10-Q/A

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q/A

(Amendment No. 1)

x Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended June 30, 2011

or

¨ Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from to .

Commission File Number 001-34444

YONGYE INTERNATIONAL, INC.

(Exact name of registrant as specified in its charter)

Nevada (State or other jurisdiction of incorporation or organization 20-8051010 (I.R.S. Employer Identification No.)

6th Floor, Suite 608, Xue Yuan International Tower,

No. 1 Zhichun Road, Haidian District Beijing, PRC

(Address of principal executive offices)

(Former name, former address and former fiscal year, if changed since last report)

+86 10 8232 8866

(Registrant’s telephone number, including area code)

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 Web site, if any, every Interactive Date 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  x      No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ¨	Accelerated filer x
Non-accelerated filer ¨  (Do not check if a smaller reporting company)	Smaller reporting company  ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ¨    No x

As of August 12 , 2011, there were 49,370,711  shares of common stock, par value $.001 per share, issued and outstanding.

Explanatory Note

The sole purpose of this Amendment No. 1 to Yongye International Inc.’s Quarterly Report on Form 10-Q (the “Form 10-Q”) for the quarterly period ended June 30, 2011, as filed with the Securities and Exchange Commission on August 9, 2011, is to furnish Exhibit 101 to the Form 10-Q in accordance with Rule 405 of Regulation S-T. Exhibit 101 provides the financial statements and related notes from the Form 10-Q formatted in XBRL (eXtensible Business Reporting Language).

No other changes have been made to the Form 10-Q. This Amendment No. 1 to the Form 10-Q does not reflect events that may have occurred subsequent to the original filing date, and does not modify or update in any way the disclosures made in the original Form 10-Q.

Item 6. Exhibits

Exhibits:

Exhibit No.	Description
3.3	Certificate of Designation (1)
4.1	Registration Rights Agreement, dated as of June 9, 2011 (2)
10.1	Working Capital Loan Contract dated April 2, 2011 between Inner Mongolia Yongye Nongfeng Biotech Co., Ltd. and China Everbright Bank, Hohhot Branch (3)
10.2	Working Capital Loan Contract dated April 18, 2011 between Inner Mongolia Yongye Nongfeng Biotech Co., Ltd. and China Everbright Bank, Hohhot Branch (3)
10.3	Maximum Amount Guarantee Contract dated April 2, 2011 between Inner Mongolia Yongye Nongfeng Biotech Co., Ltd. and China Everbright Bank, Hohhot Branch (3)
10.4	Comprehensive Credit Facility Agreement dated April 2, 2011 between Inner Mongolia Yongye Nongfeng Biotech Co., Ltd. and China Everbright Bank, Hohhot Branch (3)
10.5	Securities Purchase Agreement among the Company, MSPEA Agriculture Holding Limited and Full Alliance International Limited, dated May 29, 2011. (2)
10.6	Stockholders’ Agreement between MSPEA Agriculture Holding Limited and Full Alliance  International Limited, dated June 9, 2011 (2)
10.7	Pledge Agreement between MSPEA Agriculture Holding Limited and Full Alliance  International Limited, dated June 9, 2011 (2)
31.1	Certification by the Chief Executive Officer pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (4)
31.2	Certification by the Chief Financial Officer pursuant to Rule 13a-14(a)/15d-14(a of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002) (4)
32.1	Certification of the Chief Executive Officer pursuant 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (4)
32.2	Certification of the Chief Financial Officer pursuant 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (4)
101	The following financial statements from Yongye International Inc.’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2011 formatted in XBRL (eXtensible Business Reporting Language): (i) the Consolidated Balance Sheets (unaudited); (ii) the Consolidated Statements of Income (unaudited); (iii) the Consolidated Statements of Stockholders’ Equity and Comprehensive Income (unaudited); (iv) the Consolidated Statements of Cash Flows (unaudited); and, (vi) the Notes to Consolidated Financial Statements, tagged as blocks of text.*

* Pursuant to Rule 406T of Regulation S-T, the interactive files on Exhibit 101 hereto are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, are deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise are not subject to liability under those sections.

* Filed herewith

(1)  Incorporated by reference herein to the Company’s Current Report on Form 8-K filed on June 10, 2011.

(2)  Incorporated by reference herein to the Company’s Current Report on Form 8-K filed on May 31, 2011.

(3)  Incorporated by reference herein to the Company’s Quarterly Report on Form 10-Q for the period ended March 31, 2011 filed on May 9, 2011.

(4)  Filed as an exhibit to the original Form 10-Q for the quarterly period ended June 30, 2011, filed August 9, 2011.

Signature

In accordance with the requirements of the Securities Exchange Act of 1934, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	Yongye International, Inc.
	By:	/s/ Zishen Wu
		Name: Zishen Wu
August 16, 2011		Title: Chief Executive Officer and President (Principal Executive Officer)
	By:	/s/ Sam Yu
		Name: Sam Yu
		Title: Chief Financial Officer (Principal Financial and Accounting Officer)

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CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $)	Jun. 30, 2011	Dec. 31, 2010
Series A convertible redeemable preferred shares, par value	$ 0.001	$ 0.000
Series A convertible redeemable preferred shares, shares authorized	7,969,044	0
Series A convertible redeemable preferred shares, shares issued	5,681,818	0
Series A convertible redeemable preferred shares, shares outstanding	5,681,818	0
Common stock, par value	$ 0.001	$ 0.001
Common stock, shares authorized	75,000,000	75,000,000
Common stock, shares issued	49,370,711	48,187,044
Common stock, shares outstanding	49,370,711	48,187,044

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CONSOLIDATED STATEMENTS OF INCOME (USD $)	3 Months Ended		6 Months Ended
	Jun. 30, 2011	Jun. 30, 2010	Jun. 30, 2011	Jun. 30, 2010
Sales	$ 154,704,865	$ 89,414,388	$ 204,926,076	$ 114,349,104
Cost of sales	62,939,174	39,378,346	85,860,458	50,456,303
Gross profit	91,765,691	50,036,042	119,065,618	63,892,801
Selling expenses	29,152,923	16,343,330	36,834,243	22,631,333
Research and development expenses	5,555,634	2,238,331	6,608,614	2,338,896
General and administrative expenses	5,586,019	1,614,692	12,864,324	3,465,946
Income from operations	51,471,115	29,839,689	62,758,437	35,456,626
Other income/(expenses)
Interest expense	(291,751)	(21,614)	(309,862)	(37,554)
Interest income	16,860	14,343	27,164	22,825
Subsidy income	655,071	286,074	655,071	324,472
Other income/(expenses), net	26,560	821	101,619	(86,360)
Change in fair value of derivative liabilities	83,435	156,936	413,587	169,470
Total other income/(expenses), net	490,175	436,560	887,579	392,853
Earnings before income tax expense	51,961,290	30,276,249	63,646,016	35,849,479
Income tax expense	10,127,255	4,738,834	12,760,047	5,683,322
Net income	41,834,035	25,537,415	50,885,969	30,166,157
Less: Net income attributable to the noncontrolling interest	2,297,271	1,291,714	2,982,777	1,549,163
Net income attributable to Yongye International, Inc.	$ 39,536,764	$ 24,245,701	$ 47,903,192	$ 28,616,994
Earnings per share:
Basic earnings per common stock	$ 0.78	$ 0.54	$ 0.95	$ 0.64
Diluted earnings per common stock	$ 0.77	$ 0.54	$ 0.94	$ 0.64
Weighted average shares used in computation:
Basic earnings per common stock	49,276,070	44,578,011	48,734,565	44,555,252
Diluted earnings per common stock	49,378,396	44,696,725	48,854,281	44,674,545

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EQUITY FINANCING

6 Months Ended

Jun. 30, 2011

EQUITY FINANCING

NOTE 15 – EQUITY FINANCING

Capital stock

Concurrent with the Share Exchange, the Company entered into a securities purchase agreement on April 17, 2008 with certain investors (the “April Investors”) for the sale in a private placement of an aggregate of 6,495,619 shares of the Company’s common stock, par value $0.001 per share (the “April Investor Shares”) and 1,623,905 warrants (See below) for aggregate gross proceeds equal to $10,000,651 (the “April Offering”). 

On September 5, 2008, the Company entered into a securities purchase agreement with certain investors (the “September Investors”), for the sale in a private placement of an aggregate of 6,073,006 shares of the Company’s common stock, par value $0.001 per share (the “September Investor Shares”) and 1,518,253 warrants (See below) for aggregate gross proceeds equal to approximately $9,350,000 (the “September Offering”).

On May 8, 2009, the Company entered into a securities purchase agreement with certain investors (the “May Investors”), for the sale in a private placement of an aggregate of 5,834,083 shares of the Company’s common stock, par value $0.001 per share (the “May Shares”) for aggregate gross proceeds equal to $8,984,595 (the “May Offering”).

On December 17, 2009, the Company entered into an underwriting agreement with Roth Capital Partners, LLC (“Roth”) and Oppenheimer and Company Inc. (the “Underwriters”), pursuant to which the Company agreed to issue and sell 8,000,000 shares of common stock (the “Firm Stock”), par value $0.001 per share, to the Underwriters at a price per share of $7.50 (the ”December Offering”). The sale of the Firm Stock was priced on December 17, 2009 and closed on December 22, 2009. The aggregate proceeds from the offering were $60,000,000. Underwriting discounts and commissions and offering expenses were $3,692,000 and were recorded as a reduction of additional paid-in capital.

The Company also granted the Underwriters an option to purchase up to an additional 1,200,000 shares to cover over-allotments, if any, at the same price as the Firm Stock. On December 31, 2009 the Underwriters agreed to purchase the over-allotment for gross proceeds of $9,000,000, which after net of commissions and discounts of $450,000 was received on January 4, 2010.

In connection with the acquisition of Customer List (See note 7), the Company issued 3,600,000 shares of common stock of the Company in July 2010 to the Seller as part of the consideration.

In October 2010, the Company granted 1,183,667 restricted shares to management and independent directors of the Company in accordance with Yongye International, Inc. 2010 Omnibus Securities and Incentive Plan, as an incentive to such individuals to promote the success of the Company’s business. Management was granted 1,137,000 shares on October 8, 2010, and the independent directors were granted 46,667 shares on October 15, 2010 (See below). As of June 30, 2011, all shares have been vested.

Series A convertible redeemable preferred shares

In May 2011, the Company entered into a securities purchase agreement with MSPEA Agriculture Holding Limited (“MSPEA”), an affiliate of Morgan Stanley and Full Alliance International Limited (“Full Alliance”), the Company’s largest shareholder. Pursuant to the terms of the agreement, the Company issued 5,681,818 shares of Series A convertible redeemable preferred shares to MSPEA on June 9, 2011 for gross proceeds of $50 million. The Series A convertible redeemable preferred shares are convertible into common stock of the Company at an initial conversion price of $8.80, subject to further adjustments as discussed below.

Other significant terms of the Series A convertible redeemable preferred shares are as follows:

Liquidation Preference

In the event of the liquidation, whether voluntary or involuntary, the holders of the Series A convertible redeemable preferred shares then outstanding shall be entitled to receive, out of the assets of the Company available for distribution to its stockholders before any payment shall be made to the holders of the common stocks, with respect to each outstanding share of Series A convertible redeemable preferred shares an amount equal to the greater of (i) the original issue price, representing $8.80 per share of Series A convertible redeemable preferred shares, plus (a) all accrued but unpaid preferred dividends and (b) other declared but unpaid dividends on Series A convertible redeemable preferred shares, and (ii) such amount per share as would have been payable had all shares of Series A convertible redeemable preferred shares been converted into common stock immediately prior to such liquidation.

If upon liquidation, the assets of the Company available for distribution to its stockholders shall be insufficient to pay the holders of the Series A convertible redeemable preferred shares the full liquidation preference to which they shall be entitled as in accordance with the above, the holders of the Series A convertible redeemable preferred shares shall share ratably in any distribution of the assets available for distribution in proportion to the respective amounts which would otherwise be payable in respect of the shares held by them upon such distribution if all amounts payable on or with respect to such shares were paid in full.

Dividends

The holders of the Series A convertible redeemable preferred shares shall be entitled to receive paid-in-kind dividends in additional shares of Series A convertible redeemable preferred shares, on each anniversary of the Issuance Date, representing the number of shares of Series A convertible redeemable preferred shares held by such holders on such anniversary multiplied by an annual dividend rate determined on such anniversary in accordance with the formula set forth below (the "Preferred Dividend Rate"), compounded annually:

Preferred Dividend Rate is defined as 7% - [(VWAP – 8.8) x 2 / 310], where VWAP means one-year volume weighted average share price of the Company during the 365-day period immediately prior to the applicable anniversary of Issuance Date, provided that the preferred dividend rate should not exceed 7% per annum and shall not fall below 3% per annum.

In addition, the holders of Series A convertible redeemable preferred shares should also receive, on an as-converted basis, any dividends or distributions that the Company declares to the holders of common stock.

Conversion

At any time after issuance, each holder of any shares of Series A convertible redeemable preferred shares then outstanding may, at such holder's option, elect to convert all or any portion of the shares of Series A convertible redeemable preferred shares held by such holder into a number of fully paid and nonassessable shares of common stock. The initial conversion price is $8.80 per share and is subject to customary anti-dilution adjustments for issuances of shares of common stock as a dividend or distribution on shares of the common stock, or mergers or reorganizations or future issuances of other Company’s securities at a price lower than the then applicable conversion price. Additionally, the conversion price is subject to upward or downward adjustments, depending upon the Actual Net Income (as defined below) being greater than or lower than the Cumulative Net Income Guarantee (as defined below) of the corresponding period, provided that (i) the conversion price, as adjusted, shall not exceed $15.00 per share, and (ii) the sum of all shares of common stock issuable to the holders of Series A convertible redeemable preferred shares as a result of conversions, dividends, or distributions, or common stock acquired shall not exceed 9,869,205, or 19.99% of the total number of shares of common stock outstanding on May 29, 2011, representing the date of the Company entering into the securities purchase agreement for the issuance of Series A convertible redeemable preferred shares.

The Actual Net Income means, in respect of any fiscal year or quarter, the consolidated net income of the Company for such fiscal year or quarter (as applicable), after all charges and provisions for taxes and minority interests and adjusted to exclude certain items, as audited (for fiscal years) or reviewed (for fiscal quarters) in accordance with US GAAP.

The Cumulative Net Income Guarantee referenced above are: $84 million for fiscal 2011, $210 million for the cumulative period of fiscal 2011 through fiscal 2012, $399 million for the cumulative period of fiscal 2011 through fiscal 2013, and $682.5 million for the cumulative period of fiscal 2011 through fiscal 2014.

Automatic Conversion

On the fifth anniversary of the Issuance Date of the Series A convertible redeemable preferred shares, all Series A convertible redeemable preferred shares will automatically convert into common stock at the then applicable conversion price.

Voting Rights

The holders of the Series A convertible redeemable preferred shares are entitled to vote upon all matters upon which the holders of common stocks have the right to vote, such votes to be counted together with all other shares of stock having general voting powers and not separately as a class. The holders of the Series A convertible redeemable preferred shares are entitled to the number of votes as the number of shares of common stock as the Series A convertible redeemable preferred shares is convertible into.

Redemption

The holders of the Series A convertible redeemable preferred shares have the right to require the Company to redeem all or a portion of the outstanding Series A convertible redeemable preferred shares upon the occurrence of any of the following conditions: (i) a material breach by any of the Company and Full Alliance of any of the key obligations under the securities purchase agreement and related transaction documents, (ii) the failure to remain current in the Company’s securities filings, (iii) the failure to obtain the exploration rights and recover amounts paid for such rights, on or prior to June 30, 2012, and (iv) the discontinuation of Mr. Zishen Wu as CEO of the Company prior to December 31, 2014, unless his cessation of duties results from his death, disability or incapacity. In such cases, the redemption price for the Series A convertible redeemable preferred shares would be equal to an amount that would yield a total internal rate of return of 30% on the purchase price of the Series A convertible redeemable preferred shares.

The holders of the Series A convertible redeemable preferred shares also have the right to redeem all or a portion of their Series A convertible redeemable preferred shares if (i) the quotient of the Company’s aggregate earnings per share in any six rolling consecutive quarters from the first quarter of 2010 onwards divided by the aggregate amount of the earnings per share of the corresponding periods in the prior year is less than 120%, and (ii) net income of any fiscal year between 2011 and 2014 is less than the relevant Income Threshold for such year. In such cases, the redemption price for the Series A convertible redeemable preferred shares would be equal to an amount that would yield a total internal rate of return of 20% on the purchase price of the Series A convertible redeemable preferred shares. The “Income Threshold” is defined as: US$75 million for the fiscal year 2011, US$101 million for the fiscal year 2012, US$121 million for the fiscal year 2013 and US$145 million for the fiscal year 2014, subject to certain adjustments to account for any dilutive effect that future issuances of the Company’s securities may have on the holders of the Series A convertible redeemable preferred shares.

As at June 30, 2011, the management is of the opinion that no provision for the redemption of Series A convertible redeemable preferred shares is required, as the likelihood to breach the above-mentioned conditions is remote.

Warrants

Concurrent with the April Investor Shares, the Company issued 1,623,905 warrants to purchase 1,623,905 shares of the Company’s common stock (the “April Warrants”) to the April Investors as an inducement to the April Offering. The warrants issued have a five-year exercise period with an initial exercise price of $1.848. In addition, 649,562 warrants were issued to Roth as the placement agent with terms and exercise price identical to the warrants issued to the April Investors.

Concurrent with the September Investor Shares, the Company issued 1,518,253 warrants to purchase 1,518,253 shares of the Company’s common stock (the “September Warrants”) to the September Investors as an inducement to the September Offering. The warrants issued have a five-year exercise period with an initial exercise price of $1.848. In addition, 607,301 warrants were issued to Roth as the placement agent with terms and exercise price identical to the warrants issued to the September Investors.

On September 12, 2008, Roth executed an irrevocable cashless exercise of its warrants and was issued 686,878 shares of common stock of the Company. In exchange for the issuance of 354,987 shares, Roth surrendered 649,562 warrants received in the April Offering; and in exchange for the issuance of 331,891 shares, Roth surrendered 607,301 warrants received in the September Offering.

Concurrent with the offering of the “May Shares”, the Company issued to Roth as the placement agent, 246,224 warrants (“May Warrants”).  The warrants have a five-year exercise period and an initial exercise price of $1.848. On November 9, 2009, Roth executed an irrevocable cashless exercise of all the “May Warrants”. The Company issued 198,247 shares of common stock of the Company in exchange for the surrender of all the May Warrants.

During the three and six months ended June 30, 2011, no “April Warrants” and “September Warrants” were exercised by April Investors and September Investors.

According to the terms of these warrants, the Company could be required to pay cash to the warrant holders under certain events that are not within the control of the Company.  Specifically, upon the occurrence of certain “fundamental transactions” as defined, the warrant holders (but not the shareholders of the Company’s common stock) are entitled to receive cash equal to the value of the warrants to be determined based on an option pricing model and certain specified assumptions set forth in the warrant agreement.  In addition, the terms of the warrants include a “down-round” provision under which the exercise price could be affected by future equity offerings undertaken by the Company.  If the Company issues any common stock or common stock equivalents, as defined, at any time the warrants are outstanding, at an effective price less than the then warrant exercise price, the exercise price of warrants will be reduced to the effective price of newly issued common stock or common stock equivalents.  In the “May Offering”, the Company issued new common stock at a price of $1.54 per share and accordingly, the exercise price of the April Warrants and the September Warrants was reduced to $1.54 per share.  The exercise price of the May Warrants ($1.848) was not affected but is also subject to potential down-round adjustments in future periods. As of June 30, 2011 and December 31, 2010, there were 148,172 warrants outstanding, of which 48,714 and 99,458 warrants will expire if unexercised by April 2013 and September 2013, respectively.

The potential cash payments and the down-round provision preclude the classification of these warrants as equity. Accordingly, the warrants are accounted for as a liability and adjusted to fair value through earnings at each reporting date. The gain resulting from the decrease in fair value of warrants was $83,435 and $413,587 for the three and six months ended June 30, 2011, respectively. The gain resulting from the decrease in fair value of warrants was $156,936 and $169,470 for the three and six months ended June 30, 2010, respectively.

The estimated fair values of the warrants issued to April Investor and September Investor were determined at June 30, 2011 and December 31, 2010 using Binominal Option Pricing Model with Level 2 inputs. The following table sets forth, by level within the fair value hierarchy, the Company’s financial liabilities that were measured at fair value on a recurring basis as of June 30, 2011 and December 31, 2010.

	Fair Value Measurements Using:
			Quoted Prices in Active Markets for Identical Financial Assets and Liabilities		Significant Other Observable Inputs		Significant Unobservable Inputs
June 30, 2011	Total		Level 1		Level 2		Level 3
Liabilities at fair value:
Derivative liabilities—warrants	$	622,681		0	$	622,681		0

	Fair Value Measurements Using:
			Quoted Prices in Active Markets for Identical Financial Assets and Liabilities		Significant Other Observable Inputs		Significant Unobservable Inputs
December 31, 2010	Total		Level 1		Level 2		Level 3
Liabilities at fair value:
Derivative liabilities—warrants	$	1,036,268		0	$	1,036,268		0

The fair values of the warrants are summarized as follows:

	April Warrants		September Warrants
Fair value of warrant per share (US$) at:
Date of issuance	$	1.07	$	2.08
December 31, 2010	$	6.97	$	7.00
June 30, 2011	$	4.17	$	4.22

The fair values of the warrants outstanding as of June 30, 2011 and December 31, 2010 were determined based on the Binominal option pricing model, using the following key assumptions:

	June 30, 2011						December 31, 2010
	April Warrants			September Warrants			April Warrants			September Warrants
Expected volatility		114.6	%		108.9	%		67.5	%		67.0	%
Expected dividends yield		0	%		0	%		0	%		0	%
Time to maturity	1.8 years			2.2 years			2.3 years			2.7 years
Risk-free interest rate per annum		1.219	%		1.219	%		1.483	%		1.483	%
Fair value of underlying common shares (per share)	$	5.25		$	5.25		$	8.40		$	8.40

Stock-based compensation

Pursuant to the 2010 Omnibus Securities and Incentive Plan (the “Plan”), which was approved by the stockholders of the Company in the annual meeting held on June 11, 2010, the Company was authorized to issue up to 1,500,000 shares of the Company’s common stock in any calendar to selected executives, key employees and directors. The purpose of the Plan is to provide incentives to such individuals to promote the success of the Company’s business.

 In October 2010, the Company granted 1,183,667 restricted shares to management and independent directors of the Company in accordance with the Plan. Management was granted 1,137,000 shares on October 8, 2010, and the independent directors were granted 46,667 shares on October 15, 2010. All of the restricted shares vested in April 2011.

A summary of the status of the Company’s shares as of June 30, 2011, and changes during the three and six months ended June 30, 2011, is presented below: 

				Weighted average
				grant-date
Restricted shares	Shares			fair value
Balance at January 1, 2011		1,183,667		$	9,261,239
Granted		0			0
Vested		0			0
Forfeited		0			0
Balance at March 31, 2011		1,183,667		$	9,261,239
Granted		0			0
Vested		(1,183,667	)		(9,261,239	)
Forfeited		0			0
Balance at June 30, 2011		0		$	0

At June 30, 2011, there was no unrecognized compensation cost related to unvested shares granted under the Plan. The total stock-based compensation cost recognized in the statement of income for the three and six months ended June 30, 2011 was $370,866 and $4,950,600.

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Document and Entity Information	6 Months Ended
	Jun. 30, 2011	Aug. 05, 2011
Document Information [Line Items]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Jun. 30, 2011
Document Fiscal Year Focus	2011
Document Fiscal Period Focus	Q2
Trading Symbol	YONG
Entity Registrant Name	YONGYE INTERNATIONAL, INC.
Entity Central Index Key	0001398551
Current Fiscal Year End Date	--12-31
Entity Filer Category	Accelerated Filer
Entity Common Stock, Shares Outstanding		49,370,711

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FAIR VALUE MEASUREMENTS

6 Months Ended

Jun. 30, 2011

FAIR VALUE MEASUREMENTS

NOTE 18 – FAIR VALUE MEASUREMENTS

The fair values of the financial instruments as of June 30, 2011 and December 31, 2010 represent the estimated amounts that would be received to sell those assets or that would be paid to transfer those liabilities in an orderly transaction between market participants at that date. Those fair value measurements maximize the use of observable inputs. However, in situations where there is little, if any, market activity for the asset or liability at the measurement date, the fair value measurement reflects the Company’s own judgments about the assumptions that market participants would use in pricing the asset or liability. Those judgments are developed by the Company based on the best information available in the circumstances, including expected cash flows and appropriately risk-adjusted discount rates, available observable and unobservable inputs.

The following methods and assumptions were used to estimate the fair value of each class of financial instruments:

Cash, restricted cash, accounts receivable, other receivables, long-term loans and payables – current portion, short-term bank loans, accounts payable, accrued expenses and other payables: The carrying amounts approximate fair value because of the short maturity of these instruments.

Derivative liabilities: The method and assumptions used to estimate the fair value of derivative liabilities are set out in Note 14.

Long-term loans and payables: The fair value of the Company’s long-term loans is estimated by discounting future cash flows using current market interest rates offered to the Company and its subsidiaries for debts with substantially the same characteristics and maturities, and approximates to its carrying amount.

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INVENTORIES

6 Months Ended

Jun. 30, 2011

INVENTORIES

NOTE 4 – INVENTORIES

Inventories at June 30, 2011 and December 31, 2010 consisted of the following:

	June 30, 2011		December 31, 2010
Finished goods	$	26,689,134	$	50,435,480
Work in progress		15,918,306		14,683,295
Raw materials		918,513		641,051
Consumables and packing supplies		260,530		118,221
Total	$	43,786,483	$	65,878,047

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COMMITMENTS AND CONTINGENCIES

6 Months Ended

Jun. 30, 2011

COMMITMENTS AND CONTINGENCIES

NOTE 19 – COMMITMENTS AND CONTINGENCIES

The Company has an operating lease for an office space in Beijing, PRC for the period from January 1, 2011 to December 31, 2013. The lease expense for this office space was $64,172 and $57,974 for the three months ended June 30, 2011 and 2010, respectively, and  $127,559 and $115,926 for the six months ended June 30, 2011 and 2010, respectively. As of June 30, 2011, minimum lease payments for each of twelve months period ended June 30, 2012, 2013 and 2014 under non-cancellable operating lease agreement is $258,134, $258,134 and $129,067, respectively or an aggregated amount of $645,335. There is no minimum lease payment in the next fourth and fifth twelve months period.

On May 26, 2011 and June 3, 2011, the Company and certain of its officers and directors were named in class action lawsuits filed in the United States Federal District Court for the Southern District of New York alleging, among other things, that the Company and such officers and directors issued false and misleading information to investors about the Company’s financial and business condition. On July 19, 2011, the Company and certain of its officers and directors were named in a derivative suit filed in the First Judicial District Court of the State of Nevada and for Carson City alleging, among other things, that the Company’s directors and officers breached their fiduciary duties to the Company, misrepresented the Company’s earnings, wasted corporate assets and unjustly enriched themselves at the expense of the Company. The Company believes the claims contained in these lawsuits to be without merit and intend to defend the Company vigorously.

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INCOME TAXES

6 Months Ended

Jun. 30, 2011

INCOME TAXES

NOTE 17 – INCOME TAXES

Yongye Nongfeng, being a foreign investment enterprise located in the Western Region of the PRC, was entitled to a preferential income tax rate of 15% for the years ended December 31, 2009 and 2010. During the six months ended June 30, 2011, Yongye Nongfeng received a High-Tech Enterprise Certificate which entitles it to a preferential tax rate of 15% for three years starting from January 1, 2010.

The Company’s effective income tax rate was 19.49% and 15.65% for the three months ended June 30, 2011 and 2010, respectively, and was 20.05% and 15.85% for six months ended June 30, 2011 and 2010, respectively. The effective income tax rate for the three and six months ended June 30, 2011 differs from the PRC statutory income tax rate of 25% primarily due to the effect of the abovementioned preferential tax treatment on Yongye Nongfeng’s High-Tech Enterprise qualification which is partly offset by the effect of non-deductible expenses.

There has been no change in unrecognized tax benefits during the six months ended June 30, 2011. In addition, the Company does not expect that the amount of unrecognized tax benefits will change significantly within the next 12 months. No interest and penalties related to unrecognized tax benefits were recorded for each of the three and six months ended June 30, 2011.

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PREPAYMENT FOR MINING PROJECT

6 Months Ended

Jun. 30, 2011

PREPAYMENT FOR MINING PROJECT

NOTE 9 - PREPAYMENT FOR MINING PROJECT

On March 1, 2010, Yongye Nongfeng entered into an agreement with its major humic acid supplier, Wuchuan Shuntong Humic Acid Company Ltd. (“Vendor”), to acquire the permit for the rights to explore, develop and produce lignite coal resources (the “Mineral Right”) in a certain area of Wuchuan County. The cash consideration of the permit is approximately RMB 240 million or USD $35 million. The permit allows Yongye Nongfeng to complete all necessary administrative procedures and obtaining government approvals to acquire the Mineral Right. This includes the preparation of and obtaining government approvals of the Conservation Assessment Reports, Environment Report, Safety Assessment Report, Geologic Report, Exploration License and Geologic Exploration Report. Pursuant to the agreement, Vendor is to assist Yongye Nongfeng in completing all necessary administrative procedures and obtaining government approvals.

As of June 30, 2011, the Company has not obtained the government approvals of the Geologic Report, Exploration License and Geologic Exploration Report. The Company believes the cost to be incurred in completing the remaining administrative procedures and government approvals are not significant, and it expects to obtain the approvals mentioned above by the end of December 31, 2011. The Company believes the acquisition of the Mineral Right will allow it to secure a long term supply of humic acid, which is a major raw material used in the manufacture of fulvic acid based liquid and powder nutrient compounds, and which is sourced from lignite coals.

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CONSOLIDATED STATEMENTS OF CASH FLOWS (Parenthetical) (USD $)	6 Months Ended
	Jun. 30, 2011	Jun. 30, 2010
Proceeds from preferred shares, issuance cost	$ 600,010	$ 0
Noncash investing and financing activities:
Acquisition of other assets by assuming long-term loans	$ 1,977,956	$ 452,432

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PROPERTY, PLANT AND EQUIPMENT

6 Months Ended

Jun. 30, 2011

PROPERTY, PLANT AND EQUIPMENT

NOTE 6 – PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment at June 30, 2011 and December 31, 2010 consisted of the following:

	June 30, 2011		December 31, 2010
Buildings	$	13,889,549	$	13,168,830
Machinery and equipment		6,902,668		6,567,721
Office equipment and furniture		492,705		484,468
Vehicles		2,158,491		2,110,077
Software		19,585		19,146
Leasehold improvements		888,293		754,085
Construction in progress		88,955		0
		24,440,246		23,104,327
Less: Accumulated depreciation and amortization		2,390,648		1,557,175
Property, plant and equipment, net	$	22,049,598	$	21,547,152

Depreciation expense related to property, plant and equipment for the three months ended June 30, 2011 and 2010 was $453,803 and $184,432, respectively. Depreciation expense related to property, plant and equipment for the six months ended June 30, 2011 and 2010 was $833,473 and $350,245, respectively. 

As of June 30, 2011 and December 31, 2010, vehicles with initial carrying amount of $1,276,200 were pledged as security for the long-term banks loans of $186,065 and $315,426, respectively, provided by the banks for the purchase of the vehicles (See Note 11).

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LONG-TERM LOANS AND PAYABLES

6 Months Ended

Jun. 30, 2011

LONG-TERM LOANS AND PAYABLES

NOTE 11 – LONG-TERM LOANS AND PAYABLES

As of June 30, 2011 and December 31, 2010, the long-term loans consisted of the following:

	June 30, 2011		December 31, 2010
Vehicle loans-employees	$	186,065	$	315,426
Vehicle loans-distributors		2,311,200		525,739
Total	$	2,497,265	$	841,165

As of June 30, 2011 and December 31, 2010, vehicle-employees loans of $186,065 and $315,426, respectively, were secured by twenty-five vehicles with initial carrying amount of $1,276,200. The vehicle loans are payable in monthly installments over three to five years. Interest rates on the loans range from 5.40% to 14.54% annually, and are subject to the change of the base interest rate prescribed by People’s Bank of China. The vehicle loans were obtained by individual employees of the Company after the Company made the initial down payment of the purchase price of the vehicles. The Company and the individual employees entered into trust agreements that stipulate that (i) the vehicles are legally registered under the individuals’ name, (ii) the Company has the rights of official use, (iii) the Company has the rights to the legal title of the vehicles at all times which entitles the Company to change the registered owner to the Company or appropriated third party at any time, (iv) the Company assumes the risk of loss, damage, penalty and other obligations related to the operation and ownership of the vehicle to the extent that these were not caused by the individuals’ improper use of the vehicle, (v) the individuals have no right to sell, lease, lend or pledge the vehicles to any other person or entity, and (vi) the Company is obligated to repay the loans in full, and bears the costs of the related repairs, maintenance, insurance and taxes. Consequently, the Company has recognized the cost of the vehicles as assets and the loans as liabilities in its consolidated balance sheet.

Vehicle loans-distributors represented loans that were initially obtained by the distributors from banks and financial institutions. The Company and the distributors entered into agreements, pursuant to which the Company would assume the full repayment of the loans on behalf of these distributors in exchange for the distributors agreeing to comply with certain sales conditions (See Note 10). The loans have two or three years terms and are payable in monthly installments. Interest rates on the loans range from 5.40% to 15.99% annually, subject to the change of the base interest rate prescribed by People’s Bank of China.

The aggregate maturities of the long-term loans and payables for each of the five years subsequent to June 30, 2011 are: $996,400, $861,799, $629,898, $9,168, and $0, respectively.

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INTANGIBLE ASSET

6 Months Ended

Jun. 30, 2011

INTANGIBLE ASSET

NOTE 7 – INTANGIBLE ASSET

Intangible asset at June 30, 2011 and December 31, 2010 consisted of the following:

	June 30, 2011
	Weighted
	average	Gross					Net
	amortization	carrying		Accumulated			carrying
	period	amount		amortization			amount
Amortizing intangible assets:
Customer List	9 years	$	25,476,846		(2,830,761	)		22,646,085
Patent	10 years		112,470		(39,365	)		73,105
Total		$	25,589,316		(2,870,126	)		22,719,190

	December 31, 2010
	Weighted
	average	Gross					Net
	amortization	carrying		Accumulated			carrying
	period	amount		amortization			amount
Amortizing intangible assets:
Customer List	9 years	$	24,905,410		(1,383,634	)		23,521,776
Patent	10 years		109,947		(32,984	)		76,963
Total		$	25,015,357		(1,416,618	)		23,598,739

Amortization expense for the three months ended June 30, 2011 and 2010 was $755,628 and $2,669, respectively. Amortization expense for the six months ended June 30, 2011 and 2010 was $1,453,508 and $5,328, respectively. The estimated annual amortization expense for intangible asset in each of the next five years is $2,842,008.

On July 1, 2010, Yongye Nongfeng entered into an agreement with its provincial level distributor in Hebei Province, the PRC (“Seller”) to purchase the customer list, including the customer relationships, from Seller (“Customer List”). The acquisition of the Customer List allows Yongye Nongfeng to sell its products to sub-provincial level or regional distributors in Hebei Province directly. The consideration of the Customer List was 3,600,000 shares of common stock of the Company which was issued in July 2010 and $3 million cash. The $3 million cash consideration was paid in March 2011.

The Customer List is amortized over a period of 9 years, which is the period of expected cash flows used to measure the fair value of the Customer List that was performed by an independent valuation firm based on an income approach. In determining the useful life of Customer List, it was assumed that all of the sub-provincial level or regional distributors in the Customer List will stay for first two to three years starting from July 2010, and expect to renew two three-year contracts with most of them in future, and therefore, the business relationships between the Company and the sub-provincial level or regional distributors in the Customer List will be diminished in 9 years. A straight-line method of amortization has been adopted as the pattern in which the economic benefits of the Customer List are used up cannot be reliably determined.

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DEPOSITS TO SUPPLIERS

6 Months Ended

Jun. 30, 2011

DEPOSITS TO SUPPLIERS

NOTE 5 – DEPOSITS TO SUPPLIERS

The Company is required to pay deposits to the suppliers for the full amount of certain raw materials ordered. These raw materials primarily consist of lignite coal, chemical component materials and packing materials, and are expected to be delivered to the Company before the end of September 2011. The lignite coal, and most chemical component materials will be consumed in the production process at Yongye Fumin. As of June 30, 2011 and December 31, 2010, the deposits to suppliers for raw materials amounted to $52,657,243 and $10,845,221, respectively, and deposits to other service providers amounted to $137,119 and $61,074, respectively.

The Company’s decision to make advanced orders of raw materials is mainly based upon (1) the current and projected future market price of raw materials, (2) the demand and supply situation in the raw materials market, and (3) the forecasted demand of products.

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CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY AND COMPREHENSIVE INCOME (Parenthetical) (USD $)	6 Months Ended
	Jun. 30, 2011
Foreign currency exchange translation adjustment, income taxes	$ 0

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ORGANIZATION AND DESCRIPTION OF BUSINESS

6 Months Ended

Jun. 30, 2011

ORGANIZATION AND DESCRIPTION OF BUSINESS

NOTE 1 -ORGANIZATION AND DESCRIPTION OF BUSINESS

Yongye International, Inc. (the “Company”) was incorporated in the State of Nevada on December 12, 2006. On April 17, 2008, the Company and the Company’s principal shareholder entered into a share exchange agreement (the “Exchange Agreement”) with Fullmax Pacific Limited (“Fullmax”), a privately held investment holding company organized on May 23, 2007 under the laws of the British Virgin Islands and all the shareholders of Fullmax (the “Fullmax Shareholders”). Pursuant to the terms of the Exchange Agreement, the Fullmax Shareholders transferred to the Company all of their shares in exchange for 11,444,755 shares of the Company’s common shares (the “Share Exchange”). As a result of the Share Exchange, Fullmax became a wholly-owned subsidiary of the Company and the Fullmax Shareholders received approximately 84.7% of the Company’s issued and outstanding common shares. Immediately prior to the date of the Share Exchange, the Company was a publicly listed shell entity with no operations and a nominal amount of cash and, Fullmax, through its wholly-owned subsidiary, Asia Standard Oil Limited (“ASO”) and indirect subsidiary, Yongye Nongfeng Biotechnology Co., Ltd. (“Yongye Nongfeng”), was engaged in the sale of fulvic acid based liquid and powder nutrient compounds. The Share Exchange was accounted for as a reverse recapitalization, equivalent to the issuance of stock by Fullmax for the net monetary assets of the Company accompanied by a recapitalization.

In November 2007, ASO entered into a Sino-Foreign cooperative joint venture contract with Inner Mongolia Yongye Biotechnology Co., Ltd. (“Inner Mongolia Yongye”) to form Yongye Nongfeng, pursuant to which, Inner Mongolia Yongye and ASO were to own 10% and 90% of the equity interests in Yongye Nongfeng, respectively. Inner Mongolia Yongye was formed on September 16, 2003 in the People’s Republic of China (the “PRC”). Mr. Zishen Wu, Chief Executive Officer, President and Chairman of the Company, owns a controlling equity interest in Inner Mongolia Yongye.

On January 4, 2008, the incorporation and establishment of Yongye Nongfeng was approved by the Inner Mongolia Department of Commerce and the Inner Mongolia Administration for Industry and Commerce. The scope of business of Yongye Nongfeng is the research and development, manufacturing, distribution and sale of fulvic acid based liquid and powder nutrient compounds used in the agriculture industry. The period of the cooperative joint venture is ten years and may be extended by a written application submitted to the relevant government authority for approval no less than six months prior to the expiration of the cooperative joint venture. Prior to the legal establishment of Yongye Nongfeng, both Fullmax and ASO were non-substantive holding companies with no assets and operations and were primarily designed and used as legal vehicles to facilitate foreign participation in the business conducted by Inner Mongolia Yongye.

In connection with the September Offering (See Note 15), the Company entered into agreements to acquire the productive assets of Shengmingsu manufacturing business from Inner Mongolia Yongye (the “Acquisition”). In October, 2009, the Company completed the Acquisition. The consideration paid for the Acquisition consisted of cash of $4.7 million and 4.5% equity interests in Yongye Nongfeng. After the Acquisition, Inner Mongolia Yongye and ASO became 5% and 95% equity interest owner of Yongye Nongfeng, respectively.

On July 20, 2010, Yongye Nongfeng set up a wholly-owned subsidiary, Inner Mongolia Yongye Fumin Biotechnology Co., Ltd. (“Yongye Fumin”), with registered capital of $14,731,880 (equivalent to RMB 100 million). Yongye Fumin is to be engaged in the manufacturing and sale of fulvic acid based liquid and powder nutrient compounds. Yongye Fumin was established to expand the production capacity for fulvic acid based liquid and powder nutrient compounds, and to produce humic acid using lignite coal (See Note 9). The construction of the production plant of Yongye Fumin, which is located in Wuchuan County, was completed in the fourth quarter of 2010.

In May 2011, the Company entered into a securities purchase agreement with MSPEA Agriculture Holding Limited (“MSPEA”), an affiliate of Morgan Stanley, and Full Alliance International Limited (“Full Alliance”), the Company’s largest shareholder. According to the agreement, the Company issued 5,681,818 shares of Series A convertible redeemable preferred shares to MSPEA on June 9, 2011 (“Issuance Date”) for total gross proceeds of $50 million. The Series A convertible redeemable preferred shares can be converted into common stock of the Company at an initial conversion price of $8.80 subject to certain adjustments as specified in the agreement (See Note 15).

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SUBSEQUENT EVENTS

6 Months Ended

Jun. 30, 2011

SUBSEQUENT EVENTS

NOTE 23 – SUBSEQUENT EVENTS

On July 27, 2011, the Ministry of Finance, the General Administration of Customs and the State Administration of Taxation jointly issued a notice in which enterprises engaging in encouraged industries in Western Region are entitled to a preferential income tax rate of 15% from January 1, 2011 to December 31, 2020. The entitled Western Region area includes Sichuan, Guizhou, Inner Mongolia Autonomous Region, Qinghai and etc. Yongye Nongfeng and Yongye Fumin will apply for the preferential income tax rate as they are all located in Inner Mongolia Autonomous Region.

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

6 Months Ended

Jun. 30, 2011

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

NOTE 2 -SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

PRINCIPLES OF CONSOLIDATION AND BASIS OF PRESENTATION

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted as permitted by rules and regulations of the U.S. Securities and Exchange Commission (“SEC”). The December 31, 2010 consolidated balance sheet was derived from the audited consolidated financial statements of the Company. The accompanying unaudited consolidated financial statements should be read in conjunction with the December 31, 2010 audited consolidated financial statements of the Company included in the Company’s annual report on Form 10-K for the year ended December 31, 2010. 

In the opinion of management, all adjustments (which include normal recurring adjustments) necessary to present a fair statement of the financial position as of June 30, 2011, and the results of operations and cash flows for the three and six months ended March 31, 2011 and 2010, have been made. 

The Company’s business is subject to seasonal variations; thus, the results of operations for the three months ended June 30, 2011 are not necessarily indicative of the results for the full fiscal year ending December 31, 2011. Generally, the second and third quarters are peak sales periods, and first and fourth quarters are low sales periods for the Company.

All significant intercompany transactions and balances are eliminated on consolidation.

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

Accounting Standards Update (“ASU”) No. 2010-13 was issued in April 2010, and clarified the classification of an employee share based payment award with an exercise price denominated in the currency of a market in which the underlying security trades. This ASU is effective for the first fiscal quarter beginning after December 15, 2010, with early adoption permitted. The adoption of ASU No. 2010-13 did not have a material impact on the Company’s consolidated financial statements.

In June 2011, the FASB issued Accounting Standard Update (“ASU”) 2011-05, Comprehensive income (Topic 220), Presentation of Comprehensive Income. ASU 2011-05 increases the prominence of other comprehensive income in financial statements. Under this ASU, an entity will have the option to present the components of net income and comprehensive income in either one or two consecutive financial statements. The ASU eliminates the option in U.S. GAAP to present other comprehensive income in the statement of changes in equity. An entity should apply the ASU retrospectively. For a public entity, the ASU is effective for fiscal years, and interim periods within those years, beginning after December 15, 2011. Early adoption is permitted.

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RELATED PARTY TRANSACTIONS AND BALANCES

6 Months Ended

Jun. 30, 2011

RELATED PARTY TRANSACTIONS AND BALANCES

NOTE 20 – RELATED PARTY TRANSACTIONS AND BALANCES

On January 4, 2011, the Company entered into an operating lease with Inner Mongolia Yongye for a research and development activity facility in Beijing, PRC for the period from January 4, 2011 to December 31, 2011. The lease expense for the research and development facility paid to Inner Mongolia Yongye was $39,898 and $79,308 for the three and six months ended June 30, 2011, respectively.

During the six months ended June 30, 2010, the Company disposed of and sold three vehicles with net book value of $135,191 and an apartment with net book value of $102,263 to Inner Mongolia Yongye. In addition, the long-term loans of $144,513 that were secured by these assets were assumed by Inner Mongolia Yongye. Upon disposal, no gain or loss was recorded and the Company received cash of $92,941.

In April 2011, Yongye Nongfeng obtained two short-term bank loans of RMB 52,500,000 (equivalent to $8,122,534) and RMB 47,500,000 (equivalent to $7,348,960) from China Everbright Bank. The loan are due on April 1, 2012 and April 18, 2012, respectively, and were guaranteed by the Company’s Chairman.

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CONCENTRATIONS AND CREDIT RISKS

6 Months Ended

Jun. 30, 2011

CONCENTRATIONS AND CREDIT RISKS

NOTE 22 – CONCENTRATIONS AND CREDIT RISKS

At June 30, 2011, the Company held cash in banks of approximately $74,747,557. To limit exposure to credit risk relating to deposits, the Company primarily places cash deposits only with large financial institution in the PRC with acceptable credit rating.

Five major customers accounted for 33% of the Company’s total revenues for the three months ended June 30, 2011. Five major customers accounted for 34% of the Company’s total revenues for the six months ended June 30, 2011. Five major customers accounted for 84% of the Company’s total revenues for the three months ended June 30, 2010. Five major customers accounted for 80% of the Company’s total revenues for the six months ended June 30, 2010. The Company’s total revenues from five major customers was $51,775,780 and $69,258,378 for the three and six months ended June 30, 2011, respectively. The Company’s total revenues from five major customers was $75,432,080 and $91,324,592 for the three and six months ended June 30, 2010, respectively. All of these major customers are distributors in the PRC agriculture industry.

For the three months ended June 30, 2011						For the six months ended June 30, 2011
Largest	Primary	Amount of		% Total		Largest	Primary	Amount of		% Total
Customers	Provinces	Sales		Sales		Customers	Provinces	Sales		Sales
Customer A	Liaoning; Heilongjiang; Jilin	$	11,714,097	7	%	Customer B	Shandong	$	15,482,182	8	%
Customer B	Shandong		11,140,841	7	%	Customer A	Liaoning; Heilongjiang; Jilin		15,111,830	7	%
Customer C	Guangdong; Hainan		10,665,071	7	%	Customer C	Guangdong; Hainan		13,550,836	7	%
Customer D	Jiangsu		9,193,809	6	%	Customer F	Shaanxi		13,097,356	6	%
Customer E	Henan		9,061,962	6	%	Customer D	Jiangsu		12,016,174	6	%
Total		$	51,775,780	33	%	Total		$	69,258,378	34	%

For the three months ended June 30, 2010						For the six months ended June 30, 2010
Largest	Primary		Amount of	% Total		Largest	Primary		Amount of	% Total
Customers	Provinces		Sales	Sales		Customers	Provinces		Sales	Sales
Customer G	Hebei; Beijing; Tianjin	$	27,971,525	31	%	Customer G	Hebei; Beijing; Tianjin	$	32,370,196	28	%
Customer C	Guangdong; Jiangsu; Henan; Shanxi		18,708,074	21	%	Customer C	Guangdong; Jiangsu; Henan; Shanxi		23,917,364	21	%
Customer H	Inner Mongolia		11,101,032	12	%	Customer H	Inner Mongolia		13,299,061	12	%
Customer B	Shandong		9,406,970	11	%	Customer B	Shandong		12,251,665	11	%
Customer A	Liaoning; Heilongjiang; Jilin		8,244,479	9	%	Customer A	Liaoning; Heilongjiang; Jilin		9,486,306	8	%
Total		$	75,432,080	84	%	Total		$	91,324,592	80	%

Three major suppliers accounted for 83% ($22,790,351), of which one major supplier accounted for 31% ($8,539,793), of the Company’s total inventory purchases for the three months ended June 30, 2011. Three major suppliers accounted for 87% ($50,562,626), of which one major supplier accounted for 36% ($20,794,408), of the Company’s total inventory purchases for the six months ended June 30, 2011. Three major suppliers accounted for 88% ($31,126,269), of which one major supplier accounted for 68% ($24,109,239), of the Company’s total inventory purchases for the three months ended June 30, 2010. Three major suppliers accounted for 88% ($46,690,209), of which one major supplier accounted for 72% ($38,085,055), of the Company’s total inventory purchases for the six months ended June 30, 2010. If these suppliers terminate their supply relationship with the Company, the Company may be unable to purchase sufficient raw materials on acceptable terms which may adversely affect the Company’s results of operations.

The Company’s operations are carried out in the PRC. Accordingly, the Company’s business, financial condition and results of operations may be influenced by the political, economic and legal environments in the PRC as well as by the general state of the PRC’s economy. In addition, the Company’s business may be influenced by changes in governmental policies with respect to laws and regulations, anti-inflationary measures, currency conversion and remittance abroad, rates and methods of taxation, and the extraction of mining resources, among other factors.

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OTHER ASSETS

6 Months Ended

Jun. 30, 2011

OTHER ASSETS

NOTE 10 – OTHER ASSETS

The Company has entered into agreements with certain distributors, including sub-distributors  pursuant to which the Company provided the distributor a free vehicle in exchange for the distributor agreeing to comply with certain sale conditions during the term of the agreement of five years.  The sales conditions included (1) meeting the annual sales target set by the Company; (2) not selling the products at a price lower than the price stipulated by the Company; and (3) selling the products only in Company’s approved territories.  To the extent the distributor fails any one of these conditions during the term of the agreement, the Company has the right to have the vehicles return back to the Company.

The cost of these vehicles has been recorded as “Other asset” which is expensed over a five-year period in “Cost of Sales”.

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ACCOUNTS RECEIVABLE

6 Months Ended

Jun. 30, 2011

ACCOUNTS RECEIVABLE

NOTE 3 – ACCOUNTS RECEIVABLE

Accounts receivable at June 30, 2011 and December 31, 2010 consisted of the following:

	June 30, 2011		December 31, 2010
Accounts receivable	$	142,506,734	$	26,110,813
Less: allowance for doubtful accounts		0		0
Total	$	142,506,734	$	26,110,813

No provision for allowance for doubtful accounts was recorded as of June 30, 2011 and December 31, 2010 as management believes no accounts are uncollectible as of June 30, 2011 and December 31, 2010. There were no write-off of accounts receivable for the three and six months ended June 30, 2011 and June 30, 2010.

The Company provides credit terms of up to six months to customers with well-established trading records.

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SHORT TERM BANK LOAN

6 Months Ended

Jun. 30, 2011

SHORT TERM BANK LOAN

NOTE 13 – SHORT TERM BANK LOAN

In April 2011, Yongye Nongfeng obtained two short-term bank loans of RMB 52,500,000 (equivalent to $8,122,534) and RMB 47,500,000 (equivalent to $7,348,960), with fixed annual interest rate of 7.878% and 8.203%, respectively, from China Everbright Bank. These two short-term bank loans are guaranteed by the Company’s Chairman and are due on April 1, 2012 and April 18, 2012, respectively.

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EARNINGS PER SHARE

6 Months Ended

Jun. 30, 2011

EARNINGS PER SHARE

NOTE 21 – EARNINGS PER SHARE

The following table sets forth the computation of basic earnings per share for the periods indicated:

	For the three months ended
	June 30, 2011			June 30, 2010
Numerator:
Net income attributable to Yongye International, Inc.	$	39,536,764		$	24,245,701
Series A convertible redeemable preferred shares dividends		(201,370	)		-
Earnings allocated to participating nonvested shares		(73,453	)		-
Earnings allocated to participating Series A convertible redeemable preferred shares		(1,017,644	)		-
Net income allocated to common stockholders	$	38,244,297		$	24,245,701
Denominator:
Weighted average shares of common stock		49,276,070			44,578,011
Basic earnings per common stock	$	0.78		$	0.54
	For the six months ended
	June 30, 2011			June 30, 2010
Numerator:
Net income attributable to Yongye International, Inc.	$	47,903,192		$	28,616,994
Series A convertible redeemable preferred shares dividends		(201,370	)		-
Earnings allocated to participating nonvested shares		(606,543	)		-
Earnings allocated to participating Series A convertible redeemable preferred shares		(628,540	)		-
Net income allocated to common stockholders	$	46,466,739		$	28,616,994
Denominator:
Weighted average shares of common stock		48,734,565			44,555,252
Basic earnings per common stock	$	0.95		$	0.64

The following table sets forth the computation of dilutive earnings per share for the periods indicated:

	For the three months ended
	June 30, 2011			June 30, 2010
Numerator:
Net income allocated to common stockholders as reported in Basic EPS	$	38,244,297		$	24,245,701
Change in fair value of derivative liabilities		(83,435	)		(156,936	)
Net income allocated to common stockholders	$	38,160,862		$	24,088,765
Denominator:
Weighted average shares of common stock as reported in Basic EPS	$	49,276,070		$	44,578,011
Dilutive effect of warrants		102,326			118,714
		49,378,396			44,696,725
Dilutive earnings per common stock	$	0.77		$	0.54
	For the six months ended
	June 30, 2011			June 30, 2010
Numerator:
Net income allocated to common stockholders as reported in Basic EPS	$	46,466,739		$	28,616,994
Change in fair value of derivative liabilities		(413,587	)		(169,470	)
Net income allocated to common stockholders	$	46,053,152		$	28,447,524
Denominator:
Weighted average shares of common stock as reported in Basic EPS		48,734,565			44,555,252
Dilutive effect of warrants		110,716			119,293
		48,845,281			44,674,545
Dilutive earnings per common stock	$	0.94		$	0.64

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CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY AND COMPREHENSIVE INCOME (USD $)	Total	Series A Convertible Redeemable Preferred Shares	Common Stock	Additional Paid-in Capital	Retained Earnings	Accumulated Other Comprehensive Income	Equity attributable to Yongye International, Inc.	Noncontrolling Interest
Beginning Balance at Dec. 31, 2010	$ 225,088,285		$ 48,187	$ 144,599,839	$ 63,943,371	$ 6,623,806	$ 215,215,203	$ 9,873,082
Beginning Balance (in shares) at Dec. 31, 2010			48,187,044
Net income	50,885,969				47,903,192		47,903,192	2,982,777
Foreign currency exchange translation adjustment, net of nil income taxes	5,672,157					5,420,355	5,420,355	251,802
Comprehensive income	56,558,126						53,323,547	3,234,579
Stock compensation to management and independent directors (in shares)			1,183,667
Stock compensation to management and independent directors	4,950,600		1,184	4,949,416			4,950,600
Issuance of Series A convertible redeemable preferred shares (in shares)		5,681,818
Issuance of Series A convertible redeemable preferred shares		49,399,990
Ending Balance at Jun. 30, 2011	$ 286,597,011	$ 49,399,990	$ 49,371	$ 149,549,255	$ 111,846,563	$ 12,044,161	$ 273,489,350	$ 13,107,661
Ending Balance (in shares) at Jun. 30, 2011		5,681,818	49,370,711

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ACCRUED EXPENSES

6 Months Ended

Jun. 30, 2011

ACCRUED EXPENSES

NOTE 14 – ACCRUED EXPENSES

As of June 30, 2011 and December 31, 2010, the accrued expenses primarily consisted of accrued advertising and promotion expenses amounted to $21,232,146 and $524,668, respectively, accrued R&D expenses amounted to $4,683,500 and $6,914, respectively, and accrued freight charges amounted to $1,323,890 and $1,161,333, respectively.

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STATUTORY RESERVE

6 Months Ended

Jun. 30, 2011

STATUTORY RESERVE

NOTE 16 – STATUTORY RESERVE

Yongye Nongfeng and Yongye Fumin are required to allocate at least 10% of its after tax profits as determined under generally accepted accounting principal in the PRC to a statutory surplus reserve until the reserve balance reaches 50% of its registered capital. For the six months ended June 30, 2011 and 2010, Yongye Nongfeng made appropriations to this statutory reserve of $5,889,753, and $3,098,328, respectively. The accumulated balance of the statutory reserve of Yongye Nongfeng as of June 30, 2011 and December 31, 2010 was $15,791,863 and $9,915,074, respectively.

In accordance with the PRC laws and regulations, Yongye Nongfeng is restricted in its ability to transfer a portion of its net assets to the Company in the form of dividends, which amounted to $15,002,270, representing the amount of accumulated balance of statutory reserve of Yongye Nongfeng attributable to the Company as of June 30, 2011.

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CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $)	6 Months Ended
	Jun. 30, 2011	Jun. 30, 2010
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$ 50,885,969	$ 30,166,157
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	3,261,186	937,752
Change in fair value of derivative liabilities	(413,587)	(169,470)
Stock compensation expense	4,950,600	0
Deferred tax expense	162,234	0
Changes in operating assets and liabilities:
Accounts receivable	(115,140,649)	(47,954,830)
Inventories	23,582,770	771,354
Deposits to suppliers	(41,373,219)	(4,111,996)
Prepaid expenses	(693,128)	(342,900)
Other receivables	(5,805)	117,326
Other assets	(1,995,399)	(5,627,195)
Accounts payable-third parties	12,662,550	1,818,461
Accounts payable-related parties	0	(880,505)
Income tax payable	8,251,950	4,615,935
Advance from customers	606,546	947,831
Accrued expenses	26,366,405	10,356,848
Other payables	1,108,043	165,247
Net Cash Used in Operating Activities	(27,783,534)	(9,189,985)
CASH FLOWS FROM INVESTING ACTIVITIES
Payment for intangible asset	(3,000,000)	0
Prepayment for mining project	0	(19,309,188)
Proceeds from sale of property, plant and equipment	0	92,629
Purchase of property, plant and equipment	(1,608,789)	(2,791,242)
Purchase of property, plant and equipment-related party	0	(1,663,769)
Net Cash Used in Investing Activities	(4,608,789)	(23,671,570)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from short-term bank loans	15,384,852	0
Repayment of long-term loans and payables	(351,242)	(334,675)
Repayment of short term loans	0	(2,925,675)
Proceeds from preferred shares, net of issuance cost of $600,010	49,399,990
Proceeds from common stock issued and warrants exercised	0	8,634,397
Net Cash Provided by Financing Activities	64,433,600	5,374,047
EFFECT OF FOREIGN EXCHANGE RATE CHANGES ON CASH	878,510	134,841
NET INCREASE /(DECREASE) IN CASH	32,919,787	(27,352,667)
Cash and cash equivalent at beginning of period	41,913,469	65,518,181
Cash and cash equivalent at end of period	74,833,256	38,165,514
Supplemental cash flow information:
Cash paid for income taxes	4,345,862	1,070,826
Cash paid for interest expense	$ 309,862	$ 51,796

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LAND USE RIGHT

6 Months Ended

Jun. 30, 2011

LAND USE RIGHT

NOTE 8 – LAND USE RIGHT

As of June 30, 2011 and December 31, 2010, land use right represented:

	June 30, 2011		December 31, 2010
Land use right	$	4,431,191	$	4,331,801
Less: Accumulated amortization		(162,968)		113,795
Total	$	4,268,223	$	4,218,006

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OTHER PAYABLES

6 Months Ended

Jun. 30, 2011

OTHER PAYABLES

NOTE 12 – OTHER PAYABLES

Other payable as of June 30, 2011 mainly represented payables of $1,081,041 for the construction of the production plant in Yongye Fumin and non-income-tax payables of $1,285,453. Other payables as of December 31, 2010 mainly represented cash consideration payable of approximate $3 million for the acquisition of Customer List (See Note 7), and payables of $1,852,473 for the construction of the production plant in Yongye Fumin.

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CONSOLIDATED BALANCE SHEETS (USD $)	Jun. 30, 2011	Dec. 31, 2010
Current assets
Cash	$ 74,833,256	$ 41,913,469
Restricted cash	40,000	40,000
Accounts receivable, net of allowance for doubtful accounts	142,506,734	26,110,813
Inventories	43,786,483	65,878,047
Deposits to suppliers	52,794,362	10,906,295
Prepaid expenses	1,455,946	733,429
Other receivables	774,179	760,377
Deferred tax assets, net	0	158,675
Total Current Assets	316,190,960	146,501,105
Property, plant and equipment, net	22,049,598	21,547,152
Intangible asset, net	22,719,190	23,598,739
Land use right, net	4,268,223	4,218,006
Prepayment for mining project	34,934,633	34,151,063
Other assets	10,459,282	7,325,049
Goodwill	10,520,901	10,284,922
Total Assets	421,142,787	247,626,036
Current liabilities
Long-term loans and payables - current portion	996,400	457,880
Short-term bank loan	15,471,494	0
Accounts payable	19,018,035	6,127,606
Income tax payable	14,578,657	6,137,119
Advance from customers	679,552	60,841
Accrued expenses	29,586,579	3,024,235
Other payables	2,691,523	5,310,517
Derivative liabilities - fair value of warrants	622,681	1,036,268
Total Current Liabilities	83,644,921	22,154,466
Long-term loans and payables	1,500,865	383,285
Total Liabilities	85,145,786	22,537,751
Series A convertible redeemable preferred shares: par value $.001; 7,969,044 shares authorized; 5,681,818 shares issued and outstanding as of June 30, 2011	49,399,990	0
Equity
Common stock: par value $.001; 75,000,000 shares authorized; 49,370,711 shares issued and outstanding at June 30, 2011 and 48,187,044 shares issued and outstanding at December 31, 2010	49,371	48,187
Additional paid-in capital	149,549,255	144,599,839
Retained earnings	111,846,563	63,943,371
Accumulated other comprehensive income	12,044,161	6,623,806
Total equity attributable to Yongye International, Inc.	273,489,350	215,215,203
Noncontrolling interest	13,107,661	9,873,082
Total Equity	286,597,011	225,088,285
Commitments and Contingencies
Total Liabilities, Series A Convertible Redeemable Preferred Shares and Equity	$ 421,142,787	$ 247,626,036