Yayi International Inc., (OTC Bulletin Board: YYIN) ("Yayi International" or "the Company"), a leading producer and distributor of premium goat milk formula products for infants, toddlers, and adults throughout the People's Republic of China ("PRC"), today announced its financial results for the three and nine months ended July 31, 2009.

    Third Quarter Highlights

    -- Net sales increased 13.2% year-over-year to $7.1 million
    -- Gross profit rose 14.7% to $4.7 million from the third quarter of 2008
    -- Operating income increased 26.6% year-over-year to $2.8 million
    -- Net income was $1.8 million versus a net loss of $2.0 million in the
       third quarter of 2008
    -- Fully diluted earnings per share were $0.07 compared to a net loss per
       share of ($0.08) in the third quarter of 2008
    -- Raised $15 million from SAIF Partners III L.P.

"We are pleased to report strong revenue growth and improving margins during the third quarter, reflecting the growing acceptance of premium goat milk products and Yayi's leadership in developing this market segment. Our goal is to develop a leading brand for a range of goat milk-based products based on a commitment to health and highest quality standards," said Ms. Li Liu, Chief Executive Officer of Yayi International. "During the quarter our facilities ran at between 80 to 90% of designed capacity. Following the $15 million investment by SAIF Partners in June, we have the financial resources to continue expanding our production capacity and market reach across China."

Third Quarter Results

For the third quarter of fiscal 2009, net sales increased 13.2% to $7.1 million from $6.3 million in the third quarter of fiscal 2008. Sales volume contributed to approximately 92% of growth, while an increase in average sales prices contributed to 8%. The volume increase was attributable to more retail stores and distributors carrying the Company's products, as well as price reductions for various non-premium products.

Gross profit grew 14.7% to $4.7 million, as compared to $4.1 million in the year-ago period. Gross profit margin expanded 80 basis points to 66.3% from 65.5% in the comparable period last year, which is primarily attributable to the increased net sales volume (excluding currency effects) and reduced material costs with the realization of vertical integration synergies from the Company's acquisition of Fuping Milkgoat, a supplier of raw goat milk, in August 2008.

Operating expenses increased 1.2% to $2.0 million, or 27.4% of net sales, from $1.9 million, or 30.6%. The Company experienced an increase in commission and salaries, which were offset by lower selling, general, and administrative expenses.

Operating profit rose 26.6% to $2.8 million, as compared to $2.2 million in the year-ago period. Operating profit margin for the third quarter expanded 420 basis points to 39.0% from 34.8% in the comparable period last year.

Net income was $1.8 million, as compared to a net loss of $2.0 million in the year-ago period, which included $3.5 million in merger costs. Diluted earnings per share were $0.07, as compared to a net loss per share of $0.08.

Nine Months Results

Net sales for the nine months ended July 31, 2009 increased 34.3% to $18.9 million, as compared to $14.1 million in the comparable period last year. The majority of the increase is attributable to a 105% increase in volume for products sold, offset by a 5% decrease in the weighted average selling price. Gross profit increased 38.7% to $12.7 million, or 67.1% of net sales, from $9.1 million, or 65.0% of net sales for the same period of last year. Operating income rose 50.6% to $7.3 million, as compared to $4.8 million in comparable period last year. Net income was $4.5 million, as compared to $0.1 million for the same period of last year. Diluted earnings per share were $0.18, as compared to $0.00 in the same period last year.

Financial Condition

As of July 31, 2009, Yayi International held $13.8 million in cash and cash equivalents, $18.9 million in working capital and a current ratio of 2.1 to 1. At quarter end, the Company had $8.1 million in short-term debt, including the current portion of long-term loans, and no long-term debt. Shareholders' equity was $9.2 million, up from $4.8 million as of October 31, 2008.

Cash provided in operating activities during the first nine months of fiscal 2009 was $5.8 million, which was primarily attributable to the net income increase, as compared to $1.5 million during the comparable period of fiscal 2008. During the first nine months of fiscal 2009, the Company spent approximately $8.6 million on capital expenditures.

Business Outlook

"Based on the strong market potential for our premium goat milk products, Yayi International is in the process of increasing our production capacity for powdered goat milk products by more than 200%. We are confident that consumer awareness will continue to expand, and we are actively planning to introduce a new range of products in the future, including liquid goat milk products, that we believe have tremendous growth potential," concluded Ms. Li.

About Yayi International

Yayi International, through its subsidiaries of Tianjin Yayi Industrial Co., Limited, Weinan Milkgoat Production Co., Ltd. and Fuping Milkgoat Dairy Co., Ltd., is the first mover and the leading producer and distributor of premium goat milk formula products for infants, toddlers and adults, goat milk tablets, and goat milk drinks throughout the People's Republic of China. Its current formula product lines are targeted at the premium market segment and health-conscious consumers. The Company's distribution network comprises of approximately 3,600 retail points including infant-maternity store chains, supermarkets, and drug stores as well as catalogue sales across China.

Forward-looking Statements:

This press release contains certain statements that may include 'forward-looking statements'. All statements other than statements of historical fact included herein are 'forward-looking statements'. These forward looking statements are often identified by the use of forward-looking terminology such as 'believes,' 'expects' or similar expressions, involve known and unknown risks and uncertainties. Although the Company believes that the expectations reflected in these forward-looking statements are reasonable, they do involve assumptions, risks and uncertainties, and these expectations may prove to be incorrect. You should not place undue reliance on these forward-looking statements, which speak only as of the date of this press release. The Company's actual results could differ materially from those anticipated in these forward-looking statements as a result of a variety of factors, including those discussed in the Company's periodic reports that are filed with the Securities and Exchange Commission and available on its website ( http://www.sec.gov ). All forward-looking statements attributable to the Company or persons acting on its behalf are expressly qualified in their entirety by these factors. Other than as required under the securities laws, the Company does not assume a duty to update these forward-looking statements.

                         - Financial Tables Follow -



                  YAYI INTERNATIONAL INC. AND SUBSIDIARIES
                   CONDENSED CONSOLIDATED BALANCE SHEETS

                                                    July 31,     October 31,
                                                      2009           2008
                                                  (unaudited)     (audited)
                      ASSETS
    Current assets:
      Cash and cash equivalents                   $13,839,705       $891,278
      Restricted cash                                 772,603             --
      Accounts receivables, net of allowances
       of $44,332 and $41,050                       2,911,138      2,603,078
      Other receivables, net of allowances
       of $3,141 and $29,207                          256,892        122,732
      Inventories                                   2,812,744      3,329,776
      Prepaid expenses                                 58,671         39,702
      Advances                                     15,838,845      5,904,885
      Deferred financing cost                          44,286        184,846

    Total current assets                           36,534,884     13,076,297

      Property, plant and equipment, net            2,574,861      2,580,385
       Construction in progress                     1,658,335             --
      Livestock, net                                   60,994             --
      Goodwill                                        278,108        278,787
      Deferred financing cost                              --         18,686
      Advances                                             --      3,575,186
      Deferred tax asset                               17,275          9,402
      Other assets                                         --          5,627

    Total assets                                  $41,124,457    $19,544,370

                LIABILITIES AND STOCKHOLDERS' EQUITY
    Current liabilities:
      Short term loans                             $6,974,320     $5,274,996
      Accounts payable                              1,286,520      1,466,745
      Other payable and accrued expenses            1,221,428        212,922
      Dividend payable                                     --      4,468,250
      Advance from customers                           52,983          3,589
      Income and other tax payable                  1,471,903      1,246,211
      Accrued sales return                            204,624        243,774
      Due to related parties                        5,307,979        977,950
      Long term loans - current portion             1,136,034         34,089

    Total current liabilities                      17,655,791     13,928,526

    Long-term liabilities:
      Long-term loans                                      --        839,558

    Total liabilities                              17,655,791     14,768,084

    Commitments and contingencies

    PREFERRED STOCK, par value $0.001,
     10,000,000 shares authorized, Series
     A 10% non-cumulative redeemable
     convertible preferred stock,
     redemption $9.80 per share plus 25%
     interest from date of issuance to
     date of redemption, 1,530,612 shares
     issued and outstanding                        14,264,871             --

    STOCKHOLDERS' EQUITY

    Common stock, par value $0.001,
     100,000,000 shares authorized,
     25,000,000 shares issued and outstanding          25,000         25,000
    Additional paid in capital                      3,228,244      3,228,244
    Statutory surplus reserve fund                    502,438        502,438
    Retained earning                                5,139,038        667,873
    Accumulated other comprehensive income            309,075        352,731

    Total stockholders' equity                      9,203,795      4,776,286

    Total liabilities and stockholders' equity    $41,124,457    $19,544,370



                     YAYI INTERNATIONAL INC. AND SUBSIDIARIES

              CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS) AND
                           COMPREHENSIVE INCOME (LOSS)
                                   (UNAUDITED)

                              Three months ended        Nine months ended
                                   July 31,                 July 31,
                              2009         2008         2009         2008
                                        (restated)                (restated)

    Net sales              $7,141,880   $6,308,081  $18,901,298  $14,074,619

    Cost of goods sold      2,403,326    2,178,123    6,214,951    4,925,386

    Gross profit            4,738,554    4,129,958   12,686,347    9,149,233

    Operating expenses
    Advertising and
     promotion expense        282,247      244,515    1,352,479    1,140,704
    Salaries                  495,108      341,870    1,259,726      983,887
    Other selling,
     general and
     administrative
     expenses                 915,965    1,232,408    2,240,232    1,874,322
    Commission                217,951       82,267      433,541      240,073
    Research and
     development expense       43,993       30,811      116,035       73,309
                            1,955,264    1,931,871    5,402,013    4,312,295
    Operating profit        2,783,290    2,198,087    7,284,334    4,836,938

    Other income
     (expenses)
    Merger costs                   --   (3,456,784)          --   (3,456,784)
    Interest income             1,923        1,009        4,831        6,545
    Other income               14,975       40,537       16,504       40,537
    Interest expense         (176,701)    (111,582)    (579,110)    (239,111)
    Accretion of debt
     discount and
     deferred
     financing cost          (105,401)     (76,460)    (447,766)     (76,460)
    Other expense             (26,566)     (95,791)     (76,040)    (123,937)

    Other expense            (291,770)  (3,699,071)  (1,081,581)  (3,849,210)

    Income (loss) before
     income taxes           2,491,520   (1,500,984)   6,202,753      987,728

    Income taxes             (654,170)    (531,247)  (1,731,588)    (890,270)

    Net income (loss)       1,837,350   (2,032,231)   4,471,165       97,458

    Other comprehensive
     income
    Foreign currency
     translation
     adjustment               (29,352)     144,092      (43,656)     439,671

    Comprehensive income
     (loss)                $1,807,998  $(1,888,139)  $4,427,509     $537,129

    Basic and diluted
     weighted average
     number of shares
     outstanding           25,000,000   23,982,337   25,000,000   22,883,516

    Basic and diluted
     earnings per share         $0.07       $(0.08)       $0.18        $0.00



                        YAYI INTERNATIONAL INC. AND SUBSIDIARIES
                    CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                     (UNAUDITED)

                                                       Nine Months Ended
                                                            July 31,
                                                      2009            2008
                                                                   (Restated)
    Cash flow from operating activities
    Net income                                    $4,471,165         $97,458
    Adjustments to reconcile net income to net
     cash provided by operating activities:
      Net foreign currency transaction loss           14,474         (36,759)
      Depreciation of property, plant and
       equipment                                     263,224         191,103
      Depreciation of livestock                        4,124              --
      Amortization of deferred financing cost        159,246          32,544
      Allowance (recovery) of bad debts-Accounts
       receivable                                      3,366         (82,337)
      Allowance (recovery) of bad debts-Other
       receivable                                    (26,080)         32,224
      Sales return allowance                         (39,500)         43,104
      Merger costs from issuance of warrants and
       common stock                                       --       3,359,291
      Accretion of debt discount                     288,520          43,916

    (Increase) decrease in operating assets, net
     of effect of acquisition:
      Restricted cash                               (772,603)        676,980
      Accounts receivables                          (317,199)        364,974
      Other receivables                             (108,693)        230,167
      Inventories                                    508,091      (2,213,931)
      Prepaid expenses                               (19,001)             --
      Advances                                       248,947        (430,480)
      Other assets                                    (4,078)             --
      Deferred tax asset                              (3,819)            443
    Increase (decrease) in operating liability,
     net of effect of acquisition:                                        --
      Accounts payable                              (175,507)       (501,291)
      Bills payable                                       --        (637,023)
      Advance from customers                          49,381          15,295
      Income and other tax payable                   228,243         178,428
      Other payable and accrued expenses             986,767         129,361

    Net cash provided by operating activities      5,759,068       1,493,467

    Cash flows from investing activities
      Purchase of equipment                         (258,278)       (164,147)
      Advance for construction of office building         --      (1,931,842)
      Advance for construction of factory and
       warehouse                                  (4,111,242)             --
      Advance for acquisition of land use rights    (145,940)             --

      Advance for purchase of equipment           (1,740,133)             --
      Purchase of construction in progress        (2,288,538)             --
      Cash acquired from Ardmore                          --              23
      Purchase of livestock                          (66,154)             --

    Net cash used in investing activities         (8,610,285)     (2,095,966)

    Cash flows from financing activities
      Proceeds from short term loans               6,681,198       5,440,619
      Repayment of short-term loans               (4,994,806)     (3,077,171)
      Repayment of long-term loans                   (26,039)        (24,655)
      Repayment to minority stockholders                  --          (1,257)
      Net proceeds from private placement                 --       1,001,993
      Net proceeds from issuance of Series A
       preferred stock                            14,264,871              --
      Dividend paid to previous stockholders
       of Tianjin Yayi                            (2,550,504)             --
      Due (from) to related parties                2,426,324        (295,904)

    Net cash provided by financing activities     15,801,044       3,043,625

    Effect of exchange rate changes in cash           (1,400)        101,337

    Net increase in cash and cash equivalents     12,948,427       2,542,463

    Cash and cash equivalents, beginning of
     period                                          891,278         256,317

    Cash and cash equivalents, end of period     $13,839,705      $2,798,780

    Supplemental disclosure of cash flow
     information: Cash paid during the period

    Interest paid                                   $499,795        $168,161

    Income tax paid                               $1,586,460        $426,142

    Supplemental disclosure of non-cash
     financing and investing activities:
      Repayment of short-term loan from Tianjin
       Mengyang offset against advances             $877,508             $--
      Dividend payable                                   $--      $4,235,052
      Settlement of dividend payable              $1,916,669             $--