UNITED STATES


SECURITIES AND EXCHANGE COMMISSION


Washington, D.C.  20549





Form 10-K





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





For the fiscal year ended December 31, 2009





OR





[   ]
TRANSITION REPORT UNDER 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 whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes      No _____





Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K  (§229.405 of this chapter) 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: $350,000 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 ______





Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date.  As of April 11, 2010, 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) of 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.





FORM 10-K ANNUAL REPORT


FOR THE FISCAL YEAR ENDED DECEMBER 31, 2009





TABLE OF CONTENTS








PART I


ITEM 1 –
BUSINESS
2ITEM 1A –
RISK FACTORS
7ITEM 1B –
UNRESOLVED STAFF COMMENTS
7ITEM 2
PROPERTIES
7ITEM 3
LEGAL PROCEEDINGS
7ITEM 4 –
(REMOVED AND RESERVED)
7PART IIITEM 5 –
MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
8ITEM 6 –
SELECTED FINANCIAL DATA
8ITEM 7 –
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION
9ITEM 7A –
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
13ITEM 8 –
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
13ITEM 9 –
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
13ITEM 9A –
CONTROLS AND PROCEDURES
14ITEM 9A(T) –
CONTROLS AND PROCEDURES
14ITEM 9B –
OTHER INFORMATION
15PART IIIITEM 10 –
DIRECTORS,  EXECUTIVE OFFICERS AND CORPORATE GOVERNACE
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
21ITEM 14 –
PRINCIPAL ACCOUNTING FEES AND SERVICES
21PART IVITEM 15
EXHIBITS, FINANCIAL STATEMENT SCHEDULES
22







1


Cautionary Statement Regarding Forward Looking Statements





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.  All of our web design team members are independent contractors and we do not compensate them unless we utilize their services.  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.





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





l
Bronze Small Business Package:






2







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.






3





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.





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, 2009, no acquisition or merger has occurred and no reverse stock split has been effectuated.





Series A Convertible Preferred Stock





On June 9, 2008, we amended our Certificate of Incorporation with a Certificate of Designation of the Rights, Preferences, Privileges, and Restrictions, which had not been set forth in the Certificate of Incorporation or in any amendment thereto, of the Series A Convertible Preferred Stock of YaFarm Technologies, Inc.  The Certificate of Designation created a new series of preferred stock, consisting of 1,500,000 shares, each with an original issue price of $3.25 per share.   Each share of Series A Convertible Preferred Stock will automatically convert, without any action on the part of the holder into (i) twenty (20) shares of our common stock, and (ii) three (3) warrants to purchase our common stock, exercisable for a period of five (5) years, at an exercise price of $0.1875 per share, upon the closing of an acquisition of a company by us that (a) has net income of at least $2.4 million for the fiscal year immediately preceding the year of acquisition, and (b) results in our shareholders immediately prior to the closing of the acquisition owning less than 50% of our voting power immediately following the acquisition.  The holders of a majority of the Series A Convertible Preferred Stock may require that we redeem the Series A Convertible Preferred Stock at the original issue price of $3.25 if the acquisition transaction described above does not close on or before the date which is ninety (90) days from the date on which the first share of Series A Convertible Preferred Stock is issued by us.  Each outstanding share of Series A Convertible Preferred Stock is entitled to one (1) vote per share on all matters to which our shareholders are entitled or required to vote.  No shares of Series A Convertible Preferred Stock have been issued as of December 31, 2009.





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.






4





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.





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.






5





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.








6








ITEM 1A. – RISK FACTORS.





As a smaller reporting company we are not required to provide a statement of risk factors.





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.





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





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





In the ordinary course of business, we are 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, other than as set forth herein, 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 – (REMOVED AND RESERVED)








7





PART II





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





Our common stock is currently quoted on the OTCQB of the OTC Markets, under the symbol “YFRM.”  Our common stock did not trade during the years ended December 31, 2009 and 2008.  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.  The information reflects prices between dealers, and does not include retail markup, markdown, or commission, and may not represent actual transactions.





Fiscal Year

Ended

December 31,



Bid PricesPeriod

High

Low2008

First Quarter

$0

$0Second Quarter

$0

$0Third Quarter

$0

$0Fourth Quarter

$0

$02009

First Quarter

$0

$0Second Quarter

$0

$0Third Quarter

$0

$0Fourth Quarter

$0

$02010

First Quarter

$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 April 11, 2010, 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.





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, 2009.





ITEM 6 – SELECTED FINANCIAL DATA





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






8





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.





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, 2009, no acquisition or merger has occurred and no reverse stock split has been effectuated.






9





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, 2009.





Year ended December 31, 2009 compared to the Year ended December 31, 2008





Results of Operations





Introduction





We generated no revenues in 2009, while our operating expenses only decreased as compared to 2008.  As a result, our net loss for 2009 was about half of our net loss for 2008.





Revenues and Income (Loss) from Operations







Our revenue, operating expenses and net income (loss) from operations for the year ended December 31, 2009 as compared to the year ended December 31, 2008 are as follows:





Year Ended December 31, 2009


Year Ended December 31, 2008


Percentage

Change

Increase

(Decrease)Revenue

$
-


$
-



0
%Operating expenses


19,435



47,854



(60.4
) %Net Income (loss) from operations

$
(19,435
)

$
(47,854
)


(60.4
) %






10







We generated no revenues during the years ended December 31, 2009 and 2008.  During the year ended December 31, 2009 as compared to the year ended December 31, 2008, our operating expenses decreased by $28,419. As a result, we had a net loss from operations of $19,435 for the year ended December 31, 2009, as compared to a net loss from operations of $47,854 for the year ended December 31, 2008.





Liquidity and Capital Resources





Introduction





During the year ended December 31, 2009, we had a net loss of $26,698 and cash flow from operations of $(19,195).  Because we had no revenues, any change in our revenues or operating expenses has a material effect, and we anticipate that our net profit or loss, and operating profit or loss, will continue to vary widely from time period to time period.





Our cash and cash equivalents, total current assets, total assets, total current liabilities, and total liabilities as of December 31, 2009 as compared to December 31, 2008, are as follows:





December 31,


December 31,2009


2008Cash

$
2,993


$
9,132Total current assets


2,993



9,132Total assets


3,311



9,701Total current liabilities


3,238



67,816Total liabilities


88,124



67,816





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.










11





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, 2009, we generated negative cash flow of $19,195.  Unlike 2008, when we generated cash flow of $7,161, as a result of net cash provided by financing activities of $21,994, we did not generate any cash from financing activities in 2009, resulting in negative cash flow due the cash spent on our operations.  Net cash used in operating activities consisted primarily of an increase of $7,262 in accrued interest, which was fully offset by a net loss of $26,698 and a decrease of $10 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.





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.





Contractual Obligations





The following table summarizes our contractual obligations and commercial commitments as of December 31, 2009:





2010


2011


2012




2013


2014


TotalDebt obligations

$
-


$
-


$
-




$
-



-


$
0Capital leases


-



-



-





-



-



0Operating leases


-



-



-





-



-



0$
-


$
-


$
-




$
-



-


$
0







12






Quantitative and Qualitative Disclosures about Market Risk





We are exposed to market risks, which include interest rate risk and potentially the prices of commodities.  We do not engage in financial transactions for trading or speculative purposes.




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 Registered Public Accounting Firm
F-1Consolidated Balance Sheets as of December 31, 2009 and 2008
F-2Consolidated Statements of Operations for the years ended December 31, 2009 and 2008
F-3Consolidated Statements of Shareholders’ Equity (deficit) for the years ended December 31, 2009 and 2008
F-4Consolidated Statements of Cash Flows for the years ended December 31, 2009 and 2008
F-5Notes to Consolidated Financial Statements
F-6





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





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






13





ITEM 9A - CONTROLS AND PROCEDURES





(a)           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, 2009, to ensure that information required to be disclosed by us in the reports filed or submitted by us under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Securities Exchange Commission's rules and forms, including to ensure that information required to be disclosed by us in the reports filed or submitted by us under the Exchange Act is accumulated and communicated to our management, including our principal executive and principal financial officer, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.  Based on that evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that as of December 31, 2009, our disclosure controls and procedures were not effective at the reasonable assurance level due to the material weaknesses identified and described in Item 9A(b).





(b)           Management Report on Internal Control Over Financial Reporting





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





•

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

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





•

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





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








14





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, 2009. In making this assessment, our management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control-Integrated Framework.  Based on this assessment, Management identified the following two material weaknesses that have caused management to conclude that, as of December 31, 2009, 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, 2009.  Management evaluated the impact of our failure to have written documentation of our internal controls and procedures on our assessment of our disclosure controls and procedures and has concluded that the control deficiency that resulted represented a material weakness.





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





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





This Annual Report does not include an attestation report of our independent 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 our management’s report in this Annual Report.





(c)           Remediation of Material Weaknesses




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




(d)           Changes in Internal Control over Financial Reporting




No change in our system of internal control over financial reporting occurred during the period covered by this report, fourth quarter of the fiscal year ended December 31, 2009 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.





ITEM 9B – OTHER INFORMATION





There are no events required to be disclosed by the 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

44

Chief Executive Officer and Director (2006)Hong Zhao

39

President, Secretary, Chief Financial Officer, and Chairwoman of the Board of Directors (2006)





Zhiguang Zhang, age 44, 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 39, 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, 2009, 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, 2009 (“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
2009


-



-



-



-



-



-



-



-Director and CEO
2008


-



-



-



-



-



-



-



-2007


-



-



-



-



-



-



-



-Hong Zhao
2009


-



-



-



-



-



-



-



-President, Secretary, CFO
2008


-



-



-



-



-



-



-



-2007


-



-



-



-



-



-



-



-














17





Employment Contracts





As of December 31, 2009, 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, 2009:





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-











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









18


The following table sets forth certain information concerning outstanding stock awards held by the Named Executive Officers as of December 31, 2009:





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 April 14, 2010, 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.





20





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.





(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, we signed a note for $9,994 to Columbia. The Note carries 10% interest per annum for a term of one year.  On December 31, 2009, the principle balance ($9,994) and accrued interest ($999) on the original note were combined into a new note. The new note accrues interest at 10% per annum for a term of two years. The original note was exchanged for related party payables to Colombia as a result of professional fees paid by Colombia and a cash injection made by Colombia.  We accrued interest of $0 on the new note during the year ended December 31, 2009.





On May 20, 2009, we entered into a $13,056 note with Colombia. The note accrues interest at 10% per annum for a term of one year, and the proceeds from the note issuance were used to pay for certain professional costs such as legal, accounting and listing services.  We accrued interest of $805 on the note during the year ended December 31, 2009.





For the year ended December 31, 2009, total interest of $7,263 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.





ITEM 14 – PRINCIPAL ACCOUNTING FEES AND SERVICES





Audit Fees





The aggregate fees billed in each of the fiscal years ended December 31, 2009 and 2008 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 $10,725 and $14,336, respectively.





Audit - Related Fees





The aggregate fees billed in the fiscal year ended December 31, 2009 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, 2009, June 30, 2009 and September 30, 2009 were included in the Audited Fees above.





Tax Fees





For the fiscal years ended December 31, 2009 and 2008, our principal accountants did not render any services for tax compliance, tax advice, and tax planning work.





All Other Fees





None.





Of the fees described above for the year ended December 31, 2009, 100% were approved by the entire Board of Directors.




21







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 Registered Public Accounting Firm
F-1Balance Sheets as of December 31, 2009 and 2008
F-2Statements of Operations for the years ended December 31, 2009 and 2008
F-3Statements of Shareholders’ Equity for the years ended December 31, 2009 and 2008
F-4Statements of Cash Flows for the years ended December 31, 2009 and 2008
F-5Notes to Financial Statements
F-6








(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.






22





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 15, 2010

/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 15, 2010

/s/ Zhiguang ZhangBy:
Zhiguang ZhangIts:
Chief Executive Officer

and DirectorDated:  April 15, 2010

/s/ Hong ZhaoBy:
Hong ZhaoIts:
President, Secretary, Chief

Financial Officer, and Chairwoman

of the Board of Directors






23










Financial Statements and Report of





Independent Registered Public Accounting Firm





YAFARM TECHNOLOGIES, INC.





Fiscal Years Ended December 31, 2009 and 2008















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, 2009 and 2008, and the related statements of operations, stockholders’ equity, and cash flows for the years ended December 31, 2009 and 2008. 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, 2009 and 2008, and the results of operations and cash flows for the years ended December 31, 2009 and 2008, 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 D 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 D. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
   Mantyla McReynolds, LLC
 Salt Lake City, Utah
 
 April 15, 2010








F-1


YAFARM TECHNOLOGIES, INC.


Consolidated Balance Sheets


December 31, 2009


December 31, 2008ASSETSCurrent AssetsCash and cash equivalents

$
2,993


$
9,132Total Current Assets


2,993



9,132Property and Equipment:Computer equipment


3,308



3,308Accumulated depreciation


(2,990
)


(2,739
)Total Property and Equipment


318



569Total Assets

$
3,311


$
9,701LIABILITIES AND STOCKHOLDERS' DEFICITLiabilitiesCurrent LiabilitiesAccrued expenses and other payables

$
3,238


$
3,248Related party payable


13,056



64,568Total Current Liabilities


16,294



67,816Related party note payable


71,803



-Total Long Term Liabilities


71,830



-Total Liabilities


71,830



67,816Stockholders' DeficitConvertible Preferred Stock -- 1,500,000 shares authorized having a par value of $.001 per share; 0 shares issued and outstandingPreferred stock -- 10,000,000 shares authorized having apar value of $.001 per share; 0 shares issued andoutstandingCommon stock -- 100,000,000 shares authorized having apar value of $.001 per share; 10,000,000 shares issuedand outstanding


10,000



10,000Additional paid-in capital


26,188



26,188Accumulated deficit


(121,001
)


(94,303
)Total Stockholders' Deficit


(84,813
)


(58,115
)Total Liabilities and Stockholders' Deficit

$
3,311


$
9,701
  See Accompanying notes to financial statements
  F-2
  YAFARM TECHNOLOGIES, INC.
 Consolidated Statements of Operations
 For the Year


For the YearEnded


EndedDecember 31,


December 31,2009


2008Revenues, net of discounts

$
-


$
-Operating Expenses


19,435



47,854Net Loss from Operations


(19,435
)


(47,854
)Other Expense:Interest expense


(7,263
)


(2,322
)Total Other Expense


(7,263
)


(2,322
)Net Loss before taxes


(26,698
)


(50,176
)Provision for Income Taxes (Benefit)


-



-Net Loss

$
(26,698
)

$
(50,176
)Loss Per Share Basic and Fully Diluted

$
(0.01
)

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


10,000,000



10,000,000
    F-3
 YAFARM TECHNOLOGIES, INC.
 Consolidated Statements of Stockholders' Deficit
 For the Years Ended December 31, 2009 and 2008
 Number of


Common


Additional


Retained


NetCommon


Stocks


Paid-in


Earnings


Stockholders'Stocks





Capital


(Deficit)


Equity  (Deficit)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
)Net loss for 2009


-



-



-



(26,698
)


(26,698
)Balance, December 31, 2009


10,000,000



10,000



26,188



(121,001
)


(84,813
)








F-4




YAFARM TECHNOLOGIES, INC.


Consolidated Statements of Cash Flows


For the Year


For the YearEnded


EndedDecember 31,


December 31,2009


2008Cash Flows From Operating ActivitiesNet Loss

$
(26,698
)

$
(50,176
)Adjustments to reconcile net lossto net cash from operating activities:Depreciation


251



589(Increase)/Decrease-Receivables


-



5,000Increase/(Decrease)-Accrued Expenses


(10
)


(6,726
)Increase/(Decrease)-Accrued Intrest


7,262



2,322Expenses Paid by Shareholder


0



34,158Net Cash From Operating Activities


(19,195
)


(14,833
)Cash Flows From Investing Activities


-



-Purchase of Property and Equipment


-



-Net Cash From Investing Activities


-



-Cash Flows From Financing ActivitiesProceeds from Related Party Notes


13,056



21,994Net Cash From Financing Activities


-



21,994Net Increase (Decrease) in Cash


13,056



7,161Beginning Cash Balance


9,132



1,971Ending Cash Balance

$
2,993


$
9,132`Cash Paid During the Year for Interest


-



-Cash Paid During the Year for Income Taxes


-



-








F-5






YAFARM TECHNOLOGIES, INC.
 Notes to the Condensed Consolidated Financial Statements
 December 31, 2009
 
 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 $2,993 as of December 31, 2009.
  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. Since July 31, 2006, the Company has applied the provisions of Financial Accounting Standards Board (FASB), ASC 740 “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 revenue when earned, which occurs when services are rendered or products are delivered to customers, collection is reasonably assured, and price is fixed or determinable. 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. There were no unfinished projects in progress as of December 31, 2009. 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, 2009, 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, 2009 and 2008.
 
 Impact of New Accounting Pronouncements
  Effective July 1, 2009, the Company adopted the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 105-10 Generally Accepted Accounting Principles-Overall (“ASC 105-10”). ASC 105-10 establishes the FASB Accounting Standards Codification (the “Codification”) as the source of authoritative accounting principles recognized by the FASB to be applied by nongovernment entities in the preparation of financial statements in conformity with U.S. GAAP. Rules and interpretive releases of the SEC under authority of federal securities laws are also sources of authoritative U.S. GAAP for SEC registrants. All guidance contained in the Codification carries equal level of authority. The Codification superseded all existing non-SEC accounting and reporting standards. All other non-grandfathered non-SEC accounting literature not included in the Codification is non-authoritive. The FASB will not issue new standards in the form of Statements, FASB Staff Positions or Emerging Issues Task Force Abstracts. Instead, it will issue Accounting Standards Updates (“ASUs”). The FASB will not consider ASUs as authoritative in their own right. ASUs will serve only to update the Codification, provide background information about the guidance and provide the bases for conclusions on the change(s) in the Codification. References made to FASB guidance throughout this document have been updated for the Codification.
    F-7
  
 In December 2007, the FASB issued SFAS No. 141 (revised 2007), Business Combinations (“SFAS 141R”) which was primarily codified into Topic 805 “Business Combinations” in the ASC and SFAS No. 160, Noncontrolling Interests in Consolidated Financial Statements, an amendment of Accounting Research Bulletin No. 51 (“SFAS 160”) which was primarily codified into Topic 810 “Consolidations” in the ASC . 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. SFAS No. 141R will impact acquisitions occurring after January 1, 2009. SFAS No. 160 was adopted on January 1, 2009 with no material impact on the financial statements.
 
 In March 2008, the FASB issued SFAS No. 161, Disclosures about Derivative Instruments and Hedging Activities, an amendment of FASB Statement No. 133 (“SFAS 161”) which was primarily codified into Topic 815 “Derivatives and Hedging” in the ASC. SFAS 161 requires enhanced disclosures about an entity's derivative instruments and hedging activities including: (1) how and why an entity uses derivative instruments; (2) how derivative instruments and related hedged items are accounted for under SFAS 133 and its related interpretations; and (3) how derivative instruments and related hedged items affect an entity's financial position, financial performance and cash flows. SFAS 161 is effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008, with earlier application encouraged. The Company has no derivative instruments so the adoption of SFAS 161 did not have any impact on the Company's financial statements.
 
 In October 2009, the FASB issued Accounting Standards Update No. 2009-13 for Revenue Recognition - Multiple Deliverable Revenue Arrangements (Subtopic 605-25) “Subtopic”. This accounting standard update establishes the accounting and reporting guidance for arrangements under which the vendor will perform multiple revenue - generating activities. Vendors often provide multiple products or services to their customers. Those deliverables often are provided at different points in time or over different time periods. Specifically, this Subtopic addresses how to separate deliverables and how to measure and allocate arrangement consideration to one or more units of accounting. The amendments in this guidance will affect the accounting and reporting for all vendors that enter into multiple-deliverable arrangements with their customers when those arrangements are within the scope of this Subtopic. This Statement is effective for fiscal years beginning on or after June 15, 2010. Earlier adoption is permitted. If a vendor elects early adoption and the period of adoption is not the beginning of the entity's fiscal year, the entity will apply the amendments under this Subtopic retrospectively from the beginning of the entity's fiscal year. The presentation and disclosure requirements shall be applied retrospectively for all periods presented. Currently, Management believes this Statement will have no impact on the financial statements of the Company once adopted.
  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, 2009 and 2008.




F-8


NOTE B - Accounting for Income Taxes
 
 The provision for income taxes consists of the following:
 
 12/31/2009


12/31/2008Provision for Income TaxesCurrent Taxes

$
-


$
-Deferred Taxes


-



-Total Provision for Income Taxes

$
-


$
-
 
 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 $120,045 at December 31, 2009, and will expire in the years 2026 through 2029.
 
 At December 31, 2009, deferred taxes consisted of the following:
 
 Current


NoncurrentDeferred tax assetsNet operating losses

$
-


$
25,810Valuation allowance


-



(25,810
)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 $5,740 from $20,070, as of December 31, 2009.
 
 Net operating loss (“NOL”) carryforwards expire according to the following:
 
 Year of NOL

NOL

Expires2009

$
26,698

20292008

$
50,176

20282007


42,196

20272006


975

2026Total

$
120,045
 
 A reconciliation between income taxes at statutory tax rates (15%) and the actual income tax provision for continuing operations as of December 31, 2009 and 2008 follows:
 
 12/31/2009


12/31/2008Expected Provision(Benefit) (based on statutory rate)

$
(4,005
)

$
(7526
)Effect of:State taxes, net of federal benefit


(1,735
)


(3292
)Permanent Differences


-



-Income taxed to members of LLC prior to reverse merger


-



-Increase/(decrease) in valuation allowance


5,740



10,818Total actual provision

$
-


$
-
 
 The Company adopted the provisions of ASC topic 740 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 2009 is presented as follows:
    F-9
 
 Balance as of January 1, 2009

$
—Additions based on tax positions related to the current year


—Additions 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, 2009

$
—
 
 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, 2009 and 2008, the Company recognized no interest and penalties.  The Company had no payments of interest and penalties accrued at December 31, 2009 and 2008, respectively.
 
 NOTE C - Property and Equipment
 
 As of December 31, 2009, the Company had a net balance of fixed assets in the amount of $318. The fixed assets consist of computer and photo equipment. Depreciation expense was $251 and $598, for the years ended December 31, 2009 and 2008, respectively.
 
 NOTE D - 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, 2009, the Company had an accumulated deficit of ($121,001), raising substantial doubt about its ability to continue as a going concern.
 
 Management’s plan to address the Company’s ability to continue as a going concern includes obtaining additional funding from the sale of the Company’s securities and establishing revenues.  Although management believes that it will be able to obtain the necessary funding to allow the Company to remain a going concern through the methods discussed above, there can be no assurances that such methods will prove successful. Should we be unsuccessful, the Company may need to discontinue its operations.
  NOTE E - Related Party Payable




F-10


On February 8, 2008, the Company borrowed $20,000 through the issuance of a Note to Columbia China Capital Group, Inc. (“the Group”), an affiliated party and a shareholder of the Company. The note accrued interest at 10% per annum for a term of one year. On February 7, 2009, the principle balance ($20,000) and accrued interest ($2,000) on the original note were combined into a new note. The new note accrues interest at 10% per annum for a term of two years. The proceeds of the original note were used to pay for certain professional costs such as legal, accounting and listing services. The Company has accrued interest of $1,971 on the new note during the year ended December 31, 2009.
 
 On November 1, 2008, the Company entered into a $32,252 note with the Group. The note accrued interest at 10% per annum for a term of one year. On November 1, 2009, the principle balance ($32,252) and accrued interest ($3,225) on the original note were combined into a new note. The new note accrues interest at 10% per annum for a term of two years. The original note was exchanged for related party payables to the Group as a result of professional fees paid by the Group and a cash injection made by the Group. The Company has accrued interest of $583 on the new note during the year ended December 31, 2009.
 
 On December 31, 2008, the Company entered into a $9,994 note with the Group. The note accrued interest at 10% per annum for a term of one year. On December 31, 2009, the principle balance ($9,994) and accrued interest ($999) on the original note were combined into a new note. The new note accrues interest at 10% per annum for a term of two years. The original note was exchanged for related party payables to the Group as a result of professional fees paid by the Group and a cash injection made by the Group. The Company has accrued interest of $0 on the new note during the year ended December 31, 2009.
 
 On May 20, 2009, the Company entered into a $13,056 note with the Group. The note accrues interest at 10% per annum for a term of one year, and the proceeds from the note issuance were used to pay for certain professional costs such as legal, accounting and listing services. The Company has accrued interest of $805 on the note during the year ended December 31, 2009.
 
 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 December 31, 2009, no acquisition or merger has occurred and no reverse split has been effectuated.
 
 NOTE G - 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.