Yanglin Soybean, Inc. Reports First Quarter 2011 Financial Results

First Quarter 2011 Results

Our net sales for the three months ended March 31, 2011 decreased by $135,154 or 0.4% over the three months ended March 31, 2010. The slight decrease in sales revenue was mainly the result of adjustment of operation levels due to reduced supply of raw material caused mainly by farmers' high price expectation.

We recorded a gross loss of $217,960 in the three months ended March 31, 2011, in comparison to a gross profit of $16,622 in the three months ended March 31, 2010. Our gross profit margin decreased from positive 0.05% to negative 0.64% over the same period. The main reason for the changes in gross profit was the increase in the raw material prices of certain of our soybean products.

The PRC has long been importing large volumes of genetically-modified (GM) soybeans from US and South America, and such imports reached new peaks from the end of 2009 through 2010. The General Administration of Customs of the People's Republic of China announced that the aggregate import volume reached 55 million tons in 2010, an increase of 28.8% over that of 2009. In response to the negative effect on PRC soybean farmers of large levels of imports at low prices, the PRC government launched a national strategic reserve purchase from late 2008 to 2010, especially in Heilongjiang, in order to maintain prices of domestic non-GM soybeans and to protect the interests of domestic farmers. The highest price offered by the government was over 10% higher than the normal market price in our local area, thus forcing our cost of raw materials to rise significantly.

The above environmental factors negatively affected our gross profit margin from both cost and sales price perspectives, creating a gross loss. To counter the current difficulties, we have undertaken a series of measures, including purchasing soybeans with higher water content (which may be cheaper), implementing strict cost-saving policies, lowering production capacity utilization ratio, granting many employees temporary non-paid vacations, etc.

Selling expenses for the three months ended March 31, 2011 increased by 1.23% as compared to the three months ended March 31, 2010. General and administrative expenses for the three months ended March 31, 2011 decreased by 31.28% over the three months ended March 31, 2010. This was mainly caused by the material reduction in the expenses related to public company affairs, including professional fees paid to legal counsel. As a percentage of net sales, general and administrative expenses decreased from 2.49% for the first quarter of 2010 to 1.72% for the first quarter of 2011. As compared to the first quarter of 2010, total operating expenses decreased by 28.98% in the first quarter of 2011, and the percentage of net sales decreased from 2.68% to 1.91%.

Loss from operations was primarily due to the reasons described in the sections titled "Net Sales" and "Cost of Sales and Gross Profit" above. For the first quarter of 2011, we generated a gross loss and a loss after deducting selling and general and administrative expenses. Operating margin improved from negative 2.64% to negative 2.56% from the first quarter of 2010 to the first quarter of 2011.

Yanglin has been recognized as a "Key Leading Enterprise" in the industrial sector of the important agriculture industry by the Chinese government. The Company continues to benefit from its income tax exempt status during the entire fiscal year 2011.

Basic and diluted earnings per share (EPS) for the quarter ended March 31, 2011, were $(0.26) and $(0.26), compared to $0.19 and $0.13 for the same quarter last year, as restated.

Cash Positions

The Company's balance sheet as of March 2011 included cash and cash equivalents of $28 million, compared with $38 million at the same quarter of 2010. Total shareholders' equity was $45.1 million.

Cash provided by operating activities for the three months ended March 31, 2011 was $4,543,067, while cash provided by operating activities for the three months ended March 31, 2010, was $3,176,882. The difference was primarily due to the reduction in the balance of our inventories by $2,300,982 in the three months ended March 31, 2011, while in comparison we increased the balance of our inventories by $3,237,871 in the same period of 2010.

Conference Call

The Company will host a conference call on Monday, May 16, 2011 at 9:00 A.M. Eastern Time / 9:00 P.M. Beijing Time. A question and answer session will follow management's presentation.

To participate, please call the following numbers 10 minutes before the call start time and ask to be connected to the Yanglin Soybean conference call:

Yanglin Soybean, Inc. is one of the leading domestic soybean processors in China. The Company manufactures soybean oil, salad oil and soybean meal with an annual processing capacity of 520,000 metric tons in 2011. The Company's products are sold directly to its customers or through distributors. Majority of Yanglin Soybean's customers are located in Northern China.

Forward Looking Statement

Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995: Certain statements in this press release and oral statements made by the Company constitute forward-looking statements for purposes of the safe harbor provisions under The Private Securities Litigation Reform Act of 1995. These statements include, without limitation, statements regarding our ability to prepare the company for growth, the Company's planned capacity expansion and predictions and guidance relating to the Company's future financial performance. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our financial condition, results of operations, business strategy and financial needs but they involve risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements, which may include, but are not limited to, such factors as unanticipated changes in product demand, pricing and demand trends for the Company's products, changes to government regulations, risk associated with operation of the Company's facilities, risk associated with large scale implementation of the company's business plan, the ability to attract new customers, ability to increase its product's acceptance, cost of raw materials, downturns in the Chinese economy, and other information detailed from time to time in the Company's filings and future filings with the United States Securities and Exchange Commission. Investors are urged to consider these factors carefully in evaluating the forward-looking statements herein and are cautioned not to place undue reliance on such forward-looking statements, which are qualified in their entirety by this cautionary statement. The forward-looking statements made herein speak only as of the date of this press release and the Company undertakes no duty to update any forward-looking statement to conform the statement to actual results or changes in the company's expectations.