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Yew Bio-Pharm Reports Financial Results for 2018 Second Quarter

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EL MONTE, Calif., Aug. 14, 2018 (GLOBE NEWSWIRE) -- Yew Bio-Pharm Group, Inc. ("Yew Bio" or the "Company") (YEWB), a major grower and seller of yew trees, yew raw materials used in the manufacture of traditional Chinese medicine, handicraft products made from yew timber and yew candle and soap made with yew essential oil in China, today reported financial results for three- and six-months ended June 30, 2018.

2018 Second Quarter Results

  Three Months Ended June 30, Percentage
    2018   2017 Change
 Revenues:        
TCM Raw Materials $ 13,053,333 $ 11,536,786 13.15 %  
Yew Trees   32,501   - 100.00 %  
Handicrafts   206   1,004 (79.48 )%  
Others   1,734,328   4,066,586 (57.35 )%  
Total Revenues $ 14,820,368 $ 15,604,376 (5.02 )%  

Total revenues for the second quarter of 2018 decreased 5.02% to $14.8 million from $15.6 million a year ago. Sales of TCM raw materials amounted to 88.08% of total revenues; sales of Yew Trees amounted to 0.22% of total revenues; sales of Handicrafts amounted to 0.00% of total revenues and sales of "Others" segment consisting with the yew essential oil candles, pine needle extracts, yew essential oil soaps, complex Taxus Cuspidate and northeast yew extract amounted to 11.70% of total revenues.

For the three months ended June 30, 2018, gross profit was $3.4 million, or 22.6% of total revenues, compared with $10.6 million, or 67.9% of total revenues for the comparable 2017 quarter. The decrease in the gross profit margin was primarily attributable to the decreased gross margin yields of TCM raw materials.

Operating expenses increased 329.2% to $1,287,300 for the quarter ended June 30, 2018, from $299,915 in the year-ago quarter. The increasing was primarily attributable to the increases in the stock-based compensation.

Net income for the three months ended June 30, 2018 decreased 84.3% to $1.6 million from $10.3 million in the same quarter last year due to the increase in cost of revenues from TCM raw material. Earnings per diluted share for the three months ended June 30, 2018 was $0.03, as compared to $0.19 for the three months ended June 30, 2017.

Six Month 2018 Financial Results

  Six Months Ended June 30, Percentage
    2018   2017 Change
Revenues:      
TCM Raw Materials $ 14,748,730 $ 14,071,047 4.82 %
Yew Trees   32,501   - 100.00 %
Handicrafts   1,308   2,368 (44.76 )%
Others   3,068,967   9,406,425 (67.37 )%
Total Revenues $ 17,851,506 $ 23,479,840 (23.97 )%

Total revenues for the first six months of 2018 decreased to $17.9 million from $23.5 million a year ago. Sales of TCM raw materials amounted to 82.62% of total revenues; sales of Yew Trees amounted to 0.18% of total revenues; sales of Handicrafts amounted to 0.01% of total revenues and sales of "Others" segment consisting with yew essential oil candles, pine needle extracts, yew essential oil soaps, complex Taxus Cuspidate and northeast yew extract amounted to 17.19% of total revenues.

For the six months ended June 30, 2018, gross profit was $3.8 million, or 21.5% of total revenues, compared with $11.1 million, or 47.3% of total revenues for the comparable first six months of 2017. The decrease in the gross profit margin was primarily attributable to the decreased gross margin yields of TCM raw materials.

Operating expenses increased 158.6% to $1,547,172 for the six months ended June 30, 2018, from $598,318 for the same period last year. The increasing was primarily attributable to the increase in stock-based compensation.

Net income for the first six months of 2018 decreased 83.1% to $1.8 million from $10.4 million for the same period last year. Earnings per diluted share was $0.03, as compared to $0.19 for the six months ended June 30, 2017.

"Our total revenues decreased for the six months ended June 30, 2018 compared with the same period of 2017 was mainly due to the sales decreasing of Others segment." said Mr. Zhiguo Wang, Chairman and Chief Executive Officer of Yew Bio-Pharm Group, Inc. "As a newly added category of the company, we developed a series of yew tree derivate products such as yew essential oil soap and candle. These products have contributed a great portion of total revenues to the company since 2016. In order to explore the market demand, we attended the Las Vegas ASD trade show on July 29th, 2018, and we directly communicated to the retailers/wholesalers in the show as to our products, designs and functions. We also received highly positive responses from the customers, and we are following some potential customers after the show."

"As we mentioned in previous reports, we are reserving the yew tree resource in order to manufacture our TCM raw materials. However, we still have to cut down certain whole grown yew trees to produce TCM raw materials to fulfill the increased demands. This will increase our TCM raw materials unit cost extremely since we picked the leaves from our grown yew trees to manufacture TCM raw materials normally. In order to resolve the issue, on June 14, 2018, we entered into a Joint Venture Planting Agreement with Qing'An National Forestry Administration, pursuant to which the Qing'An Forestry has given HDS access to 10,729.5 mu of forest land located in Qing'An County to develop yew tree forests and produce yew seedlings. In addition, the Company is required to plant yew trees on this land from June 14, 2018 to June 13, 2038. Any gross revenues from the planting of yew tree shall be distributed 80% to the Company and 20% to the Qing'An Forestry. We believe this will be a great benefit for the company, which could provide more yew trees and increase our potential revenues."

ABOUT YEW BIO-PHARM GROUP, INC
Yew Bio-Pharm Group, Inc., through its operating entity, Harbin Yew Science and Technology Development Co., Ltd. (HDS), is a major grower and seller of yew trees, yew raw materials used in the manufacture of traditional Chinese medicine (TCM) and products made from yew timber in China. Raw material from the species of yew tree that the Company grows contains taxol, and TCM containing yew raw materials has been approved as a traditional Chinese medicine in China for secondary treatment of certain cancers. The Company uses a patented, accelerated growth technology to speed the growth and maturity and commercialization of yew trees and believes that it is one of the few companies possessing a permit to sell them. Yew Bio-Pharm also recently established a division to focus on organic foods and dietary supplements with the aim of developing new business opportunities in related industries. To learn more, please visit www.yewbiopharm.com.

SAFE HARBOR
This press release forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act.  These forward-looking statements involve a number of risks and uncertainties that could cause actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by these forward-looking statements.  A number of factors could cause actual results to differ materially from those contained in any forward-looking statement, including but not limited to the following: our ability to collect from our largest customers; our dependence on a small number of customers for raw materials, including a related party; our ability to continue to purchase raw materials at relatively stable prices; our dependence on a small number of customers for our yew trees for reforestation; our ability to market successfully raw materials used in the manufacture of traditional Chinese medicines; and our ability to receive continued preferential tax treatment for the sale of yew trees and potted yew trees.  From time to time, these risks, uncertainties and other factors are discussed in the Company's filings with the U.S. Securities and Exchange Commission, including its most recent annual report on Form 10-K.  Yew Bio does not undertake any obligation to update any forward-looking statements as a result of new information, future events or otherwise, except as required under applicable law.

 (financial tables follow)
YEW BIO-PHARM GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS

    June 30,
2018
    December 31,
2017
 
    (Unaudited)        
ASSETS            
CURRENT ASSETS:            
Cash   $ 772,769     $ 859,830  
Accounts receivable     60,127       9,881,914  
Accounts receivable - related parties     12,296,807       21,847,733  
Inventories, net     8,385,394       2,579,190  
Prepaid expenses - related parties     43,202       57,202  
Prepaid expenses and other assets     58,176       37,519  
VAT recoverables     990,403       170,564  
Total Current Assets     22,606,878       35,433,952  
                 
LONG-TERM ASSETS:                
Long-term prepaid expenses - related party     357,904       -  
Long-term inventories, net     1,396,072       10,546,648  
Property and equipment, net     540,854       579,557  
Land use rights and yew forest assets, net     28,455,098       6,369,938  
                 
Total Long-term Assets     30,749,928       17,496,143  
                 
Total Assets   $ 53,356,806     $ 52,930,095  
                 
LIABILITIES AND SHAREHOLDERS' EQUITY                
CURRENT LIABILITIES:                
Accounts payable   $ 167,928     $ 152,812  
Accounts payable - related parties     -       357,708  
Accrued expenses and other payables     421,710       162,619  
Taxes payable     5,522       5,574  
Due to related parties     586,295       619,999  
Short-term borrowings     4,666,779       6,099,876  
                 
Total Current Liabilities     5,848,234       7,398,588  
                 
NONCURRENT LIABILITIES:                
Deferred income     353,522       359,646  
Total Noncurrent Liabilities     353,522       359,646  
                 
Total Liabilities     6,201,756       7,758,234  
                 
SHAREHOLDERS' EQUITY:                
Common Stock ($0.001 par value; 140,000,000 shares authorized; 51,875,000 shares issued and outstanding at June 30, 2018 and December 31, 2017)     51,875       51,875  
Additional paid-in capital     11,428,412       10,363,412  
Retained earnings     32,049,852       30,287,658  
Statutory reserves     3,762,288       3,762,288  
Accumulated other comprehensive income (loss) - foreign currency translation adjustment     (137,377 )     706,628  
                 
Total Shareholders' Equity     47,155,050       45,171,861  
                 
Total Liabilities and Shareholders' Equity   $ 53,356,806     $ 52,930,095  

YEW BIO-PHARM GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (LOSS)
(UNAUDITED)

    For the Three Months Ended
June 30,
    For the Six Months Ended
June 30,
 
    2018     2017     2018     2017  
REVENUES:                        
Revenues   $ 142,412     $ 4,067,590     $ 174,670     $ 9,408,793  
Revenues - related parties     14,677,956       11,536,786       17,676,836       14,071,047  
                                 
Total Revenues     14,820,368       15,604,376       17,851,506       23,479,840  
                                 
COST OF REVENUES:                                
Cost of revenues     89,337       4,058,847       102,243       9,360,063  
Cost of revenues - related parties     11,377,474       955,866       13,916,411       3,010,134  
                                 
Total Cost of Revenues     11,466,811       5,014,713       14,018,654       12,370,197  
                                 
GROSS PROFIT     3,353,557       10,589,663       3,832,852       11,109,643  
                                 
OPERATING EXPENSES:                                
Selling     6,989       66       7,829       331  
General and administrative     1,280,311       299,849       1,539,343       597,987  
                                 
Total Operating Expenses     1,287,300       299,915       1,547,172       598,318  
                                 
INCOME FROM OPERATIONS     2,066,257       10,289,748       2,285,680       10,511,325  
                                 
OTHER INCOME (EXPENSES):                                
Interest expense     (69,077 )     (35,382 )     (137,110 )     (87,345 )
Other income     3,022       1,147       90,325       1,437  
Exchange loss     (387,014 )     -       (476,701 )     -  
                                 
Total Other Expenses     (453,069 )     (34,235 )     (523,486 )     (85,908 )
                                 
INCOME BEFORE PROVISION FOR INCOME TAXES     1,613,188       10,255,513       1,762,194       10,425,417  
PROVISION FOR INCOME TAXES     -       (604 )     -       (604 )
NET INCOME   $ 1,613,188     $ 10,254,909     $ 1,762,194     $ 10,424,813  
                                 
COMPREHENSIVE INCOME:                                
NET INCOME   $ 1,613,188     $ 10,254,909     $ 1,762,194     $ 10,424,813  
OTHER COMPREHENSIVE INCOME (LOSS):                                
Foreign currency translation adjustment     (2,400,809 )     775,601       (844,005 )     1,079,481  
                                 
COMPREHENSIVE INCOME (LOSS)   $ (787,621 )   $ 11,030,510     $ 918,189     $ 11,504,294  
                                 
NET INCOME PER COMMON SHARE:                                
Basic   $ 0.03     $ 0.20     $ 0.03     $ 0.20  
Diluted   $ 0.03     $ 0.19     $ 0.03     $ 0.19  
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:                                
Basic     51,875,000       51,875,000       51,875,000       51,875,000  
Diluted     55,866,258       53,041,145       55,502,609       55,034,527  

YEW BIO-PHARM GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)

    For the Six Months Ended
June 30,
 
    2018     2017  
CASH FLOWS FROM OPERATING ACTIVITIES:            
Net income   $ 1,762,194     $ 10,424,813  
Adjustments to reconcile net income to net cash provided by operating activities:                
Depreciation     30,050       46,498  
Stock-based compensation     1,065,000       67,348  
Amortization of land use rights and yew forest assets     598,366       70,717  
Changes in operating assets and liabilities:                
Accounts receivable     10,037,898       2,693,028  
Accounts receivable - related parties     9,542,974       (4,421,530 )
Prepaid expenses and other current assets     (21,862 )     (5,367 )
Prepaid expenses - related parties     13,543       11,816  
Inventories, net     3,297,088       (7,625,415 )
VAT recoverables     (855,373 )     292,731  
Accounts payable     15,301       (26,246 )
Accounts payable - related parties     (365,562 )     (1,978,078 )
Accrued expenses and other payables     272,245       302,587  
Due to related parties     (32,370 )     (51,602 )
Deferred income     -       218,204  
Taxes payable     (52 )     (11,869 )
                 
NET CASH PROVIDED BY OPERATING ACTIVITIES     25,359,440       7,635  
                 
CASH FLOWS FROM INVESTING ACTIVITIES:                
Prepayments made to related party for purchase of yew forest assets     (372,098 )     -  
Purchase of land use rights and yew forest assets     (23,681,125 )     (679,387 )
                 
NET CASH USED IN INVESTING ACTIVITIES     (24,053,223 )     (679,387 )
                 
CASH FLOWS FROM FINANCING ACTIVITIES:                
Proceeds from short-term borrowings     3,156,000       6,501,105  
Repayment of short-term borrowings     (4,432,593 )     (3,617,764 )
Repayments to related party     -       (75,875 )
                 
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES     (1,276,593 )     2,807,466  
                 
EFFECT OF EXCHANGE RATE ON CASH     (116,685 )     22,849  
                 
NET INCREASE (DECREASE) IN CASH     (87,061 )     2,158,563  
                 
CASH - Beginning of period     859,830       278,991  
                 
CASH - End of period   $ 772,769     $ 2,437,554  
                 
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:                
Cash paid for:                
Interest   $ 104,208     $ 86,076  
Income taxes   $ -     $ 18,015  
NON-CASH INVESTING AND FINANCIANG ACTIVITIES                
Operating expenses paid by related party   $ 4,555     $ 27,015  
Reclassification of inventories to land use rights and yew forest assets   $ -     $ 4,257,122  

 

Company Contacts:
Henry Pang
Yew Bio-Pharm Group, Inc.
Tel: (626) 401-9588
hpang@yewbiopharm.com

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