8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (date of earliest event reported): September 5, 2008

YONGYE BIOTECHNOLOGY INTERNATIONAL, INC.

(Exact name of registrant as specified in charter)

Nevada

(State or other jurisdiction of incorporation)

333-143314 (Commission File Number) 20-8051010 (IRS Employer Identification No.)

6th floor, Xue Yuan International Tower, Zhi Chun Road, Hai Dian District, Beijing, PRC

(Address of principal executive offices and zip code)

+(8610) 8231-8626  

(Registrant’s telephone number including area code)

(Former Name and Former Address)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of registrant under any of the following provisions:

· Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

· Soliciting material pursuant to Rule 14a-12(b) under the Exchange Act (17 CFR 240.14a-12(b))

· Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

· Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 1.01 ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT

On September 5, 2008, Yongye Biotechnology International, Inc., a Nevada corporation (the “Company”), entered into a securities purchase agreement (the “Purchase Agreement”), with certain qualified institutional buyers (the “Investors”) for the issuance and sale of an aggregate of 6,073,006 shares of the Company’s common stock, par value $.001 per share (the “Shares”) and warrants exercisable for 1,518,253 shares of Common Stock at an exercise price of $1.848 per share (the “Warrants”), for aggregate gross proceeds equal to approximately $9,350,000 (the “Offering”). The Warrants are for a term of 5-years and have a cashless exercise feature if, after the six-month anniversary of the date that the Warrant is issued, there is no effective registration statement registering, or no current prospectus available for, the resale of the shares underlying the Warrant.

In connection with the Offering, we entered into a registration rights agreement (the “Registration Rights Agreement”) with the Investors, in which we agreed to file a registration statement (the “Registration Statement”) with the U.S. Securities and Exchange Commission (the “SEC”) to register for resale the Shares, within 45 calendar days of the closing date of the Offering, and to use our best efforts to have the registration statement declared effective within 150 calendar days of the closing date of the Offering. We will pay liquidated damages of 1% of the dollar amount of the Shares sold in the Offering per month, payable in cash, up to a maximum of 10%, if the registration statement is not filed and declared effective within the foregoing time periods. ROTH Capital Partners, LLC (“Roth”) acted as the exclusive financial advisor and placement agent for the Company. Roth received warrants to purchase 607,301 shares of the Company’s common stock, an amount equal to 10% of the securities issued in the Offering, at a price per share of $1.848. The warrants are for a term of 5-years and have a cashless exercise feature.

We also entered into an escrow agreement (the “Escrow Agreement”) with the Investors, Roth, as representative of the Investors, Tri- State Title & Escrow LLC (the “ Escrow Agent”) and Full Alliance International Limited (the “Pledgor”), pursuant to which 4,000,000 shares of Common Stock owned by the Pledgor (the “Escrow Shares”) were delivered to the Escrow Agent. Of the Escrow Shares, 2,000,000 shares (the “Make Good Escrow Shares”) are being held as security for the achievement of (i) $10,263,919 (the “2008 Net Income Threshold”), and (ii) fully diluted earnings per share to be reported in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2008 to be filed with the SEC (the “2008 Annual Report”), of no less than $0.42 (the “2008 Guaranteed EPS”). If we achieve the 2008 Net Income Threshold and the 2008 Guaranteed EPS, the Make Good Escrow Shares will remain in escrow as security for the achievement of certain net income and fully diluted earnings per share targets for the year ended December 31, 2009. If we do not achieve the 2008 Net Income Threshold or the 2008 Guaranteed EPS, the Make Good Escrow Shares will be transferred to the Investors on a pro rata basis. If the 2008 Annual Report is not filed timely with the SEC and remains unfiled for a period in excess of 45 days after the last day that the same was required to have been filed (taking into account the relief permitted under Rule 12(b)-25 of the Exchange Act), then the 2008 After Tax Net Income shall be deemed to be less than the 2008 Net Income Threshold, and all of the Make Good Escrow Shares shall be transferred to the Investors on a pro-rata basis. If prior to the second anniversary of the filing of the 2008 Annual Report, the Company or its auditors report or recognize that the financial statements contained in the 2008 Annual Report are subject to amendment or restatement such that the Company would recognize or report adjusted 2008 After Tax Net Income of less than the 2008 Net Income Threshold or adjusted earnings per share less than the 2008 Guaranteed EPS, then notwithstanding the retention of the Make Good Escrow Shares in the escrow, or any prior return of Make Good Escrow Shares to the Pledgor, the Pledgor will, within 10 Business Days following the earlier of the filing of such amendment or restatement or recognition, deliver the Make Good Escrow Shares to the Investors. “2008 After Tax Net Income” shall mean the Company's operating income after taxes for the fiscal year ending December 31, 2008, determined in accordance with GAAP as reported in the 2008 Annual Report.

The following provisions with respect to the achievement of 2009 net income and fully diluted earnings per share targets will only apply if the Make Good Escrow Shares have been retained in the escrow after the achievement by the Company of the 2008 Net Income Threshold and 2008 Guaranteed EPS. In the event that (i) the 2009 After Tax Net Income equals or exceeds $12,649,248 and is less than $15,811,560, or (ii) the fully diluted earnings per share reported in the 2009 Annual Report on Form 10-K filed with the SEC (the “2009 Annual Report”), equals or exceeds $0.42 and is less than $0.53, then Make Good Escrow Shares equal to the product of (i)(A) $15,811,560 minus the 2009 After Tax Net Income, divided by (B) $15,811,560, and (ii) the Make Good Escrow Shares, shall be transferred to the Investors on a pro-rata basis, and the remaining Make Good Escrow Shares shall be returned to the Pledgor. In the event that (i) the 2009 After Tax Net Income is less than $12,649,248 or (ii) the fully diluted earnings per share reported in the 2009 Annual Report is less than $0.42, then all of the Make Good Escrow Shares shall be transferred to the Investors on a pro-rata basis. In the event that the (i) 2009 After Tax Net Income is equal to or greater than $15,811,560 and (ii) the fully diluted earnings per share reported in the 2009 Annual Report is equal to or greater than $0.53, then the Make Good Escrow Shares shall be returned to the Pledgor. If the 2009 Annual Report is not filed timely with the SEC and remains unfiled for a period in excess of 45 days after the last day that the same was required to have been filed (taking into account the relief permitted under Rule 12(b)-25 of the Exchange Act), then the 2009 After Tax Net Income shall be deemed to be less than $12,649,248, and all of the Make Good Escrow Shares shall be transferred to the Investors on a pro-rata basis. If prior to the second anniversary of the filing of the 2009 Annual Report, the Company or its auditors report or recognize that the financial statements contained in the 2009 Annual Report are subject to amendment or restatement such that the Company would recognize or report adjusted 2009 After Tax Net Income of less than $12,649,248 or adjusted earnings per share less than $0.42, then notwithstanding any prior return of the Make Good Escrow Shares, or any portion thereof, to the Pledgor, the Pledgor will, within 10 business days following the earlier of the filing of such amendment or restatement or recognition, deliver the relevant Make Good Escrow Shares to the Investors; provided, however, that if any portion of the Make Good Escrow Shares have been previously transferred to the Investors, the Pledgor shall only be responsible for transferring such number of Make Good Escrow Shares up to the number of Make Good Escrow Shares that were previously returned to the Pledgor. In no event shall the Pledgor be responsible for transferring any number of Make Good Escrow Shares in excess of what has been previously returned to the Pledgor. “2009 After Tax Net Income” shall mean the Company's operating income after taxes for the fiscal year ending December 31, 2009, determined in accordance with GAAP as reported in the 2009 Annual Report.

The remaining 2,000,000 shares in escrow are being held as security for the timely issuance of a fertilizer license (the “License”) to the CJV (as defined below) and completion of the CJV Restructuring (as defined below) (the “Restructuring Make Good Shares”). In the event that (1) the License has not been issued to Yongye Nong Feng Biotechnology Co., Ltd., our cooperative joint venture organized under the laws of the People’s Republic of China (the “CJV”), by June 30, 2009, or such later date as agreed to by us and Investors holding a majority of the Shares at such time (the “License Grant Date”), or (2) the License has been issued by the License Grant Date, but the CJV Restructuring is not completed by the Restructuring Completion Date, the Restructuring Make Good Shares shall be transferred in accordance with the Escrow Agreement to the Investors on a pro-rata basis for no consideration other than their respective investment amounts paid to us at Closing. The “Restructuring Completion Date” shall be the date that is 132 calendar days after the License Grant Date. CJV Restructuring means the consummation of the acquisition of the assets of Inner Mongolia Yong Ye Biotechnology Co., Ltd. by the CJV and the draw down by the CJV of a bank loan or loans for at least the RMB equivalent of US$6.0 million that is secured against the acquired assets.

If the License is issued by the License Grant Date and the CJV Restructuring is completed by the Restructuring Completion Date, the Restructuring Make Good Shares shall be returned to the Pledgor.

The Shares were issued in reliance upon an exemption from registration afforded under Section 4(2) of the Securities Act of 1933, as amended (the “Securities Act”), for transactions not involving a public offering, and Regulation D and/or Regulation S, promulgated thereunder, and in reliance upon exemptions from registration under applicable state securities laws.

A copy of the Securities Purchase Agreement, the Registration Rights Agreement and the Escrow Agreement are incorporated herein by reference as Exhibits 10.1, 4.1 and10.2, respectively, to this Form 8-K.

Item 3.02 UNREGISTERED SALES OF EQUITY SECURITIES

The Company hereby incorporates by reference its response in Item 1.01 with regard to the terms, conditions and sale of the Shares and Warrants pursuant to the Offering. Each Investor represented to the Company that it was a “qualified institutional buyer” and made other investment representations and agreed that the Shares shall bear a restrictive legend against resale without registration under the Securities Act.

A copy of the Purchase Agreement, the Registration Rights Agreement and the Escrow Agreement are incorporated herein by reference as Exhibit 10.1, Exhibit 4.1, and Exhibit 10.2, respectively, to this Form 8-K. The descriptions of the Purchase Agreement, the Registration Rights Agreement and the Escrow Agreement do not purport to be complete and are qualified in their entirety by reference to the full text of the exhibits filed herewith and incorporated by this reference.

The sale of the Shares and the Warrants was made pursuant to Section 4(2) of the Securities Act for transactions not involving a public offering and Regulation D and/or Regulation S, as promulgated by the SEC under the Securities Act, and in reliance upon exemptions from registration under applicable state securities laws.

Item 8.01 OTHER

On September 10, 2008, we issued a press release announcing the consummation of the transactions contemplated by the Purchase Agreement. The press release is annexed hereto as Exhibit 99.1.

Item 9.01 FINANCIAL STATEMENTS AND EXHIBITS.

(d) Exhibits

Set forth below is a list of exhibits to this Current Report on Form 8-K:

Exhibit No.:	Description:
4.1	Registration Rights Agreement dated as of September 5, 2008 by and among Yongye Biotechnology International, Inc. and the several investors named therein(1).
4.2	Form of Investor Warrant(1).
4.4	Form of Placement Agent Warrant(1).
10.1	Securities Purchase Agreement dated as of September 5, 2008 by and among Yongye Biotechnology International, Inc., Inner Mongolia Yongye Nong Feng Biotechnology Co., Ltd., a cooperative joint venture organized under the laws of the People’s Republic of China, and the several investors named therein (1).
10.2	Make Good Share Escrow Agreement, dated as of September 5, 2008, by and among Yongye Biotechnology International, Inc., the several investors named therein, ROTH Capital Partners, LLC, Full Alliance International Limited, and Tri-State Title & Escrow, LLC(1).
99.1	Press Release.

(1) Previously filed as an exhibit to the Registration Statement on Form S-1/A (Reg. No. 333-150949) filed with the Securities and Exchange Commission on September 9, 2008

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	YONGYE BIOTECHNOLOGY INTERNATIONAL, INC.
Dated: September 10, 2008	By:	/s/ Zishen Wu
		Zishen Wu
		CEO

EX-99.1

For Immediate Release
Contact:
Yongye Biotechnology International, Inc.	CCG Investor Relations, Inc.
Mr. Larry Gilmore-VP of Corporate Strategy	Mr. Crocker Coulson, President
Phone: +1-818-390-1272	Phone: +1-646-213-1915 (New York)
E-mail: larry.gilmore@gmail.com	E-mail: crocker.coulson@ccgir.com
	http://www.ccgir.com

Yongye Biotechnology International Raises $9.4 Million

In Private Placement

BEIJING, September 10, 2008. - Yongye Biotechnology International, Inc. (OTC Bulletin Board: YGYB; "Yongye" or the "Company"), a leading developer, producer and distributor of nutrients for plants and animals in the People's Republic of China, today announced that it closed a private placement financing with certain institutional investors led by Black River Asset Management, pursuant to which the Company issued 6,073,006 shares of its common stock for gross proceeds of approximately $9.4 million. Roth Capital Partners served as the placement agent.

The Company intends to use the proceeds from this placement to begin restructuring Yongye Nongfeng Biotechnology Co. (“Yongye Nongfeng”), the Cooperative Joint Venture (CJV) through which Yongye conducts operations in China, and for working capital. The initial steps in the restructuring will be to purchase production equipment located at an existing 2,000 Tonnes Per Annum (TPA) production line that is owned by the Company’s current contract manufacturer, Inner Mongolia Yongye Biotechnology Company, Ltd. (“Inner Mongolia Yongye”), which is scheduled to occur by the end of October 2008, and to construct a new 8,000 TPA production facility, which is scheduled to be completed by the middle of October 2008. The combined 10,000 TPA capacity of both facilities will allow the Company to produce its own finished goods in the quantities needed to fulfill its current and future sales goals. After the completion of the equipment purchase and the integration of the equipment with the Company’s new 8,000 TPA facility, the Company will discontinue its current exclusive contract manufacturing agreement with Inner Mongolia Yongye. The final step to the restructuring will be to transfer to the CJV all of the land, buildings and permits that belong to Inner Mongolia Yongye, and the new manufacturing facility, which will make the CJV the Company’s own manufacturing and distribution entity. The full restructuring process is not expected to be completed until late summer of 2009.

“The money that we receive from this additional financing will help sustain our rapid pace of growth,” said Mr. Wu, Chairman and CEO of Yongye. “Our business has outgrown our current manufacturing capabilities, and we need to be able to supply our distribution network with more of our current products and new products which we are planning to produce in the future.”

The securities issued in the private placement have not been registered under the United States Securities Act of 1933 or the securities laws of any other jurisdiction. Accordingly, these securities may not be sold by investors in the United States, except pursuant to an effective registration statement or an applicable exemption from the registration requirements.

This press release does not constitute an offer to sell or the solicitation of an offer to buy any security and shall not constitute an offer, solicitation or sale in any jurisdiction in which such offer, solicitation or sale would be unlawful.

About Yongye Biotechnology International, Inc.

Yongye Biotechnology International, Inc., headquartered in Beijing, is engaged in the development, distribution and sales of fulvic acid based nutrients for plants and animals. The Company's patent pending processes and proprietary formulas allow it to create products which increase crop yields and improve the health of livestock. Its sole operating subsidiary, Yongye Nongfeng Biotechnology Company, Ltd., is located in Inner Mongolia. The Company sells its products through distributors and directly to farmers located in ten provinces throughout China.

Forward Looking Statements

Certain statements set forth in this press release constitute "Forward- looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include, without limitation, any statement that may predict, forecast, indicate, or imply future results, performance or achievements, and may contain the words "estimate," "project," "intend," "forecast," "anticipate," "plan," "planning," "expect," "believe," "will," "will likely," "should," "could," "would," "may" or words or expressions of similar meaning. All such forward-looking statements involve risks and uncertainties, including, but not limited to: statements regarding the Company's products; marketing and sales; patents and regulatory approvals; the effect of competition and proprietary rights of third parties; the need for and availability of additional financing and access to capital; the seeking of joint development, licensing or distribution and collaboration and marketing arrangements with other companies. There can be no assurance that such forward-looking statements will prove to be accurate and Yongye undertakes no obligation to update any forward-looking statements or to announce revisions to any of the forward-looking statements.

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