by reference and the Part of the Form 10-K (e.g., Part I, Part
II, etc.) into which the document is incorporated: (1) Any annual report to
security holders; (2) Any proxy or information statement; and (3) Any prospectus
filed pursuant to rule 424(b) or (c) under the Securities Act of
1933.  The listed documents should be clearly described for
identification purposes (e.g., annual report to security holders for fiscal year
ended December 24, 1980).  None.















YAFARM
TECHNOLOGIES, INC.





TABLE OF
CONTENTS





PART
      IITEM 1 – BUSINESS
                    2ITEM 1A – RISK FACTORS
                    6ITEM 1B – UNRESOLVED STAFF COMMENTS
                    6ITEM 2 – PROPERTIES
                    6ITEM 3 – LEGAL PROCEEDINGS
                    6ITEM 4 – SUBMISSION OF MATTERS TO A VOTE OF SECURITY
      HOLDERS
                    6PART
      IIITEM 5 – MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED
      STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY
      SECURITIES
                    7ITEM 6 – SELECTED FINANCIAL DATA
                    8ITEM 7 – MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL
      CONDITION AND RESULTS OF OPERATIONS
                    8ITEM 7A – QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
      MARKET RISK
                    12ITEM 8 – FINANCIAL STATEMENTS AND SUPPLEMENTARY
      DATA
                    12ITEM 9 – CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
      ACCOUNTING AND FINANCIAL DISCLOSURE
                    13ITEM 9A – CONTROLS AND PROCEDURES
                    13ITEM 9A(T) – CONTROLS AND PROCEDURES
                    13ITEM 9B – OTHER INFORMATION
                    15PART
      IIIITEM 10 – DIRECTORS,  EXECUTIVE OFFICERS AND
      CORPORATE GOVERNANCE
                    16ITEM 11 – EXECUTIVE COMPENSATION
                    17ITEM 12 – SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
      AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
                    19ITEM 13   CERTAIN RELATIONSHIPS AND RELATED
      TRANSACTIONS, AND DIRECTOR INDEPENDENCE
                    20ITEM 14 – PRINCIPAL ACCOUNTING FEES AND
      SERVICES
                    22PART
      IVITEM 15 – EXHIBITS, FINANCIAL STATEMENT
      SCHEDULES
                    22






1




Explanatory
Note





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





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





ITEM 1 – BUSINESS





Company
Overview







We were
incorporated in the State of Delaware on June 16, 2006.  On July 31,
2006, we acquired 100% of the membership interests of YaFarm Group, LLC, a New
Jersey limited liability company, from Zhiguang Zhang and Jie Geng, its sole
owners, in exchange for a total of one million shares of our common stock,
valued at $7,823.  The purpose of the transaction was to recapitalize
the operating company and move its domicile to Delaware in anticipation of
becoming a publicly traded company.





Since its
inception, YaFarm Group, LLC has operated as a web development and web hosting
company.  We acquired YaFarm Group, LLC to gain entry into the web
development and web hosting industry and combine our resources.





We are a
New Jersey-based web development and web hosting company offering, through our
wholly-owned subsidiary, YaFarm Group, LLC, a New Jersey limited liability
company, a broad range of business-class website development and web hosting
products and services for small and medium-sized businesses.  We have
a web design team consisting of web designers, web developers, IT engineers, and
database specialists who collectively have over twenty years of experience in
providing advanced web solutions with leading firms such as AT&T, Lucent, XO
communications, BusinessEdge Solutions, and many other companies.  We
are offering one-stop shopping web solutions for small and medium sized
companies, including web development, web hosting, web maintenance and business
image consulting services.  Our goal is to help many traditional
businesses go online to tap into the market potential offered by the
Internet.








2





Currently,
we offer the following web solution packages to small and medium-sized
businesses:





l
            Bronze
      Small Business Package:





n
            Up
      to 6 pages custom professional
design.


n
            Meta
      tag generation for search engine
submission.


n
            Hosting
      setup to bring website online.


n
            Full
      support/maintenance plan available.





l
            Silver
      Medium-Sized Business Package:





n
            Up
      to 12 pages custom professional
design.


n
            One
      form submission for “contact us”
page.


n
            Meta
      tag generation for search engine
submission.


n
            Hosting
      setup to bring website online.


n
            5
      Email account setup.


n
            Full
      support/maintenance plan available.





l
            Gold
      E-Commerce Package:





n
            Up
      to 8 pages custom design.


n
            Direct
      check out shopping cart for up to 10
products.


n
            Merchant
      integration to accept online
payments.


n
            One
      form submission for “contact us”.


n
            Meta
      tag generation for search engine
submission.


n
            Hosting
      setup to bring website online.


n
            Full
      support/maintenance plan available.





We
primarily rely on advertising and referrals to reach potential
customers.  We currently advertise on a number of local as well as
national newspapers including bi-lingual newspapers targeting the Chinese
American business community.  We currently do not employ salespersons
to sell our products.





Our
Strategy





Our
strategic objective is to be a provider of standardized web solution services
including web design and hosting products and services to small and medium-sized
businesses, which we consider to be the most profitable segment of the web
market.  We intend to profitably serve our target market by achieving
scale and efficiency in our operations.  Our target market is large,
growing rapidly, and may be served with standardized products and
services.  Standardization of products and services permits the use of
standardized processes and a higher degree of automation in many areas of
operation, including the sales process.  This approach contrasts with
that of many competitors that focus on providing labor-intensive, customized
solutions to larger enterprises.  By delivering business-class web
solutions in a scalable and efficient manner, we believe we can offer better
value to our customers, leading to growing market share and
profits.





We intend
to utilize the low-cost production base in China to be able to offer competitive
and affordable web solutions to our small and medium-sized
customers.  We do not currently outsource website development or web
hosting services to persons in the Peoples Republic of China.  We plan
to raise additional capital in order to set-up web site development operation in
Beijing, China.  Currently, we do not have an estimate of how much
such operation will cost or whether we can successfully raise the necessary
capital to achieve such an objective.





Currently,
we are relying on third-party web hosting vendors for our customers’ web-hosting
needs.  The cost to us of contracting out the hosting of websites
generally includes an upfront payment of up to $100 per website and monthly fees
of up to $20 per month.  There are no material up-front costs, or
material purchases of equipment, required when we contract out the hosting of
websites.  We maintain an arm’s length relationship with such
third-party web hosting vendors and are not affiliated with any of our
vendors.  In addition, we have not entered into written agreements
with our third-party web hosting vendors.






3





We plan
to acquire or set up our own web hosting operation in the future to ensure
product quality and consistency.  Hosting websites in-house typically
involves purchasing hardware which could cost up to $50,000 depending on the
size and capacity as well as staff to maintain it, costing approximately $50,000
more per year.  Given the small scale of our operation, we do not
currently provide such services in-house.





We
believe the web-hosting market for the small and medium-sized market is very
fragmented in the U.S. and offers very attractive consolidation
opportunities.  With the addition of our in-house web-hosting
capability, we believe that our vertically-integrated operation will offer our
customers more-timely and higher-quality services thus leading to higher
profitability for our operation.





Prospective Reverse
Split





On June 13, 2008, the holders of a
majority of our issued and outstanding shares of common stock approved a
prospective amendment to our Certificate of Incorporation to effectuate a
1-for-4 reverse stock split of our issued and outstanding shares of common
stock.  The purpose of the reverse stock split is to attract
additional capital and to reduce the time involved and provide us with
flexibility with respect to creating an optimal capital structure to complete an
acquisition or merger with a future, as yet unidentified, company or
companies.  We anticipate effectuating the reverse stock split shortly
before or after the consummation of an acquisition or merger with a future, as
yet unidentified, company or companies.  On July 7, 2008, we filed a
Definitive Information Statement Pursuant to Section 14(c) of the Securities
Exchange Act of 1934 to inform the Company’s stockholders of the above
action.  As of December 31, 2008, no acquisition or merger has
occurred and no reverse stock split has been effectuated.





Series A Convertible
Preferred Stock





On June 9, 2008, we amended our
Certificate of Incorporation with a Certificate of Designation of the Rights,
Preferences, Privileges, and Restrictions, which had not been set forth in the
Certificate of Incorporation or in any amendment thereto, of the Series A
Convertible Preferred Stock of YaFarm Technologies, Inc.  The
Certificate of Designation created a new series of preferred stock, consisting
of 1,500,000 shares, each with an original issue price of $3.25 per
share.   Each share of Series A Convertible Preferred Stock will
automatically convert, without any action on the part of the holder into (i)
twenty (20) shares of our common stock, and (ii) three (3) warrants to purchase
our common stock, exercisable for a period of five (5) years, at an exercise
price of $0.1875 per share, upon the closing of an acquisition of a company by
us that (a) has net income of at least $2.4 million for the fiscal year
immediately preceding the year of acquisition, and (b) results in our
shareholders immediately prior to the closing of the acquisition owning less
than 50% of our voting power immediately following the
acquisition.  The holders of a majority of the Series A Convertible
Preferred Stock may require that we redeem the Series A Convertible Preferred
Stock at the original issue price of $3.25 if the acquisition transaction
described above does not close on or before the date which is ninety (90) days
from the date on which the first share of Series A Convertible Preferred Stock
is issued by us.  Each outstanding share of Series A Convertible
Preferred Stock is entitled to one (1) vote per share on all matters to which
our shareholders are entitled or required to vote.  No shares of
Series A Convertible Preferred Stock have been issued as of December 31,
2008.







4






The
Market





We are
currently targeting the local business markets in the New York metropolitan
area, principally the State of New Jersey, where we are
operating.  The size of the total market is difficult to estimate due
to the fragmented nature of this industry.  However, we believe the
market to service small to medium sized businesses for their online web needs is
significant in the local market where we serve as well as the national market
due to the proliferation of small businesses in the United States, especially
since the last business downturn of 2001.





Distribution
Methods





We
currently do not rely on third-party salespersons or resellers to distribute our
services.  We primarily use direct marketing such as newspaper ads or
referrals from existing customers to reach our target market.





Competition





The
market for web development and web hosting services is extremely
competitive.  There are no substantial barriers to entry, and we
expect that competition will intensify in the future.  We believe that
our ability to compete successfully depends upon a number of factors, including
market presence; the capacity, reliability, low latency and security of network
infrastructure; technical expertise and functionality, performance and quality
of services; customization; ease of access to and navigation of the Internet;
the pricing policies of our competitors; the variety of services; the timing of
introductions of new services by the Company and our competitors; customer
support; our ability to support industry standards; and industry and general
economic trends.





Many of
our competitors have greater market presence, engineering and marketing
capabilities, and financial, technological and personnel resources than those
available to the Company.  As a result, they may be able to develop
and expand their communications and network infrastructures more quickly, adapt
more swiftly to new or emerging technologies and changes in customer
requirements, take advantage of acquisition and other opportunities more
readily, and devote greater resources to the marketing and sale of their
products than can the Company.  In addition, various organizations,
may enter into or form joint ventures or consortiums to provide services similar
to those of the Company.





We
believe that new competitors, including large computer hardware, software, media
and other technology and telecommunications companies will enter the web
development and web hosting services markets, resulting in even greater
competition for the Company.  There can be no assurance that the
Company will have the financial resources, technical expertise or marketing and
support capabilities to continue to compete successfully.





Intellectual
Property





We do not
have any trademarks, patents, or other intellectual property.








5





Research
and Development





We have
not spent any material amount of time or money on research and development, and
do not anticipate doing so in the future.





Compliance
with Environmental Laws





We have
no disclosure required by this Item.





Employees





We
currently employ two individuals, who are our officers and
directors.  For the rest of our operations we use the services of
independent contractors.





ITEM 1A – RISK FACTORS





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





ITEM 1B – UNRESOLVED STAFF COMMENTS





This Item
is not applicable to us as we are not an accelerated filer, a large accelerated
filer, or a well-seasoned issuer; however, we have not received written comments
from the Commission staff regarding our periodic or current reports under the
Securities Exchange Act of 1934 within the last 180 days before the end of our
last fiscal year that have not been resolved.





ITEM 2 – PROPERTIES





We lease
our principal executive and administrative offices located at 197 Route 18
South, Suite 3000, PMB 4157, East Brunswick, NJ 08816.  On February 1,
2007, we entered into a 12-month lease with Ragus Management Group,
LLC.  Under the lease, we pay $118 per month as base rent and pay the
office and shared space expenses based on actual usage.  Currently
this lease is being renewed on a monthly basis.  The typical office is
about 100 square feet and the total office space at 197 Route 18 South is about
1,000 square feet.





ITEM 3 - LEGAL PROCEEDINGS





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





ITEM 4- SUBMISSION OF MATTERS TO A VOTE OF SECURITY
HOLDERS





No
matters were submitted to a vote of the security holders during the fourth
quarter of the last fiscal year.








6





PART
II





ITEM 5- MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED
STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES





Market
Information





Our
common stock is currently quoted on the OTC Bulletin Board of the National
Association of Securities Dealers, Inc., under the symbol “YFRM.”  Our
common stock did not trade during the years ended December 31, 2008 and
2007.  Our common stock is only expected to trade on a limited or
sporadic basis and should not be deemed to constitute an established public
trading market.  There is no assurance that there will be liquidity in
the common stock.





The
following table sets forth the high and low bid information for each quarter
within the two most recent fiscal years, as provided by the Nasdaq Stock
Markets, Inc.  The information reflects prices between dealers, and
does not include retail markup, markdown, or commission, and may not represent
actual transactions.





Bid
      PricesFiscal
      YearEndedDecember
      31,
                      
                      Period
                      
                      High
                      
                      
                      Low2007
                      
                      First
      Quarter
                      
                      $
                      0
                      
                      
                      $
                      0Second
      Quarter
                      
                      $
                      0
                      
                      
                      $
                      0Third
      Quarter
                      
                      $
                      0
                      
                      
                      $
                      0Fourth
      Quarter
                      
                      $
                      0
                      
                      
                      $
                      02008
                      
                      First
      Quarter
                      
                      $
                      0
                      
                      
                      $
                      0Second
      Quarter
                      
                      $
                      0
                      
                      
                      $
                      0Third
      Quarter
                      
                      $
                      0
                      
                      
                      $
                      0Fourth
      Quarter
                      
                      $
                      0
                      
                      
                      $
                      02009
                      
                      First
      Quarter (through February 27, 2009)
                      
                      $
                      0
                      
                      
                      $
                      0





The
Securities Enforcement and Penny Stock Reform Act of 1990 requires additional
disclosure relating to the market for penny stocks in connection with trades in
any stock defined as a penny stock.  The Commission has adopted
regulations that generally define a penny stock to be any equity security that
has a market price of less than $5.00 per share, subject to a few exceptions
which we do not meet.  Unless an exception is available, the
regulations require the delivery, prior to any transaction involving a penny
stock, of a disclosure schedule explaining the penny stock market and the risks
associated therewith.





Holders





As of
March 31, 2009, there were 10,000,000 shares of our common stock issued and
outstanding and held by 51 holders of record.  We believe many of the
shares of our common stock are held in “street name” and, therefore, we believe
the actual number of shareholders is slightly higher.








7





Dividend
Policy





We have
not paid any dividends on our common stock and do not expect to do so in the
foreseeable future.  We intend to apply our earnings, if any, in
expanding our operations and related activities.  The payment of cash
dividends in the future will be at the discretion of the Board of Directors and
will depend upon such factors as earnings levels, capital requirements, our
financial condition and other factors deemed relevant by the Board of
Directors.





Recent
Issuance of Unregistered Securities





There were no unregistered sales of
equity securities by the Company during the three month period ended December
31, 2008.





ITEM 6 – SELECTED FINANCIAL DATA





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





ITEM 7 - MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATION





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





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





Overview





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








8





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





Prospective Reverse
Split





On June 13, 2008, the holders of a
majority of our issued and outstanding shares of common stock approved a
prospective amendment to our Certificate of Incorporation to effectuate a
1-for-4 reverse stock split of our issued and outstanding shares of common
stock.  The purpose of the reverse stock split is to attract
additional capital and to reduce the time involved and provide us with
flexibility with respect to creating an optimal capital structure to complete an
acquisition or merger with a future, as yet unidentified, company or
companies.  We anticipate effectuating the reverse stock split shortly
before or after the consummation of an acquisition or merger with a future, as
yet unidentified, company or companies.  On July 7, 2008, we filed a
Definitive Information Statement Pursuant to Section 14(c) of the Securities
Exchange Act of 1934 to inform the Company’s stockholders of the above
action.  As of December 31, 2008, no acquisition or merger has
occurred and no reverse stock split has been effectuated.





Series A Convertible
Preferred Stock





On June
9, 2008, we amended our Certificate of Incorporation with a Certificate of
Designation of the Rights, Preferences, Privileges, and Restrictions, which had
not been set forth in the Certificate of Incorporation or in any amendment
thereto, of the Series A Convertible Preferred Stock of YaFarm Technologies,
Inc.  The Certificate of Designation created a new series of preferred
stock, consisting of 1,500,000 shares, each with an original issue price of
$3.25 per share.   Each share of Series A Convertible Preferred
Stock will automatically convert, without any action on the part of the holder
into (i) twenty (20) shares of our common stock, and (ii) three (3) warrants to
purchase our common stock, exercisable for a period of five (5) years, at an
exercise price of $0.1875 per share, upon the closing of an acquisition of a
company by us that (a) has net income of at least $2.4 million for the fiscal
year immediately preceding the year of acquisition, and (b) results in our
shareholders immediately prior to the closing of the acquisition owning less
than 50% of our voting power immediately following the
acquisition.  The holders of a majority of the Series A Convertible
Preferred Stock may require that we redeem the Series A Convertible Preferred
Stock at the original issue price of $3.25 if the acquisition transaction
described above does not close on or before the date which is ninety (90) days
from the date on which the first share of Series A Convertible Preferred Stock
is issued by us.  Each outstanding share of Series A Convertible
Preferred Stock is entitled to one (1) vote per share on all matters to which
our shareholders are entitled or required to vote.  No shares of
Series A Convertible Preferred Stock have been issued as of December 31,
2008.








9





Year
ended December 31, 2008 compared to the Year ended December 31,
2007





Results
of Operations





Introduction





We
generated no revenues in 2008, while our operating expenses only decreased
slightly as compared to 2007.  As a result, our net loss for 2008 was
greater than our net loss for 2007.





Revenues and Income (Loss)
from Operations







Our
revenue, operating expenses and net income (loss) from operations for the year
ended December 31, 2008 as compared to the year ended December 31, 2007 are as
follows:





Year
      Ended December 31, 2008
                  
                  
                  Year
      Ended December 31, 2007
                  
                  
                  Percentage
                    Change
                    Increase
                    (Decrease)Revenue
                  
                  $
                  -
                  
                  
                  $
                  9,807
                  
                  
                  
                  (100.0
                  )
      %Operating
      expenses
                  
                  
                  47,854
                  
                  
                  
                  52,115
                  
                  
                  
                  (8.2
                  )
      %Net
      Income (loss) from operations
                  
                  $
                  (47,854
                  )
                  
                  $
                  (42,308
                  )
                  
                  
                  13.1
                  %





We
generated no revenues during the year ended December 31, 2008 because of the
loss of a key employee.  During the year ended December 31, 2008 as
compared to the year ended December 31, 2007, our operating expenses decreased
by $4,261 in proportion to our decrease in revenues.  As a result, we
had a net loss from operations of $47,854 for the year ended December 31, 2008,
as compared to a net loss from operations of $42,308 for the year ended December
31, 2007.





Liquidity
and Capital Resources





Introduction





During
the year ended December 31, 2008, we had a net loss of $50,176 and cash flow
from operations of $(14,833).  Because our revenues are small, almost
any change in our revenues or operating expenses has a material effect, and we
anticipate that our net profit or loss, and operating profit or loss, will
continue to vary widely from time period to time period.





Our cash
and cash equivalents, total current assets, total assets, total current
liabilities, and total liabilities as of December 31, 2008 as compared to
December 31, 2007, are as follows:








10







December
      31,
                
                
                December
      31,2008
                
                
                2007Cash
                
                $
                9,132
                
                
                $
                1,971Total
      current assets
                
                
                9,132
                
                
                
                6,971Total
      assets
                
                
                9,701
                
                
                
                8,129Total
      current liabilities
                
                
                67,816
                
                
                
                16,068Total
      liabilities
                
                
                67,816
                
                
                
                16,068





Cash
Requirements





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





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




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


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





Sources and Uses of
Cash





Operations,
Investing and Financing





During
the year ended December 31, 2008, we generated cash flow of
$7,161.  This was a result of net cash provided by financing
activities of $21,994.  Net cash used in operating activities
consisted primarily of an increase of $36,480 in expenses paid by a related
party and a decrease of $5,000 in receivables, which was fully offset by a net
loss of $50,176 and a decrease of $6,726 in accrued expenses.  We
anticipate that we will continue to operate at a loss until we are able to
obtain substantial financing or acquire a profitable business.








11





Critical
Accounting Policies





Our
accounting policies are fully described in Note A to our consolidated financial
statements.





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





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





Off-balance
Sheet Arrangements





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





ITEM 7A – QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK





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





ITEM 8 - FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA








Report
      of Independent Registered Public Accounting Firm
              F-1Consolidated
      Balance Sheets as of December 31, 2008 and 2007
              F-2Consolidated
      Statements of Operations for the years
                ended
      December 31, 2008 and
      2007
              F-3Consolidated
      Statements of Stockholders’
                Equity
      for the years ended December 31, 2008 and 2007
              F-4Consolidated
      Statements of Cash Flows for the years ended December 31, 2008 and
      2007
              F-5Notes
      to Consolidated Financial Statements
              F-6









12






ITEM 9- CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE





There are
no events required to be disclosed under this Item.





ITEM 9A(T) – CONTROLS AND PROCEDURES





(a)              Evaluation of Disclosure
Controls and Procedures





We
conducted an evaluation, with the participation of our Chief Executive Officer
and Chief Financial Officer, of the effectiveness of the design and operation of
our disclosure controls and procedures, as defined in Rules 13a-15(e) and
15d-15(e) under the Securities Exchange Act of 1934, as amended, or the Exchange
Act, as of December 31, 2008, to ensure that information required to be
disclosed by us in the reports filed or submitted by us under the Exchange Act
is recorded, processed, summarized and reported, within the time periods
specified in the Securities Exchange Commission's rules and forms, including to
ensure that information required to be disclosed by us in the reports
filed or submitted by us under the Exchange Act is accumulated and
communicated to our management, including our principal executive and principal
financial officers, or persons performing similar functions, as appropriate to
allow timely decisions regarding required disclosure.  Based on that
evaluation, our Chief Executive Officer and Chief Financial Officer have
concluded that as of December 31, 2008, our disclosure controls and procedures
were not effective at the reasonable assurance level due to the material
weaknesses described below.





(b)              Management’s Report on Internal Control
Over Financial Reporting





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





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





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





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





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








13





A material weakness is a deficiency,
or a combination of deficiencies, in internal control over financial reporting,
such that there is a reasonable possibility that a material misstatement of our
annual or interim financial statements will not be prevented or detected on a
timely basis.  Our management assessed the effectiveness of our internal
control over financial reporting as of December 31, 2008.  In making this
assessment, our management used the criteria set forth by the Committee of
Sponsoring Organizations of the Treadway Commission (COSO) in Internal
Control-Integrated Framework.  Based on this assessment, management has
identified the following three material weaknesses that have caused management
to conclude that, as of December 31, 2008, our disclosure controls and
procedures, and our internal control over financial reporting, were not
effective at the reasonable assurance level:





1.           We
do not have written documentation of our internal control policies and
procedures.  Written documentation of key internal controls over
financial reporting is a requirement of Section 404 of the Sarbanes-Oxley Act as
of the year ending December 31, 2008.  Management evaluated the impact
of our failure to have written documentation of our internal controls and
procedures on our assessment of our disclosure controls and procedures and has
concluded that the control deficiency that resulted represented a material
weakness.





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





3.           We
had a significant number of audit adjustments this fiscal year.  Audit
adjustments are the result of a failure of the internal controls to prevent or
detect misstatements of accounting information.  The failure could be
due to inadequate design of the internal controls or to a misapplication or
override of controls.  Management evaluated the impact of our
significant number of audit adjustments this year and has concluded that the
control deficiency that resulted represented a material weakness.





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





(c)              Remediation of Material
Weaknesses





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





(d)              Changes in Internal Control
over Financial
Reporting





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








14





(e)           Auditor’s Attestation Report
on Internal Control over Financial Reporting





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





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





ITEM 9B – OTHER INFORMATION





There
are no events required to be disclosed under this Item.






15






PART
III





ITEM 10 – DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE
GOVERNANCE





Directors
and Executive Officers





The
following table sets forth the names and ages of our current directors and
executive officers, the principal offices and positions held by each person, and
the date such person became a director or executive officer. Our executive
officers are appointed by the Board of Directors. The directors serve one year
terms until their successors are elected. The executive officers serve terms of
one year or until their death, resignation or removal by the Board of Directors.
Unless described below, there are no family relationships among any of the
directors and officers.





Name
              
              Age
              
              Position(s)Zhiguang
      Zhang
              
              43
              
              Chief
      Executive Officer and Director (2006)Hong
      Zhao
              
              38
              
              President,
      Secretary, Chief Financial Officer, and Chairwoman of the Board of
      Directors (2006)





Zhiguang Zhang, age 43, is our
Chief Executive Officer and Director, and has held these positions since July
2006.  Mr. Zhang has held technical and management positions with
leading telecom companies such as UTSTARCOM, Niksun Inc, AT&T Labs, Lucent
(Bell Labs Research).  He graduated with a PhD in electrical
engineering from City College, CUNY in New York.  Mr. Zhang obtained
his undergraduate degree from Huazhong University of Science and
Technologies, Wuhan, China.





Hong Zhao,age 38, is our
President, Secretary, Chief Financial Officer, and Chairwoman of the Board of
Directors, and has held these positions since July 2006.  Ms. Zhao is
the vice president of Columbia China Capital Group, Inc., a greater-than-10%
shareholder of the Company, and a corporate finance firm targeting cross-border
merger and acquisitions, public listing and private placement
opportunities.  In addition, she is the Chief Executive Officer,
Secretary, Chief Financial Officer, and Chairwoman of the Board of Directors of
The Fashion Fantasia Company, a New Jersey corporation with a class of
securities registered pursuant to section 12 of the Exchange Act.  Ms.
Zhao was previously a founding member of Performance-Based.com, a leading New
York City based human resources relation service provider.  Ms. Zhao
graduated from City College, CUNY with a M.S. in computer science
degree.  She obtained her B.S. degree from Tianjin University,
Tianjin, China.





Other
Directorships





Other
than as set forth above, none of our officers and directors is a director of any
company with a class of securities registered pursuant to section 12 of the
Exchange Act or subject to the requirements of section 15(d) of such Act or any
company registered as an investment company under the Investment Company Act of
1940.








16







Audit
Committee





We do not
currently have an audit committee financial expert.





Compliance
with Section 16(a) of the Securities Exchange Act of 1934





Section
16(a) of the Securities Exchange Act of 1934 requires the Company’s directors
and executive officers and persons who own more than ten percent of a registered
class of the Company’s equity securities to file with the SEC initial reports of
ownership and reports of changes in ownership of common stock and other equity
securities of the Company.  Officers, directors and greater than ten
percent shareholders are required by SEC regulations to furnish the Company with
copies of all Section 16(a) forms they file.





To the
Company’s knowledge, none of the current required parties are delinquent in
their 16(a) filings.





Board
Meetings





During the fiscal year ended December
31, 2008, the Board of Directors did not formally meet but took written action
on numerous occasions.  The written actions were by unanimous
consent.





Code
of Ethics





We have
not adopted a written code of ethics, primarily because we believe and
understand that our officers and directors adhere to and follow ethical
standards without the necessity of a written policy.





ITEM 11- EXECUTIVE COMPENSATION





Executive
Officers and Directors





The
following tables set forth certain information about compensation paid, earned
or accrued for services by (i) our Chief Executive Officer and (ii) all other
executive officers who earned in excess of $100,000 in the fiscal year ended
December 31, 2008 (“Named Executive Officers”):





Name
      and
                      Principal
      Position
                    Year
                    
                    Salary
                      ($)
                    
                    
                    Bonus
                      ($)
                    
                    
                    Stock
                      Awards
                      ($)
      *
                    
                    
                    Option
      Awards
                      ($)
      *
                    
                    
                    Non-Equity
      Incentive Plan Compensation ($)
                    
                    
                    Nonqualified
      Deferred Compensation ($)
                    
                    
                    All
      Other
                      Compensation
                      ($)
                    
                    
                    Total
                      ($)Zhiguang
      Zhang
                    2008
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -Director
      and CEO
                    2007
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -Hong
      Zhao
                    2008
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -President,
      Secretary, CFO
                    2007
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -





*
            Based
      upon the aggregate grant date fair value calculated in accordance with the
      Financial Accounting Standards Board (“FASB”) Statement of Financial
      Accounting Standard (“FAS”) No. 123R, Share Based
  Payment.








17





Employment
Contracts





As of
December 31, 2008, there were no employment agreements in place covering any of
our executive officers.





Other
Compensation





None.





Director
Compensation





The
following table sets forth director compensation as of December 31,
2008:





Name
                
                Fees
      Earned or Paid in Cash
                  ($)
                
                
                Stock
      Awards
                  ($)
      *
                
                
                Option
      Awards
                  ($)
      *
                
                
                Non-Equity
      Incentive Plan Compensation
                  ($)
                
                
                Nonqualified
      Deferred Compensation Earnings
                  ($)
                
                
                All
      Other Compensation
                  ($)
                
                
                Total
                  ($)Zhiguang
      Zhang
                
                
                -0-
                
                
                
                -0-
                
                
                
                -0-
                
                
                
                -0-
                
                
                
                -0-
                
                
                
                -0-
                
                
                
                -0-Hong
      Zhao
                
                
                -0-
                
                
                
                -0-
                
                
                
                -0-
                
                
                
                -0-
                
                
                
                -0-
                
                
                
                -0-
                
                
                
                -0-





*
            Based
      upon the aggregate grant date fair value calculated in accordance with the
      Financial Accounting Standards Board (“FASB”) Statement of Financial
      Accounting Standard (“FAS”) No. 123R, Share Based
  Payment.





The compensation of each of our
directors is fully furnished in the Summary Compensation Table
above.





Our
Directors who are also employees do not receive cash compensation for their
services as directors or members of the committees of the board of
directors.  All directors may be reimbursed for their reasonable
expenses incurred in connection with attending meetings of the board of
directors or management committees.





Outstanding
Equity Awards at Fiscal Year-End





The following table sets forth certain
information concerning outstanding stock awards held by the Named Executive
Officers as of December 31, 2008:








18







Option
      Awards
                                    
                                    
                                    Stock
      AwardsName
                                    
                                    Number
      of Securities Underlying Unexercised Options
                                      (#)
                                      Exercisable
                                    
                                    
                                    Number
      of Securities Underlying Unexercised Options
                                      (#)
                                      Unexercisable
                                    
                                    
                                    Equity
      Incentive Plan Awards: Number of Securities Underlying Unexercised
      Unearned Options
                                      (#)
                                    
                                    
                                    Option
                                      Exercise
                                      Price
                                      ($)
                                    
                                    
                                    Option
      Expiration Date
                                    
                                    
                                    Number
      of Shares or Units of Stock That Have Not Vested
                                      (#)
                                    
                                    
                                    Market
      Value of Shares or Units of Stock That Have Not Vested
                                      ($)
                                    
                                    
                                    Equity
      Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights
      That Have Not Vested
                                      (#)
                                    
                                    
                                    Equity
      Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or
      Other Rights That Have Not Vested
                                      ($)Zhiguang
      Zhang
                                    
                                    
                                    -0-
                                    
                                    
                                    
                                    -0-
                                    
                                    
                                    
                                    -0-
                                    
                                    
                                    
                                    N/A
                                    
                                    
                                    
                                    N/A
                                    
                                    
                                    
                                    -0-
                                    
                                    
                                    
                                    -0-
                                    
                                    
                                    
                                    -0-
                                    
                                    
                                    
                                    -0-Hong
      Zhao
                                    
                                    
                                    -0-
                                    
                                    
                                    
                                    -0-
                                    
                                    
                                    
                                    -0-
                                    
                                    
                                    
                                    N/A
                                    
                                    
                                    
                                    N/A
                                    
                                    
                                    
                                    -0-
                                    
                                    
                                    
                                    -0-
                                    
                                    
                                    
                                    -0-
                                    
                                    
                                    
                                    -0-





Securities
Authorized for Issuance under Equity Compensation Plans





We do not currently have any equity
compensation plans.





ITEM 12 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT AND RELATED STOCKHOLDER MATTERS





The
following table sets forth, as of March 31, 2009, certain information with
respect to the Company’s equity securities owned of record or beneficially by
(i) each Officer and Director of the Company; (ii) each person who owns
beneficially more than 5% of each class of the Company’s outstanding equity
securities; and (iii) all Directors and Executive Officers as a
group.





Name
      and Address
            
            Nature
      of Affiliation
            
            Common
      Stock Ownership
            
            Percentage
      of Common Stock Ownership (1)Hong
      Zhao (2)
              22
      Berkshire Way, East Brunswick, NJ 08816
            
            President,
      Secretary, Chief Financial Officer, and Chairwoman of the Board of
      Directors
            
            -0-
            
            0%Zhiguang
      Zhang (3)
              2
      Apache Court,
              East
      Brunswick, NJ 08816
            
            Chief
      Executive Officer and Director
            
            500,000
            
            5.0%Columbia
      China Capital Group, Inc. (2)
              P.O.
      Box 936
              East
      Brunswick, NJ 08816
            
            5%
      Owner
            
            5,370,374
            
            53.7%Andrew
      Han
              32
      Independence Drive
              New
      Hyde Park, NY  11040
            
            5%
      Owner
            
            1,296,296
            
            13.0%CH
      Capital, LLC (4)
              18101
      Von Karman Ave.,
              Suite
      330
              Irvine,
      CA 92612
            
            5%
      Owner
            
            500,000
            
            5.0%Jie
      Geng (3)
              2
      Apache Court,
              East
      Brunswick, NJ 08816
            
            5%
      Owner
            
            500,000
            
            5.0%All
      Officers and Directors as a Group (2 Persons)
            
            
            
            500,000
            
            5.0%






19







(1)
            Unless
      otherwise indicated, based on 10,000,000 shares of common stock issued and
      outstanding.  Shares of common stock subject to options or
      warrants currently exercisable, or exercisable within 60 days, are deemed
      outstanding for purposes of computing the percentage of the person holding
      such options or warrants, but are not deemed outstanding for purposes of
      computing the percentage of any other
person.





(2)
            Hong
      Zhao, our President, Secretary, Chief Financial Officer, and Chairwoman of
      the Board of Directors, is a vice president with Columbia China Capital
      Group, Inc.  She is the wife of James Tie Li, president of
      Columbia China Capital Group, Inc.





(3)
            Zhiguang
      Zhang, our Chief Executive Officer and Director, is married to Jie
      Geng.  Consequently, the shares owned by each are attributed to
      the other.  Together, they are the beneficial owners of
      1,000,000 shares or 10.0% of the
Company.





(4)
            Mark
      Stewart, the managing member of CH Capital, LLC, exercises voting and/or
      dispositive power over the securities held by CH Capital,
      LLC.  In addition, Mark Stewart is the president of Mark Stewart
      Securities, Inc., a registered broker-dealer.  CH Capital, LLC
      is an underwriter, and any profit on the sale of common stock by CH
      Capital, LLC and any discounts, concessions or commissions received by CH
      Capital, LLC will be considered underwriting discounts and commissions
      under the Securities Act of 1933.





The
issuer is not aware of any person who owns of record, or is known to own
beneficially, ten percent or more of the outstanding securities of any class of
the issuer, other than as set forth above.  There are no classes of
stock other than common stock issued or outstanding.





Other
than as set forth above, none of these parties owns, in the aggregate and
including shares of our common stock that may be acquired upon exercise of their
warrants, more than five percent (5%) of our common stock.





There are
no current arrangements which will result in a change in control.





ITEM 13 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND
DIRECTOR INDEPENDENCE





Certain
Relationships and Related Transactions





Other
than as set forth below, during the last two fiscal years there have not been
any relationships, transactions or proposed transactions to which the Company
was or is to be a party, in which any of the directors, officers, or 5% or
greater stockholders (or any immediate family thereof) had or is to have a
direct or indirect material interest.





(a)             Zhiguang
Zhang, our Chief Executive Officer and Director, is married to Jie Geng, our
consultant.  Together, they are the beneficial owners of 1,000,000
shares or 10% of the Company.








20





(b)             On
July 5, 2006, we issued an aggregate of 6,500,000 shares of our common stock to
our founders as follows: Columbia China Capital Group, Inc., of which Hong Zhao,
our President, Secretary, Chief Financial Officer, and Chairwoman of the Board
of Directors, is a vice president.  Additionally, Hong Zhao is married
to James Tie Li, who is the president of Columbia China Capital Group, Inc.
(5,500,000); The Lebrecht Group, APLC (500,000); and CH Capital, LLC (500,000),
in exchange for aggregate cash consideration of $6,500.





(c)             During
the year ended December 31, 2006, we borrowed $16,099 from Columbia China
Capital Group, Inc., our majority shareholder, to pay for costs incurred
relating to a private placement offering and our SB-2 filing.  The
terms of the loan were at least as favorable to us as they would have been with
an unrelated third party.  During the quarterly period ended September
30, 2007, we repaid this loan in full.





(d)             During
the year ended December 31, 2007, we borrowed $6,094 from a shareholder to pay
for certain professional costs. The balance of the related party payable as of
December 31, 2007 was $6,094.  The note is due on demand and interest
free.





(e)             On
February 8, 2008, we borrowed $20,000 through the issuance of a Note to Columbia
China Capital Group, Inc., our majority shareholder. The Note carries 10%
interest per annum for a term of one year.  The proceeds of the Note
were used to pay for certain professional costs such as legal, accounting and
listing services.  On November 1, 2008, the Company signed a $32,252
Note to Columbia China Capital Group, Inc., our majority shareholder. The Note
carries 10% interest per annum for a term of one year. The Note was exchanged
for related party payables to Columbia China Capital Group as a result of
professional fees paid by Columbia and cash injection made by Columbia. On
December 31, 2008, the Company signed a $9,994 Note to Columbia China Capital
Group, Inc., our majority shareholder. The Note carries 10% interest per annum
for a term of one year. The Note was exchanged for related party payables to
Columbia China Capital Group as a result of professional fees paid by Columbia
and cash injection made by Columbia. For the year ended December 31, 2008, total
interest of $2,322 was accrued related to the notes issued to Columbia China
Capital Group.




For each
of the transactions noted above, the transaction was negotiated, on our part, on
the basis of what is in the best interests of the Company and its
stockholders.  In addition, in each case the interested affiliate did
not vote in favor of the transaction; however, the full board of directors did
make the determination that the terms in each case were as favorable as could
have been obtained from non-affiliated parties.





Certain
of our officers and directors are engaged in other businesses, either
individually or through partnerships and corporations in which they have an
interest, hold an office or serve on a board of directors.  As a
result, certain conflicts of interest may arise between us and such officers and
directors.  We will attempt to resolve such conflicts of interest in
our favor.





We do not
have a written policy concerning the review, approval, or ratification of
transactions with related persons.





We do not
have an audit, compensation, or nominating committee, and none of our Directors
are considered independent.





We have
not had a promoter during the last five fiscal years.










21





ITEM 14 – PRINCIPAL ACCOUNTING FEES AND SERVICES





Audit
Fees





The
aggregate fees billed in each of the fiscal years ended December 31, 2008 and
2007 for professional services rendered by the principal accountant for the
audit of our annual financial statements and review of the financial statements
included in our Form 10-K or services that are normally provided by the
accountant in connection with statutory and regulatory filings or engagements
for those fiscal years were $14,336 and $10,108, respectively.





Audit
- Related Fees





The aggregate fees billed in the fiscal
year ended December 31, 2008 for professional services rendered by the principal
accountant for the review of the financial statements included in our Forms 10-Q
for the quarterly periods ended March 31, 2008, June 30, 2008 and September 30,
2008 were $6,122.





Tax
Fees





For the
fiscal years ended December 31, 2008 and 2007, our principal accountants did not
render any services for tax compliance, tax advice, and tax planning
work.





All
Other Fees





None.


PART
IV





ITEM 15 - EXHIBITS, FINANCIAL STATEMENT SCHEDULES





(a)(1)                      Financial
Statements





The following financial statements are
filed as part of this report:




Report
      of Independent Registered Public Accounting Firm
              F-1Consolidated
      Balance Sheets as of December 31, 2008 and 2007
              F-2Consolidated
      Statements of Operations for the years
                ended
      December 31, 2008 and
      2007
              F-3Consolidated
      Statements of Stockholders’
                Equity
      for the years ended December 31, 2008 and 2007
              F-4Consolidated
      Statements of Cash Flows for the years ended December 31, 2008 and
      2007
              F-5Notes
      to Consolidated Financial Statements
              F-6









22





(a)(2)         Financial
Statement Schedules





We do not have any financial statement
schedules required to be supplied under this Item.





(a)(3)         Exhibits





Refer to (b) below.





(b)             
Exhibits





2.1
      (1)
              
              Reorganization
      and Stock Purchase Agreement dated as of July 31, 2006, between the
      Company and YaFarm Group, LLC3.1
      (1)
              
              Certificate
      of Incorporation of YaFarm Technologies, Inc., filed on June 16,
      20063.2
      (1)
              
              Certificate
      of Amendment of Certificate of Incorporation of YaFarm Technologies, Inc.,
      filed on June 28, 20063.3
      (1)
              
              Bylaws
      of YaFarm Technologies, Inc.31.1
              
              Rule 13a-14(a)/15d-14(a) Certification of Chief Executive
      Officer31.2
              
              Rule 13a-14(a)/15d-14(a) Certification of Chief Financial
      Officer32.1
              
              Chief Executive Officer Certification Pursuant to 18 USC,
      Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act
      of 2002.32.2
              
              Chief Financial Officer Certification Pursuant to 18 USC,
      Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act
      of 2002.





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








23







SIGNATURES





In accordance with Section 13 or 15(d)
of the Exchange Act, the registrant caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.








YaFarm Technologies,
      Inc.Dated:  April
      9, 2009
            
            /s/
      Zhiguang
      ZhangBy:
            Zhiguang
      ZhangIts:
            Chief
      Executive Officer
              and
      Director








In accordance with the Exchange Act,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.





Dated:  April
      9, 2009
            
            /s/
      Zhiguang
      ZhangBy:
            Zhiguang
      ZhangIts:
            Chief
      Executive Officer
              and
      DirectorDated:  April
      9, 2009
            
            /s/
      Hong
      ZhaoBy:
            Hong
      ZhaoIts:
            President,
      Secretary, Chief
              Financial
      Officer, and Chairwoman
              of
      the Board of Directors






24












Financial
Statements and Report of





Independent
Registered Public Accounting Firm





YAFARM
TECHNOLOGIES, INC.





Fiscal
Years Ended December 31, 2008 and 2007















REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
 
 The Board
of Directors and Shareholders
 YaFarm
Technologies, Inc.
 
 We have
audited the accompanying consolidated balance sheets of YaFarm Technologies,
Inc. and its wholly owned subsidiary YaFarm Group, LLC as of December 31, 2008
and 2007, and the related statements of operations, stockholders’ equity, and
cash flows for the years ended December 31, 2007 and 2006.  These
financial statements are the responsibility of the Company's
management.  Our responsibility is to express an opinion on these
financial statements based on our audit.
 
 We
conducted our audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States).  Those standards require
that we plan and perform an audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement.  The
Company has determined that it is not required to have, nor were we engaged to
perform, an audit of its internal control over financial
reporting.  Our audit included consideration of internal control over
financial reporting as a basis for designing audit procedures that are
appropriate in the circumstances, but not for the purposes of expressing an
opinion on the effectiveness of the Company’s internal controls over financial
reporting.  Accordingly, we express no such opinion.  An
audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, as well as evaluating the
overall financial statement presentation.  We believe that our audit
provides a reasonable basis for our opinion.
 
 In our
opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of YaFarm Technologies, Inc. and its
wholly owned subsidiary YaFarm Group, LLC as of December 31, 2008 and 2007, and
the results of operations and cash flows for the years ended December 31, 2008
and 2007, in conformity with accounting principles generally accepted in the
United States of America.
 
 The
accompanying financial statements have been prepared assuming YaFarm
Technologies, Inc. will continue as a going concern.  As discussed in
Note G to the financial statements, the Company has accumulated losses and
negative cash flow from operations and a deficit in working
capital.  These issues raise substantial doubt about its ability to
continue as a going concern.  Management’s plans in regard to these
matters are also described in Note G.  The financial statements do not
include any adjustments that might result from the outcome of this
uncertainty.
 
 
 
 Mantyla
McReynolds, LLC
 
 Salt Lake
City, Utah
 March 31,
2009








F-1






YAFARM TECHNOLOGIES, INC.Consolidated
      Balance Sheets
                        As
      of December 31, 2008 and 200712/31/2008
                      
                      
                      12/31/2007ASSETSCurrent
      AssetsCash
      and cash equivalents
                      
                      $
                      9,132
                      
                      
                      $
                      1,971Account
      receivable, net
                      
                      
                      -
                      
                      
                      
                      5,000Total
      Current Assets
                      
                      
                      9,132
                      
                      
                      
                      6,971Property
      and EquipmentComputer
      equipment
                      
                      
                      3,308
                      
                      
                      
                      3,308Accumulated
      depreciation
                      
                      
                      (2,739
                      )
                      
                      
                      (2,150
                      )Total
      Property and Equipment
                      
                      
                      569
                      
                      
                      
                      1,158Total
      Assets
                      
                      $
                      9,701
                      
                      
                      $
                      8,129LIABILITIES
      AND STOCKHOLDERS' EQUITY (DEFICIT)LIABILITIESCurrent
      LiabilitiesAccrued
      expenses and other payables
                      
                      $
                      3,248
                      
                      
                      $
                      9,974Related
      party payable
                      
                      
                      64,568
                      
                      
                      
                      6,094Total
      Current Liabilities
                      
                      
                      67,816
                      
                      
                      
                      16,068Long
      Term Liabilities
                      
                      
                      -
                      
                      
                      
                      -Total
      Long Term Liabilities
                      
                      
                      -
                      
                      
                      
                      -Total
      Liabilities
                      
                      
                      67,816
                      
                      
                      
                      16,068STOCKHOLDERS'
      EQUITY (DEFICIT)Convertible
      Preferred stock -- 1,500,000 shares
                        authorized
      having a par value of $.001 per share;
                        0
      shares issued and outstanding
                      
                      
                      -
                      
                      
                      
                      -Preferred
      stock -- 10,000,000 shares authorized having
                        a
      par value of $.001 per share; 0 shares issued andoutstanding
                      
                      
                      -
                      
                      
                      
                      -Common
      stock -- 100,000,000 shares authorized
                        having
      a par value of $.001 per share;
                        10,000,000
      shares issuedand
      outstanding
                      
                      
                      10,000
                      
                      
                      
                      10,000Additional
      paid-in capital
                      
                      
                      26,188
                      
                      
                      
                      26,188Accumulated
      deficit
                      
                      
                      (94,303
                      )
                      
                      
                      (44,127
                      )Total
      Stockholders' Equity (Deficit)
                      
                      
                      (58,115
                      )
                      
                      
                      (7,939
                      )Total
      Liabilities and Stockholders' Equity (Deficit)
                      
                      $
                      9,701
                      
                      
                      $
                      8,129
 See
Accompanying notes to financial statements
     F-2
    YAFARM TECHNOLOGIES, INC.
  Consolidated
Statements of Operations
 For
the years ended December 31, 2008 and 2007
  For
      the Year
                                  
                                  
                                  For
      the YearEnded
                                  
                                  
                                  EndedDecember
      31,
                                  
                                  
                                  December
      31,2008
                                  
                                  
                                  2007Revenues,
      net of discounts
                                  
                                  $
                                  -
                                  
                                  
                                  $
                                  9,807Operating
      Expenses
                                  
                                  
                                  47,854
                                  
                                  
                                  
                                  52,115Net
      Income (Loss) from Operations
                                  
                                  
                                  (47,854
                                  )
                                  
                                  
                                  (42,308
                                  )Other
      Income (Expense)
                                  
                                  
                                  -
                                  
                                  
                                  
                                  94Interest
      Expense
                                  
                                  
                                  (2,322
                                  )
                                  
                                  
                                  -Total
      Other Income (Expense)
                                  
                                  
                                  (2,322
                                  )
                                  
                                  
                                  94Net
      Income (Loss) before taxes
                                  
                                  
                                  (50,176
                                  )
                                  
                                  
                                  (42,214
                                  )Provision
      for Income Taxes
                                  
                                  
                                  -
                                  
                                  
                                  
                                  786Net
      Income (Loss)
                                  
                                  $
                                  (50,176
                                  )
                                  
                                  $
                                  (43,000
                                  )Income
      (Loss) Per Share Basic and
                                    Diluted
                                  
                                  $
                                  (0.01
                                  )
                                  
                                  $
                                  (0.01
                                  )Weighted
      Average Shares Outstanding
                                    Basic
      and Diluted
                                  
                                  
                                  10,000,000
                                  
                                  
                                  
                                  9,901,856
   See
Accompanying notes to financial statements
   
 F-3
 
 YAFARM TECHNOLOGIES, INC.
 Consolidated
Statements of Stockholders' Equity (Deficit)
 For
the Years Ended December 31, 2008 and
2007
  Number
      of
                                        
                                        
                                        Common
                                        
                                        
                                        Additional
                                        
                                        
                                        Retained
                                        
                                        
                                        NetCommon
                                        
                                        
                                        Stocks
                                        
                                        
                                        Paid-in
                                        
                                        
                                        Earnings
                                        
                                        
                                        Stockholders'Stocks
                                        
                                        
                                        
                                        
                                        
                                        Capital
                                        
                                        
                                        (Deficit)
                                        
                                        
                                        EquityBalance,  January
      1, 2007
                                        
                                        
                                        8,419,896
                                        
                                        
                                        $
                                        8,420
                                        
                                        
                                        $
                                        24,235
                                        
                                        
                                        $
                                        (1,127
                                        )
                                        
                                        $
                                        31,528Common
      stock issued at $0.03 pershare
      in exchange for cash, netof
      commissions
                                        
                                        
                                        1,580,104
                                        
                                        
                                        
                                        1,580
                                        
                                        
                                        
                                        38,820
                                        
                                        
                                        
                                        
                                        
                                        
                                        
                                        40,400Professional
      fees incurreddirectly
      related to the stockoffering
                                        
                                        
                                        
                                        
                                        
                                        
                                        
                                        
                                        
                                        
                                        (36,867
                                        )
                                        
                                        
                                        
                                        
                                        
                                        
                                        (36,867
                                        )Net
      loss for 2007
                                        
                                        
                                        
                                        
                                        
                                        
                                        
                                        
                                        
                                        
                                        
                                        
                                        
                                        
                                        (43,000
                                        )
                                        
                                        
                                        (43,000
                                        )Balance,
      December 31, 2007
                                        
                                        
                                        10,000,000
                                        
                                        
                                        $
                                        10,000
                                        
                                        
                                        $
                                        26,188
                                        
                                        
                                        $
                                        (44,127
                                        )
                                        
                                        $
                                        (7,939
                                        )Net
      loss for 2008
                                        
                                        
                                        
                                        
                                        
                                        
                                        
                                        
                                        
                                        
                                        
                                        
                                        
                                        
                                        (50,176
                                        )
                                        
                                        
                                        (50,176
                                        )Balance,
      December 31, 2008
                                        
                                        
                                        10,000,000
                                        
                                        
                                        $
                                        10,000
                                        
                                        
                                        $
                                        26,188
                                        
                                        
                                        $
                                        (94,303
                                        )
                                        
                                        $
                                        (58,115
                                        )
  See Accompanying notes to
financial statements
 
 
 
 F-4
 
 
 YAFARM TECHNOLOGIES, INC.Consolidated
      Statements of Cash Flows
                            For
      the years ended December 31, 2008 and 2007For
      the Year
                          
                          
                          For
      the YearEnded
                          
                          
                          EndedDecember
      31,
                          
                          
                          December
      31,2008
                          
                          
                          2007Cash
      Flows From Operating ActivitiesNet
      Income (Loss)
                          
                          $
                          (50,176
                          )
                          
                          $
                          (43,000
                          )Adjustments
      to reconcile net income (loss)to
      net cash from operating activities
                          
                          
                          -
                          
                          
                          
                          -Depreciation
                          
                          
                          589
                          
                          
                          
                          468(Increase)/Decrease-Receivables
                          
                          
                          5,000
                          
                          
                          
                          (5,000
                          )(Increase)/Decrease-Prepaid
      Expenses
                          
                          
                          -
                          
                          
                          
                          14,300(Increase)/Decrease-Deferred
      Taxes
                          
                          
                          -
                          
                          
                          
                          113Increase/(Decrease)-Accrued
      Expenses
                          
                          
                          (6,726
                          )
                          
                          
                          7,029Expenses
      Paid by Shareholder
                          
                          
                          36,480
                          
                          
                          
                          (10,005
                          )Net
      Cash Flow From Operating Activities
                          
                          
                          (14,833
                          )
                          
                          
                          (36,095
                          )Cash
      Flow From Investing ActivitiesPurchase
      of Property and Equipment
                          
                          
                          -
                          
                          
                          
                          (1,183
                          )Net
      Cash Flow From Investing Activities
                          
                          
                          -
                          
                          
                          
                          (1,183
                          )Cash
      Flow From Financing ActivitiesProceeds
      from Related Party Notes
                          
                          
                          21,994
                          
                          
                          
                          -Proceeds
      from issuance of Common Stock
                          
                          
                          -
                          
                          
                          
                          40,400Professional
      Fees related to stock offering
                          
                          
                          -
                          
                          
                          
                          (36,867
                          )Net
      Cash From Financing Activities
                          
                          
                          21,994
                          
                          
                          
                          3,533Net
      Increase (Decrease) in Cash
                          
                          
                          7,161
                          
                          
                          
                          (33,745
                          )Beginning
      Cash Balance
                          
                          
                          1,971
                          
                          
                          
                          35,716Ending
      Cash Balance
                          
                          $
                          9,132
                          
                          
                          $
                          1,971Supplemental
      Disclosure of Cash Flow Information:Cash
      paid during the year for interest
                          
                          
                          -
                          
                          
                          
                          -Cash
      paid during the year for income taxes
                          
                          
                          -
                          
                          
                          
                          -
   See Accompanying notes to
financial statements
   F-5
  
 YAFARM TECHNOLOGIES, INC.
 Notes
to the Consolidated Financial Statements
 December
31, 2008
 
 NOTE
A Summary of Significant Accounting Policies
 
 Company
Background
 
 YaFarm
Technologies, Inc. was formed as a corporation under the laws of the State of
Delaware on June 16, 2006. On July 31, 2006, YaFarm Technologies, Inc. acquired
YaFarm Group, LLC, a limited liability company formed under the laws of the
State of New Jersey on November 13, 2003. The acquisition was accounted for as a
reverse merger.
 
 YaFarm
Group, LLC is a New Jersey-based web development and web hosting company
offering a broad range of business-class website development and web hosting
products and services for small and medium-sized businesses. The Company is
offering one-stop shopping web solutions for small and medium sized companies,
including web development, web hosting, website maintenance and business image
consulting services. The Company’s goal is to help many traditional businesses
go online to tap into the market potential offered by the Internet.
 
 The
financial statements of the Company have been prepared in accordance with U. S.
generally accepted accounting principles. The following summarizes the more
significant of such policies:
 
 Principles of
Consolidation
 
 The
consolidated financial statements include the accounts of the Company and its
wholly owned subsidiary, YaFarm Group, LLC. All significant intercompany
accounts and transactions are eliminated in consolidation.
 
 Cash and Cash
Equivalents
 
 For
purposes of the statement of cash flows, cash and cash equivalents are comprised
of cash on hand or on deposit in banks and all highly liquid debt instruments
purchased with a maturity of three months or less. The Company had a cash
balance of $9,132 as of December 31, 2008.
 
 Income
Taxes
 
 The
Company was organized as a limited liability company through July 31, 2006 and
as a C corporation since July 31, 2006. Income taxes were imposed on the
Company’s members prior to July 31, 2006. After July 31, 2006, the Company
applies the provision of Statements of Financial Accounting Standards No. 109,
“Accounting for Income Taxes.” This statement requires an asset and liability
approach for financial accounting and reporting of income taxes, and the
recognition of deferred tax assets and liabilities for the temporary differences
between the financial reporting basis and tax basis of the Company’s assets and
liabilities at enacted tax rates expected to be in effect when such amounts are
realized or settled.
    F-6
 
 Use of Estimates in
Preparation of Financial Statements
 
 The
preparation of financial statements in conformity with U. S. generally accepted
accounting principles 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 period.
Actual results could differ from those estimates.
 
 Revenue
Recognition
 
 The
Company recognizes revenues in accordance with the Securities and Exchange
Commission, Staff Accounting Bulletin (SAB) number 104, "Revenue Recognition."
SAB 104 clarifies application of U. S. generally accepted accounting principles
to revenue transactions.
 
 Fees for
development of web sites are negotiated based on the level of detail and
features desired by the customer. Half of the fee is generally billed when the
contract is entered. The remaining fee is due upon completion of the customers
working web site.  Revenue is recognized in accordance with the
requirements of SAB 104, which generally results in recognition of revenue when
the project is completed.  There were no unfinished projects in
progress as of December 31, 2008. Historically, maintenance work and the
associated costs have been minimal. Deposits received prior to the commencement
of the projects are recorded as deferred revenues. As of December 31, 2008,
deferred revenues were $0.
 
 Bad Debt and allowance for
doubtful accounts
 
 The
allowance for doubtful accounts is maintained at a level sufficient to provide
for estimated credit losses based on evaluating known and inherent risks in the
receivables portfolio. The Company provides an allowance for doubtful accounts
which, based upon management’s evaluation of numerous factors, including
economic conditions, a predictive analysis of the outcome of the current
portfolio and prior credit loss experience, is deemed adequate to cover
reasonably expected losses inherent in outstanding receivables. The allowance
was $0 as of December 31, 2008 and 2007.
 
 Impact of New Accounting
Pronouncements
 
 In
February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial
Assets and Liabilities – Including an amendment of FASB Statement No. 115 (“SFAS
159”).  SFAS 159 allows entities the option to measure eligible
financial instruments at fair value as of specified dates. Such election, which
may be applied on an instrument by instrument basis, is typically irrevocable
once elected.  The Company elected not to measure any additional
financial assets or liabilities at fair value at the time SFAS 159 was adopted
on January 1, 2008.  As a result, implementation of SFAS 159 had no
impact on the Company’s condensed consolidated financial
statements.
   F-7
 
 In
December 2007, the FASB issued SFAS No. 141 (revised 2007), Business
Combinations (“SFAS 141R”) and SFAS No. 160, Noncontrolling Interests in
Consolidated Financial Statements, an amendment of Accounting Research Bulletin
No. 51(“SFAS 160”). SFAS No. 141R requires an acquirer to measure the
identifiable assets acquired, the liabilities assumed and any noncontrolling
interest in the acquiree at their fair values on the acquisition date, with
goodwill being the excess value over the net identifiable assets
acquired.  SFAS No. 160 clarifies that a noncontrolling interest in a
subsidiary should be reported as equity in the consolidated financial
statements. The calculation of earnings per share will continue to be based on
income amounts attributable to the parent. SFAS No. 141R and SFAS No. 160 are
effective for financial statements issued for fiscal years beginning after
December 15, 2008.  Early adoption is prohibited.  The
Company has not yet determined the effect on its consolidated financial
statements, if any, upon adoption of SFAS No. 141R or SFAS No. 160.
 
 In March
2008, the FASB issued Statement of Financial Accounting Standards No. 161,
“Disclosures about Derivative Instruments and Hedging Activities, an amendment
of FASB Statement No. 133” (“FAS 161”), which requires enhanced disclosures
about a company’s derivative and hedging activities. The Company currently is
evaluating the impact of the adoption of the enhanced disclosures required by
FAS 161 which is effective for the Company at the beginning of its fiscal year
2010.
 
 In May
2008, the FASB issued Statement of Financial Accounting Standards No. 162, “The
Hierarchy of Generally Accepted Accounting Principles (“FAS 162”). The new
standard is intended to improve financial reporting by identifying a consistent
framework, or hierarchy, for selecting accounting principles to be used in
preparing financial statements that are presented in conformity with generally
accepted accounting principles (“GAAP”) for nongovernmental entities in the
United States. FAS 162 is effective 60 days following SEC approval of the Public
Company Accounting Oversight Board Auditing amendments to AU Section 411, “The
Meaning of Present Fairly in Conformity with Generally Accepted Accounting
Principles.” The Company is currently evaluating the impact, if any, of adopting
FAS 162, on its Consolidated Financial Statements
 
 In May
2008, the FASB issued SFAS No. 163, Accounting for Financial Guarantee Insurance
Contracts – an Interpretation of FASB Statement No. 60 (“SFAS
163”).  SFAS 163 clarifies how Statement 60 applies to financial
guarantee insurance contracts, including the recognition and measurement of
premium revenue and claim liabilities.  This Statement also requires
expanded disclosures about financial guarantee insurance
contracts.  SFAS 163 is effective for fiscal years beginning on or
after December 15, 2008, and interim periods within those fiscal
years.  The Company does not expect that the adoption of SFAS 163 will
have a material impact on its financial statements.
    F-8
 
 In
September 2006, the FASB issued SFAS No. 157 “Fair Value
Measurements.”  SFAS 157 defines fair value, establishes a framework
for measuring fair value, and expends disclosures about fair value
measurements.  SFAS 157 applies under other accounting pronouncements
that require or permit fair value measurements and does not require any new fair
value measurements.  The provisions of SFAS 157 were originally to be
effective beginning January 1, 2008.  Subsequently, the FASB provided
for a one-year deferral of the provisions of SFAS 157 for non-financial assets
and liabilities that are recognized or disclosed at fair value in consolidated
financial statements on a non-recurring basis.  The Company is
currently evaluating the input of adopting the provisions of SFAS 157 for
non-financial assets and liabilities that are recognized or disclosed on a
non-recurring basis.
 
 Property and
Equipment
 
 Property
and equipment are stated at cost. Depreciation is provided using the
double-declining balance method over the useful lives of the related assets. See
Note C. Expenditures for maintenance and repairs are charged to expense as
incurred.
 
 Basic and Diluted Income
(Loss) Per Share
 
 Basic and
diluted net income (loss) per common share has been calculated by dividing the
net income (loss) for the year by the basic and diluted weighted average number
of shares outstanding assuming that the capital structure in place subsequent to
the reverse merger had occurred as of the beginning of the first period
presented. There are no dilutive investments outstanding as of the balance sheet
date. Therefore, basic and diluted weighted average shares are the same for the
years ended December 31, 2008 and 2007.
 
 Advertising
Costs
 
 All
advertising costs are expensed when incurred.  There was no
advertising expense for the years ended December 31, 2008 and 2007.
 
 NOTE
B Accounting for Income Taxes
 
 The
provision for income taxes consists of the following:
 
 12/31/2008
                  
                  
                  12/31/2007Provision
      for Income TaxesCurrent Taxes
                  
                  $
                  -
                  
                  
                  $
                  500Deferred Taxes
                  
                  
                  -
                  
                  
                  
                  286Total Provision for Income
      Taxes
                  
                  $
                  -
                  
                  
                  $
                  786
  YaFarm
Technologies, Inc uses the asset/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. The net deferred tax asset
generated by the loss carry-forward has been fully reserved.  The
cumulative net operating loss carry-forward is approximately $93,347 at December
31, 2008, and will expire in the years 2026 through 2028.
 F-9
  At
December 31, 2008, deferred taxes consisted of the following:
  Current
                    
                    
                    NoncurrentDeferred
      tax assetsNet operating
    losses
                    
                    $
                    -
                    
                    
                    $
                    20,070Valuation
    allowance
                    
                    
                    -
                    
                    
                    
                    (20,070
                    )Net deferred tax
      asset
                    
                    
                    -
                    
                    
                    
                    -Deferred
      tax liabilities
                    
                    
                    -
                    
                    
                    
                    -Net
      deferred taxes
                    
                    $
                    -
                    
                    
                    $
                    -
  A
valuation allowance is provided when it is more likely than not that some
portion of the deferred tax asset will not be realized.  Because of
the lack of visibility as to the Company’s earning ability in the near future,
the Company has established a valuation allowance for all future deductible net
operating loss carry forwards. The valuation allowance has increased $10,818
from $9,252, as of December 31, 2008.
 Net
operating loss (“NOL”) carryforwards expire according to the
following:
 
 Year of NOL
                        
                        NOL
                        
                        Expires2008
                        
                        $
                        50,176
                        
                        20282007
                        
                        
                        42,196
                        
                        20272006
                        
                        
                        975
                        
                        2026Total
                        
                        $
                        93,347
 
 A
reconciliation between income taxes at statutory tax rates (15%) and the actual
income tax provision for continuing operations as of December 31, 2008 and 2007
follows:
  12/31/2008
                      
                      
                      12/31/2007Expected
      Provision(Benefit) (based on statutory rate)
                      
                      $
                      (7,526
                      )
                      
                      $
                      (6,332
                      )Effect
      of:State
      taxes, net of federal benefit
                      
                      
                      (3,292
                      )
                      
                      
                      (2,199
                      )Permanent
      Differences
                      
                      
                      0
                      
                      
                      
                      65Income
      taxed to members of LLC prior to reverse merger
                      
                      
                      -
                      
                      
                      
                      -Increase/(decrease)
      in valuation allowance
                      
                      
                      10,818
                      
                      
                      
                      9,252Total
      actual provision
                      
                      $
                      0
                      
                      
                      $
                      786
 
 
 
 The
Company adopted the provisions of FIN 48 on January 1, 2007.  As a
result of this adoption, the Company has not made any adjustments to deferred
tax assets or liabilities.  The Company did not identify any material
uncertain tax positions on returns that have been filed or that will be
filed.  The Company continues to incur net operating losses as
disclosed above.  Since it is not thought that these net operating
loss carry forwards will ever produce a tax benefit, even if examined by taxing
authorities and disallowed entirely, there would be no effect on the financial
statements.  A reconciliation of our unrecognized tax benefits for
2008 is presented as follows:
   F-10
  
 Balance
      as of January 1, 2008
                        
                        $
                        0Additions
      based on tax positions related to the current year
                        
                        
                        0Additions
      based on tax positions related to prior years
                        
                        
                        —Reductions
      for tax positions of prior years
                        
                        
                        —Reductions
      due to expiration of statute of limitations
                        
                        
                        —Settlements
      with taxing authorities
                        
                        
                        —Balance
      as of December 31, 2008
                        
                        $
                        0
 
 The
Company has filed income tax returns in the U.S. federal jurisdiction and
Delaware state jurisdictions.  The Company is subject to U.S. federal
tax examinations of all tax returns since inception on June 16,
2006.
 
 The
Company recognizes interest accrued related to unrecognized tax benefits in
interest expense and penalties in operating expenses.  During the
years ended December 31, 2008 and 2007, the Company recognized no interest and
penalties.  The Company had no payments of interest and penalties
accrued at December 31, 2008 and 2007, respectively.
 
 NOTE
C Property and Equipment
 
 As of
December 31, 2008, the Company had a net balance of fixed assets in the amount
of $569. The fixed assets consist of computer and photo equipment. These assets
are being depreciated over 5 years.  Depreciation expense was $589 and
$468, for the years ended December 31, 2008 and 2007,
respectively.
 NOTE
D Related Party Payable
 
 On
February 8, 2008, the Company borrowed $20,000 through the issuance of a Note to
Columbia China Capital Group, Inc., an affiliated party and a shareholder of the
Company. The Note carries 10% interest per annum for a term of one year. The
proceeds of the Note are used to pay for certain professional costs such as
legal, accounting and listing services.  On November 1, 2008, the
Company signed a $32,252 Note to Columbia China Capital Group, Inc., an
affiliated party and a shareholder of the Company. The Note carries 10% interest
per annum for a term of one year. The Note was exchanged for related party
payables to Columbia China Capital Group as a result of professional fees paid
by Columbia and cash injection made by Columbia. On December 31, 2008, the
Company signed a $9,994 Note to Columbia China Capital Group, Inc., an
affiliated party and a shareholder of the Company. The Note carries 10% interest
per annum for a term of one year. The Note was exchanged for related party
payables to Columbia China Capital Group as a result of professional fees paid
by Columbia and cash injection made by Columbia. For the year ended on December
31, 2008, total interest of $2,322 was accrued related to the notes issued to
Columbia China Capital Group. The
balance due to this party, including accrued interest, as of December 31, 2008
was $64,568.
   F-11
 
 NOTE
E  Amendment to Articles of Incorporation
 
 On June
9, 2008, the Company amended its Certificate of Incorporation with a Certificate
of Designation of the Rights, Preferences, Privileges, and Restrictions, which
had not been set forth in the Certificate of Incorporation or in any amendment
thereto, of the Series A Convertible Preferred Stock of YaFarm Technologies,
Inc.  The Certificate of Designation created a new series of preferred
stock, consisting of 1,500,000 shares, each with an original issue price of
$3.25 per share.   Each share of Series A Convertible Preferred
Stock will automatically convert, without any action on the part of the holder
into (i) twenty (20) shares of common stock of the Company, and (ii) three (3)
warrants to purchase common stock of the Company, exercisable for a period of
five (5) years, at an exercise price of $0.1875 per share, upon the closing of
an acquisition of a company by the Company that (a) has net income of at least
$2.4 million for the fiscal year immediately preceding the year of acquisition,
and (b) results in the shareholders of the Company immediately prior to the
closing of the acquisition owning less than 50% of the voting power of the
Company immediately following the acquisition.  The holders of a
majority of the Series A Convertible Preferred Stock may require that the
Corporation redeem the Series A Convertible Preferred Stock at the original
issue price of $3.25 if the acquisition transaction described above does not
close on or before the date which is ninety (90) days from the date on which the
first share of Series A Convertible Preferred Stock is issued by the
Company.  Each outstanding share of Series A Convertible Preferred
Stock is entitled to one (1) vote per share on all matters to which the
shareholders of the Company are entitled or required to vote.  No
shares of Series A Convertible Preferred Stock have been issued as of December
31, 2008.
 
 NOTE
F Approval of Prospective Reverse Stock Split
 
 On June
13, 2008, the holders of a majority of the issued and outstanding shares of
common stock of the Company approved a prospective amendment to the Certificate
of Incorporation of the Company to effectuate a 1-for-4 reverse stock split of
the issued and outstanding shares of common stock of the Company.  The
purpose of the reverse stock split is to attract additional capital and to
reduce the time involved and provide the Company with flexibility with respect
to creating an optimal capital structure to complete an acquisition or merger
with a future, as yet unidentified, company or companies.  The Company
anticipates effectuating the reverse stock split shortly before or after the
consummation of an acquisition or merger with a future, as yet unidentified,
company or companies.  On July 7, 2008, the Company filed a Definitive
Information Statement Pursuant to Section 14(c) of the Securities Exchange Act
of 1934 to inform the Company’s stockholders of the above action.  As
of December 31, 2008 no acquisition or merger has occurred and no reverse stock
split has been effectuated.
   F-12
 
 NOTE
G Going Concern
 
 The
Company’s financial statements have been prepared on a going concern basis,
which contemplates the realization of assets and the satisfaction of liabilities
in the normal course of business.  As of December 31, 2008, the
Company had an accumulated deficit of ($94,303), and negative working capital of
$58,684 raising substantial doubt about its ability to continue as a going
concern.
 
 Management’s
plan to address the Company’s ability to continue as a going concern includes:
(1) obtaining additional funding from the sale of the Company’s securities and
establishing revenues; and/or (2) completing an acquisition or merger with a
future, as yet unidentified, company or companies.  Although
management believes that it will be able to obtain the necessary funding to
allow the Company to remain a going concern through the methods discussed above,
there can be no assurances that such methods will prove
successful.  Should we be unsuccessful, the Company may need to
discontinue its operations.
 
 NOTE
H Operating Leases
 
 Effective
February 2007, the Company entered into an operating lease agreement to lease an
office space.  The lease is being renewed on a monthly basis with
payments of $118 per month.
   F-13