First Quarter 2012 Results

• Net sales increased 34.7% to $8.3 million from $6.2 million in the fourth quarter of fiscal 2011
• Gross profit rose 26.1% to $5.2 million from $4.1 million in the previous quarter
• Gross margin declined to 62.6% compared to 66.9% in the previous quarter
• Adjusted net income was $0.8 million, or $0.03 per diluted share, compared to an adjusted net income of $0.6 million in the previous quarter

  Ms. Li Liu, Chief Executive Officer of Yayi International, commented, "We are pleased to achieve strong revenue growth and an adjusted net income of $0.8 million for the first quarter of fiscal 2012. This strong revenue performance reflects the growing strength of our sales team as well as greater industrial demand for milk powder. We also remain focused on strengthening our competitive position. Our management team is constantly evaluating the sales strategies we have in place to better tailor them to the rapidly-shifting dynamics of our industry. Overall, we believe that though China’s infant formula market continues to remain highly volatile it is also full of opportunity.”

  “To better highlight the initiatives taking place, we have chosen to present a sequential comparison of our financials this quarter. In the past year, we implemented a strategy realignment and continued to innovate our methodology to better fit our dynamic industry. A year-over-year comparison fails to capture much of the exciting near-term changes that are taking place so we believe a sequential comparison is a better fit. A year-over-year comparison is available through our 10-Q filing with the Securities and Exchange Commission as well as at the end of this press release,” Ms. Liu concluded.