UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q /A

ý QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2008

OR

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the transition period from ________________ to ________

CHINA YINGXIA INTERNATIONAL, INC.

(Exact name of registrant as specified in its charter)

Florida	65-0664961
(State or other jurisdiction of	(I.R.S. Employer
incorporation or organization)	Identification No.)
Harbin Yingxia Industrial Co., Ltd, 300 Xidazhi Street, Nangang District, Harbin, Heilongjiang, People’s Republic of China	150001
(Address of principal executive offices)	(Zip Code)

86 451 86310948

(Registrant’s telephone number, including area code)

None

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

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 [   ]No  [   ]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer.  See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act.Large accelerated filer [   ]Accelerated filer  [   ]Non-accelerated filer  [   ]

Smaller Reporting Company x

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

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date.

Class	Outstanding at  August 13, 2008
Common Stock, $0.001 par value per share	44,469,787 shares

CHINA YINGXIA INTERNATIONAL, INC.

FORM 10-Q

TABLE OF CONTENTS

PART I - FINANCIAL INFORMATION	3
Item 1. Financial Statements	3
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	14
Item 3. Quantitative and Qualitative Disclosures About Market Risk	19
Item 4T. Controls and Procedures	20
PART II - OTHER INFORMATION	20
Item 1. Legal Proceedings	20
Item 1A. Risk Factors	20
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	20
Item 3. Defaults Upon Senior Securities	20
Item 4. Submission of Matters to a Vote of Security Holders	20
Item 5. Other Information	20
Item 6. Exhibits	20
SIGNATURES	21

Except as otherwise required by the context, all references in this report to "we", "us”, "our", “CYXI”, “China Yingxia” or "Company" refer to the consolidated operations of China Yingxia International, Inc., a Florida corporation, and its wholly owned subsidiaries.

2

Item 1. Financial Statements.

CHINA YINGXIA INTERNATIONAL, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

FOR THE SIX MONTHS ENDED JUNE 30, 2008 AND 2007

ASSETS	30-Jun-08		31-Dec-07
	(Unaudited)		(Audited)
Current assets:
Cash and cash equivalents	$	2,513,855	$	736,683
Account receivables, net of allowance for doubtful accounts $847,948 & $1,558,597 respectively		3,580,094		20,081
Inventory		8,307,331		5,527,135
Tax Receivable		-		32,317
Short-term loan receivable		-		2,194,774
Other receivables		3,624,368		3,150,777
Advances to suppliers		934,190		1,434,059
Loan Receivable from related parties		93,310		2,037,551
Total Current Assets		19,053,148		15,133,377
Property and equipment, net of accumulated depreciation		22,190,190		15,515,896
Other Assets
Goodwill		57,447		-
Deposits on buildings and land		1,344,154		1,718,077
Investment Advance		291,583		4,112,631
Intangible assets, net		743,256		666,785
Total other assets		2,436,440		6,497,493
Total Assets	$	43,679,777	$	37,146,766
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	152,190	$	2,911
Unearned revenue		44,198		6,509
Tax Payable		127,668		-
Accrued expenses and other payables		357,398		357,976
Total Current Liabilities		681,454		367,396
Total Liabilities		681,454		367,396
Stockholders' Equity
Preferred stock, $0.001 par value, 10,000,000 shares authroized; - 0 - shares
outstanding at  June 30,2008 and December 31, 2007		-		-
Common stock, $0.001 par value, 100,000,000 shares authorized;
44,469,787 and 44,439,787 shares outstanding at June 30,2008
and December 31, 2007, respectively		44,480		44,440
Additional paid in capital		16,841,627		16,799,667
Accumulated other comprehensive income		5,309,478		2,885,038
Statutory reserves		901,463		901,463
Retained earnings		19,901,275		16,148,762
Total Stockholders' Equity		42,998,323		36,779,370
Total Liabilities and Stockholders' Equity	$	43,679,777	$	37,146,766

See accompanying notes to the condensed consolidated Financial Statements.

3

CHINA YINGXIA INTERNATIONAL, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

FOR THE SIX MONTHS ENDED JUNE 30, 2008 AND 2007

	Six Months Ended June 30,					Three Months Ended June 30,
	2008			2007		2008			2007
	(Unaudited)			(Unaudited)		(Unaudited)			(Unaudited)
Sales	$	8,527,496		$	6,867,039	$	6,415,592		$	5,227,933
Cost of Sales		3,672,909			3,099,185		2,848,275			2,317,113
Gross Profit		4,854,587			3,767,855		3,567,317			2,910,820
Operating Expenses
Research & Development Expense		13,171			134,739		13,171			135,452
Selling, general and administrative		899,669			628,236		409,329			311,605
Income before other Income and (Expenses)		3,941,748			3,004,880		3,144,818			2,463,763
Other Income and (Expenses)
Interest Income		1,324			-		1,202			-
Other  Income		-			318		-			364
Other Expense		(315	)		-		(177	)		-
Other Income and Expenses Total Other Income and (Expenses)		1,009			318		1,026			364
Income Before Income Taxes (Benefits)		3,942,757			3,005,198		3,145,844			2,464,127
Provision for Income Taxes (Benefits)		190,244			-		105,701			-
Net Income	$	3,752,513		$	3,005,198	$	3,040,143		$	2,464,127
Other Comprehensive Income
Foreign Currency Translation Adjustment		2,424,440			526,991		940,385			322,712
Comprehensive Income	$	6,176,953		$	3,532,189	$	3,980,528		$	2,786,839
Basic and Diluted Income per common share
Basic	$	0.08		$	0.09	$	0.07		$	0.07
Diluted	$	0.08		$	0.09	$	0.06		$	0.07
Weighted average common share outstanding
Basic		44,457,260			33,608,857		44,469,787			33,608,857
Diluted		49,724,025			33,608,857		49,736,552			33,608,857

See accompanying notes to the condensed consolidated Financial Statements.

4

CHINA YINGXIA INTERNATIONAL, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE SIX MONTHS ENDED JUNE 30, 2008 AND 2007

	Six Months Ended June 30,
	2008			2007
	(Unaudited)			(Unaudited)
Cash Flows From Operating Activities:
Net income	$	3,752,513		$	3,005,198
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Depreciation and amortization		533,859			337,794
Amortization of stock-based compensation		42,000			-
Changes in operating assets and liabilities:
Accounts receivable		(3,560,013	)		1,314
Inventory		(2,780,196	)		(892,553	)
Tax Receivable		32,317			-
Prepaid expenses		-			95,479
Other receivable		(473,591	)		(1,273,102	)
Advances to suppliers		499,868			(3,364,596	)
Accounts payable		149,280			1,247,610
Unearned revenue		37,689			1,314
Taxes payable		127,668			48,397
Accrued expenses and other payables		(578	)		(41,184	)
Cash used in operating activities		(1,639,185	)		(834,331	)
Cash Flows From Investing Activities:
Purchase of property and equipment		(962,387	)		(57,864	)
Purchase of patent/land use right					(102,282	)
Investment advance to India Company		(283,322	)
Acquisition of Chichi Company		(174,950	)
Collection of Short term loan		2,194,774			-
Deposits on buildings and land		(297,488	)		-
Collections on loans to related party		1,944,241			1,198,676
Additions to construction in process		(161,604	)		(545,353	)
Cash provided by investing activities		2,259,264			493,176
Cash Flows From Financing Activities:
None		-			-
Cash provided by (used in) financing activities		-			-
Effect of exchange rate changes on cash and cash equivalents		1,157,094			363,584
Increase in cash and cash equivalents		1,777,172			22,429
Cash and Cash Equivalents - Beginning of period		736,683			77,867
Cash and Cash Equivalents - End of period	$	2,513,855		$	100,296

See accompanying notes to the condensed consolidated Financial Statements.

5

CHINA YINGXIA INTERNATIONAL INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2008 AND 2007

(UNAUDITED)

1.  ORGANIZATION AND DESCRIPTION OF BUSINESS

China Yingxia International, Inc. (the “Company” or “China Yingxia”) was incorporated in the State of Florida on May 6, 1996 and formerly known as Agronix, Inc. (“Agronix”).

On May 12, 2006, the Company entered into a share exchange agreement with Warner Nutraceutical International, Inc. (‘WNI”), which is the parent company to Harbin Yingxia Industrial Group Co, Ltd. ("Harbin Yingxia"). Pursuant to the share exchange agreement, the Company issued to WNI shareholders 54,811,475 shares of Common Stock, par value $0.001 per share, and 1,473,649.074 shares of Class A Preferred Stock, par value $0.001 per share, of which each share is convertible into five hundred (500) shares of the Company’s Common Stock. As a result of the transactions, there was a change in control of the Company as the shareholders of WNI became the majority shareholders of the Company.

For accounting purpose, the transaction was accounted for as a reverse acquisition under the purchase method. Accordingly, WNI and its subsidiary are treated as the continuing entity for accounting purposes. Following the merger, Agronix filed a Certificate of Amendment and changed its name to China Yingxia International, Inc.

On July 21, 2006, the Company’s board of directors approved a reverse stock split on both common stock and preferred stock.  Each 24.9 shares of the Company's Common Stock and Class A Preferred Stock were converted into one (1) share of Common Stock and one (1) share of Class A Preferred Stock, respectively. Simultaneously, all of the preferred shares were converted into common shares at ration of 1 to 500 and the preferred shares were cancelled.

On February 28, 2008, the Company signed a letter of Intent with Guangzhou Chichi Network Technology Development Co., Ltd. (“Guangzhou Technology”), and Guangzhou Chichi Network Supermarket Chain Co., Ltd. (“Guangzhou Supermarket Chain”), together known as the Chichi Wang companies.  Subsequent to this agreement, the Company spent RMB 1,200,000 (approximately US$171,000) to finalize the acquisition on April 25, 2008. The Company intends to expand its distribution channel, customer base and sales revenue by utilizing Chi Chi Wang’s online network in Southern China.

The Company operates its business through its wholly-owned subsidiary Harbin Yingxia Industrial Group, Ltd. (" Harbin Yingxia"), a joint stock corporation organized and existing under the laws of the People's Republic of China (“PRC”) in 1998. Harbin Yingxia is engaged in the development, manufacture and distribution of organic nutritional food products and dietary supplements.

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the requirements of Item 8-03 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the six months ended June 30, 2008 and 2007 are not necessarily indicative of the results that may be expected for the full years. The information included in this Form 10-Q should be read in conjunction with Management’s Discussion and Analysis and the financial statements and notes to thereto included in the Company’s 2007 Form 10-KSB.

2.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of consolidation

The consolidated financial statements of China Yingxia International, Inc. include the accounts of the Company and its wholly owned subsidiaries, WNI and Harbin Yingxia.  All significant inter-company balances and transactions are eliminated in consolidation.

6

CHINA YINGXIA INTERNATIONAL INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2008 AND 2007

(UNAUDITED)

2.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Basis of presentation

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

Use of estimates

In preparing the financial statements in conformity with US GAAP, management makes estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the dates of the financial statements, as well as the reported amounts of revenues and expenses during the reporting year. Significant estimates, required by management, include the recoverability of long-lived assets and the valuation of inventories.  Actual results could differ from those estimates.

Cash and cash equivalents

For purposes of the statement of cash flow, the Company considers all highly liquid investments with an original maturity of three months or less to be cash equivalents.

Accounts receivables

Accounts receivables are stated at net realizable value. This value includes an appropriate allowance for estimated uncollectible accounts. The allowance is calculated based upon the evaluation and the level of past due accounts and the relationship with and the economic status of the customers.  The allowance for doubtful accounts was $847,948 as of June 30, 2008.  Although account receivables increased significantly during the second quarter, the Company does not maintain a large balance of accounts receivable due to the nature of its business, and the collections on the Company’s accounts receivable has been generally good. Except for the above reserved allowance, the Company has not encountered any uncollected accounts receivable.

The increase in account receivables for the second quarter mainly represents cactus seedlings given to the farmers to expand cactus production, which will be collected in the form of lower purchase prices before the 2nd quarter of 2009 when the cacti are harvested and purchased from the farmers.

Inventories

Inventories are composed of raw materials and packing materials for manufacturing, work in process, and finished goods. Inventories are valued at the lower of cost or market with cost determined on a first-in first-out basis. Management compares the cost of inventory with the market value and an allowance is made for writing down the inventory to its market value, if lower than cost.

Property and equipment

Property and equipment are stated at cost, net of accumulated depreciation. Depreciation is computed using the straight-line method over the estimated useful lives as below:

Category	Estimated Useful Lives
Machinery & Equipment	4-5    years
Automobiles	7       years
Buildings	15-40 years

Advance to suppliers

Advance to suppliers represent the payments made and recorded in advance for goods and services received. The Company makes advances to certain vendors’ inventory purchases, construction projects and equipment purchases. The advance to suppliers totaled $934,190 as of June 30, 2008.

7

CHINA YINGXIA INTERNATIONAL INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2008 AND 2007

(UNAUDITED)

2.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Impairment of long-lived assets

Long-lived assets, which include property, plant and equipment and intangible assets, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.

Recoverability of long-lived assets to be held and used is measured by a comparison of the carrying amount of an asset to the estimated undiscounted future cash flows expected to be generated by the asset.   If the carrying amount of an asset exceeds its estimated undiscounted future cash flows, an impairment charge is recognized by the amount by which the carrying amount of the asset exceeds the fair value of the assets.  Fair value is generally determined using the asset’s expected future discounted cash flows or market value, if readily determinable.

Goodwill

Goodwill represents the excess of the purchase price over the fair value of the net tangible and identifiable intangible assets of the business acquired. Goodwill is not subject to amortization, but is generally subject to an annual assessment for impairment, applying a fair-value based test. Goodwill is also tested in between annual test dates if events or circumstances indicate that the carrying amount of goodwill exceeds its implied fair value.

Income taxes

The Company accounts for income tax under the provisions of SFAS No.109 "Accounting for Income Taxes", which requires recognition of deferred tax assets and liabilities for the expected future tax consequences of the events that have been included in the financial statements or tax returns.  Deferred income taxes are recognized for all significant temporary differences between tax and financial statements bases of assets and liabilities.  Valuation allowances are established against net deferred tax assets when it is more likely than not that some portion or all of the deferred tax asset will not be realized.

The Company does not have any long-term deferred tax assets or liabilities in China that will exist once the tax holiday (See Note 11) expires. The Company does not have any significant deferred tax asset or liabilities that relate to tax jurisdictions not covered by the tax holiday.

Revenue recognition

The Company recognizes revenue on product sales when products are delivered and the title passes to the customers and collection is reasonably assured.

Cost of revenues

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

Stock-based compensation

Effective January 1, 2007, the Company adopted the provisions of Financial Accounting Standards Board Statement of Financial Accounting Standards (“SFAS”) No. 123(R), “Share-Based Payments,” which establishes the accounting for employee stock-based awards. Under the provisions of SFAS No. 123(R), stock-based compensation is measured at the grant date, based on the calculated fair value of the award. And it is recognized as an expense over the requisite employee service period (generally the vesting period of the grant).

The Company measures compensation expense for its non-employee stock-based compensation under the Financial Accounting Standards Board (FASB) Emerging Issues Task Force (EITF) Issue No. 96-18, “Accounting for Equity Instruments that are Issued to Other Than Employees for Acquiring, or in Conjunction with Selling, Goods or Services”.  The fair value of the option issued is used to measure the transaction, as this is more reliable than the fair value of the services received.  Fair value is measured as the value of the Company’s common stock on the date that the commitment for performance by the counterparty has been reached or the counterparty’s performance is complete.  The fair value of the equity instrument is charged directly to compensation expense and additional paid-in capital.

8

CHINA YINGXIA INTERNATIONAL INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2008 AND 2007

(UNAUDITED)

2.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Concentration of credit risk

Financial instruments that potentially subject the Company to concentration of credit risk consist primarily of accounts receivable and other receivables.  The Company does not require collateral or other security to support these receivables.  The Company conducts periodic reviews of its clients' financial condition and customer payment practices to minimize collection risk on accounts receivable.

The operations of the Company are located 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 economy.

Fair value of financial instruments

The carrying amounts of certain financial instruments, including cash and cash equivalents, accounts receivable, other receivables, accounts payable, accrued expenses, taxes payable, notes payable and other loans payable approximate fair value due to the short-term nature of these items.  The carrying amounts of bank borrowings approximate the fair value based on the Company's expected borrowing rate for debt with similar remaining maturities and comparable risk.

Foreign currency translation

The Company’s functional currency is the Renminbi (“RMB”). For financial reporting purposes, RMB has been translated into United States dollars ("USD") as the reporting currency. Assets and liabilities are translated at the exchange rate in effect at the balance sheet date. Revenues and expenses are translated at the average rate of exchange prevailing during the reporting period. Translation adjustments arising from the use of different exchange rates from period to period are included as a component of stockholders' equity as "Accumulated other comprehensive income". Gains and losses resulting from foreign currency transactions are included in accumulated other comprehensive income.  There is no significant fluctuation in exchange rate for the conversion of RMB to USD after the balance sheet date.

Research and Development

Research and development costs are related primarily to the Company developing its intellectual property. Research and development costs are expenses as incurred. The costs of material and equipment that are acquired or constructed for research and development activities and have alternative future uses are classified as plant and equipment and depreciated over their estimated useful lives.

Start-up Costs

In accordance with the American Institute of Certified Public Accountants Statement of Position 98-5, “Reporting on the Costs of Start-up Activities”, the Company expenses all costs incurred in connection with the start-up and organization of the Company.

Earnings per share

Basic earnings per share are computed by dividing income available to common shareholders by the weighted-average number of common shares outstanding during the period. Diluted earnings per share is computed similar to basic earnings per share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common shares had been issued and if the additional common shares were dilutive. There are 5,362,565 warrants outstanding for dilution purposes as of June 30, 2008

9

CHINA YINGXIA INTERNATIONAL INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2008 AND 2007

(UNAUDITED)

2.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

New accounting pronouncements

In February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial Assets and Financial Liabilities—Including an amendment of FASB Statement No. 115 (“FAS 159”). FAS 159 permits companies to choose to measure many financial instruments and certain other items at fair value that   are not currently required to be measured at fair value. The objective of FAS 159 is to provide opportunities to mitigate volatility in reported earnings caused by   measuring related assets and liabilities differently without having to apply hedge accounting provisions. FAS 159 also establishes presentation and disclosure requirements designed to facilitate comparisons between companies that choose different measurement attributes for similar types of assets and liabilities. SFAS 159 will be effective in the first quarter of fiscal 2009. The Company is evaluating the impact that this statement will have on its consolidated financial   statements.

In June 2007, the FASB issued FASB Staff Position No. EITF 07-3, “Accounting for Nonrefundable Advance Payments for Goods or Services Received for use in Future Research and Development Activities” (“FSP EITF 07-3”), which addresses whether nonrefundable advance payments for goods or services that used or rendered for research and development activities should be expensed when the advance payment is made or when the research and development activity has been performed. The Company has adopted FSP EITF 07-3 and expensed the research and development as it incurred.

In December 2007, the FASB issued SFAS No. 160,“Noncontrolling Interests in Consolidated Financial Statements - an amendment of Accounting Research Bulletin No. 51” (“SFAS 160”), which establishes accounting and reporting standards for ownership interests in subsidiaries held by parties other than the parent, the amount of consolidated net income attributable to the parent and to the non-controlling interest, changes in a parent’s ownership interest and the valuation of retained non-controlling equity investments when a subsidiary is deconsolidated. The Statement also establishes reporting requirements that provide sufficient disclosures that clearly identify and distinguish between the interests of the parent and the interests of the non-controlling owners. SFAS 160 is effective for fiscal years beginning after December 15, 2008. The Company has not determined the effect that the application of SFAS 160 will have on its consolidated financial statements.

In December 2007, Statement of Financial Accounting Standards No. 141(R), Business Combinations , was issued. SFAS No. 141R replaces SFAS No. 141, Business Combinations. SFAS 141R retains the fundamental requirements in SFAS 141 that the acquisition method of accounting (which SFAS 141 called the purchase method ) be used for all business combinations and for an acquirer to be identified for each business combination. SFAS 141R requires an acquirer to recognize the assets acquired, the liabilities assumed, and any non-controlling interest in the acquiree at the acquisition date, measured at their fair values as of that date, with limited exceptions. This replaces SFAS 141’s cost-allocation process, which required the cost of an acquisition to be allocated to the individual assets acquired and liabilities assumed based on their estimated fair values. SFAS 141R also requires the acquirer in a business combination achieved in stages (sometimes referred to as a step acquisition) to recognize the identifiable assets and liabilities, as well as the non-controlling interest in the acquiree, at the full amounts of their fair values (or other amounts determined in accordance with SFAS 141R). SFAS 141R applies prospectively to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008. An entity may not apply it before that date. The Company has adopted SFAS No. 141R.

In March 2008, the FASB issued Statement of Financial Accounting Standards (“SFAS”) No. 161, Disclosures about Derivative Instruments and Hedging Activities, an amendment of FASB Statement No. 133, which requires additional disclosures about the objectives of the derivative instruments and hedging activities, the method of accounting for such instruments under SFAS No. 133 and its related interpretations, and a tabular disclosure of the effects of such instruments and related hedged items on our financial position, financial performance, and cash flows. SFAS No. 161 is effective beginning January 1, 2009. We are currently assessing the potential impact that adoption of SFAS No. 161 may have on our financial statements.

10

CHINA YINGXIA INTERNATIONAL INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2008 AND 2007

(UNAUDITED)

3.   INVENTORY

	June 30, 2008		December 31, 2007
Packing Materials	$	99,635	$	102,707
Raw Materials		5,991,259		2,660,601
Work in process	$	177,513		210,864
Finished Goods		2,038,923		2,552,963
Total	$	8,307,331	$	5,527,135

No allowance for inventory was made for the six months ended June 30, 2008 and December 31, 2007.

4.   PROPERTY, PLANT AND EQUIPMENT, NET

Property, plant and equipment consist of the following at June 30, 2008 and December 31, 2007:

	June 30, 2008			December 31, 2007
Machinery & Equipment	$	7,544,107		$	2,906,024
Automobiles		430,771			405,054
Buildings		15,956,194			13,358,530
Sub total		23,881,369			16,669,608
Less: Accumulated Depreciation		(4,120,538	)		(3,371,764	)
Construction in progress		2,379,656			2,218,052
Total property, plant & Equipment, net	$	22,190,190		$	15,515,896

Depreciation expense for the six months ended June 30, 2008 and 2007 was $519,543 and $337,794, respectively.

5.   INTANGIBLE ASSETS

Intangible assets include land use right and patent right.

Land use right – all land in the People’s Republic of China is government owned and cannot be sold to any individual or company. Instead, the government grants the user a “Land use right” (the Right) to use the land. The Company has the right to use the land for 50 years and amortized the Right on a straight-line basis over 50 years.

Patent – capitalized patent costs represent the acquisition costs paid for exclusive use of the patented organic rice seeds.  Capitalized patent costs are amortized on a straight method over the related patent term of 15 years.

Net intangible assets at June 30, 2008 and December 31, 2007 were as follows:

	June 30, 2008		December 31, 2007
Land use right	$	451,209	$	424,271
Patent		291,583		274,175
Brandname (Chichi Network)		48,867
Less: Accumulated amortization		( 48,404)		(31,661)
Intangible assets, net	$	743,256	$	666,785

Amortization expense for the six months ended June 30, 2008 and 2007 amounted to $14,315 and $0, respectively.

6.  OTHER RECEIVABLES

Other receivables typically represent cash advances to employees and sales representatives for normal business purposes. As of June 30, 2008 the Company has other receivables in the amount of $3,624,368. The increase in other receivables primarily attributes to 1). An increase in cash deposits to retail stores to expand soybean milk sales, which will be collectable by the end of the year; 2). Deposits to the farmers in Jiangsu for seeds and fertilizers for their rice, which will be collectable when the rice crops are harvested and purchased by Yingxia.

An allowance in the amount of $489,080 was recorded as of June 30, 2008.

7. RELATED PARTY LOANS

As of June 30, 2008, the Company has loans receivable from related parties in the amount of $93,310. All related party loans are provided to the affiliated retail stores or companies to facilitate the initial establishment of their businesses for selling the Company’s products. These loans are interest free and unsecured and are due upon demand. The Company expects to collect most of the outstanding loans in the next few months. As many stores are closing down and turned into online stores, the loans are becoming much smaller compared with the first quarter of 2008.

11

CHINA YINGXIA INTERNATIONAL INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2008 AND 2007

(UNAUDITED)

8.  DEPOSITS ON BUILDINGS AND LAND

The Company made separate deposits in the total amount of $1,344,154 on one office space in Beijing and a piece of land in Anhui Province it intends to purchase. All purchases are evidenced by purchase agreements and the transactions were not finalized as of June 30, 2008. Once the Company completes the title transfers, the deposits will be reclassified to Property, Plant and Equipment account.

9. INVESTMENT ADVANCE

On January 23, 2008, the Company registered ‘China Xianhe India Private Limited” in New Deli, India. RMB 2,000,000 was made an advance as initial start up cost. . The Company intends to expand its dietary supplement products into Indian market in the next several months.

As of June 30, 2008, this Indian subsidiary has not started operations yet. It is waiting for the license of direct sales from the Indian authorities.

10. GOODWILL

On February 28, 2008, the Company signed an agreement with Guangzhou Chichi Network Technology Development Co., Ltd. (“Guangzhou Technology”), and Guangzhou Chichi Network Supermarket Chain Co., Ltd. (“Guangzhou Supermarket Chain”), together known as the Chichi Wang Companies.  Subsequent to this agreement, the Company spent RMB 1,200,000 (approximately US$171,000) to finalize the acquisition on April 25, 2008.

The operating results of Chichi Wang Companies have been consolidated into the financial statements of China Yingxia in this 10-Q.

The Company intends to expand its distribution channel, customer base and sales revenue by utilizing Chi Chi Wang’s online network in Southern China.

The accompanying consolidated financial statements include the allocation of the acquisition cost to the net assets acquired based on their respective fair values. The net assets were estimate by the Company’s management. If the final valuation, which is expected to be completed within 12 months from the closing of the acquisition, derives different amounts from our estimate, we will adjust these amounts to goodwill.

Goodwill represents the excess of the purchase price over the fair value of the net tangible and identifiable intangible assets of the 100% interest in Chichi Network Companies acquired.  The following represents the allocation of the acquisition cost to the net assets acquired based on their respective fair values:

Current assets	$	88,880
Construction in process	$	-
Fixed assets	$	48,430
Other non-current asset	$	55,227
Total liabilities assumed	$	75,034
Net assets acquired	$	117,503
Total consideration paid	$	174,950
Goodwill	$	57,447

11.  INCOME TAXES

The Company is governed by the Income Tax Law of the People’s Republic of China concerning the private-run enterprises, which are subject to tax at a statutory rate of 25% and were, until January 2008, subject to tax at a statutory rate of 33% (30% state income tax plus 3% local income tax) on its taxable income.

In 2006, the Company obtained its foreign-owned entity (“WOFE”) status upon completion of the reverse acquisition. According to the Provisional Regulations of the People’s Republic of China on Income Tax, the Document of Reductions and Exemptions of Income Tax for the Company has been approved by the local tax bureau and the Management Regulation of Harbin Economic and Technological Development Zone for the reporting period. The Company was granted the status of WOFE and therefore is exempt from income tax from January 1, 2004 through December 31, 2007. The Company has also been approved to have its tax rate reduced by 50% from January 1, 2008 to December 31, 2010.

On March 16, 2007, the National People’s Congress of China approved the Corporate Income Tax Law of the People’s Republic of China (the “New CIT Law”), which is effective from January 1, 2008. Under the new CIT law, the corporate income tax rate applicable to all Companies, including both domestic companies and foreign-invested companies, is 25%, replacing the prior applicable tax rate of 33%. However, companies previously approved for any income holiday will not be subject to the new enacted tax rate until the holiday runs out.

To continue with its WOFE tax holiday of tax rate reduction by 50% for three years, the Company is subject to 12.5% of income tax rate from January 1, 2008 to December 31, 2010.  For the six months ended June 30, 2008, the Company has income tax provision of $190,244

One of our product categories, cactus raw materials, is also exempted from corporate income tax and value-added tax.

12. STATUTORY RESERVES

Pursuant to the laws of People’s Republic of China, the Company is required to maintain certain statutory reserves by appropriating from its after-tax profit before declaration or payment of dividends. The statutory reserves include surplus reserve fund, common welfare fund and the enterprise fund. These statutory reserves represent restricted retained earnings.

12

CHINA YINGXIA INTERNATIONAL INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2008 AND 2007

(UNAUDITED)

12. STATUTORY RESERVES (CONTINUED)

Surplus reserve fund

The Company is generally required to transfer 10% of its net income, as determined under PRC accounting rules and regulations, to a statutory surplus reserve fund until such reserve balance reaches 50% of the Company’s registered capital. However, the laws exclude the companies owned by foreign entities. The Company’s operating subsidiary, Harbin Yingxia, became a foreign owned entity in 2007 upon acquisition by the Company. Therefore, it is exempted from making any more mandatory reserves. It is at the management’s discretion whether to make any additional reserves.  For the six months end June 30, 2008, the Company elected not to make any additional funds to this reserve.

The surplus reserve fund is non-distributable other than during liquidation and can be used to fund previous years’ losses, if any, and may be utilized for business expansion or converted into share capital by issuing new shares to existing shareholders in proportion to their shareholding or by increasing the par value of the shares currently held by them, provided that the remaining reserve balance after such issue is not less than 25% of the registered capital.

Common welfare fund

The Company is required to transfer 5% to 10% of its net income, as determined in accordance with the PRC accounting rules and regulations, to the statutory common welfare fund. Making any additional common welfare reserve becomes voluntary for the Company because of its foreign entity status. For the six months ended June 30, 2008, the Company elected not to make any additional funds to this reserve.

This fund can only be utilized on capital items for the collective benefit of the Company’ s employees, such as construction of dormitories, cafeteria facilities, and other staff welfare facilities. This fund is non-distributable other than upon liquidation.

Enterprise fund

The enterprise fund may be used to acquire fixed assets or to increase the working capital to expend on production and operation of the business. No minimum contribution is required and the Company did not make any contribution to this fund during the six months ended June 30, 2008

The following represents the accumulated balances of the appropriations as of June 30, 2008:

Surplus Reserve	$	600,975
Common Welfare Reserve		300,488
Total	$	901,463

13. SEGMENT REPORTING

The company operates in one operating segment in accordance with the provisions of SFAS No. 131, “Disclosures about Segments of an Enterprise and Related Information”. Although the Company develops, manufactures and commercializes various products such as nutritional food products, dietary supplements, cosmetic products, raw cactus plants and personal care products etc., the Company’s chief operating decision maker reviews and evaluates one set of combined financial information deciding how to allocate resources and in assessing performance.

For the six months ended June 30, 2008 and 2007, the Company’s sales revenue from various products are as follows:

	June 30, 2008		June 30, 2007
Nutritional Food Products	$	2,104,183	$	1,207,912
Dietary Supplements		1,804,973		566,531
Cosmetic Products		152,578		221,805
Cactus products		4,206,724		3,469,228
Personal Care Products & others		154,147		1,402,249
Chichi Network companies		104,891		--
Total	$	8,527,496	$	6,867,039

All the Company’s revenue were generated in China. The Company’s sales in foreign nations represent pilot programs that as of yet have not become full-scale operations.

13

CHINA YINGXIA INTERNATIONAL INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2008 AND 2007

(UNAUDITED)

14. STOCKHOLDERS’ EQUITY

A. Issuance of Common Stock

July 2007 Private Placement

On July 16, 2007, the Company entered into a stock subscription and warrant agreement, (“Subscription Agreement”), with three (3) accredited investors. Pursuant to the Subscription Agreement, the investors purchased 1,000,000 units, each unit consisting of (a) two shares of common stock and (b) one common stock purchase warrant, at a purchase price of $2.00 per unit. The Company received net proceeds of $1,980,000 in connection with this private placement.

With the warrants attached to the units sold in the private placement, the investors are entitled to purchase an aggregate of 1,000,000 shares of common stock at an exercise price of $1.50 per share. All these warrants are exercisable for five years from the effective date of registration statement.

Upon completion of the placement, the Company incurred approximately $20,000 in legal and other expenses.

August 2007 Private Placement

On August 9, 2007, the Company completed another private placement of its securities to accredited investors pursuant to Regulation D under the Securities Act of 1933, as amended. The Company entered into a stock subscription agreement and warrant agreement (“Subscription Agreement”), with twenty (20) accredited investors. Pursuant to the Subscription Agreement, the investors purchased 34.90052 units, each unit consisting of (a) 250,000 shares of common stock and (b) a 5-year stock purchase warrant to purchase 125,000 shares of common stock exercisable at $2.00 per share. The units were sold for a price of $250,000 per unit, yielding gross proceeds of $8,725,130 from the sale of the units. The Company paid fees and commissions in the aggregate amount of $1,398,387 in connection with this offering.

B. Warrants

Upon the execution of the both Subscription Agreements, the Company issued to the investors (i) 1,000,000 warrants under July 2007 Private Placement and (ii)4,362,565 warrants under August 2007 Private Placement. All warrants do not contain a cashless exercise provision. Accordingly, in accordance with EITF 00-19, the warrants are classified as equity.

The fair value of the warrants was calculated using the Black-Scholes options pricing model using the following assumptions: Volatility 63%, risk free interest rate 5.050% for July 2007 Placement and 4.790% for August 2007 Placement, and expected term of 5 years.

Following is a summary of the status of warrants outstanding as of June 30, 2008:

			Outstanding Warrants
Exercise Price			Number	Average Remaining Life
	$	1.50	1,000,000	4.00
	$	2.00	4,362,565	4.08
			5,362,565

14

CHINA YINGXIA INTERNATIONAL INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2008 AND 2007

(UNAUDITED)

14. STOCKHOLDERS’ EQUITY (CONTINUED)

C. Stock issued for consulting services

In 2007, 105,800 shares of common stock were issued as full compensation to several consultants for certain consulting services provided to the Company.  An amount of $212,744, which represents the aggregate fair value of the shares issued in excess of par value, was included in additional paid-in capital. The full amount was expensed and included in the Statements of Income as a part of general and administrative expenses.

On February 26, 2008, 40,000 shares of common stock were issued as full compensation to certain consultants for consulting services provided to the Company. An amount of $41,960, which represents the aggregate fair value of the shares issued in excess of par value, was included in additional paid-in capital. The full amount was amortized and included in the Statements of Income as a part of general and administrative expenses.

As a result of these offerings, the Company issued a total of 10,840,930 shares of its common stock. As of June 30, 2008, there are 44,469,787 shares of common stock outstanding and no preferred stock.

15. COMMITMENTS AND CONTINGENCIES

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

The Company’s sales, purchases and expenses transactions are denominated in RMB and all of the Company’s assets and liabilities are also denominated in RMB. The PRC government imposes controls on the convertibility of Renminbi into foreign currencies and, in certain cases, the remittance of currency outside of the PRC. We receive substantially all of our revenues in Renminbi. Under existing PRC foreign exchange regulations, payments of current account items, including profit distributions, interest payments and expenditures from trade-related transactions, can be made in foreign currencies without prior approval from the PRC State Administration of Foreign Exchange by complying with certain procedural requirements.  

15

Item 2.  Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The following discussion should be read in conjunction with the Financial Statements and Notes thereto appearing elsewhere in this Form 10-Q.

Safe Harbor Regarding Forward-Looking Statements

The following discussion contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 relating to future events or our future performance. Actual results may materially differ from those projected in the forward-looking statements as a result of certain risks and uncertainties set forth in this prospectus. Although management believes that the assumptions made and expectations reflected in the forward-looking statements are reasonable, there is no assurance that the underlying assumptions will, in fact, prove to be correct or that actual results will not be different from expectations expressed in this report.

Overview

The Company operates its business through its wholly-owned subsidiary Harbin Yingxia Industrial Co., Ltd. (" Harbin Yingxia"), a joint stock corporation organized and existing under the laws of the People's Republic of China (“PRC”). Harbin Yingxia is engaged in the development, production, and sale of nutritional food products, including soybean milk and yogurt, and rice and millet products; dietary supplements and cactus plants, as well as beauty cosmetics and other products. Sales within China comprise 100% of total revenue.

Results of Operations 

For the three Months Ended June 30, 2008 compared to the three Months Ended June 30, 2007:

Revenue

The Company generated $6,415,592 in sales for the three months ended June 30, 2008, an increase of $1,187,659 or 22.72% as compared to the revenue of $5,227,933 for the three months ended June 30, 2007. This increase in sales is the direct result of the continued expansion of company’s distribution network. In the second quarter, the company has added 230 new stores to its chain of franchisee owned retail outlets, making the total at 1,273.

Cost of Sales

The cost of sales was $2,848,275 for the three months ended June 30, 2008, an increase of $531,162 or 22.92% as compared to the cost of sales of $2,317,117 for the three months ended June 30, 2007. The increase in the cost of sales is in proportion with the increase of sales.

Total Operating Expenses

Total operating expenses were $422,500 for the three months ended June 30, 2008,  a decrease  of  $24,557 or 5.49% as  compared to total  operating expenses of  $447,057  for the three  months  ended  June 30, 2007.  The decrease is due to substantial reduction in company’s research and development expense, because the company has enough new products launched and must focus on their sales and marketing.

Net Income

Net income for the three months ended June 30, 2008 increased by $576,016 to $3,040,143 or 23.38% from $2,464,127 for the three months ended June 30, 2007. The increase in net income is the direct result of an increase in revenue and proportionally smaller increases in costs and expenses.

For the Six Months Ended June 30, 2008 compared to the Six Months Ended June 30, 2007:

Revenue

The Company generated $8,527,496 in net sales for the six months ended June 30, 2008, an increase of $1,660,457 or 24.18% as compared to the revenue of $6,867,039 for the six months ended June 30, 2007.

A breakdown of sales by product categories and as a percentage of total sales, as well as their respective gross margins for both first half of 2008 and the second quarter of 2008 are listed below:

	Q1 + Q2 2008 Revenue		Percentage of Revenue	Gross Margins
Nutritional Foods	$	2,104,183	24.68 %	49.39 %
Dietary Supplements	$	1,804,973	21.17 %	65.43 %
Cosmetic Products	$	152,578	1.79 %	71.9 2%
Cactus Materials	$	4,206,724	49.33 %	61.58 %
Personal Care and Other Products	$	154,147	1.81 %	75.00 %
Chichi Network Companies	$	104,891	1.23 %	19.50 %
Total	$	8,527,496	100 %	60.85 %

	Q2 2008 Revenue		Percentage of Revenue	Gross Margins
Nutritional Foods	$	1,399,571	21.82 %	49.13 %
Dietary Supplements	$	578,290	9.01 %	67.73 %
Cosmetic Products	$	49,151	0.77 %	69.59 %
Cactus Materials	$	4,144,189	64.60 %	56.28 %
Personal Care and Other Products	$	139,500	2.17 %	70.11 %
Chichi Network Companies	$	104,891	1.64 %	19.50-%
Total	$	6,415,592	100 %	56.16 %

16

Within the two of the major categories:

Nutritional Foods	Q2 2008 Revenue		Percentage of Nutritional Food Sales
Organic Rice	$	713,792		52.18	%
Soybean Milk and Yogurt	$	385,385		28.17	%
Long Gu Millet	$	41,449		3.03	%

Dietary Supplements	Q2 2008 Revenue		Percentage of Dietary Supplements Sales
Cactus Based Supplements	$	164,285		29.07	%
Cactus Crystal Drink	$	99,886		17.67	%
Wild Herbal Supplements	$	103,688		18.35	%

Our operations have clear seasonality.  The fact that the second quarter revenue triples that of the first quarter attributes to much larger harvests of cactus crops in the second quarter and large increase in nutritional products sales which is part of our production position strategy.

Our general production strategy is to grow our revenue year over year at a healthy and steady rate, at the same time rationalizing the product portfolio.

Compared with the same period last year, nutritional and green food category has the biggest increase of over 630%. This represents the shift of the production focus toward products that are more value-added and have larger market potentials.

Meanwhile, the company continues to expand its distribution network and has created 230 new franchisees stores during the 2nd quarter. The distribution of the new stores is as follows:

Region	City	# of stores		Revenue contribution in Q2		Note P-Provincial level M-City level C-County level
Northeast			123	$	530,363
	Harbin		48				P
	Daqing		27				C
	Qiqihar		21				C
	Mudanjiang		16				C
	Suihua		11				C
Northern China			11	$	48,156		C
	Beijing		11				C
Eastern China			21	$	90,563		C
	Shanghai		16				C
	Hefei		5				C
Southern China			43	$	185,438		C
	Guangzhou		27				C
	Shenzhen		16				C
Northwest			5	$	21,816		C
	Lanzhou		5				C
Southwest			20	$	86,270		C
	Chongqing		20				C
Southcentral			7	$	30,879		C
	Wuhan		7				C
Total			230	$	993,486		C

17

Order sizes over $30,000 make the store provincial level store, $22,400 municipal level, $15,000 county level, and $5,910 trial stores. A trial store does not have physical store space and is usually an individual selling from his/her home. All stores must reorder within every three months and the company provides incentives, such as rebates, to larger orders.

Provincial stores are mostly stand alone shops or a counter in a major supermarket. Most of the stores opened during the second quarter in Harbin are provincial stores. The stores opened in other cities are mostly county level and trial stores.

The company is rapidly building an online sales force. Many previous stores also turned online to save costs and taxes. When the customers order online, the company takes the payments and the nearby stores deliver the products.

Cost of Sales

The cost of sales was $3,672,909 for the six months ended June 30, 2008, an increase of $573,724 or 18.51% as compared to the cost of sales of $3,099,185 for the six months ended June 30, 2007.

As a percentage of total sales, cost of sales decreased to 43.07% from 45.13% during the first six months of 2008 compared to same period in 2007. This is a continued improvement of our overall gross margins. While we are increasing the production and sales of our green food product category, which we believe has the best market potential but also has relative lower margins than other product categories that China Yingxia manufactures, we are also improving our overall production efficiency, such as continuing to reduce the portion of the production that is contracted out to the third party manufacturers (11.76% in the second quarter), and strategic control of our raw materials prices. Therefore we expect to maintain our overall gross margin at the high 50’s percentile.

Total Operating Expenses

Total operating  expenses were $912,840 for the six months ended June 30, 2008,  an increase  of  $149,865 or 19.64% as  compared to total  operating expenses of  $762,975  for the six  months  ended  June 30, 2007.  This is a proportionally smaller increase than the increase in revenue. There was a $36,263 drop in selling expense from the first quarter, which is a holiday quarter and usually requires high expenses [due to compensation expenses associated with the Chinese New Year holiday.

18

Net Income

Net income for the six months ended June 30, 2008 increased by $747,315 to $3,752,513 or 24.87% from $3,005,198 for the six months ended June 30, 2007. The increase in net income is the direct result of an increase in revenue and proportionally smaller increases in costs and expenses.

Liquidity and Capital Resources

As of June 30, 2008, the Company had cash and cash equivalents of $2,513,855, as compared to $736,683 at December 31, 2007. As of June 30, 2008, the Company had working capital of $18,371,694, as compared to $ 14,765,981 as ofDecember 31, 2007.

Net cash used in operating activities totaled $1,639,185 for the six months ended June 30, 2008, as compared to cash used by operating activities of $834,331 for the six months ended June 30, 2007. The net cash used in operations was largely impacted by the increase in account receivable of $3,560,013 and inventory of $2,780,196.

The cause for the account receivable increase is the expansion of cactus growing areas. We provide the farmers with cactus seedlings as a loan and enter the dollar amount into account receivables. When the farmers harvest the cactus crops and sell them to the company, we collect the loan as a deduction in the purchase price.  We expect the collection from the third quarter of 2008 to the second quarter of 2009.

High inventory results from continued stocking of raw materials of agricultural products, which is usually carried out during the first and second quarter.

Net cash provided by investing activities totaled $2,259,264 for the six months ended June 30, 2008 as compared to net cash provided of $493,176 for the six months ended June 30, 2007. During the six month period ended June 30, 2008, we were able to collect short term loans of $2,194,774 and loans to related parties of $1,944,241. These collections are related to the short term loans we made to the farmers of our Hulan production base to finance the construction of well sinkers during the drought in 2007.

These collections offset purchase of property and equipment, investment advance to support our India subsidiary’s working capital, deposits on buildings and land along with investment made toward the development of our business in southern China with Chichi Wang companies.

On January 23, 2008, the Company registered ‘China Xianhe India Private Limited” in New Deli, India.   RMB 2,000,000 (approximately US$283,322) was made an advance as initial start up cost as of June 30, 2008.  The Company intends to expand its dietary supplement products into Indian market in the next several months. It is currently waiting for the business license of direct sales from Indian authorities.

On February 28, 2008, the Company signed an agreement with Guangzhou Chichi Network Technology Development Co., Ltd. (“Guangzhou Technology”), and Guangzhou Chichi Network Supermarket Chain Co., Ltd. (“Guangzhou Supermarket Chain”), together known as the Chichi Wang companies.  Subsequent to this agreement, the Company spent RMB 1,200,000 (approximately US$174,950) to finalize the acquisition on April 25,2008. The operating results of Chichi Network Companies have been consolidated into China Yingxia’s financial statements in this 10-Q.

Net cash used in financing activities were $0 for both six month periods ended June 30, 2008 and June 30, 2007.

Item 3.  Quantitative and Qualitative Disclosures About Market Risk

The Company is subject to certain market risks, including changes in interest rates and currency exchange rates.  The Company does not undertake any specific actions to limit those exposures.

19

 Item 4T. Evaluation of Disclosure Controls and Procedures

PART I - Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

As of June 30, 2008, under the direction of our Chief Executive Officer/Chief Financial Officer, we evaluated our disclosure controls and procedures as of June 30, 2008 and concluded that our disclosure controls and procedures were ineffective as of June 30, 2008 due to the following:  A material weakness due to a lack sufficient personnel with the appropriate level of knowledge, experience and training in the application of accounting operations of our company. This weakness causes us to not fully identify and resolve accounting and disclosure issues that could lead to a failure to perform timely internal control and reviews.  In order to remedy the weaknesses identified in this assessment, in June 2008, we hired a full-time CFO and instructed him to develop and implement necessary internal control procedures.

There were no changes in our internal control over financial reporting during the fiscal quarter ended June 30, 2008, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II - OTHER INFORMATION

Item 1.    Legal Proceedings.

None.

Item 1A.    Risk Factors.

Item 2.    Unregistered Sales of Equity Securities and Use of Proceeds.

None. 

Item 3.    Defaults Upon Senior Securities.

None.

Item 4.   Submission of Matters to a Vote of Security Holders.

None.

Item 5.   Other Information.

None.

Item 6.   Exhibits.

Exhibit No.	Title of Document
31.1	Certification of Principal Executive Officer pursuant to Rule 13a-14 and Rule 15d-14(a), promulgated under the Securities and Exchange Act of 1934, as amended
31.2	Certification of Principal Financial Officer pursuant to Rule 13a-14 and Rule 15d 14(a), promulgated under the Securities and Exchange Act of 1934, as amended
32.1	Certification pursuant to Section 906 of Sarbanes Oxley Act of 2002 (Chief Executive Officer)
32.2	Certification pursuant to Section 906 of Sarbanes Oxley Act of 2002 (Chief Financial Officer)

20

SIGNATURES

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

	CHINA YINGXIA INTERNATIONAL, INC.
Date: December 4, 2008	By:	/s/ Yingxia Jiao
		Yingxia Jiao
		Chief Executive Officer

Date: December 4, 2008	By:	/s/ Ren Hu
		Ren Hu
		Chief Financial Officer

21