10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q 

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2018  

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE TRANSITION PERIOD FROM                       TO

COMMISSION FILE NUMBER 000-54701

YEW BIO-PHARM GROUP, INC.

(Exact name of registrant as specified in its charter)

Nevada	26-1579105
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

9460 Telstar Avenue, Suite 6

El Monte, California 91731

 (Address of principal executive offices) (Zip Code)

(626) 401-9588 

 (Registrant’s telephone number, including area code)

N/A

(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 has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒   No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or smaller reporting company. See the definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☒
		Emerging Growth Company	☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards pursuant to Section 13(a) of the Exchange Act. ☐

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

As of November 19, 2018, there were 52,075,000 shares, $0.001 par value per share, of the registrant’s common stock outstanding. 

YEW BIO-PHARM GROUP, INC.

FORM 10-Q

FOR THE NINE-MONTH PERIOD ENDED SEPTEMBER 30, 2018

TABLE OF CONTENTS

		Page Number
PART I. FINANCIAL INFORMATION
ITEM 1.	FINANCIAL STATEMENTS	1
	CONSOLIDATED BALANCE SHEETS AS OF SEPTEMBER 30, 2018 (UNAUDITED) AND DECEMBER 31, 2017	1
	CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (UNAUDITED) FOR THE THREE AND NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2018 AND 2017	2
	CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) FOR THE NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2018 AND 2017	3
	NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS	4
ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	22
ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	37
ITEM 4.	CONTROLS AND PROCEDURES	37
PART II. OTHER INFORMATION
		37
ITEM 1.	LEGAL PROCEEDINGS
ITEM 1A.	RISK FACTORS	38
ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	38
ITEM 3.	DEFAULTS UPON SENIOR SECURITIES	38
ITEM 4.	MINE SAFETY DISCLOSURES	38
ITEM 5.	OTHER INFORMATION	38
ITEM 6.	EXHIBITS	38

i

Forward-Looking Statements

This document contains 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. All statements other than statements of historical fact are “forward-looking statements”, including, but not limited to, any projections of earnings, revenue or other financial items; any statements of the plans, strategies and objectives of management for future operations; any statements concerning proposed new services or developments; any statements regarding future economic conditions or performance; any statements of belief; and any statements of assumptions underlying any of the foregoing.

Forward-looking statements may include the words “may,” “could,” “will,” “estimate,” “intend,” “continue,” “believe,” “expect” or “anticipate” or other similar words. These forward-looking statements present our estimates and assumptions only as of the date of this report. Except for our ongoing obligation to disclose material information as required by the federal securities laws, we do not intend, and undertake no obligation, to update any forward-looking statement.

Although we believe that the expectations reflected in any of our forward-looking statements are reasonable, actual results could differ materially from those projected or assumed in any of our forward-looking statements. Our future financial condition and results of operations, as well as any forward-looking statements, are subject to change and inherent risks and uncertainties. Some of the key factors impacting these risks and uncertainties include, but are not limited to:

● risks related to our ability to collect amounts owed to us by some of our largest customers;

● our ability to continue to purchase yew cuttings from our various suppliers at relatively stable prices;

● our dependence on a small number of customers for our yew raw materials, including a related party ;

● our dependence on a small number of customers for our yew trees for reforestation;

● our ability to market successfully yew raw materials used in the manufacture of traditional Chinese medicine (“TCM”);

● industry-wide market factors and regulatory and other developments affecting our operations;

● our ability to sustain revenues should the Chinese economy slow from its current rate of growth;

● continued preferential tax treatment for the sale of yew trees and potted yew trees;

● uncertainties about involvement of the Chinese government in business in the People’s Republic of China (the “PRC” or “China”) generally; and

● any change in the rate of exchange of the Chinese Renminbi (“RMB”) to the U.S. dollar, which could affect currency translations of our results of operations, which are earned in RMB but reported in dollars;

● industry-wide market factors and regulatory and other developments affecting our operations;

● any impairment of any of our assets;

● a slowdown in the Chinese economy; and

● risks related to changes in accounting interpretations.

For a detailed description of these and other factors that could cause actual results to differ materially from those expressed in any forward-looking statement, please see the section entitled “Risk Factors”, beginning on page 15 of our Annual Report on Form 10-K for the year ended December 31, 2017 filed with the Securities & Exchange Commission (“SEC”) on April 2, 2018.

ii

PART I

FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

YEW BIO-PHARM GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

	September 30, 2018			December 31, 2017
	(Unaudited)
ASSETS
CURRENT ASSETS:
Cash	$	522,260		$	859,830
Accounts receivable		6,871,285			9,881,914
Accounts receivable - related parties		6,592,266			21,847,733
Inventories, net		6,784,838			2,579,190
Prepaid expenses - related parties		57,153			57,202
Prepaid expenses and other assets		35,488			37,519
VAT recoverables		1,056,483			170,564
Total Current Assets		21,919,773			35,433,952
LONG-TERM ASSETS:
Long-term inventories, net		1,700,797			10,546,648
Property and equipment, net		526,419			579,557
Land use rights and yew forest assets, net		31,087,820			6,369,938
Total Long-term Assets		33,315,036			17,496,143
Total Assets	$	55,234,809		$	52,930,095
LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable	$	816,010		$	152,812
Accounts payable - related parties		14,563			357,708
Accrued expenses and other payables		306,561			162,619
Advance from customers		27,602			-
Taxes payable		235,736			5,574
Due to related parties		585,326			619,999
Short-term borrowings		6,512,038			6,099,876
Total Current Liabilities		8,497,836			7,398,588
NONCURRENT LIABILITIES:
Taxes payable		1,202,741			-
Deferred income		340,785			359,646
Total Noncurrent Liabilities		1,543,526			359,646
Total Liabilities		10,041,362			7,758,234
COMMITMENTS AND CONTINGENCIES		-			-
SHAREHOLDERS’ EQUITY:
Common Stock ($0.001 par value; 140,000,000 shares authorized; 52,075,000 and 51,875,000 shares issued and outstanding at September 30, 2018 and December 31, 2017)		52,075			51,875
Additional paid-in capital		11,470,760			10,363,412
Retained earnings		31,669,034			30,287,658
Statutory reserves		3,762,288			3,762,288
Accumulated other comprehensive income (loss)		(1,760,710	)		706,628
Total Shareholders’ Equity		45,193,447			45,171,861
Total Liabilities and Shareholders’ Equity	$	55,234,809		$	52,930,095

See notes to these unaudited consolidated financial statements.

1

YEW BIO-PHARM GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (LOSS)

(UNAUDITED)

	For the Three Months Ended September 30,						For the Nine Months Ended September 30,
	2018			2017			2018			2017
REVENUES:
Revenues	$	8,003,644		$	7,272,296		$	8,178,314		$	16,681,089
Revenues - related parties		6,035,593			4,292,619			23,712,429			18,363,666
Total Revenues		14,039,237			11,564,915			31,890,743			35,044,755
COST OF REVENUES:
Cost of revenues		7,499,241			7,371,663			7,601,484			16,731,726
Cost of revenues - related parties		5,075,419			3,443,336			18,991,830			6,453,470
Total Cost of Revenues		12,574,660			10,814,999			26,593,314			23,185,196
GROSS PROFIT		1,464,577			749,916			5,297,429			11,859,559
OPERATING EXPENSES:
Selling		16,964			64,347			24,793			64,678
General and administrative		234,507			196,569			1,773,850			794,556
Total Operating Expenses		251,471			260,916			1,798,643			859,234
INCOME FROM OPERATIONS		1,213,106			489,000			3,498,786			11,000,325
OTHER INCOME (EXPENSES):
Interest expense		(45,549	)		(52,105	)		(182,659	)		(139,450	)
Other income		(9,969	)		(3,332	)		80,356			(1,895	)
Exchange loss		(106,570	)		181,454			(583,271	)		181,454
Total Other Expenses		(162,088	)		126,017			(685,574	)		40,109
INCOME BEFORE PROVISION FOR INCOME TAXES		1,051,018			615,017			2,813,212			11,040,434
PROVISION FOR INCOME TAXES		(1,431,836	)		(610	)		(1,431,836	)		(610	)
NET INCOME (LOSS)	$	(380,818	)	$	614,407		$	1,381,376		$	11,039,824
COMPREHENSIVE INCOME:
NET INCOME	$	(380,818	)	$	614,407		$	1,381,376		$	11,039,824
OTHER COMPREHENSIVE INCOME (LOSS):
Foreign currency translation adjustment		(1,623,333	)		790,549			(2,467,338	)		1,870,030
COMPREHENSIVE INCOME (LOSS)	$	(2,004,151	)	$	1,404,956		$	(1,085,962	)	$	12,909,854
NET INCOME PER COMMON SHARE:
Basic	$	(0.01	)	$	0.01		$	0.03		$	0.21
Diluted	$	(0.01	)	$	0.01		$	0.03		$	0.20
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
Basic		52,018,478			51,875,000			51,923,352			51,875,000
Diluted		52,018,478			54,561,533			54,808,280			53,965,264

See notes to these unaudited consolidated financial statements.

2

YEW BIO-PHARM GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

	For the Nine Months Ended September 30,
	2018			2017
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	1,381,376		$	11,039,824
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation		44,912			50,944
Stock-based compensation		1,067,548			94,177
Amortization of land use rights and yew forest assets		4,950,556			137,903
Changes in operating assets and liabilities:
Accounts receivable		2,641,250			3,276,466
Accounts receivable - related parties		14,873,927			(11,005,869	)
Prepaid expenses and other current assets		(22,053	)		(14,847	)
Prepaid expenses - related parties		19,729			17,902
Inventories, net		4,299,077			(3,278,467	)
VAT recoverables		(943,333	)		1,081,219
Accounts payable		692,154			501,728
Accounts payable - related parties		(341,954	)		(2,803,224	)
Accrued expenses and other payables		160,728			(202,645	)
Advance from customers		29,097
Due to related parties		(28,211	)		(57,632	)
Taxes payable		1,431,836			(11,873	)
Deferred income		1,067			220,403
NET CASH PROVIDED BY(USED IN) OPERATING ACTIVITIES		30,257,706			(953,991	)
CASH FLOWS FROM INVESTING ACTIVITIES:
Prepayments made to related party for purchase of yew forest assets		(20,690	)		-
Purchase of land use rights and yew forest assets		(31,356,873	)		(793,662	)
NET CASH USED IN INVESTING ACTIVITIES		(31,377,563	)		(793,662	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from short-term borrowings		7,331,599			7,881,105
Repayment of short-term borrowings		(6,695,593	)		(4,997,764	)
Proceeds from exercise of stock options		40,000			-
Repayments to related party		-			(105,875	)
NET CASH PROVIDED BY FINANCING ACTIVITIES		676,006			2,777,466
EFFECT OF EXCHANGE RATE ON CASH		106,281			30,869
NET INCREASE (DECREASE) IN CASH		(337,570	)		1,060,682
CASH - Beginning of period		859,830			278,991
CASH - End of period	$	522,260		$	1,339,673
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for:
Interest	$	166,884		$	140,555
Income taxes	$	-		$	18,197
NON-CASH INVESTING AND FINANCING ACTIVITIES
Operating expenses paid by related party	$	5,834		$	34,341
Reclassification of inventories to land use rights and yew forest assets	$	-		$	4,300,033

See notes to these unaudited consolidated financial statements.

3

YEW BIO-PHARM GROUP, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2018

NOTE 1 - ORGANIZATION AND PRINCIPAL ACTIVITIES

The accompanying unaudited interim consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted as permitted by rules and regulations of the Securities and Exchange Commission (“SEC”). The consolidated balance sheet as of December 31, 2017 was derived from the audited consolidated financial statements of Yew Bio-Pharm Group, Inc. (individually “YBP” and collectively with its subsidiaries and operating variable interest entity, the “Company”). The accompanying unaudited interim consolidated financial statements should be read in conjunction with the summary of significant accounting policies and notes to consolidated financial statements included in the Company’s annual report on Form 10-K for the year ended December 31, 2017.

In the opinion of management, all adjustments (which include normal recurring adjustments) necessary to present a fair statement of the financial position as of September 30, 2018, and the results of operations and cash flows for the nine-month periods ended September 30, 2018 and 2017, have been presented.

The preparation of consolidated financial statements in accordance with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. The Company continually evaluates its estimates, including those related to bad debts, inventories, income taxes, and the valuation of equity transactions. The Company bases its estimates on historical experience and on various other assumptions that it believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Any future changes to these estimates and assumptions could cause a material change to our reported amounts of revenues, expenses, assets and liabilities. Actual results may differ from these estimates under different assumptions or conditions.

Accounts payable and accounts payable—related party from prior period financial statements have been reclassified to conform to the current period presentation. This reclassification has resulted in no changes to the Company’s financial position or results of operations presented.

Details of the Company’s subsidiaries, variable interest entity (“VIE”) and VIE’s subsidiary are as follows:

Name	Domicile and Date of Incorporation	Registered Capital	Effective Ownership			Principal Activities
Heilongjiang Jinshangjing Bio-Technology Development Co., Limited (“JSJ”)	PRC October 29, 2009	US$100,000		100	%	Holding company
Yew Bio-Pharm Holdings Limited (“Yew Bio-Pharm (HK)”)	Hong Kong November 29, 2010	HK$10,000		100	%	Holding company of JSJ
Harbin Yew Science and Technology Development Co., Ltd. (“HDS”)	PRC August 22, 1996	RMB45,000,000		Contractual arrangements		Sales of yew tree components for use in pharmaceutical industry; sales of yew tree seedlings; the manufacture of yew tree wood handicrafts; and the sales of candle, pine needle extract, yew essential oil soap, complex taxus cuspidate extract, and northeast yew extract
Harbin Yew Food Co., Ltd (“HYF”)	PRC November 4, 2014	RMB100,000		100	%(1)	Sales of wood ear mushroom drink
MC Commerce Holding Inc. (“MC”)	State of California, United State September 8, 2016			100	%(2)	Sales of yew oil candles and yew oil soaps

(1) Wholly-owned subsidiary of HDS

(2) 51% owned by YBP and 49% owned by HDS

4

NOTE 2 - PRINCIPLES OF CONSOLIDATION

The consolidated financial statements include the financial statements of YBP, its subsidiaries and operating VIE and its subsidiary in which the Company is the primary beneficiary. All significant intercompany balances and transactions have been eliminated on consolidation.

Pursuant to a restructuring plan intended to ensure compliance with applicable PRC laws and regulations (the “Second Restructure”), on November 5, 2010, JSJ entered into a series of contractual arrangements (the “Contractual Arrangements”) with HDS and/or Zhiguo Wang, his wife Guifang Qi and Xingming Han (collectively with Mr. Wang and Madame Qi, the “HDS Shareholders”), as described below:

● Exclusive Business Cooperation Agreement. Pursuant to the Exclusive Business Cooperation Agreement between JSJ and HDS (the “Business Cooperation Agreement”), JSJ has the exclusive right to provide to HDS general business operation services, including advice and strategic planning, as well as consulting services related to technology, research and development, human resources, marketing and other services deemed necessary (collectively, the “Services”). Under the Business Cooperation Agreement, JSJ has exclusive and proprietary rights and interests in all rights, ownership, interests and intellectual properties arising out of or created during the performance of the Business Cooperation Agreement, including but not limited to copyrights, patents, patent applications, software and trade secrets. HDS shall pay to JSJ a monthly consulting service fee (the “Service Fee”) in RMB that is equal to 100% of the monthly net income of HDS. Upon the prior written consent by JSJ, the rate of Service Fee may be adjusted pursuant to the operational needs of HDS. Within 30 days after the end of each month, HDS shall (a) deliver to JSJ the management accounts and operating statistics of HDS for such month, including the net income of HDS during such month (the “Monthly Net Income”), and (b) pay 80% of such Monthly Net Income to JSJ (each such payment, a “Monthly Payment”). Within ninety (90) days after the end of each fiscal year, HDS shall (a) deliver to JSJ financial statements of HDS for such fiscal year, which shall be audited and certified by an independent certified public accountant approved by JSJ, and (b) pay an amount to JSJ equal to the shortfall, if any, of the aggregate net income of HDS for such fiscal year, as shown in such audited financial statements, as compared to the aggregate amount of the Monthly Payments paid by HDS to JSJ in such fiscal year. HDS also granted an irrevocable and exclusive option to JSJ to purchase any and all of the assets of HDS, to the extent permitted under PRC law, at the lowest price permitted by PRC law. Unless earlier terminated in accordance with the provisions of the Business Cooperation Agreement or other agreements separately executed between JSJ and HDS, the Business Cooperation Agreement is for a term of ten years and expires on November 5, 2020; however, the term of the Business Cooperation Agreement may be extended if confirmed in writing by JSJ prior to the expiration of the term thereof. The period of the extended term shall be determined exclusively by JSJ and HDS shall accept such extended term unconditionally. Unless JSJ commits gross negligence, or a fraudulent act, against HDS, HDS shall not terminate the Business Cooperation Agreement prior to the expiration of the term, including any extended term. Notwithstanding the foregoing, JSJ shall have the right to terminate the Business Cooperation Agreement at any time upon giving 30 days’ prior written notice to HDS.

● Exclusive Option Agreement. Under an Exclusive Option Agreement among JSJ, HDS and each HDS Shareholder (individually, an “Option Agreement”), the terms of which are substantively identical to each other, each HDS Shareholder has granted JSJ or its designee the irrevocable and exclusive right to purchase, to the extent permitted under PRC law, all or any part of the HDS Shareholder’s equity interests in HDS (the “Equity Interest Purchase Option”) for RMB10. If an appraisal is required by PRC laws at the time when and if JSJ exercises the Equity Interest Purchase Option, the parties shall negotiate in good faith and, based upon the appraisal, make a necessary adjustment to the purchase price so that it complies with any and all then applicable PRC laws. Without the consent of JSJ, the HDS Shareholders shall not sell, transfer, mortgage or dispose of their respective shares of HDS stock. Additionally, without the prior consent of JSJ, the HDS Shareholders shall not in any manner supplement, change or amend the articles of association and bylaws of HDS, increase or decrease its registered capital, change the structure of its registered capital in any other manner, or engage in any transactions that could materially affect HDS’ assets, liabilities, rights or operations, including, without limitation, the incurrence or assumption of any indebtedness except incurred in the ordinary course of business, execute any major contract over RMB500,000, sell or purchase any assets or rights, incur of any encumbrance on any of its assets or intellectual property rights in favor of a third party or transfer of any agreements relating to its business operation to any third party. The term of each Option Agreement is ten years commencing on November 5, 2020 and may be extended at the sole election of JSJ.

5

● Equity Interest Pledge Agreement. In order to guarantee HDS’s performance of its obligations under the Business Cooperation Agreement, each HDS Shareholder, JSJ and HDS entered into an Equity Interest Pledge Agreement (individually, a “Pledge Agreement”), the terms of which are substantially similar to each other. Pursuant to the Pledge Agreement, each HDS Shareholder pledged all of his or her equity interest in HDS to JSJ. If HDS or the HDS Shareholders breach their respective contractual obligations and such breach is not remedied to the satisfaction of JSJ within 20 days after the giving of notice of breach, JSJ, as pledgee, will be entitled to exercise certain rights, including the right to foreclose upon and sell the pledged equity interests. During the term of the Pledge Agreement, the HDS Shareholder shall not transfer his or her equity interest in HDS or place or otherwise permit any other security interest of other encumbrance to be placed on such equity interest. Upon the full payment of the Service Fee under the Business Cooperation Agreement and upon the termination of HDS’s obligations thereunder, the Pledge Agreement shall be terminated.

● Power of Attorney. Under the Power of Attorney executed by each HDS Shareholder (each, a “Power of Attorney”), the terms of which are substantially similar to each other, JSJ has been granted an exclusive, irrevocable power of attorney to take actions in the place and stead of the HDS Shareholders, to act on behalf of the HDS Shareholder as his or her exclusive agent and attorney with respect to all matters concerning the HDS Shareholder’s equity interests in HDS, including without limitation, the right to: 1) attend shareholders’ meetings of HDS; 2) exercise all the HDS Shareholders’ rights, including voting rights under PRC laws and HDS’s Articles of Association, including but not limited to the sale or transfer or pledge or disposition of the HDS Shareholder’s equity interests in HDS in whole or in part; and 3) designate and appoint on behalf of the HDS Shareholders the legal person, executive director, supervisor, manager and other senior management of HDS.

To the extent that the Contractual Arrangements are enforceable under PRC law, as from time to time interpreted by relevant state agencies, they constitute the valid and binding obligations of each of the parties to each such agreement.

The Company believes that HDS is considered a VIE under ASC 810 “Consolidation”, because the equity investors in HDS no longer have the characteristics of a controlling financial interest, and the Company, through JSJ, is the primary beneficiary of HDS and controls HDS’s operations. Accordingly, HDS has been consolidated as a deemed subsidiary into YBP as a reporting company under ASC 810.

YBP has no direct or indirect legal or equity ownership interest in HDS. However, through the Contractual Arrangements, the stockholders of HDS have assigned all their rights as stockholders, including voting rights and disposition rights of their equity interests in HDS to JSJ, our indirect, wholly-owned subsidiary. YBP is deemed to be the primary beneficiary of HDS and the financial statements of HDS are consolidated in the Company’s consolidated financial statements. At September 30, 2018 and December 31, 2017, the carrying amount and classification of the assets and liabilities in the Company’s balance sheets that relate to the Company’s variable interest in the VIE and VIE’s subsidiary are as follows:

	September 30, 2018		December 31, 2017
Assets
Cash	$	487,809	$	798,514
Accounts receivable		6,616,158		9,841,841
Accounts receivable - related parties		6,592,266		21,847,733
Inventories (current and long-term), net		6,077,191		10,680,304
Prepaid expenses and other assets		44,115		26,637
Prepaid expenses - related parties		35,488		57,202
Property and equipment, net		522,009		573,563
Land use rights and yew forest assets, net		31,042,461		6,326,529
VAT recoverables		1,056,483		170,564
Total assets of VIE and its subsidiary	$	52,473,980	$	50,322,887
Liabilities
Accrued expenses and other payables	$	303,357	$	162,004
Accounts payable		534,247		17,727
Accounts payable - related parties		14,563		357,708
Advance from customers		27,602		-
Due to VIE holding companies		559,343		590,300
Short-term borrowings		6,512,038		6,099,876
Deferred income		340,785		359,646
Due to related parties		109,991		145,474
Total liabilities of VIE and its subsidiary	$	8,401,926	$	7,732,735

6

NOTE 3 - REVENUE RECOGNITION

The Company accounts for revenue arising from contracts and customers in accordance with Accounting Standards Update (ASU or Update) No. 2014-09, Revenue from Contracts with Customers (“ASC 606”), which was adopted on January 1, 2018 using the full retrospective method. The adoption of ASC 606 did not impact the Company’s previously reported financial statements in any prior period nor did it result in a cumulative effect adjustment to retained earnings.

Under ASC 606, the Company recognizes revenue when its customer obtains control of promised goods, in an amount that reflects the consideration which the Company expects to receive in exchange for those goods. To determine revenue recognition for arrangements that the Company determines are within the scope of ASC 606, the Company performs the following five steps: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the Company satisfies a performance obligation. The Company only applies the five-step model to contracts when it is probable that Company will collect the consideration it is entitled to in exchange for the goods it transfers to the customer. At contract inception, once the contract is determined to be within the scope of ASC 606, the Company assesses the goods promised within each contract and determines those that are performance obligations and assesses whether each promised good is distinct. The Company then recognizes as revenue the amount of the transaction price, which is allocated to the respective performance obligation, when the performance obligation is satisfied. Generally, the Company’s performance obligations are satisfied when the customers take possession of the products, which normally occurs upon shipment or delivery depending on the terms of the contracts.

In general, the Company’s products within its segments are aligned according to the nature and economic characteristics of its products and provide meaningful disaggregation of each business segment’s results of operations. Disaggregation of revenue by business segment are included in Note 11 - SEGMENT INFORMATION. 

NOTE 4 - INVENTORIES

Inventories consisted of raw materials, finished goods including handicrafts, yew essential oil soap, complex cuspidate extract, composite northeast yew extract, yew candles and pine needle extracts, yew seedlings and other trees, which consist of larix, spruce and poplar trees. The Company classifies its inventories based on its historical and anticipated levels of sales; any inventory in excess of its normal operating cycle of one year is classified as long-term on its consolidated balance sheets. As of September 30, 2018 and December 31, 2017, inventories consisted of the following:

	September 30, 2018									December 31, 2017
	Current portion			Long-term portion			Total			Current portion			Long-term portion			Total
Raw materials	$	39,807		$	2,512,232		$	2,552,039		$	62,548		$	2,651,272		$	2,713,820
Finished goods		6,745,331			577,373			7,322,704			2,475,709			588,444			3,064,153
Yew seedlings and Other trees		-			1,203,700			1,203,700			47,913			10,036,658			10,084,571
Total		6,785,138			4,293,305			11,078,443			2,586,170			13,276,374			15,862,544
Inventory write-down		(300	)		(2,592,508	)		(2,592,808	)		(6,980	)		(2,729,726	)		(2,736,706	)
Inventories, net	$	6,784,838		$	1,700,797		$	8,485,635		$	2,579,190		$	10,546,648		$	13,125,838

Inventories as of September 30, 2018 and December 31, 2017 consisted of the inventory purchased from related parties are as follows:

	September 30,		December 31,
	2018		2017
Inventories, net	$	962,185	$	1,022,452
Inventories - related parties, net		5,822,653		1,556,738
Total	$	6,784,838	$	2,579,190

	September 30,		December 31,
	2018		2017
Long-term inventories, net	$	1,700,797	$	3,375,247
Long-term inventories - related parties, net		-		7,171,401
Total	$	1,700,797	$	10,546,648

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NOTE 5 - TAXES

(a) Federal Income Tax and Enterprise Income Taxes

The Company, YBP, registered in the state of Nevada, and its subsidiary, MC, registered in the State of California, are subject to the United States federal income tax at a tax rate of 21%. No provision for income taxes in the U.S. has been made as YBP and MC had no U.S. taxable income as of September 30, 2018 and December 31, 2017.

The Company’s subsidiary, Yew Bio-Pharm (HK), is incorporated in Hong Kong and has no operating profit or tax liabilities during the years. Yew Bio-Pharm (HK) is subject to tax at 16.5% on the assessable profits arising in or derived from Hong Kong.

The Company’s subsidiary, JSJ, and VIE and its subsidiary, HYF and HDS, incorporated in the PRC, are subject to PRC’s Enterprise Income Tax. Pursuant to the PRC Income Tax Laws, Enterprise Income Taxes (“EIT”) is generally imposed at 25%. However, HDS has been named as a leading enterprise in the agricultural industry and awarded with a tax exemption through December 31, 2058 with an exception of sales of handicrafts, yew candle, pine needle extracts and yew essential oil soap which are not within the scope of agricultural area.

The table below summarizes the difference between the U.S. statutory federal tax rate and the Company’s effective tax rate for the nine months ended September 30, 2018 and 2017:

	Nine Months Ended September 30,
	2018			2017
U.S. federal income tax rate		21.00	%		34.00	%
Foreign income not recognized in the U.S.		(21.00	)%		(34.00	)%
PRC EIT rate		25.00	%		25.00	%
PRC tax exemption and reduction		(37.81	)%		(26.20	)%
Income tax difference under different tax jurisdictions		12.66	%		1.08	%
Valuation allowance		0.15	%		0.12	%
Effective tax rate		-			-

Deferred tax assets and liabilities are provided for significant income and expense items recognized in different years for income tax and financial reporting purposes. Temporary differences, which give rise to a net deferred tax asset for the Company as of September 30, 2018 and December 31, 2017, are as follows:

	September 30, 2018			December 31, 2017
Net operating loss carry-forwards	$	140,000		$	2,541,363
Inventory write-down		648,127			614,625
Valuation allowance		(788,127	)		(3,155,988	)
Non-current deferred tax assets	$	-		$	-

The U.S. Tax Cuts and Jobs Act (the “Tax Act”) was enacted on December 22, 2017. The Tax Act among other changes, reduces the U.S. federal corporate tax rate from 35% to 21%. The Company recognized provisional tax impacts related to the revaluation of deferred tax assets and liabilities and corresponding valuation allowances in its consolidated financial statements for the nine months ended September 30, 2018. There was no impact of the revaluation to the current net income because it was fully offset by the valuation allowance that was recorded against the deferred tax asset. In addition, the Tax Act implements a modified territorial tax system that includes a one-time transition tax on deemed repatriation of previously untaxed accumulated earnings and profits of certain foreign subsidiaries, and creates new taxes on certain foreign-sourced earnings. In connection with the Tax Act, the Securities and Exchange Commission (“SEC”) issued Staff Accounting Bulletin No. 118 (“SAB 118”) that allows companies to record provisional estimates of the effects of the legislative change, and a one-year measurement period to finalize the accounting of those effects.

During the three months ended September 30, 2018, the Company recognized a one-time transition tax of $1,431,836 that represented management’s estimate of the amount of U.S. corporate income tax based on the deemed repatriation to the United States of the Company’s share of previously deferred earnings of certain non-U.S. subsidiaries of the Company mandated by the U.S. Tax Reform. The Company elected to pay the one-time transition tax over eight years commencing in 2018. The actual impact of the U.S. Tax Reform on the Company may differ from management’s estimates, and management may update its judgments based on future regulations or guidance issued or changes in the interpretations taken that would adjust the provisional amounts recorded. As of the filing date, no transition tax payment has been made.

In addition, the 2017 Tax Act also creates a new requirement that certain income (i.e., Global Intangible Low-Taxed Income (“GILTI”)) earned by controlled foreign corporations (“CFCs”) must be included currently in the gross income of the CFCs’ U.S. shareholder. GILTI is the excess of the shareholder’s net CFC tested income over the net deemed tangible income return, which is currently defined as the excess of (1) 10 percent of the aggregate of the U.S. shareholder’s pro rata share of the qualified business asset investment of each CFC with respect to which it is a U.S. shareholder over (2) the amount of certain interest expense taken into account in the determination of net CFC-tested income. The Company has elected to recognize the tax on GILTI as a period expense in the period the tax is incurred. For the nine months and three months ended September 30, 2018, no GILTI tax obligation existed and nil GILTI tax expense was recorded.

8

NOTE 6 - SHORT-TERM BORROWINGS

In May 2016, HDS entered into a line of credit agreement with Harbin Rongtong Branch of Bank of Communications (“BOCOM”) for the period from May 3, 2016 through May 3, 2018, pursuant to which the Company obtained a bank loan in the amount of RMB10,000,000 (approximately $1,471,000) on June 13, 2017, payable on June 12, 2018. Under this credit agreement. The loan carries an interest rate of 5.873% per annum and is payable quarterly. Heilongjiang Zishan Technology Co., Ltd. (“ZTC”), a related party controlled by Zhiguo Wang and his wife Madame Qi, collateralized its buildings and land use right with BOCOM to secure the loans under this credit agreement. In addition, ZTC, Heilongjiang Yew Pharmaceutical Co., Ltd. (“Yew Pharmaceutical”), a related party of the Company, Zhiguo Wang, Madame Qi, Yicheng Wang, the son of Zhiguo Wang and Yuqi Mao, the former family member of Yicheng Wang, provided guarantees to the loan. HDS paid off the loan in full on June 11, 2018.

On November 15, 2017, HDS entered into a loan agreement with Shanghai Pudong Development Bank (“SPD Bank”) Harbin Branch, pursuant to which the Company obtained a bank loan in the amount of RMB10,000,000 (approximately $1,509,000), payable on October 20, 2018. The loan carries an interest rate of 4.100% per annum and is payable at maturity. The proceeds of the loan were used by the Company to purchase raw materials. Madam Qi has secured the loan with her personal assets. In addition, Yew Pharmaceutical, Zhiguo Wang, Yicheng Wang, and Yuqi Mao, the former family member of Yicheng Wang provided guarantees to the loan.

On December 22, 2016, HDS entered into a credit agreement with China Everbright Bank (“CEB”) which agreed to provide credit line of RMB20,000,000 (approximately $2,880,000) to the Company for the period of three years. During the nine months ended September 30, 2018 and 2017, the Company obtained short-term loans from CEB in the total amount of $4,406,000 and $6,410,000, respectively, under this credit agreement and paid off in the total amount of $5,133,000 and $3,540,000, respectively. As of September 30, 2018 and December 31, 2017, the balance of loans borrowed from CEB was $2,143,000 and $2,870,000, respectively. These loans carry interest rates ranging from 4.30% to 4.60% per annum and the interests are payable monthly. The loans with CEB are secured by properties and land use rights of Yew Pharmaceutical. In addition, Zhiguo Wang, Madame Qi, Yew Pharmaceutical, and ZTC provided guarantees to the loans.

On August 6, 2018, HDS entered into a loan agreement with Bank of Yingkou Harbin Branch (“Yingkou Bank”), pursuant to which HDS obtained a bank loan in the amount of RMB15,000,000 (approximately $2,192,000), payable on August 5, 2019. The loan carries an interest rate of 5.4375% per annum and is payable monthly. Heilongjiang Zishan Technology Co., Ltd. (“ZTC”), a related party controlled by Zhiguo Wang and his wife Madame Qi, collateralized its buildings and land use right with Yingkou Bank to secure the loan.

During nine months ended September 30, 2018 and 2017, interest expense was $182,659 and $139,450, respectively.

NOTE 7 - STOCKHOLDERS’ EQUITY

Stock option activities for the nine months ended September 30, 2018 and 2017 were summarized in the following table.

	Nine Months Ended September 30, 2018				Nine Months Ended September 30, 2017
	Number of Stock Options		Weighted Average Exercise Price		Number of Stock Options		Weighted Average Exercise Price
Balance at beginning of period		24,872,212		0.22		25,325,512		0.22
Issued		-		-		50,000		0.25
Exercised		200,000		-		-		-
Expired		15,503,475		0.22		-		-
Forfeited		-		-		-		-
Balance at end of period		9,168,737		0.22		25,375,512		0.22
Option exercisable at end of period		9,068,737		0.22		24,465,012		0.22

9

On May 20, 2018 the Board approved to extend the expiration date of 5,000,000 options issued to Zhiguo Wang and 2,488,737 options issued to Guifang Qi from September 30, 2018 to December 31, 2019. The Company treated this extension as a modification of the award upon the directors’ extraordinary services rendered to the Company and recognized incremental compensation cost. The Company measured the incremental compensation cost as the excess of the fair value of the modified award over the fair value of the original award immediately before its terms were modified. As a result of these modifications, the Company recognized incremental compensation cost of $1,059,987 in stock-based compensation expense during the nine months ended September 30, 2018, and the weighted average remaining contractual life was changed to 1.25 years.

On July 20, 2018, the Company issued 200,000 shares of common stock to Xuehai Wu, a director, for the exercise of the stock options with an exercise price of $0.20 granted to him pursuant to the stock option agreement entered into on July 18, 2014. The Company received the proceeds in the amount of $40,000 on July 19, 2018.

The following table summarizes the shares of the Company’s common stock issuable upon exercise of options outstanding at September 30, 2018:

Stock Options Outstanding								Stock Options Exercisable
Range of Exercise Price		Number Outstanding at September 30, 2018		Weighted Average Remaining Contractual Life (Years)		Weighted Average Exercise Price		Number Exercisable at September 30, 2018		Weighted Average Exercise Price
$	0.20-0.25		9,168,737		1.25	$	0.22		9,068,737	$	0.22

The Company’s outstanding stock options and exercisable stock options had no intrinsic value based upon the Company’s closing stock price of $0.20 as of September 30, 2018. Stock option expense recognized during the nine months ended September 30, 2018 and 2017 amounted to $1,067,548 and $94,177, respectively. The value of options was calculated using Black Scholes Option Pricing Model based upon the following assumptions: dividend yield of 0%, volatility of 91%-212%, risk free rate of 0.14%-2.58%, and expected term of 0.12-3.03 years.

NOTE 8 - EARNINGS PER SHARE

Under the provisions of ASC 260, “Earnings Per Share”, basic income per common share is computed by dividing net income attributable to common shareholders by the weighted average number of shares of common stock outstanding for the periods presented. Diluted income per share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that would then share in the income of the company, subject to anti-dilution limitations.

The following table presents a reconciliation of basic and diluted net income per share for the three and nine months ended September 30, 2018 and 2017:

	For the Three Months Ended September 30,					For the Nine Months Ended September 30,
	2018			2017		2018		2017
Net income (loss) available to common stockholders for basic and diluted net income per share of common stock	$	(380,818	)	$	614,407	$	1,381,376	$	11,039,824
Weighted average common stock outstanding - basic		52,018,478			51,875,000		51,923,352		51,875,000
Effect of dilutive securities:
Non-vested restricted common stock		-			-		-		-
Stock options issued to directors/officers/employees		-			2,686,533		2,884,928		2,090,264
Weighted average common stock outstanding - diluted		52,018,478			54,561,533		54,808,280		53,965,264
Net income per common share - basic	$	(0.01	)	$	0.01	$	0.03	$	0.21
Net income per common share - diluted	$	(0.01	)	$	0.01	$	0.03	$	0.20

Diluted net income per share is computed using the weighted average number of common shares and dilutive potential common shares outstanding during the respective periods. The potentially dilutive securities that were not included in the calculation of diluted net income per share in the periods presented where their inclusion would be anti-dilutive included options to purchase common shares of 0 and 1,961,436 on a weighted average basis for the three months ended September 30, 2018 and 2017, respectively; and option to purchase common shares of 0 and 244,322 on a weighted average basis for the nine months ended September 30, 2018 and 2017, respectively.

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NOTE 9 - CONCENTRATIONS OF CREDIT RISK AND MAJOR CUSTOMERS

Customers

For the nine months ended September 30, 2018 and 2017, customers accounting for 10% or more of the Company’s revenue were as follows:

	For the Nine Months Ended September 30,
Customer	2018			2017
A (Yew Pharmaceutical, a related party)		56.7	%		48.5	%
B		*	%		47.5	%
T		21.9	%		*	%

* Less than 10%

The two largest customers accounted for 76.9% and 99.3% of the Company’s total outstanding accounts receivable as of September 30, 2018 and December 31, 2017, respectively, of which Yew Pharmaceutical, a related party, accounted for 27.7% and 68.3% of the total outstanding accounts receivable, respectively; customer B accounted for 31.0% of total outstanding accounts receivable at December 31, 2017 and customer T accounted for 49.2% of the total outstanding accounts receivable at September 30, 2018.

Suppliers

For the nine months ended September 30, 2018 and 2017, suppliers accounting for 10% or more of the Company’s purchase were as follows:

	For the Nine Months Ended September 30,
Supplier	2018			2017
A (Yew Pharmaceutical, a related party)		38.5	%		62	%
C (Changzhi Du, a related party)		*	%		10	%
Q (Heilongjiang Zishan Technology Co., Ltd., a related party)		12	%		*	%

Accounts payable to supplier D, a related party, supplier K, and supplier J accounted for 60.2%, 11.6% and 13.4%, respectively, of the Company’s total accounts payable at December 31, 2017.

Accounts payable to supplier I accounted for 63.5% of the Company’s total accounts payable at September 30, 2018.

11

NOTE 10 - RELATED PARTY TRANSACTIONS

In addition to several of the Company’s officers and directors, the Company conducted transactions with the following related parties:

Company	Nature of Relationship
Heilongjiang Zishan Technology Co., Ltd. (“ZTC”)	51% owned by Heilongjiang Hongdoushan Ecology Forest Co., Ltd., 34% owned by Zhiguo Wang, Chairman and Chief Executive Officer, 11% owned by Guifang Qi, the wife of Mr. Wang and director of the Company, and 4% owned by third parties.
Heilongjiang Yew Pharmaceutical Co., Ltd. (“Yew Pharmaceutical”)	95% owned by Heilongjiang Hongdoushan Ecology Forest Stock Co., Ltd., and 5% owned by Madame Qi.
Shanghai Kairun Bio-Pharmaceutical Co., Ltd. (“Kairun”)	60% owned by Heilongjiang Zishan Technology Co., Ltd., 20% owned by Heilongjiang Hongdoushan Ecology Forest Stock Co., Ltd., and 20% owned by Mr. Wang.
Heilongjiang Hongdoushan Ecology Forest Co., Ltd. (“HEFS”)	63% owned by Mr. Wang, 34% owned by Madame Qi, and 3% owned by third parties.
Hongdoushan Bio-Pharmaceutical Co., Ltd. (“HBP”)	30% owned by Mr. Wang, 19% owned by Madame Qi and 51% owned by HEFS
Heilongjiang Pingshan Hongdoushan Development Co., Ltd. (“HDS Development”)	80% owned by HEFS and 20% owned by Kairun
Wuchang City Xinlin Forestry Co., Ltd. (Xinlin)	98% owned by ZTC and 2% owned by HEFS effective March 21, 2016
Changzhi Du	Legal person of Xinlin before March 1, 2017
Jinguo Wang	Management of HDS, legal person of Xinlin before February 9, 2018, and director of ZTC effective February 1, 2018.
Others	Individuals who have significant influence on the Company
Wonder Genesis Global Ltd.	Jinguo Wang is the Company’s director before June 10, 2018
Lifeforfun Limited	Yuqi Mao, the former family member of Yicheng Wang, is the Lifeforfun Limited’s director.

Land use rights and yew forest assets purchased from related parties

Yew forest assets purchased from related parties which are included in land use rights and yew forest assets as of September 30, 2018 and December 31, 2017 are as follows:

	September 30,		December 31,
	2018		2017
Land use rights, net	$	305,369	$	325,737
Yew forest assets, net		10,897,297		3,210,195
Yew forest assets - related parties, net		19,885,154		2,834,006
Total	$	31,087,820	$	6,369,938

Transactions with Yew Pharmaceutical

On January 9, 2010, the Company entered into a Cooperation and Development Agreement (the “Development Agreement”) with Yew Pharmaceutical. Pursuant to the Development Agreement, for a period of ten years expiring on January 9, 2020, the Company shall supply cultivated yew raw materials to Yew Pharmaceutical that will be used by Yew Pharmaceutical to make traditional Chinese medicines and other pharmaceutical products, at price of RMB 1,000,000 (approximately $158,000) per metric ton. In addition, the Company entered into a series of wood ear mushroom selling agreements with Yew Pharmaceuticals, pursuant to which the Company sells wood ear mushroom collected from local peasants to Yew Pharmaceuticals for manufacturing of wood ear mushroom products. Furthermore, the Company entered into a series of yew candles, yew essential oil soaps, complex taxus cuspidate extract, composite northeast yew extract and pine needle extracts purchase agreements with Yew Pharmaceuticals, pursuant to which the Company purchases yew candles and pine needle extracts as finished goods and then sells to third party and related party.

12

For the nine months ended September 30, 2018 and 2017, total revenues to Yew Pharmaceutical under the above agreement amounted to $ 18,075,032 and $17,011,006 and corresponding cost of revenues amounted to $13,863,380 and $5,031,433, respectively. At September 30, 2018 and December 31, 2017, the Company had $3,728,148 and $21,647,828 accounts receivable from Yew Pharmaceutical, respectively.

For the nine months ended September 30, 2018 and 2017, the total purchase of yew candles, pine needle extracts, composite northeast yew extract and mixed essential oil from Yew Pharmaceutical amounted to $18,033,411 and $14,934,540, respectively. For the nine months ended September 30, 2018 and 2017, the products HDS purchased from Yew Pharmaceutical in the amount of $11,042,307 and $17,804,944 were sold and included in the total cost of revenues.

For the nine months ended September 30, 2018 and 2017, HYF did not purchase any wood ear mushroom from Yew Pharmaceutical. For the nine months ended September 30, 2018 and 2017, the products HYF purchased from Yew Pharmaceutical in the amount of $482 and $20,698 were sold and included in the total cost of revenues. HYF had accounts payable of $0 and $50,318 to Yew Pharmaceutical at September 30, 2018 and December 31, 2017, respectively.

At September 30, 2018 and December 31, 2017, HYF had $0 and $39,974, respectively, due to Yew Pharmaceutical, which represents an unsecured loan bearing no interest and payable on demand and was included in due to related parties in the accompanying consolidated balance sheets.

Transactions with HBP

For the nine months ended September 30, 2018 and 2017, HBP paid off operation expense on behalf of HYF in the amount of $5,834 and $34,341, respectively. As of September 30, 2018 and December 31, 2017, HYF had due to HBP in the amount of $101,898 and $101,697, respectively, which was included in due to related parties in the accompanying consolidated balance sheets.

Transactions with HDS Development

For the nine months ended September 30, 2018 and 2017, total revenues to HDS Development amounted to $1,842,271 and $0, and corresponding cost of revenues amounted to $1,390,834 and $0, respectively. At September 30, 2018 and December 31, 2017, the Company had $1,747,615 and $0 accounts receivable from HDS Development, respectively.

Transactions with Wonder Genesis Global Ltd.

For the nine months ended September 30, 2018 and 2017, total revenues to Wonder Genesis Global Ltd. amounted to $2,591,681 and $1,352,660, and the corresponding cost of revenues amounted to $2,574,537 and $1,422,036, respectively. As of September 30, 2018 and December 31, 2017, the Company had $0 and $199,905 accounts receivable from Wonder Genesis Global Ltd., respectively.

Transactions with Lifeforfun Limited

For the nine months ended September 30, 2018 and 2017, total revenues to Lifeforfun Limited amounted to $1,176,975 and $0, and the corresponding cost of revenues amounted to $1,144,367 and $0, respectively. As of September 30, 2018 and December 31, 2017, the Company had $1,116,503 and $0 accounts receivable from Lifeforfun Limited, respectively.

Transactions with ZTC

During the nine months ended September 30, 2018 and 2017, HDS purchased yew forest assets from ZTC in the amount of $5,616,194 and $0, respectively. At September 30, 2018 and December 31, 2017, the Company had zero balance payable to ZTC.

13

Transactions with Xinlin

During the nine months ended September 30, 2018 and 2017, HDS purchased yew forest assets from Xinlin in the amount of $2,622,473 and $0, respectively. At September 30, 2018 and December 31, 2017, the Company had zero balance payable to Xinlin.

Transactions with Changzhi Du

During the nine months ended September 30, 2018 and 2017, HDS purchased yew forest assets from Changzhi Du in the amount of $1,317,224 and purchased yew seedlings from Changzhi Du in the amount of $2,395,051, respectively. As of September 30, 2018 and December 31, 2017, the Company had zero balance payable to Changzhi Du.

Transactions with Jinguo Wang

During the nine months ended September 30, 2018 and 2017, HDS purchased yew forest assets from Jinguo Wang in the amount of $1,426,873 and purchased yew seedlings from Jinguo Wang in the amount of $25,934, respectively. As of September 30, 2018 and December 31, 2017, the Company had zero balance payable to Jinguo Wang.

Transactions with Guifang Qi

During the nine months ended September 30, 2018 and 2017, HDS purchased yew forest assets from Guifang Qi in the amount of $1,869,130 and $0, respectively. As of September 30, 2018 and December 31, 2017, the Company had zero balance payable to Guifang Qi.

Transactions with Zhiguo Wang

During the nine months ended September 30, 2018 and 2017, HDS purchased yew forest assets from Zhiguo Wang in the amount of $1,289,590 and $0, respectively. As of September 30, 2018 and December 31, 2017, the Company had zero balance payable to Zhiguo Wang.

Transactions with Others

During the nine months ended September 30, 2018 and 2017, HDS purchased yew forest from others in the amount of $3,549,966 and purchased yew seedlings from others in the amount of $8,743,172, respectively. As of September 30, 2018 and December 31, 2017, the Company had accounts payable to others in the amount of $0 and $307,390, respectively, which was included in the accounts payable-related parties in the accompanying consolidated balance sheets.

During the nine months ended September 30, 2018 and 2017, HDS prepaid $35,488 and $0 to others for purchase of yew forests, respectively, which was included in the long-term prepaid expenses-related party in the accompanying consolidated balance sheets.

For the nine months ended September 30, 2018 and 2017, total revenues to others amounted to $27,082 and $0, and the corresponding cost of revenues amounted to $19,144 and $0, respectively. As of September 30, 2018 and December 31, 2017, the Company had no accounts receivable from others.

14

Operating Leases

On March 25, 2005, the Company entered into an Agreement for the Lease of Seedling Land with ZTC (the “ZTC Lease”). Pursuant to the ZTC Lease, the Company leased 361 mu of land from ZTC for a period of 30 years, expiring on March 24, 2035. Annual payments under the ZTC Lease are RMB162,450 (approximately $26,000). The payment for the first five years of the ZTC Lease was due prior to December 31, 2010 and beginning in 2011, the Company is required to make full payment for the land use rights in advance for each subsequent five-year period. For the nine months ended September 30, 2018 and 2017, rent expense related to the ZTC Lease amounted to $18,705 and $17,902, respectively. At September 30, 2018 and December 31, 2017, prepaid rent to ZTC amounted to $35,488 and $56,177, respectively, which was included in prepaid expenses-related parties in the accompanying consolidated balance sheets.

On January 1, 2010, the Company entered into a lease for office space with Mr. Wang (the “Office Lease”). Pursuant to the Office Lease, annual payments of RMB15,000 (approximately $2,000) are due for each of the term. The term of the Office Lease is 15 years and expires on December 31, 2025. For the nine months ended September 30, 2018 and 2017, rent expense related to the Office Lease amounted to $1,727 and $1,653, respectively. As of September 30, 2018 and December 31, 2017, the unpaid rent was $3,421 and $1,881, respectively, which was included in due to related parties in the accompanying consolidated balance sheets.

On July 1, 2012, the Company entered into a lease for office space with Zhiguo Wang (the “JSJ Lease”). Pursuant to the JSJ Lease, JSJ leases approximately 30 square meter of office space from Zhiguo Wang in Harbin. Rent under the JSJ Lease is RMB10,000 (approximately $1,600) annually. The term of the JSJ Lease is three years and expires on September 30, 2015. On July 1, 2015, the Company and Mr. Wang renewed the JSJ Lease. The renewed lease expires on September 30, 2018. On July 1, 2018, the Company renewed JSJ Lease for three years, which will now expire on June 30, 2021. Pursuant to the renewed lease agreement, the annual payment will be RMB 10,000 (approximately $1,600). For the nine months ended September 30, 2018 and 2017, rent expense related to the JSJ Lease amounted to $1,151 and $1,102, respectively. As of September 30, 2018 and December 31, 2017, the unpaid rent was $6,189 and $5,380, respectively, which was included in due to related parties in the accompanying consolidated balance sheets.

On January 1, 2015, HYF entered into an lease agreement with HBP, pursuant to which HBP leases a warehouse, with an area of 225 square meters, and a workshop, with an area of 50 square meters, both of which are located at No.1 Zisan Road, Shangzhi economic development district, Shangzhi City, Heilongjiang Province, to HYF in exchange for no consideration for the period from January 1, 2015 to December 31, 2020.

The Company leased office space from HDS Development in the A’cheng district in Harbin (the “A’cheng Lease”) on March 20, 2002. The A’cheng Lease is for a term of 23 years and expires on March 19, 2025. Pursuant to the A’cheng Lease, lease payment shall be made as follows:

Period	Annual lease amount		Payment due date
March 2002 to February 2012	RMB	25,000	Before December 2012
March 2012 to February 2017	RMB	25,000	Before December 2017
March 2017 to March 2025	RMB	25,000	Before December 2025

For the nine months ended September 30, 2018 and 2017, rent expense related to the A’cheng Lease amounted $2,879 and $2,635, respectively. At September 30, 2018 and December 31, 2017, the unpaid rent was $4,551 and $1,921, respectively, which was included in due to related parties in the accompanying consolidated balance sheets.

The Company leased an apartment in the Nangang district (the “Jixing Lease”) in Harbin from Ms. Qi on October 1, 2016. The term of Jixing Lease is one year. On October 1, 2017, the Company and Ms. Qi renewed the Jixing Lease. The renewed lease expires on September 30, 2018. For the nine months ended September 30, 2018 and 2017, rent expense related to the Jixing Lease amounted $1,151 and $980, respectively. As of September 30, 2018 and December 31, 2017, the prepaid rent to Ms. Qi amounted to $121 and $1,025, respectively, which was included in prepaid expenses-related parties in the accompanying consolidated balance sheets.

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Due to Related Parties

The Company’s officers, directors and other related parties, from time to time, provided advances to the Company for working capital purpose. These advances are usually short-term in nature, non-interest bearing, unsecured and payable on demand. Due to Zhiguo Wang and Madam Qi, excluding the unpaid rents disclosed above and the borrowings from Madame Qi as disclosed below, amounted to $41,051 at September 30, 2018 and December 31, 2017, which was included in due to related parties in the accompanying consolidated balance sheets.

On May 15, 2015, the Company borrowed $648,000 from Madame Qi through the issuance of a subordinated promissory note. The note bears 2% interest per annum and shall be payable on or before November 15, 2015 (“Due Date”). Interest payment shall be made with principal on Due Date. On September 28, 2015, Madame Qi and the Company agreed to extend the Due Date to January 31, 2016, with the remaining terms of the note unchanged. On January 15, 2016, 2017 and 2018, the Company and Madame Qi entered into agreements to further extend the Due Date of the note to December 31, 2016, 2017 and 2018, respectively. During the nine months ended September 30, 2018 and 2017, the Company made repayments of $0 and $75,875 to Madame Qi, respectively. As of September 30, 2018 and December 31, 2017, the total borrowings including the interest were $428,095, which was included in due to related parties in the accompanying consolidated balance sheets.

Research and Development Agreement

The Company entered into a Technology Development Service Agreement dated January 1, 2010 (the “Technology Agreement”) with Kairun. The term of the Technology Agreement was two years. Under the Technology Agreement, Kairun provides the Company with testing and technologies regarding utilization of yew trees to extract taxol and develop higher concentration of taxol in the yew trees the Company grow and cultivate. For these services, the Company agreed to pay Kairun RMB200,000 (approximately $32,000) after the technologies developed by Kairun are tested and approved by the Company. The Company will retain all intellectual property rights in connection with the technologies developed by Kairun. Kairun may not provide similar services to any other party without the Company’s prior written consent. In February 2012, we entered into a supplemental agreement with Kairun, extending the term of the Technology Agreement indefinitely until project results specified in the original Technology Agreement have been achieved. Kairun is owned directly and indirectly primarily by Mr. Wang and Madame Qi. As of September 30, 2018, Kairun has not yet completed the services provided for in the Technology Agreement and, therefore, no payment was made to Kairun.

NOTE 11 - SEGMENT INFORMATION

ASC 280 requires use of the “management approach” model for segment reporting. The management approach model is based on the way a company’s management organizes segments within the company for making operating decisions and assessing performance. Reportable segments are based on products and services, geography, legal structure, management structure, or any other manner in which management disaggregates a company.

For the nine months ended September 30, 2018 and 2017, the Company operated in four reportable business segments: (1) the TCM raw materials segment, consisting of the production and sale of yew raw materials or yew tree extracts used in the manufacture of TCM; (2) the yew tree segment, consisting of the growth and sale of yew tree seedlings and mature trees; (3) the handicrafts segment, consisting of the manufacture and sale of handicrafts and furniture made of yew timber; and (4) Others segment, consisting of the sales of yew candles, pine needle extracts, yew essential oil soap, complex taxus cuspidate extract, and composite northeast yew extract. The Company’s reportable segments are strategic business units that offer different products. They are managed separately based on the fundamental differences in their operations. All of the Company’s operations including the sales of yew candles, pine needle extracts, yew essential oil soap, complex taxus cuspidate extract and composite northeast yew extract are conducted in the PRC.

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Information with respect to these reportable business segments for the nine  months  ended September 30, 2018 and 2017 was as follows:

	For the Nine Months Ended September 30,
	2018			2017
Revenues:
TCM raw materials	$	19,917,303		$	17,011,006
Yew trees		31,766			9,906
Handicrafts		1,520			5,284
Others		11,940,154			18,018,559
	$	31,890,743		$	35,044,755
Cost of revenues:
TCM raw materials	$	15,254,214		$	5,031,434
Yew trees		19,747			7,897
Handicrafts		1,328			4,663
Others		11,318,025			18,141,202
	$	26,593,314		$	23,185,196
Depreciation and amortization:
TCM raw materials	$	364,903		$	130,262
Yew trees		31,501			31,778
Handicrafts		709			679
Others		12,703			18,487
	$	409,816		$	181,206
Net income (loss):
TCM raw materials	$	4,069,973		$	11,834,671
Yew trees		11,073			1,924
Handicrafts		146			576
Others		(1,267,980	)		(797,347	)
	$	2,813,212		$	11,039,824

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Information with respect to these reportable business segments for the three months  ended September 30, 2018 and 2017 was as follows:

	For the Three Months Ended September 30,
	2018			2017
Revenues:
TCM raw materials	$	5,168,573		$	2,939,959
Yew trees		-			9,906
Handicrafts		212			2,916
Others		8,870,452			8,612,134
	$	14,039,237		$	11,564,915
Cost of revenues:
TCM raw materials	$	4,236,907		$	2,021,300
Yew trees		-			7,897
Handicrafts		87			2,487
Others		8,337,666			8,783,315
	$	12,574,660		$	10,814,999
Depreciation and amortization:
TCM raw materials	$	171,415		$	114,482
Yew trees		10,125			31,778
Handicrafts		226			676
Others		4,512			(12,228	)
	$	186,278		$	134,708
Net income (loss):
TCM raw materials	$	1,519,823		$	1,021,374
Yew trees		1,019			1,924
Handicrafts		177			417
Others		(470,001	)		(408,704	)
	$	1,051,018		$	615,011

	September 30, 2018
	TCM raw materials		Yew trees		Handicrafts		Others		Total
Identifiable long-lived assets, net	$	31,087,820	$	420,329	$	10,905	$	95,185	$	31,614,239

	December 31, 2017
	TCM raw materials		Yew trees		Handicrafts		Others		Total
Identifiable long-lived assets, net	$	6,369,938	$	474,961	$	12,066	$	92,530	$	6,949,495

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The Company does not allocate any selling, general and administrative expenses, other income/expenses to its reportable segments because these activities are managed at a corporate level. In addition, the specified amounts for interest expense and income tax expense are not included in the measure of segment profit or loss reviewed by the chief operating decision maker and these specified amounts are not regularly provided to the chief operating decision maker. Therefore, the Company has not disclosed interest expense and income tax expense for each reportable segment.

Asset information by reportable segment is not reported to or reviewed by the chief operating decision maker and, therefore, the Company has not disclosed asset information for each reportable segment. The Company’s operations are located in the PRC. All revenues are derived from customers in the PRC. All of the Company’s operating assets are located in the PRC.

NOTE 12 - COMMITMENTS AND CONTINGENCIES

Operating Lease

On February 1, 2015, the Company entered into a lease for its U.S. principal office space in California. Pursuant to the office lease, the monthly payment of $3,039 is due on the first day of each month of the first year, $3,150 for each month of the second year and $3,261 for each month of the third year. The term of the lease is for 3 years and expires on January 31, 2018. On February 1, 2018, the Company renewed the lease and the lease expires on January 31, 2020. Pursuant to the renewed lease agreement, the monthly payment is $3,521 from February 1, 2018 to January 1, 2019, and $3,669 from February 1, 2019 to January 31, 2020. For the nine months ended September 30, 2018 and 2017, rent expense related to the U.S. principal office lease amounted to $35,687 and $30,348, respectively.

On May 1, 2017, the Company entered into a lease for product exhibition and promotion space in California. The lease is on month by month basis and the monthly rent is $2,800. For the nine months ended September 30, 2018 and 2017, the related rent expense amounted to $25,006 and $14,000, respectively. 

On April 30, 2018, the Company entered into a lease for product sales space in California. The lease term is from May 11, 2018 to April 30, 2019. The lease includes a monthly base rent payment, due on the first day of each calendar month, and contingent rent, based on a percentage of sales in excess of specified target amounts. Pursuant to the lease agreement, the monthly base rent payment is $1,761 from May 11, 2018 to May 31, 2018, $2,600 from June 1, 2018 to October 30, 2018 and from January 1, 2019 to April 30, 2019, and $4,600 from November 1, 2018 to December 31, 2018. The contingent rent is recognized as rent expense when achievement of the specified sales that triggers the contingent rent is probable. For the nine months ended September 30, 2018, the related rent expense amounted to $14,761, and no contingent rent expense was incurred.

See Note 10 for related party operating lease commitments.

Seedling Purchase and Sale Long-Term Cooperation Agreement

On November 25, 2010, HDS entered into a Seedling Purchase and Sale Long-Term Cooperation Agreement (the “Seedling Agreement”) with Wuchang City Xinlin Foresty Co., Ltd (“Xinlin”), pursuant to which HDS will sell yew seedlings to Xinlin at a price equal to 90% of HDS’s publicly-published wholesale prices. Xinlin has agreed to purchase from the Company 10,000 yew seedlings annually. For the nine months ended September 30, 2018 and 2017, the Company didn’t make any sales under the Seedling Agreement.

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NOTE 13 - RECENT ACCOUNTING PRONOUNCEMENTS

In June 2018, the FASB issued ASU 2018-07, “Compensation - Stock Compensation (Topic 718) - Improvements to Nonemployee Share-Based Payment Accounting “, which expands the scope of Topic 718 to include all share-based payment transactions for acquiring goods and services from nonemployees. These amendments align the accounting for share-based payment transactions with non-employees with accounting for share-based payment transactions with employees. An entity should only remeasure liability-classified awards that have not been settled by the date of adoption and equity-classified awards for which a measurement date has not been established through a cumulative-effect adjustment to retained earnings as of the beginning of the fiscal year of adoption. Upon transition, the entity is required to measure these nonemployee awards at fair value as of the adoption date. The entity must not remeasure assets that are completed. This standard will be effective for public business entities for fiscal years beginning after December 15, 2018 including interim periods within those fiscal years. Early adoption is permitted, but no earlier than an entity’s adoption date of Topic 606. The Company is currently evaluating the impact of the adoption of ASU No. 2018-07 on its consolidated financial statements.

In July 2018, the FASB issued ASU 2018-09, “Codification Improvements”, which affects a wide variety of Topics in the Codification and applies to all reporting entities within the scope of the affected accounting guidance. These amendments represent changes to clarify, correct errors in, or make minor improvements to the Codification, eliminating inconsistencies and providing clarifications in current guidance. Some of the amendments do not require transition guidance and will be effective upon issuance. However, many of the amendments do have transition guidance with effective dates for annual periods beginning after December 15, 2018, for public business entities. The Company is currently evaluating the impact of the adoption of ASU No. 2018-09 on its consolidated financial statements.

In July 2018, the FASB issued ASU 2018-10, “Codification Improvements to Topic 842, Leases”. These amendments affect narrow aspects of the guidance issued in the amendments in ASU 2016-02 including those regarding residual value guarantees, rate implicit in the lease, lessee reassessment of lease classification, lessor reassessment of lease term and purchase option, variable lease payments that depend on an index or a rate, investment tax credits, lease term and purchase option, transition guidance for amounts previously recognized in business combinations, certain transition adjustments, transition guidance for leases previously classified as capital leases under Topic 840, transition guidance for modifications to leases previously classified as direct financing or sales-type leases under Topic 840, transition guidance for sale and leaseback transactions, impairment of net investment in the lease, unguaranteed residual asset, effect of initial direct costs on rate implicit in the lease, and failed sale and leaseback transactions. For entities that early adopted Topic 842, the amendments are effective upon issuance of ASU 2018-10, and the transition requirements are the same as those in Topic 842. For entities that have not adopted Topic 842, the effective date and transition requirements will be the same as the effective date and transition requirements in Topic 842. The Company is currently evaluating the impact of the adoption of ASU No. 2018-10 on its consolidated financial statements.

In July 2018, the FASB issued ASU 2018-11, “Leases (Topic 842): Targeted Improvements”. The amendments in this ASU affect the guidance issued in ASU 2016-02, Leases (Topic 842), which is not yet effective. The amendments provide entities with an additional (and optional) transition method to adopt the new leases standard. Under this new transition method, an entity initially applies the new leases standard at the adoption date and recognizes a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. The amendments also provide lessors with a practical expedient to not separate non-lease components from the associated lease component and, instead, to account for those components as a single component in certain circumstances. For the entities that have not adopted Topic 842, the effective date for this ASU are the same as those for ASU 2016-02, which is effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. The Company is currently evaluating the impact of the adoption of ASU No. 2018-11 on its consolidated financial statements.

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NOTE 14 - JOINT VENTURE AGREEMENT FOR PLANTING OF YEW TREES

On June 14, 2018, HDS entered into a Joint Venture Planting Agreement (the “Joint Venture Agreement”) with Qing’An National Forestry Administration (“Qing’An Forestry”), pursuant to which the Qing’An Forestry has given HDS access to 10,729.5 mu of forest land located in Qing’An County, Suihua City, Heilongjiang Province to develop yew tree forests and produce yew seedlings. 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. The Company accounts for this Joint Venture Agreement as a collaborative arrangement under ASC 808, “Collaborative Arrangements” and related topics and will record revenue on a gross basis as the prime contractor. For the nine months ended September 30, 2018, the Company has not generated any revenues or activities on this land.

NOTE 15 – SUBSEQUENT EVENTS

On October, 18 2018, HDS repaid the loan from SPD Bank in an amount of RMB 10,000,000 (approximately $1,509,000).

On October 15, 2018, HDS repaid the loan to CEB in an amount of $359,000 and draw down additional borrowings from CEB in a total amount of $1,090,000.

The Company has evaluated all other subsequent events through the date these consolidated financial statements were issued and determine that there were no other subsequent events or transactions that require recognition or disclosures in the consolidated financial statements.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion of our consolidated results of operations and cash flows for the nine months ended September 30, 2018 and 2017, and consolidated financial conditions as of September 30, 2018 and December 31, 2017 should be read in conjunction with our unaudited consolidated financial statements and the related notes included elsewhere in this document.

Overview

We are a major grower and seller of yew trees and manufacturer of products made from yew trees, including handicrafts. We also sell branches and leaves of yew trees for the manufacture of TCM containing taxol, which TCM has been approved in the PRC for use as a secondary treatment of certain cancers, meaning it must be administered in combination with other pharmaceutical drugs. The yew industry is highly regulated in the PRC because the Northeast yew tree is considered an endangered species.

For the nine months ended September 30, 2018, revenues from the sales of TCM raw materials represented approximately 62.45% of consolidated revenue (including 62.45% of consolidated revenues from related parties); sales of yew trees represented approximately 0.10% of consolidated revenue (including 0.08% of consolidated revenue from a related party); sales of handicrafts represented approximately 0.00% of consolidated revenue; and the sales of others represented approximately 37.44% of consolidated revenue (including 11.82% of consolidated revenue from related parties). For the nine months ended September 30, 2017, revenues from the sales of TCM raw materials represented approximately 48.54% of consolidated revenue (including 48.54% of consolidated revenues from a related party); sales of yew trees represented approximately 0.03% of consolidated revenue; sales of handicrafts represented approximately 0.02% of consolidated revenue; and the sales of others represented approximately 51.42% of consolidated revenue.

For the three months ended September 30, 2018, revenues from the sales of TCM raw materials represented approximately 36.82% of consolidated revenue (including 36.82% of consolidated revenues from related parties); sales of yew trees represented approximately 0.00% of consolidated revenue; sales of handicrafts represented approximately 0.00% of consolidated revenue; and the sales of others represented approximately 63.18% of consolidated revenue (including 6.18% of consolidated revenue from related parties). For the three months ended September 30, 2017, revenues from the sales of TCM raw materials represented approximately 25.42% of consolidated revenue (including 25.42% of consolidated revenues from a related party); sales of yew trees represented approximately 0.09% of consolidated revenue; sales of handicrafts represented approximately 0.03% of consolidated revenue; and the sales of others represented approximately 74.47% of consolidated revenue.

YBP’s revenues were mostly generated by HDS and in the PRC. The expenses ($1,535,544 and $434,757 for the nine months ended September 30, 2018 and 2017, respectively) incurred in the U.S. were primarily related to fulfilling the reporting requirements of public listed company, stock-based compensation, office daily operations and other costs. As of September 30, 2018, YBP had $522,260 in cash and held the 100% equity interests in its subsidiaries Yew HK and JSJ. Yew HK itself has no business operations or assets other than holding of equity interests in JSJ. JSJ has no business operations and assets with a book value of approximately $2,770, including approximately $2,770 in cash at September 30, 2018. JSJ also holds the VIE interests in HDS through the contractual arrangements (the “Contractual Arrangements”) described in Notes to Consolidated Financial Statements. On November 4, 2014, HDS established a new subsidiary, Harbin Yew Food Co. LTD. (“HYF”), to develop and cultivate wood ear mushroom. As of September 30, 2018, HYF had started pilot production with limited amount of sales. In the event that we are unable to enforce the Contractual Agreements, we may not be able to exert effective control over HDS and HYF, and our ability to conduct our business may be materially and adversely affected. If the applicable PRC authorities invalidate our Contractual Agreements for any violation of PRC laws, rules and regulations, we would lose control of the VIE and its subsidiary resulting in its deconsolidation in financial reporting and severe loss in our market valuation. On September 8, 2016, YBP established a new subsidiary, MC Commerce Holding Inc. (MC), to sales the Company’s yew products in American market. MC had limited operation activities for the nine months ended September 30, 2018.

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Critical accounting policies and estimates

Our discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these consolidated financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. We continually evaluate our estimates, including those related to bad debts, allowance for obsolete inventory, and the classification of short and long-term inventory, the useful life of property and equipment and intangible assets, recovery of long-lived assets, income taxes, write-down in value of inventory, and the valuation of equity transactions. We base our estimates on historical experience and on various other assumptions that we believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Any future changes to these estimates and assumptions could cause a material change to our reported amounts of revenues, expenses, assets and liabilities. Actual results may differ from these estimates under different assumptions or conditions. We believe the following critical accounting policies affect our significant judgments and estimates used in the preparation of the financial statements.

Variable interest entities

Pursuant to ASC 810 and related subtopics related to the consolidation of variable interest entities, we are required to include in our consolidated financial statements the financial statements of VIEs. The accounting standards require a VIE to be consolidated by a company if that company is subject to the risk of loss for the VIE or is entitled to receive the VIE’s residual returns. VIEs are those entities in which we, through contractual arrangements, bear the risk of, and enjoy the rewards normally associated with ownership of the entity, and therefore we are the primary beneficiary of the entity. HDS is considered a VIE, and we are the primary beneficiary. We entered into agreements with HDS pursuant to which we shall receive 100% of HDS’s net income. In accordance with these agreements, HDS shall pay consulting fees equal to 100% of its net income to our wholly-owned subsidiary, JSJ. JSJ shall supply the technology and administrative services needed to service the HDS.

The accounts of HDS are consolidated in the accompanying financial statements. As a VIE, HDS’ sales are included in our total sales, its income from operations is consolidated with ours, and our net income includes all of HDS’ net income, and their assets and liabilities are included in our consolidated balance sheets. The VIEs do not have any non-controlling interest and, accordingly, we did not subtract any net income in calculating the net income attributable to us. Because of the contractual arrangements, we have pecuniary interest in HDS that requires consolidation of HDS’ financial statements with our financial statements.

As required by ASC 810-10, we perform a qualitative assessment to determine whether we are the primary beneficiary of HDS which is identified as a VIE of us. A quality assessment begins with an understanding of the nature of the risks in the entity as well as the nature of the entity’s activities including terms of the contracts entered into by the entity, ownership interests issued by the entity and the parties involved in the design of the entity. The significant terms of the agreements between us and HDS are discussed above in the “Corporate Structure and Recapitalization - Second Restructure” section. Our assessment on the involvement with HDS reveals that we have the absolute power to direct the most significant activities that impact the economic performance of HDS. JSJ, our wholly own subsidiary, is obligated to absorb a majority of the risk of loss from HDS activities and is entitled to receive a majority of HDS’s expected residual returns. In addition, HDS’ shareholders have pledged their equity interest in HDS to JSJ, irrevocably granted JSJ an exclusive option to purchase, to the extent permitted under PRC Law, all or part of the equity interests in HDS and agreed to entrust all the rights to exercise their voting power to the person(s) appointed by JSJ. Under the accounting guidance, we are deemed to be the primary beneficiary of HDS and the results of HDS’ operation are consolidated in our consolidated financial statements for financial reporting purposes.

Accordingly, as a VIE, HDS’ sales are included in our total sales, its income from operations is consolidated with our income from operations and our net income includes all of HDS’ net income. All the equity (net assets) and profits (losses) of HDS are attributed to us. Therefore, no non-controlling interest in HDS is presented in our consolidated financial statements. As we do not have any non-controlling interest and, accordingly, did not subtract any net income in calculating the net income attributable to us. Because of the Contractual Arrangements, YBP has a pecuniary interest in HDS that requires consolidation of HDS’ financial statements with those of ours.

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Additionally, pursuant to ASC 805, as YBP and HDS are under the common control of the HDS Shareholders, the Second Restructure was accounted for in a manner similar to a pooling of interests. As a result, our historical amounts in the accompanying consolidated financial statements give retrospective effect to the Second Restructure, whereby our assets and liabilities are reflected at the historical carrying values and their operations are presented as if they were consolidated for all periods presented, with our results of operations being consolidated from the date of the Second Transfer Agreement. The accounts of HDS are consolidated in the accompanying financial statements.

Accounts receivable

Accounts receivable are presented net of an allowance for doubtful accounts. We maintain allowances for doubtful accounts for estimated losses. We review the accounts receivable balance on a periodic basis and make general and specific allowances when there is doubt as to the collectability of individual balances. In evaluating the collectability of individual receivable balances, we consider many factors, including the age of the balance, a customer’s historical payment history, its current credit-worthiness and current economic trends. Accounts are written off after exhaustive efforts at collection. We recognize the probability of the collection for each customer and believe the amount of the balance as of September 30, 2018 could be collected and accordingly, based on a review of our outstanding balances, we did not record any allowance for doubtful accounts.

Inventories

Inventories consisted of raw materials, finished goods including handicrafts, yew essential oil soap, complex cuspidate extract, composite northeast yew extract, yew candles and pine needle extracts, yew seedlings and other trees, which consist of larix, spruce and poplar trees. We classify our inventories based on our historical and anticipated levels of sales; any inventory in excess of its normal operating cycle of one year is classified as long-term on our consolidated balance sheets. Inventories are stated at the lower of cost or market value utilizing the weighted average method. Raw materials primarily include yew timber used in the production of products such as handicrafts, furniture and other products containing yew timber. Finished goods-handicraft and yew seedlings include direct materials and direct labor.

We estimate the amount of the excess inventories by comparing inventory on hand with the estimated sales that can be sold within our normal operating cycle of one year. Any inventory in excess of our current requirements based on historical and anticipated levels of sales is classified as long-term on our consolidated balance sheets. Our classification of long-term inventory requires us to estimate the portion of inventory that can be realized over the next 12 months.

To estimate the amount of slow-moving or obsolete inventories, we analyze movement of our products, monitor competing products and technologies and evaluate acceptance of our products. Periodically, we identify inventories that cannot be sold at all or can only be sold at deeply discounted prices. An allowance will be established if management determines that certain inventories may not be saleable. If inventory costs exceed expected market value due to obsolescence or quantities in excess of expected demand, we will record reserves for the difference between the carrying cost and the estimated market value.

Our handicraft and yew furniture products are hand-made by traditional Chinese artisans.

In accordance with ASC 905, “Agriculture”, our costs of growing yew seedlings are accumulated until the time of harvest and are reported at the lower of cost or market.

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Property and equipment

Property and equipment are carried at cost and are depreciated on a straight-line basis (after taking into account their respective estimated residual value) over the estimated useful lives of the assets. The cost of repairs and maintenance is expensed as incurred; major replacements and improvements are capitalized. When assets are retired or disposed of, the cost and accumulated depreciation are removed from the accounts, and any resulting gains or losses are included in income in the year of disposition. We examine the possibility of decreases in the value of fixed assets when events or changes in circumstances reflect the fact that their recorded value may not be recoverable. The estimated useful lives are as follows:

Building	15 years
Machinery and equipment	10 years
Office equipment	3 years
Leasehold improvement	5 years
Motor vehicles	4 years

Land use rights and yew forest assets

All land in the PRC is owned by the PRC government and cannot be sold to any individual or company. We have recorded the amounts paid to the PRC government to acquire long-term interests to utilize land and yew forests as land use rights and yew forest assets. This type of arrangement is common for the use of land in the PRC. Yew trees on land containing yew tree forests are used to supply raw materials such as branches, leaves and fruit to us that will be used to manufacture our products. We amortize these land and yew forest use rights over the term of the respective land and yew forest use right, which ranges from 45 to 50 years. The lease agreements do not have any renewal option and we have no further obligations to the lessor. We record the amortization of these land and forest use rights as part of our cost of revenues.

Revenue recognition

We generate our revenue from sales of yew seedling products, sales of yew raw materials for medical application, sales of yew handicraft products, sales of “Others” including yew candles, yew essential oil soap, pine needle extract, complex taxus cuspidate extract, and composite northeast yew extract. Pursuant to the guidance of ASC 606, we recognize revenue when obligations under the terms of a contract with customer are satisfied; generally this occurs with the transfer of control of the products sold. Transfer of control to the customer is based on the standardized shipping terms in the contract as this determines when we has the right to payment, the customer has legal title to the asset and the customer has the risks of ownership. 

Income taxes

We are governed by the Income Tax Law of the PRC, Hong Kong and the United States. We account for income tax using the liability method prescribed by ASC 740, “Income Taxes”. Under this method, deferred tax assets and liabilities are determined based on the difference between the financial reporting and tax bases of assets and liabilities using enacted tax rates that will be in effect in the year in which the differences are expected to reverse. We record a valuation allowance to offset deferred tax assets if based on the weight of available evidence; it is more-likely-than-not that some portion, or all, of the deferred tax assets will not be realized. The effect on deferred taxes of a change in tax rates is recognized as income or loss in the period that includes the enactment date.

We apply the provisions of ASC 740-10-50, “Accounting for Uncertainty in Income Taxes”, which provides clarification related to the process associated with accounting for uncertain tax positions recognized in our financial statements. Audit periods remain open for review until the statute of limitations has passed. The completion of review or the expiration of the statute of limitations for a given audit period could result in an adjustment to our liability for income taxes. Any such adjustment could be material to our results of operations for any given quarterly or annual period based, in part, upon the results of operations for the given period. Currently, we have no uncertain tax positions, and will continue to evaluate for uncertain positions in the future.

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Stock-based compensation

Stock based compensation is accounted for based on the requirements of the Share-Based Payment topic of ASC 718 which requires recognition in the financial statements of the cost of employee and director services received in exchange for an award of equity instruments over the period the employee or director is required to perform the services in exchange for the award. The Accounting Standards Codification also requires measurement of the cost of employee and director services received in exchange for an award based on the grant-date fair value of the award.

Pursuant to ASC 505-50, for share-based payments to consultants and other third-parties, compensation expense is determined at the “measurement date.” The expense is recognized over the period of services or the vesting period, whichever is applicable. Until the measurement date is reached, the total amount of compensation expense remains uncertain. We record compensation expense based on the fair value of the award at the reporting date. The awards to consultants and other third-parties are then revalued, or the total compensation is recalculated based on the then current fair value, at each subsequent reporting date.

Recent accounting pronouncements

In May 2014, the FASB issued ASU 2014-09, “Revenue from Contracts with Customers (ASC 606)”. Under ASU 2014-09, revenue is recognized when a customer obtains control of promised goods or services and is recognized in an amount that reflects the consideration which the entity expects to receive in exchange for those goods or services. In addition, the standard requires disclosure of the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. The guidance permits two methods of adoption: retrospectively to each prior reporting period presented (full retrospective method), or retrospectively with the cumulative effect of initially applying the guidance recognized at the date of initial application (modified retrospective method).

On January 1, 2018, we adopted this new standard using the full retrospective method to restate each prior reporting period presented. We have identified its revenue streams and assessed each for the impacts. The new standard does not change the timing of when we recognize revenue as the majority of our revenue arises from contracts with customers in which the sale of goods is the main performance obligation. We recognize revenue when obligations under the terms of a contract with its customer are satisfied; generally this occurs with the transfer of control of the products sold. Transfer of control to the customer is based on the standardized shipping terms in the contract as this determines when we have the right to payment, the customer has legal title to the asset and the customer has the risks of ownership. Payment terms are defined in the contract and the contracts do not have a significant financing component.

The adoption did not have any impact on our consolidated financial statements and as a result, no changes were made to prior reporting periods presented

In June 2018, the FASB issued ASU 2018-07, “Compensation - Stock Compensation (Topic 718) - Improvements to Nonemployee Share-Based Payment Accounting ”, which expands the scope of Topic 718 to include all share-based payment transactions for acquiring goods and services from nonemployees. These amendments align the accounting for share-based payment transactions with non-employees with accounting for share-based payment transactions with employees. An entity should only remeasure liability-classified awards that have not been settled by the date of adoption and equity-classified awards for which a measurement date has not been established through a cumulative-effect adjustment to retained earnings as of the beginning of the fiscal year of adoption. Upon transition, the entity is required to measure these nonemployee awards at fair value as of the adoption date. The entity must not remeasure assets that are completed. This standard will be effective for public business entities for fiscal years beginning after December 15, 2018 including interim periods within those fiscal years. Early adoption is permitted, but no earlier than an entity’s adoption date of Topic 606. The Company is currently evaluating the impact of the adoption of ASU No. 2018-07 on its consolidated financial statements.

In July 2018, the FASB issued ASU 2018-09, “Codification Improvements”, which affects a wide variety of Topics in the Codification and applies to all reporting entities within the scope of the affected accounting guidance. These amendments represent changes to clarify, correct errors in, or make minor improvements to the Codification, eliminating inconsistencies and providing clarifications in current guidance. Some of the amendments do not require transition guidance and will be effective upon issuance. However, many of the amendments do have transition guidance with effective dates for annual periods beginning after December 15, 2018, for public business entities. The Company is currently evaluating the impact of the adoption of ASU No. 2018-09 on its consolidated financial statements.

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In July 2018, the FASB issued ASU 2018-10, “Codification Improvements to Topic 842, Leases”. These amendments affect narrow aspects of the guidance issued in the amendments in ASU 2016-02 including those regarding residual value guarantees, rate implicit in the lease, lessee reassessment of lease classification, lessor reassessment of lease term and purchase option, variable lease payments that depend on an index or a rate, investment tax credits, lease term and purchase option, transition guidance for amounts previously recognized in business combinations, certain transition adjustments, transition guidance for leases previously classified as capital leases under Topic 840, transition guidance for modifications to leases previously classified as direct financing or sales-type leases under Topic 840, transition guidance for sale and leaseback transactions, impairment of net investment in the lease, unguaranteed residual asset, effect of initial direct costs on rate implicit in the lease, and failed sale and leaseback transactions. For entities that early adopted Topic 842, the amendments are effective upon issuance of ASU 2018-10, and the transition requirements are the same as those in Topic 842. For entities that have not adopted Topic 842, the effective date and transition requirements will be the same as the effective date and transition requirements in Topic 842. The Company is currently evaluating the impact of the adoption of ASU No. 2018-10 on its consolidated financial statements.

In July 2018, the FASB issued ASU 2018-11, Leases (Topic 842): Targeted Improvements. The amendments in this ASU affect the guidance issued in ASU 2016-02, Leases (Topic 842), which is not yet effective. The amendments provide entities with an additional (and optional) transition method to adopt the new leases standard. Under this new transition method, an entity initially applies the new leases standard at the adoption date and recognizes a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. The amendments also provide lessors with a practical expedient to not separate non-lease components from the associated lease component and, instead, to account for those components as a single component in certain circumstances. For the entities that have not adopted Topic 842, the effective date for this ASU are the same as those for ASU 2016-02, which is effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. The Company is currently evaluating the impact of the adoption of ASU No. 2018-11 on its consolidated financial statements.

Currency exchange rates

Our functional currency is the U.S. dollar, and the functional currency of our operating subsidiaries and VIE is the RMB. All of our sales are denominated in RMB. As a result, changes in the relative values of U.S. dollars and RMB affect our reported levels of revenues and profitability as the results of our operations are translated into U.S. dollars for reporting purposes. In particular, fluctuations in currency exchange rates could have a significant impact on our financial stability due to a mismatch among various foreign currency-denominated sales and costs. Fluctuations in exchange rates between the U.S. dollar and RMB affect our gross and net profit margins and could result in foreign exchange and operating losses.

Our exposure to foreign exchange risk primarily relates to currency gains or losses resulting from timing differences between signing of sales contracts and settling of these contracts. Furthermore, we translate monetary assets and liabilities denominated in other currencies into RMB, the functional currency of our operating subsidiaries. Our results of operations and cash flow are translated at average exchange rates during the period, and assets and liabilities are translated at the unified exchange rate at the end of the period. Translation adjustments resulting from this process are included in accumulated other comprehensive income in our statement of shareholders’ equity. We have not used any forward contracts, currency options or borrowings to hedge our exposure to foreign currency exchange risk. We cannot predict the impact of future exchange rate fluctuations on our results of operations and may incur net foreign currency losses in the future.

Our financial statements are expressed in U.S. dollars, which is the functional currency of our parent company. The functional currency of our operating subsidiaries and affiliates is RMB. To the extent we hold assets denominated in U.S. dollars, any appreciation of the RMB against the U.S. dollar could result in a charge in our statement of operations and a reduction in the value of our U.S. dollar denominated assets. On the other hand, a decline in the value of RMB against the U.S. dollar could reduce the U.S. dollar equivalent amounts of our financial results.

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Recently enacted JOBS Act

We qualify as an “emerging growth company” under the recently enacted JOBS Act. As a result, we are permitted to, and intend to, rely on exemptions from certain disclosure requirements. For so long as we are an emerging growth company, among other things, we will not be required to:

● Have an auditor report on our internal controls over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act;

● Submit certain executive compensation matters to shareholder advisory votes, such as “say-on-pay” and “say-on-frequency”;

● Obtain shareholder approval of any golden parachute payments not previously approved; and

● Disclose certain executive compensation related items such as the correlation between executive compensation and performance and comparisons of the Chief Executive’s compensation to median employee compensation.

In addition, Section 107 of the JOBS Act also provides that an emerging growth company can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. In other words, an emerging growth company can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have elected to take advantage of the benefits of this extended transition period. Our financial statements may therefore not be comparable to those of companies that comply with such new or revised accounting standards.

We will remain an “emerging growth company” for up to five years, or until the earliest of (i) the last day of the first fiscal year in which our total annual gross revenues exceed $1 billion; (ii) the date that we become a “large accelerated filer” as defined in Rule 12b-2 under the Securities Exchange Act of 1934, which would occur if the market value of our ordinary shares that is held by non-affiliates exceeds $700 million as of the last business day of our most recently completed second fiscal quarter or (iii) the date on which we have issued more than $1 billion in non-convertible debt during the preceding three-year period.

Until such time, however, because the JOBS Act has only recently been enacted, we cannot predict whether investors will find our stock less attractive because of the more limited disclosure requirements that we may be entitled to follow and other exemptions on which we are relying while we are an “emerging growth company”. If some investors find our common stock less attractive as a result, there may be a less active trading market for our common stock and our stock price may be more volatile.

Results of Operations

The following tables set forth key components of our results of operations for the periods indicated, in dollars. The discussion following the table is based on these results:

	Three Months Ended September 30,						Nine Months Ended September 30,
	2018			2017			2018			2017
Revenues - third parties	$	8,003,644		$	7,272,296		$	8,178,314		$	16,681,089
Revenues - related parties		6,035,593			4,292,619			23,712,429			18,363,666
Total revenues		14,039,237			11,564,915			31,890,743			35,044,755
Cost of revenues - third parties		7,499,241			7,371,663			7,601,484			16,731,726
Cost of revenues - related parties		5,075,419			3,443,336			18,991,830			6,453,470
Total cost of revenues		12,574,660			10,814,999			26,593,314			23,185,196
Gross profit		1,464,577			749,916			5,297,429			11,859,559
Operating expenses		251,471			260,916			1,798,643			859,234
Income from operations		1,213,106			489,000			3,498,786			11,000,325
Other expenses		(162,088	)		126,017			(685,574	)		40,109
Net income before income taxes		1,051,018			615,017			2,813,212			11,040,434
Income taxes		(1,431,836	)		(610	)		(1,431,836	)		(610	)
Net income		(380,818	)		614,407			1,381,376			11,039,824
Other comprehensive income (loss):
Foreign currency translation adjustment		(1,623,333	)		790,549			(2,467,338	)		1,870,030
Comprehensive income (loss)	$	(2,004,151	)	$	1,404,956		$	(1,085,962	)	$	12,909,854

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Three and Nine Months Ended September 30, 2018 Compared to Three and Nine Months Ended September 30, 2017

Revenues

For the three months ended September 30, 2018, we had total revenues of $14,039,237, as compared to $11,564,915 for the three months ended September 30, 2017, an increase of $2,474,322 or 21.40%. The increase in total revenue was attributable to the increase in revenues from TCM and “Others” segments, partially offset by decrease in revenues from sales of handicrafts and yew trees to related parties.

For the nine months ended September 30, 2018, we had total revenues of $31,890,743, as compared to $35,044,755 for the nine months ended September 30, 2017, a decrease of $3,154,012 or 9%. The decrease in total revenue was attributable to the decrease in revenues from “Others” segments and handicrafts, partially offset by increase in revenues from sales of TCM raw materials and yew trees to related parties.

Total revenue is summarized as follows:

	Three Months Ended September 30,				Increase			Percentage
	2018		2017		(Decrease)			Change
TCM raw materials	$	5,168,573	$	2,939,959	$	2,228,614			75.80	%
Yew trees		-735		9,906		(10,641	)		-107.42	%
Handicrafts		212		2,916		(2,704	)		-92.73	%
Others		8,871,187		8,612,134		259,053			3.01	%
Total	$	14,039,237	$	11,564,915	$	2,474,322			21.40	%

	Nine Months Ended September 30,				Increase			Percentage
	2018		2017		(Decrease)			Change
TCM raw materials	$	19,917,303	$	17,011,006	$	2,906,297			17.08	%
Yew trees		31,766		9,906		21,860			220.67	%
Handicrafts		1,520		5,284		(3,764	)		-71.23	%
Others		11,940,154		18,018,559		(6,078,405	)		-33.73	%
Total	$	31,890,743	$	35,044,755	$	(3,154,012	)		-9.00	%

For the three months ended September 30, 2018 compared to September 30, 2017, the increase in revenue of TCM raw material was mainly attributable to the increase in demand from our related parties, Yew Pharmaceutical and HDS Development. The decrease in revenue of handicrafts was mainly attributable to the decrease in market demand. The increase in revenue of others was mainly attributable to higher demand in export market.

For the nine months ended September 30, 2018 compared to September 30, 2017, the increase in revenue of TCM raw material was mainly attributable to the increase in demand from our related parties, Yew Pharmaceutical and HDS Development. The decrease in revenue of handicrafts was mainly attributable to the decrease in market demand. The decrease in revenue of others was mainly attributable to the decrease in demand of yew candles, pine needle extracts and handmade essential oil soaps.

Cost of Revenues

For the three months ended September 30, 2018, cost of revenues amounted to $12,574,660 as compared to $10,814,999 for the three months ended September 30, 2017, an increase of $1,759,661 or 16.27%. For the three months ended September 30, 2018, cost of revenues accounted for 89.57% of total revenues compared to 93.52% of total revenues for the three months ended September 30, 2017.

For the nine months ended September 30, 2018, cost of revenues amounted to $26,593,314 as compared to $23,185,196 for the nine months ended September 30, 2017, an increase of $3,408,118 or 14.70%. For the nine months ended September 30, 2018, cost of revenues accounted for 83.39% of total revenues compared to 66.16% of total revenues for the nine months ended September 30, 2017.

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Cost of revenues by product categories is as follows:

	Three Months Ended September 30,				Increase			Percentage
	2018		2017		(Decrease)			Change
TCM raw materials	$	4,236,907	$	2,021,300	$	2,215,607			109.61	%
Yew trees		-457		7,897		(8,354	)		-105.79	%
Handicrafts		87		2,487		(2,400	))		-96.50	%
Others		8,338,123		8,783,315		(445,192	))		-5.07	%
Total	$	12,574,660	$	10,814,999	$	1,759,661			16.27	%

	Nine Months Ended September 30,				Increase			Percentage
	2018		2017		(Decrease)			Change
TCM raw materials	$	15,254,214	$	5,031,434	$	10,222,780			203.18	%
Yew trees		19,747		7,897		11,850			150.06	%
Handicrafts		1,328		4,663		(3,335	)		-71.52	%
Others		11,318,025		18,141,202		(6,823,177	)		-37.61	%
Total	$	26,593,314	$	23,185,196	$	3,408,118			14.70	%

The increase in our cost of revenues for the three months ended September 30, 2018 as compared to the three months ended September 30, 2017 was primarily a result of the increase in cost of revenue in TCM raw materials, partially offset by the decrease in the “Others” segments. The increase in our cost of revenues for the nine months ended September 30, 2018 as compared to the nine months ended September 30, 2017 was primarily a result of the increase in cost of revenue in TCM raw materials, partially offset by decrease in costs of revenue in the “Others” segments.

The increase in cost of revenue in TCM raw material segment was primarily attributable to the increase in the unit cost of TCM raw materials and increase of sales to our related parties, Yew Pharmaceutical and HDS Development. Usually we obtained yew foliage by picking the leaves from the grown yew trees. The unit cost of the TCM raw material only consisted of the picking labor cost and amortization. However, in the second quarter of 2018, the demand for TCM raw material increased due to the increased demand from our related parties, Yew Pharmaceutical and HDS Development. We did not have enough leaves to be picked from the grown yew trees. Thus, the Company cut down certain whole grown yew to produce TCM raw material, which led to significantly increase in the unit price due to the fact that the cost consisted of the unit price of the grown tree. But in the second quarter of 2017, we have had enough leaves to pick and sale without cutting down the grown trees and our unit cost was lower.

The decrease in cost of revenue in “Others” segment for the three months ended September 30, 2018 as compared to the three months ended September 30, 2017 was primarily due to the decreased sales of yew candles, pine needle extracts and essential oil soaps, which was in line with the decrease in revenue.

The decrease in cost of revenue in “Others” segment for the nine months ended September 30, 2018 as compared to the nine months ended September 30, 2017 was primarily due to the decreased sales of yew candles, pine needle extracts and essential oil soaps, which was in line with the decrease in revenue.

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Gross Profit

For the three months ended September 30, 2018, gross profit was $1,464,577 as compared to $749,916 for the three months ended September 30, 2017, representing gross profit margins of 10.43% and 6.48%, respectively. For the nine months ended September 30, 2018, gross profit was $5,297,429 as compared to $11,859,559 for the nine months ended September 30, 2017, representing gross profit margins of 16.61% and 33.84%, respectively. Gross profit margins by categories are as follows:

	Three Months Ended September 30,									Nine Months Ended September 30,
	2018			2017			(Decrease) Increase			2018			2017			(Decrease) Increase
TCM raw materials		18.03	%		31.25	%		-13.22	%		23.41	%		70.42	%		-47.01	%
Yew trees		37.82	%		20.28	%		17.54	%		37.84	%		20.28	%		17.56	%
Handicrafts		58.96	%		14.71	%		44.25	%		12.63	%		11.75	%		0.88	%
Others		6.01	%		-1.99	%		8.00	%		5.21	%		-0.68	%		5.89	%
Total		10.43	%		6.48	%		3.95	%		16.61	%		33.84	%		-17.23	%

The decrease in our overall gross profit margin for the three and nine month ended September 30, 2018 as compared to the three and nine months ended September 30, 2017 were primarily attributable to the lower gross margin yields of TCM raw materials.

The decrease in our gross margin percentage related to the sale of TCM raw materials for the three and nine months ended September 30, 2018 as compared to the three and nine months ended September 30, 2017 was primarily attributable to the significant increase in the cost of revenue of TCM raw materials for the three and nine months ended September 30, 2018.

Selling Expenses 

Selling expenses consisted of the following: 

	Three Months Ended September 30,				Nine Months Ended September 30,
	2018		2017		2018		2017
Salary and related benefit	$	-	$	-	$	-	$	-
Shipping and handling		-		-		-		-
Other		16,964		64,347		24,793		64,678
Total	$	16,964	$	64,347	$	24,793	$	64,678

General and Administrative Expenses  

For the three months ended September 30, 2018, general and administrative expenses amounted to $234,507, as compared to $196,569 for the three months ended September 30, 2017, an increase of $37,938, or 19.30%. For the nine months ended September 30, 2018, general and administrative expenses amounted to $1,773,850, as compared to $794,556 for the nine months ended September 30, 2017, an increase of $979,294, or 123.25%.  

General and administrative expenses consisted of the following: 

	Three Months Ended September 30,					Nine Months Ended September 30,
	2018		2017			2018		2017
Compensation and related benefits	$	34,448	$	92,335		$	1,161,703	$	342,252
Depreciation		4,553		(5,446	)		13,261		21,849
Travel and entertainment		10,030		23,915			61,450		72,529
Professional fees		9,999		9,504			36,805		25,455
Other		175,477		76,261			500,631		332,471
Total	$	234,507	$	196,569		$	1,773,850	$	794,556

The increase in our general and administrative expenses for the nine months ended September 30, 2018, as compared to the nine months ended September 30, 2017 was primarily attributable to the increase in our stock-based compensation.  

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Income from Operations

For the three months ended September 30, 2018, income from operations was $1,213,106, as compared to income from operations of $489,000 for the three months ended September 30, 2017, an increase of $724,106, or 148.10%. The increase was primarily attributable to the increase in gross profit from TCM raw materials and others.

For the nine months ended September 30, 2018, income from operations was $3,498,786, as compared to income from operations of $11,000,325 for the nine months ended September 30, 2017, a decrease of $7,501,539, or 68.19%. The decrease was primarily attributable to the decrease in gross profit from TCM raw materials.

Other Expenses

For the three months ended September 30, 2018, total other expense was $162,088 as compared to total other income of $126,017 for the three months ended September 30, 2017. The decrease was primarily attributable to the decrease in government subsidy.

For the nine months ended September 30, 2018, total other expense was $685,574 as compared to total other income of $40,109 for the nine months ended September 30, 2017. The decrease was primarily attributable to the decrease in government subsidy.

Net Income

As a result of the factors described above, our net loss was $380,818 or $(0.01) (basic and diluted), for the three months ended September 30, 2018, as compared to net income of $614,407 or $0.01(basic and diluted), for the three months ended September 30, 2017. As a result of the factors described above, our net income was $1,381,376 or $0.03 (basic and diluted), for the nine months ended September 30, 2018, as compared to net income of $11,039,824 or $0.21 and $0.20 (basic and diluted, respectively), for the nine months ended September 30, 2017.

Foreign Currency Translation Adjustment

For the three months ended September 30, 2018, we reported an unrealized loss on foreign currency translation of $1,623,333, as compared to a gain of $790,549 for the three months ended September 30, 2017. For the nine months ended September 30, 2017, we reported an unrealized loss on foreign currency translation of $2,467,338, as compared to a gain of $1,870,030 for the nine months ended September 30, 2017. The change reflects the effect of the value of the U.S. dollar in relation to the RMB. These gains and loss are non-cash items. As described elsewhere herein, the functional currency of our subsidiary, JSJ, and our VIE, HDS, is the RMB. The accompanying consolidated financial statements have been translated and presented in U.S. dollars using period end rates of exchange for assets and liabilities, and average rates of exchange for the period for net revenues, costs, and expenses. Net gains resulting from foreign exchange transactions, if any, are included in the consolidated statements of income and comprehensive income.

Comprehensive Income 

For the three months ended September 30, 2018, comprehensive loss of $2,004,151 was derived from the sum of our net loss of $380,818 with foreign currency translation loss of $1,623,333. For the three months ended September 30, 2017, comprehensive income of $1,404,956 was derived from the sum of our net income of $614,407 with foreign currency translation gain of $790,549.

For the nine months ended September 30, 2018, comprehensive loss of $1,085,962 was derived from the sum of our net income of $1,381,376 with foreign currency translation loss of $2,467,338. For the nine months ended September 30, 2017, comprehensive income of $12,909,854 was derived from the sum of our net income of $11,039,824 with foreign currency translation gain of $1,870,030.

Segment Information

For the three and nine months ended September 30, 2018 as compared to the three and nine months ended September 30, 2017, we operated in four reportable business segments: (1) the TCM raw materials segment, consisting of the production and sale of yew raw materials and yew tree extracts used in the manufacture of TCM; (2) the yew tree segment, consisting of the growth and sale of yew tree seedlings and mature trees; (3) the handicrafts segment, consisting of the manufacture and sale of furniture and handicrafts made of yew timber; and (4) the “Others” segment, consisting of the sales of yew candles, pine needle extracts, yew essential oil soaps, complex taxus cuspidate extract, and composite northeast yew extract. Our reportable segments are strategic business units that offer different products. The four business segments are managed separately based on the fundamental differences in their operations. All of the Company’s operations including the sales of export commodities are conducted in the PRC.

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Information with respect to these reportable business segments for the three months ended September 30, 2018 and 2017 was as follows:

	For the three months ended September 30, 2018						For the three months ended September 30, 2017
	Revenues- third parties		Revenues - related parties		Total		Revenues- third parties		Revenues - related parties		Total
Revenues
TCM raw materials	$	-	$	5,168,573	$	5,168,573	$	-	$	2,939,959	$	2,939,959
Yew trees		-		-		-		9,906		-		9,906
Handicrafts		212		-		212		2,916		-		2,916
Others		8,003,432		867,020		8,870,452		7,259,474		1,352,660		8,612,134
Total revenues	$	8,003,644	$	6,035,593	$	14,039,237	$	7,272,296	$	4,292,619	$	11,564,915
Cost of Revenues
TCM raw materials	$	-	$	4,236,907	$	4,236,907	$	-	$	2,021,300	$	2,021,300
Yew trees		-		-		-		7,897		-		7,897
Handicrafts		87		-		87		2,487		-		2,487
Others		7,499,154		838,512		8,337,666		7,361,279		1,422,036		8,783,315
Total cost of revenues	$	7,499,241	$	5,075,419	$	12,574,660	$	7,371,663	$	3,443,336	$	10,814,999

Information with respect to these reportable business segments for the nine months ended September 30, 2018 and 2017 was as follows:

	For the nine months ended September 30, 2018						For the nine months ended September 30, 2017
	Revenues- third parties		Revenues - related parties		Total		Revenues- third parties		Revenues - related parties		Total
Revenues:
TCM raw materials	$	-	$	19,917,303	$	19,917,303	$	-	$	17,011,006	$	17,011,006
Yew trees		5,297		26,469		31,766		9,906		-		9,906
Handicrafts		1,520		-		1,520		5,284		-		5,284
Others		8,171,497		3,768,657		11,940,154		16,665,899		1,352,660		18,018,559
Total revenues	$	8,178,314	$	23,712,429	$	31,890,743	$	16,681,089	$	18,363,666	$	35,044,755
Cost of sales:
TCM raw materials	$	-	$	15,254,214	$	15,254,214	$	-	$	5,031,434	$	5,031,434
Yew trees		1,035		18,712		19,747		7,897		-		7,897
Handicrafts		1,328		-		1,328		4,663		-		4,663
Others		7,599,121		3,718,904		11,318,025		16,719,166		1,422,036		18,141,202
Total cost of revenues	$	7,601,484	$	18,991,830	$	26,593,314	$	16,731,726	$	6,453,470	$	23,185,196

33

TCM raw materials

During the three months ended September 30, 2018, we sold 22,763 kg of TCM raw materials as compared to 11,902 kg of TCM raw materials during the three months ended September 30, 2017, a 91.25% increase in sales volume primarily attributable to increase in sales volume to our related parties, Yew Pharmaceutical and HDS Development.

During the nine months ended September 30, 2018, we sold 96,762 kg of TCM raw materials as compared to 77,383 kg of TCM raw materials during the nine months ended September 30, 2016, a 25.04% increase in sales volume primarily attributable to increase in sales volume to our related parties, Yew Pharmaceutical and HDS Development.

In February 2010, we began selling yew branches and leaves that are used in the production of TCM. On January 9, 2010, we entered into the Development Agreement with Yew Pharmaceutical, a related party, for the development, production and sale of yew-based TCM. Pursuant to the Development Agreement, we sell yew branches and leaves to Yew Pharmaceutical. Yew Pharmaceutical manufactures TCM at its own facilities in Harbin in accordance with the requirements of the Heilongjiang Food and Drug Administration (the “HFDA”). Yew Pharmaceutical is also responsible for producing the finished product in accordance with GMP requirements. In this regard, Yew Pharmaceutical received a GMP certificate in November 2009, and has filed all applications with, and obtained all approvals from, the HFDA.

For the three months ended September 30, 2018 and 2017, we had revenue of $5,168,573 and $2,939,959, respectively, from the sale of TCM raw materials to Yew Pharmaceutical and HDS Development. For the three months ended September 30, 2018 and 2017, we had no revenue from the sale of TCM raw materials to third parties.

For the nine months ended September 30, 2018 and 2017, we had revenue of $19,917,303 and $17,011,006, respectively, from the sale of TCM raw materials to Yew Pharmaceutical and HDS Development. For the nine months ended September 30, 2018 and 2017, we had no revenue from the sale of TCM raw materials to third parties.

Sales volume was summarized as follows:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2018		2017		2018		2017
Sales volume - third parties (kg)		-		-		-		-
Sales volume - related party (kg)		22,763		11,902		96,762		77,383
Total sales volume		22,763		11,902		96,762		77,383

Additionally, in order to ensure the sustainability of our yew forests, we closely monitor the growth rate of our yew trees. The amount of TCM raw materials we can sell is limited by the seasonal growth rate of our yew trees that are available for cutting branches and leaves. Over time, as more yew trees reach maturity, these limits may be increased.

Others

During the three months ended September 30, 2018, we sold approximately 23,810 yew candles to related party. During the nine months ended September 30, 2018, we sold approximately 61,850 yew candles to related party.

During the three months ended September 30, 2017, we sold $nil yew candles, 2,160 kilograms complex taxus cuspidate extract to third party. For the same period, we sold 240 kilograms northeast yew extract in amount of $1,352,660 to a related party. During the nine months ended September 30, 2017, we sold approximately 99,504 yew candles, 3,090 kilograms of pine needle extract, and 2,160 kilograms of complex taxus cuspidate extract to third party. For the same period, we sold 240 kilograms northeast yew extract to a related party. 

34

Liquidity and Capital Resources

Liquidity is the ability of a company to generate funds to support its current and future operations, satisfy its obligations and otherwise operate on an ongoing basis. At September 30, 2018 and December 31, 2017, we had cash balances of $522,260 and $859,830, respectively. These funds are primarily located in various financial institutions located in China. Our primary uses of cash have been for the purchase of yew trees, land use rights and yew forest assets. Additionally, we use cash for employee compensation and working capital.

The following table sets forth information as to the principal changes in the components of our working capital from December 31, 2017 to September 30, 2018:

					December 31, 2017 to September 30, 2018
Category	September 30, 2018		December 31, 2017		Change			Percentage change
Current assets:
Cash	$	522,260	$	859,830	$	(337,570	)		-39.26	%
Accounts receivable		6,871,285		9,881,914		(3,010,629	)		-30.47	%
Accounts receivable - related parties		6,592,266		21,847,733		(15,255,467	)		-69.83	%
Inventories, net		6,784,838		2,579,190		4,205,648			163.06	%
Prepaid expenses - related parties		57,153		57,202		19,634			52.33	%
Prepaid expenses and other assets		35,488		37,519		(21,714			-37.96	%
VAT recoverables		1,056,483		170,564		885,919			519.41	%
Current liabilities:
Accounts payable		816,010		152,812		663,198			434.00	%
Accounts payable - related parties		14,563		357,708		(343,145	)		-95.93	%
Accrued expenses and other payables		306,561		162,619		143,942			88.51	%
Advance from customers		27,602				27,602			100.00	%
Taxes payable		235,736		5,574		203,162			4129.21	%
Due to related parties		585,326		619,999		(34,673	)		-5.59	%
Short-term borrowings		6,512,038		6,099,876		412,162			6.76	%
Working capital:
Total current assets	$	21,919,773	$	35,433,952	$	(13,514,179	)		-38.14	%
Total current liabilities		8,497,836		7,398,588		1,099,248			14.86	%
Working capital	$	13,421,937	$	28,035,364	$	(14,613,427	)		-52.12	%

Our working capital decreased by $14,613,427 to $13,421,937 at September 30, 2018, from working capital of $28,035,364 at December 31, 2017. This decrease in working capital is primarily attributable to:

● a decrease in accounts receivable - related parties of approximately $15,255,000

● a decrease in accounts receivable of approximately $3,011,000

● an increase in short-term borrowings of approximately $412,000

	partially offset by:
●	an increase in inventories, net of approximately $4,206,000

For the nine months ended September 30, 2018, net cash flow provided by operating activities was $30,257,706, as compared to net cash flow used in operating activities of $953,991 for the nine months ended September 30, 2017, an increase of $31,211,697. Because the exchange rate conversion is different for the balance sheet and the statements of cash flows, the changes in assets and liabilities reflected on the statements of cash flows are not necessarily identical with the comparable changes reflected on the balance sheets.

For the nine months ended September 30, 2018, net cash flow provided by operating activities of $30,257,706 was primarily attributable to:

● net income of approximately $1,381,400 adjusted for the add-back of non-cash items, such as depreciation of approximately $45,000, amortization of land use rights and yew forest assets of approximately $4,951,000 and stock-based compensation of approximately $1,068,000; and

● Changes in operating assets and liabilities, such as a decrease in accounts receivable-related parties of approximately $14,874,000, a decrease in inventories, net of approximately $4,300,000, a decrease in accounts payable-related parties of approximately $342,000.   Partially offset by a decrease in VAT recoverable of approximately $944,000.

35

For the nine months ended September 30, 2017, net cash flow used operating activities of approximately $954,000 was primarily attributable to:

● net income of approximately $11,039,000 adjusted for the add-back of non-cash items, such as depreciation of approximately $51,000, amortization of land use rights and yew forest assets of approximately $138,000, and stock-based compensation of approximately $94,000; and

● the receipt of cash from operations from changes in operating assets and liabilities, such as an increase in accounts receivable-related parties of approximately $11,006,000, a decrease in inventories of approximately $3,278,000, a decrease in accounts payable of approximately $2,803,000.

● partially offset by: the use of cash from changes in operating assets and liabilities, such as a decrease in accounts receivable of approximately $3,276,000.

Net cash flow used in investing activities was approximately $31,378,000 for the nine months ended September 30, 2018. During the nine months ended September 30, 2018, we have made payment in approximately $31,357,000 for purchase of yew forest assets, and made prepayments for purchases of PPE of approximately $21,000. Net cash flow used in investing activities was approximately $794,000 for the nine months ended September 30, 2017. During the nine months ended September 30, 2017, we have made payment in approximately $794,000 for purchase of yew forest assets.

Net cash flow provided by financing activities was approximately $676,000 for the nine months ended September 30, 2018 and consisted of proceeds of $7,332,000 from a bank, and offset by repayments of approximately $6,696,000. Net cash flow provided by financing activities was approximately $2,777,000 for the nine months ended September 30, 2017 and consisted of proceeds of approximately $7,881,000 from a bank, and offset by repayments of approximately $4,998,000 and $106,000 to bank and our related party respectively.

We have historically financed our operations and capital expenditures through cash flows from operations, bank loans and advances from related parties. From March 2008 to September 2009, we received approximately $2.9 million of proceeds in the aggregate from offerings and sales of our common stock. Except for the portion used to pay for professional and other expenses in the U.S., substantial portions of the proceeds we received through sales of our common stock were retained in the PRC and used to fund our working capital requirements. As the PRC government imposes controls on PRC companies’ ability to convert RMB into foreign currencies and the remittance of currency out of China, from time to time, in order to fund our corporate activities in the U.S., Zhiguo Wang, our President and CEO, advanced funds to us in the U.S. and we repaid the amounts owed to him in RMB in the PRC.

It is management’s intention to expand our operations as quickly as reasonably practicable to capitalize on the demand opportunity for our products. We regularly review our cash funding requirements and attempt to meet those requirements through a combination of cash on hand, cash provided by operations and any potential available bank borrowings. We believe that we can continue meeting our cash funding requirements for our business in this manner over at least the next twelve months. The majority of our funds are maintained in RMB in bank accounts in China. We receive most of our revenue in the PRC. 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 by complying with certain procedural requirements. However, approval from China’s State Administration of Foreign Exchange (“SAFE”) or its local counterparts is required where RMB is to be converted into foreign currency and remitted out of China to pay capital expenses such as the repayment of loans denominated in foreign currencies. The PRC government may also, at its discretion, restrict access to foreign currencies for current account transactions. As of September 30, 2018 and December 31, 2017, approximately $47.1 million and $44.9 million, respectively, of our net assets are located in the PRC. If the foreign exchange control system in the PRC prevents us from obtaining sufficient foreign currency to satisfy our currency demands, we may not be able to transfer funds deposited within the PRC to fund working capital requirements in the U.S. or pay any dividends in currencies other than the RMB, to our shareholders.

Off-Balance Sheet Arrangements

We have not entered into any financial guarantees or other commitments to guarantee the payment obligations of any third parties. We have not entered into any derivative contracts that are indexed to our shares and classified as shareholder’s equity or that are not reflected in our consolidated financial statements. Furthermore, we do not have any retained or contingent interest in assets transferred to an unconsolidated entity that serves as credit, liquidity or market risk support to such entity. We do not have any variable interest in any unconsolidated entity that provides financing, liquidity, market risk or credit support to us or engages in leasing, hedging or research and development services with us.

36

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Foreign Currency Exchange Rates Risk

Substantially all of our operating revenues and expenses are denominated in RMB. We operate using RMB and the effects of foreign currency fluctuations are largely mitigated because local expenses in the PRC are also denominated in the same currency. We do not believe that we currently have any significant direct foreign exchange risk and have not hedged exposures denominated in foreign currencies or any other derivative financial instruments. Because we generally receive cash flows denominated in RMB, our exposure to foreign exchange risks should be limited.

Our assets and liabilities, of which the functional currency is the RMB, are translated into USD using the exchange rates in effect at the balance sheet date, resulting in translation adjustments that are reflected as cumulative translation adjustment in the shareholders’ equity section on our consolidated balance sheets. A portion of our net assets are impacted by changes in foreign currencies translation rates in relation to the U.S. dollar. We recorded a foreign currency translation loss of $2,467,338 for the nine months ended September 30, 2018 and a gain of $1,870,030 for the nine months ended September 30, 2017, respectively, to reflect the impact of the fluctuation of the RMB against the U.S. dollar.

The value of the RMB against the U.S. dollar and other currencies may fluctuate and is affected by, among other things, changes in China’s political and economic conditions. The conversion of the RMB into foreign currencies, including U.S. dollars, has been based on rates set by the People’s Bank of China.

To the extent that we decide to convert RMB denominated cash amounts into U.S. dollars for the purpose of making any dividend payments, which we have not declared but may declare in the future, or for other business purposes, appreciation of the U.S. dollar against the RMB would have a negative effect on the U.S. dollar amount available to us. Conversely, if we need to convert U.S. dollars into RMB for operations, appreciation of the RMB against the U.S. dollar would have an adverse effect on the RMB amount it received from the conversion. We have not used, and do not currently expect to use in the future, any forward contracts or currency borrowings to hedge exposure to foreign currency exchange risk.

Interest Rate Risk

We have not been, nor do we currently anticipate being, exposed to material risks due to changes in interest rates.

ITEM 4. CONTROLS AND PROCEDURES

(a) Evaluation of Disclosure Controls and Procedures.

The Company’s management has evaluated, with the participation of the Company’s Chief Executive Officer and Chief Financial Officer, the effectiveness of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended) as of the end of the period covered by this report. Based on that evaluation, the Chief Executive Officer and the Chief Financial Officer have concluded that the Company’s disclosure controls and procedures were not effective as of the end of the period covered by this report.

(b) Changes in Internal Control over Financial Reporting.

There have not been any changes in the Company’s internal control over financial reporting that occurred during the Company’s fiscal quarter ended September 30, 2018 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

37

PART II

OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

We are not currently a party to any lawsuit or proceeding which, in the opinion of management, is likely to have a material adverse effect on us or our business.

ITEM 1A. RISK FACTORS

No material change.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

None.

ITEM 6. EXHIBITS

The following exhibits are attached hereto and filed herewith:

31.1*	Certification by the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 and Rules 13a-14 and 15d-14 under the Securities Exchange Act of 1934.
31.2*	Certification by the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 and Rules 13a-14 and 15d-14 under the Securities Exchange Act of 1934.
32*	Certification of Periodic Financial Report by the Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS	XBRL Instance Document
101.SCH	XBRL Taxonomy Extension Schema Document
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document
101.LAB	XBRL Taxonomy Extension Label Linkbase Document
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document

* Filed herewith.

38

SIGNATURE

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 thereunto duly authorized.

YEW BIO-PHARM GROUP, INC.
By:	/s/ YUXI XING
	Yuxi Xing
	Chief Financial Officer

Date: November 19, 2018

39

EXHIBIT INDEX

Exhibit Number	Description of Exhibit
31.1*	Certification by the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 and Rules 13a-14 and 15d-14 under the Securities Exchange Act of 1934.
31.2*	Certification by the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 and Rules 13a-14 and 15d-14 under the Securities Exchange Act of 1934.
32*	Certification of Periodic Financial Report by the Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS	XBRL Instance Document
101.SCH	XBRL Taxonomy Extension Schema Document
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document
101.LAB	XBRL Taxonomy Extension Label Linkbase Document
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document

* Filed herewith.

40

EX-31.1

EXHIBIT 31.1

Certification of Chief Executive Officer

Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

and Rules 13a-14 and 15d-14 under the Securities Exchange Act of 1934

I, Zhiguo Wang, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Yew Bio-Pharm Group, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financing reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 19, 2018	/s/ ZHIGUO WANG
	Zhiguo Wang Chief Executive Officer

EX-31.2

EXHIBIT 31.2

Certification of Chief Financial Officer

Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

and Rules 13a-14 and 15d-14 under the Securities Exchange Act of 1934

I, Yuxi Xing certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Yew Bio-Pharm Group, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financing reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 19, 2018	/s/ YUXI XING
	Yuxi Xing Chief Financial Officer

EX-32

EXHIBIT 32

Certification of Periodic Financial Report by the Chief Executive Officer and

Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

Solely for the purposes of complying with 18 U.S.C. §1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned Chief Executive Officer and Chief Financial Officer of Yew Bio-Pharm Group, Inc. (the “Company”), hereby certifies, based on my knowledge, that the Quarterly Report on Form 10-Q of the Company for the quarter ended September 30, 2018 (the “Report”) fully complies with the requirements of Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934 and that the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: November 19, 2018	/s/ ZHIGUO WANG
	Zhiguo Wang Chief Executive Officer

Date: November 19, 2018	/s/ YUXI XING
	Yuxi Xing Chief Financial Officer

XML

Document and Entity Information - shares	9 Months Ended
	Sep. 30, 2018	Nov. 19, 2018
Document and Entity Information [Abstract]
Entity Registrant Name	Yew Bio-Pharm Group, Inc.
Entity Central Index Key	0001548240
Trading Symbol	YEWB
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Document Type	10-Q
Document Period End Date	Sep. 30, 2018
Document Fiscal Period Focus	Q3
Document Fiscal Year Focus	2018
Entity Filer Category	Non-accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	true
Entity Ex Transition Period	false
Entity Common Stock, Shares Outstanding		52,075,000

XML

Consolidated Balance Sheets - USD ($)	Sep. 30, 2018	Dec. 31, 2017
CURRENT ASSETS:
Cash	$ 522,260	$ 859,830
Accounts receivable	6,871,285	9,881,914
Accounts receivable - related parties	6,592,266	21,847,733
Inventories, net	6,784,838	2,579,190
Prepaid expenses - related parties	57,153	57,202
Prepaid expenses and other assets	35,488	37,519
VAT recoverables	1,056,483	170,564
Total Current Assets	21,919,773	35,433,952
LONG-TERM ASSETS:
Long-term inventories, net	1,700,797	10,546,648
Property and equipment, net	526,419	579,557
Land use rights and yew forest assets, net	31,087,820	6,369,938
Total Long-term Assets	33,315,036	17,496,143
Total Assets	55,234,809	52,930,095
CURRENT LIABILITIES:
Accounts payable	816,010	152,812
Accounts payable - related parties	14,563	357,708
Accrued expenses and other payables	306,561	162,619
Advance from customers	27,602
Taxes payable	235,736	5,574
Due to related parties	585,326	619,999
Short-term borrowings	6,512,038	6,099,876
Total Current Liabilities	8,497,836	7,398,588
NONCURRENT LIABILITIES:
Taxes payable	1,202,741
Deferred income	340,785	359,646
Total Noncurrent Liabilities	1,543,526	359,646
Total Liabilities	10,041,362	7,758,234
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY:
Common Stock ($0.001 par value; 140,000,000 shares authorized; 52,075,000 and 51,875,000 shares issued and outstanding at September 30, 2018 and December 31, 2017)	52,075	51,875
Additional paid-in capital	11,470,760	10,363,412
Retained earnings	31,669,034	30,287,658
Statutory reserves	3,762,288	3,762,288
Accumulated other comprehensive income (loss)	(1,760,710)	706,628
Total Shareholders' Equity	45,193,447	45,171,861
Total Liabilities and Shareholders' Equity	$ 55,234,809	$ 52,930,095

XML

Consolidated Balance Sheets (Parenthetical) - $ / shares	Sep. 30, 2018	Dec. 31, 2017
Balance Sheets [Abstract]
Common stock, par value	$ 0.001	$ 0.001
Common stock, shares authorized	140,000,000	140,000,000
Common stock, shares issued	52,075,000	51,875,000
Common stock, shares outstanding	52,075,000	51,875,000

XML

Consolidated Statements of Income and Comprehensive Income (Loss) (Unaudited) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
REVENUES:
Revenues	$ 8,003,644	$ 7,272,296	$ 8,178,314	$ 16,681,089
Revenues - related parties	6,035,593	4,292,619	23,712,429	18,363,666
Total Revenues	14,039,237	11,564,915	31,890,743	35,044,755
COST OF REVENUES:
Cost of revenues	7,499,241	7,371,663	7,601,484	16,731,726
Cost of revenues - related parties	5,075,419	3,443,336	18,991,830	6,453,470
Total Cost of Revenues	12,574,660	10,814,999	26,593,314	23,185,196
GROSS PROFIT	1,464,577	749,916	5,297,429	11,859,559
OPERATING EXPENSES:
Selling	16,964	64,347	24,793	64,678
General and administrative	234,507	196,569	1,773,850	794,556
Total Operating Expenses	251,471	260,916	1,798,643	859,234
INCOME FROM OPERATIONS	1,213,106	489,000	3,498,786	11,000,325
OTHER INCOME (EXPENSES):
Interest expense	(45,549)	(52,105)	(182,659)	(139,450)
Other income	(9,969)	(3,332)	80,356	(1,895)
Exchange loss	(106,570)	181,454	(583,271)	181,454
Total Other Expenses	(162,088)	126,017	(685,574)	40,109
INCOME BEFORE PROVISION FOR INCOME TAXES	1,051,018	615,017	2,813,212	11,040,434
PROVISION FOR INCOME TAXES	(1,431,836)	(610)	(1,431,836)	(610)
NET INCOME (LOSS)	(380,818)	614,407	1,381,376	11,039,824
COMPREHENSIVE INCOME:
NET INCOME	(380,818)	614,407	1,381,376	11,039,824
OTHER COMPREHENSIVE INCOME (LOSS):
Foreign currency translation adjustment	(1,623,333)	790,549	(2,467,338)	1,870,030
COMPREHENSIVE INCOME (LOSS)	$ (2,004,151)	$ 1,404,956	$ (1,085,962)	$ 12,909,854
NET INCOME PER COMMON SHARE:
Basic	$ (0.01)	$ 0.01	$ 0.03	$ 0.21
Diluted	$ (0.01)	$ 0.01	$ 0.03	$ 0.20
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
Basic	52,018,478	51,875,000	51,923,352	51,875,000
Diluted	52,018,478	54,561,533	54,808,280	53,965,264

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Consolidated Statements of Cash Flows (Unaudited) - USD ($)	9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$ 1,381,376	$ 11,039,824
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation	44,912	50,944
Stock-based compensation	1,067,548	94,177
Amortization of land use rights and yew forest assets	4,950,556	137,903
Changes in operating assets and liabilities:
Accounts receivable	2,641,250	3,276,466
Accounts receivable - related parties	14,873,927	(11,005,869)
Prepaid expenses and other current assets	(22,053)	(14,847)
Prepaid expenses - related parties	19,729	17,902
Inventories, net	4,299,077	(3,278,467)
VAT recoverables	(943,333)	1,081,219
Accounts payable	692,154	501,728
Accounts payable - related parties	(341,954)	(2,803,224)
Accrued expenses and other payables	160,728	(202,645)
Advance from customers	29,097
Due to related parties	(28,211)	(57,632)
Taxes payable	1,431,836	(11,873)
Deferred income	1,067	220,403
NET CASH PROVIDED BY(USED IN) OPERATING ACTIVITIES	30,257,706	(953,991)
CASH FLOWS FROM INVESTING ACTIVITIES:
Prepayments made to related party for purchase of yew forest assets	(20,690)
Purchase of land use rights and yew forest assets	(31,356,873)	(793,662)
NET CASH USED IN INVESTING ACTIVITIES	(31,377,563)	(793,662)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from short-term borrowings	7,331,599	7,881,105
Repayment of short-term borrowings	(6,695,593)	(4,997,764)
Proceeds from exercise of stock options	40,000
Repayments to related party		(105,875)
NET CASH PROVIDED BY FINANCING ACTIVITIES	676,006	2,777,466
EFFECT OF EXCHANGE RATE ON CASH	106,281	30,869
NET INCREASE (DECREASE) IN CASH	(337,570)	1,060,682
CASH - Beginning of period	859,830	278,991
CASH - End of period	522,260	1,339,673
Cash paid for:
Interest	166,884	140,555
Income taxes		18,197
NON-CASH INVESTING AND FINANCING ACTIVITIES
Operating expenses paid by related party	5,834	34,341
Reclassification of inventories to land use rights and yew forest assets		$ 4,300,033

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Organization and Principal Activities

9 Months Ended

Sep. 30, 2018

Organization and Principal Activities [Abstract]

ORGANIZATION AND PRINCIPAL ACTIVITIES

NOTE 1 - ORGANIZATION AND PRINCIPAL ACTIVITIES

The accompanying unaudited interim consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted as permitted by rules and regulations of the Securities and Exchange Commission (“SEC”). The consolidated balance sheet as of December 31, 2017 was derived from the audited consolidated financial statements of Yew Bio-Pharm Group, Inc. (individually “YBP” and collectively with its subsidiaries and operating variable interest entity, the “Company”). The accompanying unaudited interim consolidated financial statements should be read in conjunction with the summary of significant accounting policies and notes to consolidated financial statements included in the Company’s annual report on Form 10-K for the year ended December 31, 2017.

In the opinion of management, all adjustments (which include normal recurring adjustments) necessary to present a fair statement of the financial position as of September 30, 2018, and the results of operations and cash flows for the nine-month periods ended September 30, 2018 and 2017, have been presented.

The preparation of consolidated financial statements in accordance with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. The Company continually evaluates its estimates, including those related to bad debts, inventories, income taxes, and the valuation of equity transactions. The Company bases its estimates on historical experience and on various other assumptions that it believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Any future changes to these estimates and assumptions could cause a material change to our reported amounts of revenues, expenses, assets and liabilities. Actual results may differ from these estimates under different assumptions or conditions.

Accounts payable and accounts payable—related party from prior period financial statements have been reclassified to conform to the current period presentation. This reclassification has resulted in no changes to the Company’s financial position or results of operations presented.

Details of the Company’s subsidiaries, variable interest entity (“VIE”) and VIE’s subsidiary are as follows:

Name	Domicile and Date of Incorporation	Registered Capital	Effective Ownership			Principal Activities
Heilongjiang Jinshangjing Bio-Technology Development Co., Limited (“JSJ”)	PRC  October 29, 2009	US$100,000		100	%	Holding company
Yew Bio-Pharm Holdings Limited (“Yew Bio-Pharm (HK)”)	Hong Kong  November 29, 2010	HK$10,000		100	%	Holding company of JSJ
Harbin Yew Science and Technology Development Co., Ltd. (“HDS”)	PRC  August 22, 1996	RMB45,000,000		Contractual arrangements		Sales of yew tree components for use in pharmaceutical industry; sales of yew tree seedlings; the manufacture of yew tree wood handicrafts; and the sales of candle, pine needle extract, yew essential oil soap, complex taxus cuspidate extract, and northeast yew extract
Harbin Yew Food Co., Ltd (“HYF”)	PRC  November 4, 2014	RMB100,000		100	%(1)	Sales of wood ear mushroom drink
MC Commerce Holding Inc. (“MC”)	State of California,  United State  September 8, 2016			100	%(2)	Sales of yew oil candles and yew oil soaps

(1) Wholly-owned subsidiary of HDS

(2) 51% owned by YBP and 49% owned by HDS

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Principles of Consolidation

9 Months Ended

Sep. 30, 2018

Principles of Consolidation [Abstract]

PRINCIPLES OF CONSOLIDATION

NOTE 2 - PRINCIPLES OF CONSOLIDATION

The consolidated financial statements include the financial statements of YBP, its subsidiaries and operating VIE and its subsidiary in which the Company is the primary beneficiary. All significant intercompany balances and transactions have been eliminated on consolidation.

Pursuant to a restructuring plan intended to ensure compliance with applicable PRC laws and regulations (the “Second Restructure”), on November 5, 2010, JSJ entered into a series of contractual arrangements (the “Contractual Arrangements”) with HDS and/or Zhiguo Wang, his wife Guifang Qi and Xingming Han (collectively with Mr. Wang and Madame Qi, the “HDS Shareholders”), as described below:

● Exclusive Business Cooperation Agreement. Pursuant to the Exclusive Business Cooperation Agreement between JSJ and HDS (the “Business Cooperation Agreement”), JSJ has the exclusive right to provide to HDS general business operation services, including advice and strategic planning, as well as consulting services related to technology, research and development, human resources, marketing and other services deemed necessary (collectively, the “Services”). Under the Business Cooperation Agreement, JSJ has exclusive and proprietary rights and interests in all rights, ownership, interests and intellectual properties arising out of or created during the performance of the Business Cooperation Agreement, including but not limited to copyrights, patents, patent applications, software and trade secrets. HDS shall pay to JSJ a monthly consulting service fee (the “Service Fee”) in RMB that is equal to 100% of the monthly net income of HDS. Upon the prior written consent by JSJ, the rate of Service Fee may be adjusted pursuant to the operational needs of HDS. Within 30 days after the end of each month, HDS shall (a) deliver to JSJ the management accounts and operating statistics of HDS for such month, including the net income of HDS during such month (the “Monthly Net Income”), and (b) pay 80% of such Monthly Net Income to JSJ (each such payment, a “Monthly Payment”). Within ninety (90) days after the end of each fiscal year, HDS shall (a) deliver to JSJ financial statements of HDS for such fiscal year, which shall be audited and certified by an independent certified public accountant approved by JSJ, and (b) pay an amount to JSJ equal to the shortfall, if any, of the aggregate net income of HDS for such fiscal year, as shown in such audited financial statements, as compared to the aggregate amount of the Monthly Payments paid by HDS to JSJ in such fiscal year. HDS also granted an irrevocable and exclusive option to JSJ to purchase any and all of the assets of HDS, to the extent permitted under PRC law, at the lowest price permitted by PRC law. Unless earlier terminated in accordance with the provisions of the Business Cooperation Agreement or other agreements separately executed between JSJ and HDS, the Business Cooperation Agreement is for a term of ten years and expires on November 5, 2020; however, the term of the Business Cooperation Agreement may be extended if confirmed in writing by JSJ prior to the expiration of the term thereof. The period of the extended term shall be determined exclusively by JSJ and HDS shall accept such extended term unconditionally. Unless JSJ commits gross negligence, or a fraudulent act, against HDS, HDS shall not terminate the Business Cooperation Agreement prior to the expiration of the term, including any extended term. Notwithstanding the foregoing, JSJ shall have the right to terminate the Business Cooperation Agreement at any time upon giving 30 days’ prior written notice to HDS.

● Exclusive Option Agreement. Under an Exclusive Option Agreement among JSJ, HDS and each HDS Shareholder (individually, an “Option Agreement”), the terms of which are substantively identical to each other, each HDS Shareholder has granted JSJ or its designee the irrevocable and exclusive right to purchase, to the extent permitted under PRC law, all or any part of the HDS Shareholder’s equity interests in HDS (the “Equity Interest Purchase Option”) for RMB10. If an appraisal is required by PRC laws at the time when and if JSJ exercises the Equity Interest Purchase Option, the parties shall negotiate in good faith and, based upon the appraisal, make a necessary adjustment to the purchase price so that it complies with any and all then applicable PRC laws. Without the consent of JSJ, the HDS Shareholders shall not sell, transfer, mortgage or dispose of their respective shares of HDS stock. Additionally, without the prior consent of JSJ, the HDS Shareholders shall not in any manner supplement, change or amend the articles of association and bylaws of HDS, increase or decrease its registered capital, change the structure of its registered capital in any other manner, or engage in any transactions that could materially affect HDS’ assets, liabilities, rights or operations, including, without limitation, the incurrence or assumption of any indebtedness except incurred in the ordinary course of business, execute any major contract over RMB500,000, sell or purchase any assets or rights, incur of any encumbrance on any of its assets or intellectual property rights in favor of a third party or transfer of any agreements relating to its business operation to any third party. The term of each Option Agreement is ten years commencing on November 5, 2020 and may be extended at the sole election of JSJ.

● Equity Interest Pledge Agreement. In order to guarantee HDS’s performance of its obligations under the Business Cooperation Agreement, each HDS Shareholder, JSJ and HDS entered into an Equity Interest Pledge Agreement (individually, a “Pledge Agreement”), the terms of which are substantially similar to each other. Pursuant to the Pledge Agreement, each HDS Shareholder pledged all of his or her equity interest in HDS to JSJ. If HDS or the HDS Shareholders breach their respective contractual obligations and such breach is not remedied to the satisfaction of JSJ within 20 days after the giving of notice of breach, JSJ, as pledgee, will be entitled to exercise certain rights, including the right to foreclose upon and sell the pledged equity interests. During the term of the Pledge Agreement, the HDS Shareholder shall not transfer his or her equity interest in HDS or place or otherwise permit any other security interest of other encumbrance to be placed on such equity interest. Upon the full payment of the Service Fee under the Business Cooperation Agreement and upon the termination of HDS’s obligations thereunder, the Pledge Agreement shall be terminated.

● Power of Attorney. Under the Power of Attorney executed by each HDS Shareholder (each, a “Power of Attorney”), the terms of which are substantially similar to each other, JSJ has been granted an exclusive, irrevocable power of attorney to take actions in the place and stead of the HDS Shareholders, to act on behalf of the HDS Shareholder as his or her exclusive agent and attorney with respect to all matters concerning the HDS Shareholder’s equity interests in HDS, including without limitation, the right to: 1) attend shareholders’ meetings of HDS; 2) exercise all the HDS Shareholders’ rights, including voting rights under PRC laws and HDS’s Articles of Association, including but not limited to the sale or transfer or pledge or disposition of the HDS Shareholder’s equity interests in HDS in whole or in part; and 3) designate and appoint on behalf of the HDS Shareholders the legal person, executive director, supervisor, manager and other senior management of HDS.

To the extent that the Contractual Arrangements are enforceable under PRC law, as from time to time interpreted by relevant state agencies, they constitute the valid and binding obligations of each of the parties to each such agreement.

The Company believes that HDS is considered a VIE under ASC 810 “Consolidation”, because the equity investors in HDS no longer have the characteristics of a controlling financial interest, and the Company, through JSJ, is the primary beneficiary of HDS and controls HDS’s operations. Accordingly, HDS has been consolidated as a deemed subsidiary into YBP as a reporting company under ASC 810.

YBP has no direct or indirect legal or equity ownership interest in HDS. However, through the Contractual Arrangements, the stockholders of HDS have assigned all their rights as stockholders, including voting rights and disposition rights of their equity interests in HDS to JSJ, our indirect, wholly-owned subsidiary. YBP is deemed to be the primary beneficiary of HDS and the financial statements of HDS are consolidated in the Company’s consolidated financial statements. At September 30, 2018 and December 31, 2017, the carrying amount and classification of the assets and liabilities in the Company’s balance sheets that relate to the Company’s variable interest in the VIE and VIE’s subsidiary are as follows:

	September 30, 2018		December 31, 2017
Assets
Cash	$	487,809	$	798,514
Accounts receivable		6,616,158		9,841,841
Accounts receivable - related parties		6,592,266		21,847,733
Inventories (current and long-term), net		6,077,191		10,680,304
Prepaid expenses and other assets		44,115		26,637
Prepaid expenses - related parties		35,488		57,202
Property and equipment, net		522,009		573,563
Land use rights and yew forest assets, net		31,042,461		6,326,529
VAT recoverables		1,056,483		170,564
Total assets of VIE and its subsidiary	$	52,473,980	$	50,322,887
Liabilities
Accrued expenses and other payables	$	303,357	$	162,004
Accounts payable		534,247		17,727
Accounts payable - related parties		14,563		357,708
Advance from customers		27,602		-
Due to VIE holding companies		559,343		590,300
Short-term borrowings		6,512,038		6,099,876
Deferred income		340,785		359,646
Due to related parties		109,991		145,474
Total liabilities of VIE and its subsidiary	$	8,401,926	$	7,732,735

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Revenue Recognition

9 Months Ended

Sep. 30, 2018

Revenue Recognition [Abstract]

REVENUE RECOGNITION

NOTE 3 - REVENUE RECOGNITION

The Company accounts for revenue arising from contracts and customers in accordance with Accounting Standards Update (ASU or Update) No. 2014-09, Revenue from Contracts with Customers (“ASC 606”), which was adopted on January 1, 2018 using the full retrospective method. The adoption of ASC 606 did not impact the Company’s previously reported financial statements in any prior period nor did it result in a cumulative effect adjustment to retained earnings.

Under ASC 606, the Company recognizes revenue when its customer obtains control of promised goods, in an amount that reflects the consideration which the Company expects to receive in exchange for those goods. To determine revenue recognition for arrangements that the Company determines are within the scope of ASC 606, the Company performs the following five steps: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the Company satisfies a performance obligation. The Company only applies the five-step model to contracts when it is probable that Company will collect the consideration it is entitled to in exchange for the goods it transfers to the customer. At contract inception, once the contract is determined to be within the scope of ASC 606, the Company assesses the goods promised within each contract and determines those that are performance obligations and assesses whether each promised good is distinct. The Company then recognizes as revenue the amount of the transaction price, which is allocated to the respective performance obligation, when the performance obligation is satisfied. Generally, the Company’s performance obligations are satisfied when the customers take possession of the products, which normally occurs upon shipment or delivery depending on the terms of the contracts.

In general, the Company’s products within its segments are aligned according to the nature and economic characteristics of its products and provide meaningful disaggregation of each business segment’s results of operations. Disaggregation of revenue by business segment are included in Note 11 - SEGMENT INFORMATION. 

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Inventories

9 Months Ended

Sep. 30, 2018

Inventories [Abstract]

INVENTORIES

NOTE 4 - INVENTORIES

Inventories consisted of raw materials, finished goods including handicrafts, yew essential oil soap, complex cuspidate extract, composite northeast yew extract, yew candles and pine needle extracts, yew seedlings and other trees, which consist of larix, spruce and poplar trees. The Company classifies its inventories based on its historical and anticipated levels of sales; any inventory in excess of its normal operating cycle of one year is classified as long-term on its consolidated balance sheets. As of September 30, 2018 and December 31, 2017, inventories consisted of the following:

	September 30, 2018									December 31, 2017
	Current portion			Long-term portion			Total			Current portion			Long-term portion			Total
Raw materials	$	39,807		$	2,512,232		$	2,552,039		$	62,548		$	2,651,272		$	2,713,820
Finished goods		6,745,331			577,373			7,322,704			2,475,709			588,444			3,064,153
Yew seedlings and Other trees		-			1,203,700			1,203,700			47,913			10,036,658			10,084,571
Total		6,785,138			4,293,305			11,078,443			2,586,170			13,276,374			15,862,544
Inventory write-down		(300	)		(2,592,508	)		(2,592,808	)		(6,980	)		(2,729,726	)		(2,736,706	)
Inventories, net	$	6,784,838		$	1,700,797		$	8,485,635		$	2,579,190		$	10,546,648		$	13,125,838

Inventories as of September 30, 2018 and December 31, 2017 consisted of the inventory purchased from related parties are as follows:

	September 30,		December 31,
	2018		2017
Inventories, net	$	962,185	$	1,022,452
Inventories - related parties, net		5,822,653		1,556,738
Total	$	6,784,838	$	2,579,190

	September 30,		December 31,
	2018		2017
Long-term inventories, net	$	1,700,797	$	3,375,247
Long-term inventories - related parties, net		-		7,171,401
Total	$	1,700,797	$	10,546,648

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Taxes

9 Months Ended

Sep. 30, 2018

Taxes [Abstract]

TAXES

NOTE 5 - TAXES

(a) Federal Income Tax and Enterprise Income Taxes

The Company, YBP, registered in the state of Nevada, and its subsidiary, MC, registered in the State of California, are subject to the United States federal income tax at a tax rate of 21%. No provision for income taxes in the U.S. has been made as YBP and MC had no U.S. taxable income as of September 30, 2018 and December 31, 2017.

The Company’s subsidiary, Yew Bio-Pharm (HK), is incorporated in Hong Kong and has no operating profit or tax liabilities during the years. Yew Bio-Pharm (HK) is subject to tax at 16.5% on the assessable profits arising in or derived from Hong Kong.

The Company’s subsidiary, JSJ, and VIE and its subsidiary, HYF and HDS, incorporated in the PRC, are subject to PRC’s Enterprise Income Tax. Pursuant to the PRC Income Tax Laws, Enterprise Income Taxes (“EIT”) is generally imposed at 25%. However, HDS has been named as a leading enterprise in the agricultural industry and awarded with a tax exemption through December 31, 2058 with an exception of sales of handicrafts, yew candle, pine needle extracts and yew essential oil soap which are not within the scope of agricultural area.

The table below summarizes the difference between the U.S. statutory federal tax rate and the Company’s effective tax rate for the nine months ended September 30, 2018 and 2017:

	Nine Months Ended September 30,
	2018			2017
U.S. federal income tax rate		21.00	%		34.00	%
Foreign income not recognized in the U.S.		(21.00	)%		(34.00	)%
PRC EIT rate		25.00	%		25.00	%
PRC tax exemption and reduction		(37.81	)%		(26.20	)%
Income tax difference under different tax jurisdictions		12.66	%		1.08	%
Valuation allowance		0.15	%		0.12	%
Effective tax rate		-			-

Deferred tax assets and liabilities are provided for significant income and expense items recognized in different years for income tax and financial reporting purposes. Temporary differences, which give rise to a net deferred tax asset for the Company as of September 30, 2018 and December 31, 2017, are as follows:

	September 30, 2018			December 31, 2017
Net operating loss carry-forwards	$	140,000		$	2,541,363
Inventory write-down		648,127			614,625
Valuation allowance		(788,127	)		(3,155,988	)
Non-current deferred tax assets	$	-		$	-

The U.S. Tax Cuts and Jobs Act (the “Tax Act”) was enacted on December 22, 2017. The Tax Act among other changes, reduces the U.S. federal corporate tax rate from 35% to 21%. The Company recognized provisional tax impacts related to the revaluation of deferred tax assets and liabilities and corresponding valuation allowances in its consolidated financial statements for the nine months ended September 30, 2018. There was no impact of the revaluation to the current net income because it was fully offset by the valuation allowance that was recorded against the deferred tax asset. In addition, the Tax Act implements a modified territorial tax system that includes a one-time transition tax on deemed repatriation of previously untaxed accumulated earnings and profits of certain foreign subsidiaries, and creates new taxes on certain foreign-sourced earnings. In connection with the Tax Act, the Securities and Exchange Commission (“SEC”) issued Staff Accounting Bulletin No. 118 (“SAB 118”) that allows companies to record provisional estimates of the effects of the legislative change, and a one-year measurement period to finalize the accounting of those effects.

During the three months ended September 30, 2018, the Company recognized a one-time transition tax of $1,431,836 that represented management’s estimate of the amount of U.S. corporate income tax based on the deemed repatriation to the United States of the Company’s share of previously deferred earnings of certain non-U.S. subsidiaries of the Company mandated by the U.S. Tax Reform. The Company elected to pay the one-time transition tax over eight years commencing in 2018. The actual impact of the U.S. Tax Reform on the Company may differ from management’s estimates, and management may update its judgments based on future regulations or guidance issued or changes in the interpretations taken that would adjust the provisional amounts recorded. As of the filing date, no transition tax payment has been made.

In addition, the 2017 Tax Act also creates a new requirement that certain income (i.e., Global Intangible Low-Taxed Income (“GILTI”)) earned by controlled foreign corporations (“CFCs”) must be included currently in the gross income of the CFCs’ U.S. shareholder. GILTI is the excess of the shareholder’s net CFC tested income over the net deemed tangible income return, which is currently defined as the excess of (1) 10 percent of the aggregate of the U.S. shareholder’s pro rata share of the qualified business asset investment of each CFC with respect to which it is a U.S. shareholder over (2) the amount of certain interest expense taken into account in the determination of net CFC-tested income. The Company has elected to recognize the tax on GILTI as a period expense in the period the tax is incurred. For the nine months and three months ended September 30, 2018, no GILTI tax obligation existed and nil GILTI tax expense was recorded.

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Short-Term Borrowings

9 Months Ended

Sep. 30, 2018

Short-Term Borrowings [Abstract]

SHORT-TERM BORROWINGS

NOTE 6 - SHORT-TERM BORROWINGS

In May 2016, HDS entered into a line of credit agreement with Harbin Rongtong Branch of Bank of Communications (“BOCOM”) for the period from May 3, 2016 through May 3, 2018, pursuant to which the Company obtained a bank loan in the amount of RMB10,000,000 (approximately $1,471,000) on June 13, 2017, payable on June 12, 2018. Under this credit agreement. The loan carries an interest rate of 5.873% per annum and is payable quarterly. Heilongjiang Zishan Technology Co., Ltd. (“ZTC”), a related party controlled by Zhiguo Wang and his wife Madame Qi, collateralized its buildings and land use right with BOCOM to secure the loans under this credit agreement. In addition, ZTC, Heilongjiang Yew Pharmaceutical Co., Ltd. (“Yew Pharmaceutical”), a related party of the Company, Zhiguo Wang, Madame Qi, Yicheng Wang, the son of Zhiguo Wang and Yuqi Mao, the former family member of Yicheng Wang, provided guarantees to the loan. HDS paid off the loan in full on June 11, 2018.

On November 15, 2017, HDS entered into a loan agreement with Shanghai Pudong Development Bank (“SPD Bank”) Harbin Branch, pursuant to which the Company obtained a bank loan in the amount of RMB10,000,000 (approximately $1,509,000), payable on October 20, 2018. The loan carries an interest rate of 4.100% per annum and is payable at maturity. The proceeds of the loan were used by the Company to purchase raw materials. Madam Qi has secured the loan with her personal assets. In addition, Yew Pharmaceutical, Zhiguo Wang, Yicheng Wang, and Yuqi Mao, the former family member of Yicheng Wang provided guarantees to the loan.

On December 22, 2016, HDS entered into a credit agreement with China Everbright Bank (“CEB”) which agreed to provide credit line of RMB20,000,000 (approximately $2,880,000) to the Company for the period of three years. During the nine months ended September 30, 2018 and 2017, the Company obtained short-term loans from CEB in the total amount of $4,406,000 and $6,410,000, respectively, under this credit agreement and paid off in the total amount of $5,133,000 and $3,540,000, respectively. As of September 30, 2018 and December 31, 2017, the balance of loans borrowed from CEB was $2,143,000 and $2,870,000, respectively. These loans carry interest rates ranging from 4.30% to 4.60% per annum and the interests are payable monthly. The loans with CEB are secured by properties and land use rights of Yew Pharmaceutical. In addition, Zhiguo Wang, Madame Qi, Yew Pharmaceutical, and ZTC provided guarantees to the loans.

On August 6, 2018, HDS entered into a loan agreement with Bank of Yingkou Harbin Branch (“Yingkou Bank”), pursuant to which HDS obtained a bank loan in the amount of RMB15,000,000 (approximately $2,192,000), payable on August 5, 2019. The loan carries an interest rate of 5.4375% per annum and is payable monthly. Heilongjiang Zishan Technology Co., Ltd. (“ZTC”), a related party controlled by Zhiguo Wang and his wife Madame Qi, collateralized its buildings and land use right with Yingkou Bank to secure the loan.

During nine months ended September 30, 2018 and 2017, interest expense was $182,659 and $139,450, respectively.

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Stockholders' Equity

9 Months Ended

Sep. 30, 2018

Stockholders' Equity [Abstract]

STOCKHOLDERS' EQUITY

NOTE 7 - STOCKHOLDERS’ EQUITY

Stock option activities for the nine months ended September 30, 2018 and 2017 were summarized in the following table.

	Nine Months Ended September 30, 2018				Nine Months Ended September 30, 2017
	Number of Stock Options		Weighted Average Exercise Price		Number of Stock Options		Weighted Average Exercise Price
Balance at beginning of period		24,872,212		0.22		25,325,512		0.22
Issued		-		-		50,000		0.25
Exercised		200,000		-		-		-
Expired		15,503,475		0.22		-		-
Forfeited		-		-		-		-
Balance at end of period		9,168,737		0.22		25,375,512		0.22
Option exercisable at end of period		9,068,737		0.22		24,465,012		0.22

On May 20, 2018 the Board approved to extend the expiration date of 5,000,000 options issued to Zhiguo Wang and 2,488,737 options issued to Guifang Qi from September 30, 2018 to December 31, 2019. The Company treated this extension as a modification of the award upon the directors’ extraordinary services rendered to the Company and recognized incremental compensation cost. The Company measured the incremental compensation cost as the excess of the fair value of the modified award over the fair value of the original award immediately before its terms were modified. As a result of these modifications, the Company recognized incremental compensation cost of $1,059,987 in stock-based compensation expense during the nine months ended September 30, 2018, and the weighted average remaining contractual life was changed to 1.25 years.

On July 20, 2018, the Company issued 200,000 shares of common stock to Xuehai Wu, a director, for the exercise of the stock options with an exercise price of $0.20 granted to him pursuant to the stock option agreement entered into on July 18, 2014. The Company received the proceeds in the amount of $40,000 on July 19, 2018.

The following table summarizes the shares of the Company’s common stock issuable upon exercise of options outstanding at September 30, 2018:

Stock Options Outstanding								Stock Options Exercisable
Range of Exercise Price		Number Outstanding at September 30, 2018		Weighted Average Remaining Contractual Life (Years)		Weighted Average Exercise  Price		Number Exercisable at September 30, 2018		Weighted Average Exercise  Price
$	0.20-0.25		9,168,737		1.25	$	0.22		9,068,737	$	0.22

The Company’s outstanding stock options and exercisable stock options had no intrinsic value based upon the Company’s closing stock price of $0.20 as of September 30, 2018. Stock option expense recognized during the nine months ended September 30, 2018 and 2017 amounted to $1,067,548 and $94,177, respectively. The value of options was calculated using Black Scholes Option Pricing Model based upon the following assumptions: dividend yield of 0%, volatility of 91%-212%, risk free rate of 0.14%-2.58%, and expected term of 0.12-3.03 years.

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Earnings Per Share

9 Months Ended

Sep. 30, 2018

Earnings Per Share [Abstract]

EARNINGS PER SHARE

NOTE 8 - EARNINGS PER SHARE

Under the provisions of ASC 260, “Earnings Per Share”, basic income per common share is computed by dividing net income attributable to common shareholders by the weighted average number of shares of common stock outstanding for the periods presented. Diluted income per share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that would then share in the income of the company, subject to anti-dilution limitations.

The following table presents a reconciliation of basic and diluted net income per share for the three and nine months ended September 30, 2018 and 2017:

	For the Three Months Ended September 30,					For the Nine Months Ended  September 30,
	2018			2017		2018		2017
Net income (loss) available to common stockholders for basic and diluted net income per share of common stock	$	(380,818	)	$	614,407	$	1,381,376	$	11,039,824
Weighted average common stock outstanding - basic		52,018,478			51,875,000		51,923,352		51,875,000
Effect of dilutive securities:
Non-vested restricted common stock		-			-		-		-
Stock options issued to directors/officers/employees		-			2,686,533		2,884,928		2,090,264
Weighted average common stock outstanding - diluted		52,018,478			54,561,533		54,808,280		53,965,264
Net income per common share - basic	$	(0.01	)	$	0.01	$	0.03	$	0.21
Net income per common share - diluted	$	(0.01	)	$	0.01	$	0.03	$	0.20

Diluted net income per share is computed using the weighted average number of common shares and dilutive potential common shares outstanding during the respective periods. The potentially dilutive securities that were not included in the calculation of diluted net income per share in the periods presented where their inclusion would be anti-dilutive included options to purchase common shares of 0 and 1,961,436 on a weighted average basis for the three months ended September 30, 2018 and 2017, respectively; and option to purchase common shares of 0 and 244,322 on a weighted average basis for the nine months ended September 30, 2018 and 2017, respectively.

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Concentrations of Credit Risk and Major Customers

9 Months Ended

Sep. 30, 2018

Concentrations of Credit Risk and Major Customers [Abstract]

CONCENTRATIONS OF CREDIT RISK AND MAJOR CUSTOMERS

NOTE 9 - CONCENTRATIONS OF CREDIT RISK AND MAJOR CUSTOMERS

Customers

For the nine months ended September 30, 2018 and 2017, customers accounting for 10% or more of the Company’s revenue were as follows:

	For the Nine Months Ended September 30,
Customer	2018			2017
A (Yew Pharmaceutical, a related party)		56.7	%		48.5	%
B		*	%		47.5	%
T		21.9	%		*	%

* Less than 10%

The two largest customers accounted for 76.9% and 99.3% of the Company’s total outstanding accounts receivable as of September 30, 2018 and December 31, 2017, respectively, of which Yew Pharmaceutical, a related party, accounted for 27.7% and 68.3% of the total outstanding accounts receivable, respectively; customer B accounted for 31.0% of total outstanding accounts receivable at December 31, 2017 and customer T accounted for 49.2% of the total outstanding accounts receivable at September 30, 2018.

Suppliers

For the nine months ended September 30, 2018 and 2017, suppliers accounting for 10% or more of the Company’s purchase were as follows:

	For the Nine Months Ended September 30,
Supplier	2018			2017
A (Yew Pharmaceutical, a related party)		38.5	%		62	%
C (Changzhi Du, a related party)		*	%		10	%
Q (Heilongjiang Zishan Technology Co., Ltd., a related party)		12	%		*	%

Accounts payable to supplier D, a related party, supplier K, and supplier J accounted for 60.2%, 11.6% and 13.4%, respectively, of the Company’s total accounts payable at December 31, 2017.

Accounts payable to supplier I accounted for 63.5% of the Company’s total accounts payable at September 30, 2018.

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Related Party Transactions

9 Months Ended

Sep. 30, 2018

Related Party Transactions [Abstract]

RELATED PARTY TRANSACTIONS

NOTE 10 - RELATED PARTY TRANSACTIONS

In addition to several of the Company’s officers and directors, the Company conducted transactions with the following related parties:

Company	Nature of Relationship
Heilongjiang Zishan Technology Co., Ltd. (“ZTC”)	51% owned by Heilongjiang Hongdoushan Ecology Forest Co., Ltd., 34% owned by Zhiguo Wang, Chairman and Chief Executive Officer, 11% owned by Guifang Qi, the wife of Mr. Wang and director of the Company, and 4% owned by third parties.
Heilongjiang Yew Pharmaceutical Co., Ltd. (“Yew Pharmaceutical”)	95% owned by Heilongjiang Hongdoushan Ecology Forest Stock Co., Ltd., and 5% owned by Madame Qi.
Shanghai Kairun Bio-Pharmaceutical Co., Ltd. (“Kairun”)	60% owned by Heilongjiang Zishan Technology Co., Ltd., 20% owned by Heilongjiang Hongdoushan Ecology Forest Stock Co., Ltd., and 20% owned by Mr. Wang.
Heilongjiang Hongdoushan Ecology Forest Co., Ltd. (“HEFS”)	63% owned by Mr. Wang, 34% owned by Madame Qi, and 3% owned by third parties.
Hongdoushan Bio-Pharmaceutical Co., Ltd. (“HBP”)	30% owned by Mr. Wang, 19% owned by Madame Qi and 51% owned by HEFS
Heilongjiang Pingshan Hongdoushan Development Co., Ltd. (“HDS Development”)	80% owned by HEFS and 20% owned by Kairun
Wuchang City Xinlin Forestry Co., Ltd. (Xinlin)	98% owned by ZTC and 2% owned by HEFS effective March 21, 2016
Changzhi Du	Legal person of Xinlin before March 1, 2017
Jinguo Wang	Management of HDS, legal person of Xinlin before February 9, 2018, and director of ZTC effective February 1, 2018.
Others	Individuals who have significant influence on the Company
Wonder Genesis Global Ltd.	Jinguo Wang is the Company’s director before June 10, 2018
Lifeforfun Limited	Yuqi Mao, the former family member of Yicheng Wang, is the Lifeforfun Limited’s director.

Land use rights and yew forest assets purchased from related parties

Yew forest assets purchased from related parties which are included in land use rights and yew forest assets as of September 30, 2018 and December 31, 2017 are as follows:

	September 30,		December 31,
	2018		2017
Land use rights, net	$	305,369	$	325,737
Yew forest assets, net		10,897,297		3,210,195
Yew forest assets - related parties, net		19,885,154		2,834,006
Total	$	31,087,820	$	6,369,938

Transactions with Yew Pharmaceutical

On January 9, 2010, the Company entered into a Cooperation and Development Agreement (the “Development Agreement”) with Yew Pharmaceutical. Pursuant to the Development Agreement, for a period of ten years expiring on January 9, 2020, the Company shall supply cultivated yew raw materials to Yew Pharmaceutical that will be used by Yew Pharmaceutical to make traditional Chinese medicines and other pharmaceutical products, at price of RMB 1,000,000 (approximately $158,000) per metric ton. In addition, the Company entered into a series of wood ear mushroom selling agreements with Yew Pharmaceuticals, pursuant to which the Company sells wood ear mushroom collected from local peasants to Yew Pharmaceuticals for manufacturing of wood ear mushroom products. Furthermore, the Company entered into a series of yew candles, yew essential oil soaps, complex taxus cuspidate extract, composite northeast yew extract and pine needle extracts purchase agreements with Yew Pharmaceuticals, pursuant to which the Company purchases yew candles and pine needle extracts as finished goods and then sells to third party and related party.

For the nine months ended September 30, 2018 and 2017, total revenues to Yew Pharmaceutical under the above agreement amounted to $ 18,075,032 and $17,011,006 and corresponding cost of revenues amounted to $13,863,380 and $5,031,433, respectively. At September 30, 2018 and December 31, 2017, the Company had $3,728,148 and $21,647,828 accounts receivable from Yew Pharmaceutical, respectively.

For the nine months ended September 30, 2018 and 2017, the total purchase of yew candles, pine needle extracts, composite northeast yew extract and mixed essential oil from Yew Pharmaceutical amounted to $18,033,411 and $14,934,540, respectively. For the nine months ended September 30, 2018 and 2017, the products HDS purchased from Yew Pharmaceutical in the amount of $11,042,307 and $17,804,944 were sold and included in the total cost of revenues.

For the nine months ended September 30, 2018 and 2017, HYF did not purchase any wood ear mushroom from Yew Pharmaceutical. For the nine months ended September 30, 2018 and 2017, the products HYF purchased from Yew Pharmaceutical in the amount of $482 and $20,698 were sold and included in the total cost of revenues. HYF had accounts payable of $0 and $50,318 to Yew Pharmaceutical at September 30, 2018 and December 31, 2017, respectively.

At September 30, 2018 and December 31, 2017, HYF had $0 and $39,974, respectively, due to Yew Pharmaceutical, which represents an unsecured loan bearing no interest and payable on demand and was included in due to related parties in the accompanying consolidated balance sheets.

Transactions with HBP

For the nine months ended September 30, 2018 and 2017, HBP paid off operation expense on behalf of HYF in the amount of $5,834 and $34,341, respectively. As of September 30, 2018 and December 31, 2017, HYF had due to HBP in the amount of $101,898 and $101,697, respectively, which was included in due to related parties in the accompanying consolidated balance sheets.

Transactions with HDS Development

For the nine months ended September 30, 2018 and 2017, total revenues to HDS Development amounted to $1,842,271 and $0, and corresponding cost of revenues amounted to $1,390,834 and $0, respectively. At September 30, 2018 and December 31, 2017, the Company had $1,747,615 and $0 accounts receivable from HDS Development, respectively.

Transactions with Wonder Genesis Global Ltd.

For the nine months ended September 30, 2018 and 2017, total revenues to Wonder Genesis Global Ltd. amounted to $2,591,681 and $1,352,660, and the corresponding cost of revenues amounted to $2,574,537 and $1,422,036, respectively. As of September 30, 2018 and December 31, 2017, the Company had $0 and $199,905 accounts receivable from Wonder Genesis Global Ltd., respectively.

Transactions with Lifeforfun Limited

For the nine months ended September 30, 2018 and 2017, total revenues to Lifeforfun Limited amounted to $1,176,975 and $0, and the corresponding cost of revenues amounted to $1,144,367 and $0, respectively. As of September 30, 2018 and December 31, 2017, the Company had $1,116,503 and $0 accounts receivable from Lifeforfun Limited, respectively.

Transactions with ZTC

During the nine months ended September 30, 2018 and 2017, HDS purchased yew forest assets from ZTC in the amount of $5,616,194 and $0, respectively. At September 30, 2018 and December 31, 2017, the Company had zero balance payable to ZTC.

Transactions with Xinlin

During the nine months ended September 30, 2018 and 2017, HDS purchased yew forest assets from Xinlin in the amount of $2,622,473 and $0, respectively. At September 30, 2018 and December 31, 2017, the Company had zero balance payable to Xinlin.

Transactions with Changzhi Du

During the nine months ended September 30, 2018 and 2017, HDS purchased yew forest assets from Changzhi Du in the amount of $1,317,224 and purchased yew seedlings from Changzhi Du in the amount of $2,395,051, respectively. As of September 30, 2018 and December 31, 2017, the Company had zero balance payable to Changzhi Du.

Transactions with Jinguo Wang

During the nine months ended September 30, 2018 and 2017, HDS purchased yew forest assets from Jinguo Wang in the amount of $1,426,873 and purchased yew seedlings from Jinguo Wang in the amount of $25,934, respectively. As of September 30, 2018 and December 31, 2017, the Company had zero balance payable to Jinguo Wang.

Transactions with Guifang Qi

During the nine months ended September 30, 2018 and 2017, HDS purchased yew forest assets from Guifang Qi in the amount of $1,869,130 and $0, respectively. As of September 30, 2018 and December 31, 2017, the Company had zero balance payable to Guifang Qi.

Transactions with Zhiguo Wang

During the nine months ended September 30, 2018 and 2017, HDS purchased yew forest assets from Zhiguo Wang in the amount of $1,289,590 and $0, respectively. As of September 30, 2018 and December 31, 2017, the Company had zero balance payable to Zhiguo Wang.

Transactions with Others

During the nine months ended September 30, 2018 and 2017, HDS purchased yew forest from others in the amount of $3,549,966 and purchased yew seedlings from others in the amount of $8,743,172, respectively. As of September 30, 2018 and December 31, 2017, the Company had accounts payable to others in the amount of $0 and $307,390, respectively, which was included in the accounts payable-related parties in the accompanying consolidated balance sheets.

During the nine months ended September 30, 2018 and 2017, HDS prepaid $35,488 and $0 to others for purchase of yew forests, respectively, which was included in the long-term prepaid expenses-related party in the accompanying consolidated balance sheets.

For the nine months ended September 30, 2018 and 2017, total revenues to others amounted to $27,082 and $0, and the corresponding cost of revenues amounted to $19,144 and $0, respectively. As of September 30, 2018 and December 31, 2017, the Company had no accounts receivable from others.

Operating Leases

On March 25, 2005, the Company entered into an Agreement for the Lease of Seedling Land with ZTC (the “ZTC Lease”). Pursuant to the ZTC Lease, the Company leased 361 mu of land from ZTC for a period of 30 years, expiring on March 24, 2035. Annual payments under the ZTC Lease are RMB162,450 (approximately $26,000). The payment for the first five years of the ZTC Lease was due prior to December 31, 2010 and beginning in 2011, the Company is required to make full payment for the land use rights in advance for each subsequent five-year period. For the nine months ended September 30, 2018 and 2017, rent expense related to the ZTC Lease amounted to $18,705 and $17,902, respectively. At September 30, 2018 and December 31, 2017, prepaid rent to ZTC amounted to $35,488 and $56,177, respectively, which was included in prepaid expenses-related parties in the accompanying consolidated balance sheets.

On January 1, 2010, the Company entered into a lease for office space with Mr. Wang (the “Office Lease”). Pursuant to the Office Lease, annual payments of RMB15,000 (approximately $2,000) are due for each of the term. The term of the Office Lease is 15 years and expires on December 31, 2025. For the nine months ended September 30, 2018 and 2017, rent expense related to the Office Lease amounted to $1,727 and $1,653, respectively. As of September 30, 2018 and December 31, 2017, the unpaid rent was $3,421 and $1,881, respectively, which was included in due to related parties in the accompanying consolidated balance sheets.

On July 1, 2012, the Company entered into a lease for office space with Zhiguo Wang (the “JSJ Lease”). Pursuant to the JSJ Lease, JSJ leases approximately 30 square meter of office space from Zhiguo Wang in Harbin. Rent under the JSJ Lease is RMB10,000 (approximately $1,600) annually. The term of the JSJ Lease is three years and expires on September 30, 2015. On July 1, 2015, the Company and Mr. Wang renewed the JSJ Lease. The renewed lease expires on September 30, 2018. On July 1, 2018, the Company renewed JSJ Lease for three years, which will now expire on June 30, 2021. Pursuant to the renewed lease agreement, the annual payment will be RMB 10,000 (approximately $1,600). For the nine months ended September 30, 2018 and 2017, rent expense related to the JSJ Lease amounted to $1,151 and $1,102, respectively. As of September 30, 2018 and December 31, 2017, the unpaid rent was $6,189 and $5,380, respectively, which was included in due to related parties in the accompanying consolidated balance sheets.

On January 1, 2015, HYF entered into an lease agreement with HBP, pursuant to which HBP leases a warehouse, with an area of 225 square meters, and a workshop, with an area of 50 square meters, both of which are located at No.1 Zisan Road, Shangzhi economic development district, Shangzhi City, Heilongjiang Province, to HYF in exchange for no consideration for the period from January 1, 2015 to December 31, 2020.

The Company leased office space from HDS Development in the A’cheng district in Harbin (the “A’cheng Lease”) on March 20, 2002. The A’cheng Lease is for a term of 23 years and expires on March 19, 2025. Pursuant to the A’cheng Lease, lease payment shall be made as follows:

Period	Annual lease amount		Payment due date
March 2002 to February 2012	RMB	25,000	Before December 2012
March 2012 to February 2017	RMB	25,000	Before December 2017
March 2017 to March 2025	RMB	25,000	Before December 2025

For the nine months ended September 30, 2018 and 2017, rent expense related to the A’cheng Lease amounted $2,879 and $2,635, respectively. At September 30, 2018 and December 31, 2017, the unpaid rent was $4,551 and $1,921, respectively, which was included in due to related parties in the accompanying consolidated balance sheets.

The Company leased an apartment in the Nangang district (the “Jixing Lease”) in Harbin from Ms. Qi on October 1, 2016. The term of Jixing Lease is one year. On October 1, 2017, the Company and Ms. Qi renewed the Jixing Lease. The renewed lease expires on September 30, 2018. For the nine months ended September 30, 2018 and 2017, rent expense related to the Jixing Lease amounted $1,151 and $980, respectively. As of September 30, 2018 and December 31, 2017, the prepaid rent to Ms. Qi amounted to $121 and $1,025, respectively, which was included in prepaid expenses-related parties in the accompanying consolidated balance sheets.

Due to Related Parties

The Company’s officers, directors and other related parties, from time to time, provided advances to the Company for working capital purpose. These advances are usually short-term in nature, non-interest bearing, unsecured and payable on demand. Due to Zhiguo Wang and Madam Qi, excluding the unpaid rents disclosed above and the borrowings from Madame Qi as disclosed below, amounted to $41,051 at September 30, 2018 and December 31, 2017, which was included in due to related parties in the accompanying consolidated balance sheets.

On May 15, 2015, the Company borrowed $648,000 from Madame Qi through the issuance of a subordinated promissory note. The note bears 2% interest per annum and shall be payable on or before November 15, 2015 (“Due Date”). Interest payment shall be made with principal on Due Date. On September 28, 2015, Madame Qi and the Company agreed to extend the Due Date to January 31, 2016, with the remaining terms of the note unchanged. On January 15, 2016, 2017 and 2018, the Company and Madame Qi entered into agreements to further extend the Due Date of the note to December 31, 2016, 2017 and 2018, respectively. During the nine months ended September 30, 2018 and 2017, the Company made repayments of $0 and $75,875 to Madame Qi, respectively. As of September 30, 2018 and December 31, 2017, the total borrowings including the interest were $428,095, which was included in due to related parties in the accompanying consolidated balance sheets.

Research and Development Agreement

The Company entered into a Technology Development Service Agreement dated January 1, 2010 (the “Technology Agreement”) with Kairun. The term of the Technology Agreement was two years. Under the Technology Agreement, Kairun provides the Company with testing and technologies regarding utilization of yew trees to extract taxol and develop higher concentration of taxol in the yew trees the Company grow and cultivate. For these services, the Company agreed to pay Kairun RMB200,000 (approximately $32,000) after the technologies developed by Kairun are tested and approved by the Company. The Company will retain all intellectual property rights in connection with the technologies developed by Kairun. Kairun may not provide similar services to any other party without the Company’s prior written consent. In February 2012, we entered into a supplemental agreement with Kairun, extending the term of the Technology Agreement indefinitely until project results specified in the original Technology Agreement have been achieved. Kairun is owned directly and indirectly primarily by Mr. Wang and Madame Qi. As of September 30, 2018, Kairun has not yet completed the services provided for in the Technology Agreement and, therefore, no payment was made to Kairun.

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Segment Information

9 Months Ended

Sep. 30, 2018

Segment Information [Abstract]

SEGMENT INFORMATION

NOTE 11 - SEGMENT INFORMATION

ASC 280 requires use of the “management approach” model for segment reporting. The management approach model is based on the way a company’s management organizes segments within the company for making operating decisions and assessing performance. Reportable segments are based on products and services, geography, legal structure, management structure, or any other manner in which management disaggregates a company.

For the nine months ended September 30, 2018 and 2017, the Company operated in four reportable business segments: (1) the TCM raw materials segment, consisting of the production and sale of yew raw materials or yew tree extracts used in the manufacture of TCM; (2) the yew tree segment, consisting of the growth and sale of yew tree seedlings and mature trees; (3) the handicrafts segment, consisting of the manufacture and sale of handicrafts and furniture made of yew timber; and (4) Others segment, consisting of the sales of yew candles, pine needle extracts, yew essential oil soap, complex taxus cuspidate extract, and composite northeast yew extract. The Company’s reportable segments are strategic business units that offer different products. They are managed separately based on the fundamental differences in their operations. All of the Company’s operations including the sales of yew candles, pine needle extracts, yew essential oil soap, complex taxus cuspidate extract and composite northeast yew extract are conducted in the PRC.

Information with respect to these reportable business segments for the nine  months  ended September 30, 2018 and 2017 was as follows:

	For the Nine Months Ended September 30,
	2018			2017
Revenues:
TCM raw materials	$	19,917,303		$	17,011,006
Yew trees		31,766			9,906
Handicrafts		1,520			5,284
Others		11,940,154			18,018,559
	$	31,890,743		$	35,044,755
Cost of revenues:
TCM raw materials	$	15,254,214		$	5,031,434
Yew trees		19,747			7,897
Handicrafts		1,328			4,663
Others		11,318,025			18,141,202
	$	26,593,314		$	23,185,196
Depreciation and amortization:
TCM raw materials	$	364,903		$	130,262
Yew trees		31,501			31,778
Handicrafts		709			679
Others		12,703			18,487
	$	409,816		$	181,206
Net income (loss):
TCM raw materials	$	4,069,973		$	11,834,671
Yew trees		11,073			1,924
Handicrafts		146			576
Others		(1,267,980	)		(797,347	)
	$	2,813,212		$	11,039,824

Information with respect to these reportable business segments for the three months  ended September 30, 2018 and 2017 was as follows:

	For the Three Months Ended September 30,
	2018			2017
Revenues:
TCM raw materials	$	5,168,573		$	2,939,959
Yew trees		-			9,906
Handicrafts		212			2,916
Others		8,870,452			8,612,134
	$	14,039,237		$	11,564,915
Cost of revenues:
TCM raw materials	$	4,236,907		$	2,021,300
Yew trees		-			7,897
Handicrafts		87			2,487
Others		8,337,666			8,783,315
	$	12,574,660		$	10,814,999
Depreciation and amortization:
TCM raw materials	$	171,415		$	114,482
Yew trees		10,125			31,778
Handicrafts		226			676
Others		4,512			(12,228	)
	$	186,278		$	134,708
Net income (loss):
TCM raw materials	$	1,519,823		$	1,021,374
Yew trees		1,019			1,924
Handicrafts		177			417
Others		(470,001	)		(408,704	)
	$	1,051,018		$	615,011

	September 30, 2018
	TCM raw materials		Yew trees		Handicrafts		Others		Total
Identifiable long-lived assets, net	$	31,087,820	$	420,329	$	10,905	$	95,185	$	31,614,239

	December 31, 2017
	TCM raw materials		Yew trees		Handicrafts		Others		Total
Identifiable long-lived assets, net	$	6,369,938	$	474,961	$	12,066	$	92,530	$	6,949,495

The Company does not allocate any selling, general and administrative expenses, other income/expenses to its reportable segments because these activities are managed at a corporate level. In addition, the specified amounts for interest expense and income tax expense are not included in the measure of segment profit or loss reviewed by the chief operating decision maker and these specified amounts are not regularly provided to the chief operating decision maker. Therefore, the Company has not disclosed interest expense and income tax expense for each reportable segment.

Asset information by reportable segment is not reported to or reviewed by the chief operating decision maker and, therefore, the Company has not disclosed asset information for each reportable segment. The Company’s operations are located in the PRC. All revenues are derived from customers in the PRC. All of the Company’s operating assets are located in the PRC.

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Commitments and Contingencies

9 Months Ended

Sep. 30, 2018

Commitments and Contingencies [Abstract]

COMMITMENTS AND CONTINGENCIES

NOTE 12 - COMMITMENTS AND CONTINGENCIES

Operating Lease

On February 1, 2015, the Company entered into a lease for its U.S. principal office space in California. Pursuant to the office lease, the monthly payment of $3,039 is due on the first day of each month of the first year, $3,150 for each month of the second year and $3,261 for each month of the third year. The term of the lease is for 3 years and expires on January 31, 2018. On February 1, 2018, the Company renewed the lease and the lease expires on January 31, 2020. Pursuant to the renewed lease agreement, the monthly payment is $3,521 from February 1, 2018 to January 1, 2019, and $3,669 from February 1, 2019 to January 31, 2020. For the nine months ended September 30, 2018 and 2017, rent expense related to the U.S. principal office lease amounted to $35,687 and $30,348, respectively.

On May 1, 2017, the Company entered into a lease for product exhibition and promotion space in California. The lease is on month by month basis and the monthly rent is $2,800. For the nine months ended September 30, 2018 and 2017, the related rent expense amounted to $25,006 and $14,000, respectively. 

On April 30, 2018, the Company entered into a lease for product sales space in California. The lease term is from May 11, 2018 to April 30, 2019. The lease includes a monthly base rent payment, due on the first day of each calendar month, and contingent rent, based on a percentage of sales in excess of specified target amounts. Pursuant to the lease agreement, the monthly base rent payment is $1,761 from May 11, 2018 to May 31, 2018, $2,600 from June 1, 2018 to October 30, 2018 and from January 1, 2019 to April 30, 2019, and $4,600 from November 1, 2018 to December 31, 2018. The contingent rent is recognized as rent expense when achievement of the specified sales that triggers the contingent rent is probable. For the nine months ended September 30, 2018, the related rent expense amounted to $14,761, and no contingent rent expense was incurred.

See Note 10 for related party operating lease commitments.

Seedling Purchase and Sale Long-Term Cooperation Agreement

On November 25, 2010, HDS entered into a Seedling Purchase and Sale Long-Term Cooperation Agreement (the “Seedling Agreement”) with Wuchang City Xinlin Foresty Co., Ltd (“Xinlin”), pursuant to which HDS will sell yew seedlings to Xinlin at a price equal to 90% of HDS’s publicly-published wholesale prices. Xinlin has agreed to purchase from the Company 10,000 yew seedlings annually. For the nine months ended September 30, 2018 and 2017, the Company didn’t make any sales under the Seedling Agreement.

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Recent Accounting Pronouncements

9 Months Ended

Sep. 30, 2018

Recent Accounting Pronoucements [Abstract]

RECENT ACCOUNTING PRONOUCEMENTS

NOTE 13 - RECENT ACCOUNTING PRONOUNCEMENTS

In June 2018, the FASB issued ASU 2018-07, “Compensation - Stock Compensation (Topic 718) - Improvements to Nonemployee Share-Based Payment Accounting “, which expands the scope of Topic 718 to include all share-based payment transactions for acquiring goods and services from nonemployees. These amendments align the accounting for share-based payment transactions with non-employees with accounting for share-based payment transactions with employees. An entity should only remeasure liability-classified awards that have not been settled by the date of adoption and equity-classified awards for which a measurement date has not been established through a cumulative-effect adjustment to retained earnings as of the beginning of the fiscal year of adoption. Upon transition, the entity is required to measure these nonemployee awards at fair value as of the adoption date. The entity must not remeasure assets that are completed. This standard will be effective for public business entities for fiscal years beginning after December 15, 2018 including interim periods within those fiscal years. Early adoption is permitted, but no earlier than an entity’s adoption date of Topic 606. The Company is currently evaluating the impact of the adoption of ASU No. 2018-07 on its consolidated financial statements.

In July 2018, the FASB issued ASU 2018-09, “Codification Improvements”, which affects a wide variety of Topics in the Codification and applies to all reporting entities within the scope of the affected accounting guidance. These amendments represent changes to clarify, correct errors in, or make minor improvements to the Codification, eliminating inconsistencies and providing clarifications in current guidance. Some of the amendments do not require transition guidance and will be effective upon issuance. However, many of the amendments do have transition guidance with effective dates for annual periods beginning after December 15, 2018, for public business entities. The Company is currently evaluating the impact of the adoption of ASU No. 2018-09 on its consolidated financial statements.

In July 2018, the FASB issued ASU 2018-10, “Codification Improvements to Topic 842, Leases”. These amendments affect narrow aspects of the guidance issued in the amendments in ASU 2016-02 including those regarding residual value guarantees, rate implicit in the lease, lessee reassessment of lease classification, lessor reassessment of lease term and purchase option, variable lease payments that depend on an index or a rate, investment tax credits, lease term and purchase option, transition guidance for amounts previously recognized in business combinations, certain transition adjustments, transition guidance for leases previously classified as capital leases under Topic 840, transition guidance for modifications to leases previously classified as direct financing or sales-type leases under Topic 840, transition guidance for sale and leaseback transactions, impairment of net investment in the lease, unguaranteed residual asset, effect of initial direct costs on rate implicit in the lease, and failed sale and leaseback transactions. For entities that early adopted Topic 842, the amendments are effective upon issuance of ASU 2018-10, and the transition requirements are the same as those in Topic 842. For entities that have not adopted Topic 842, the effective date and transition requirements will be the same as the effective date and transition requirements in Topic 842. The Company is currently evaluating the impact of the adoption of ASU No. 2018-10 on its consolidated financial statements.

In July 2018, the FASB issued ASU 2018-11, “Leases (Topic 842): Targeted Improvements”. The amendments in this ASU affect the guidance issued in ASU 2016-02, Leases (Topic 842), which is not yet effective. The amendments provide entities with an additional (and optional) transition method to adopt the new leases standard. Under this new transition method, an entity initially applies the new leases standard at the adoption date and recognizes a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. The amendments also provide lessors with a practical expedient to not separate non-lease components from the associated lease component and, instead, to account for those components as a single component in certain circumstances. For the entities that have not adopted Topic 842, the effective date for this ASU are the same as those for ASU 2016-02, which is effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. The Company is currently evaluating the impact of the adoption of ASU No. 2018-11 on its consolidated financial statements.

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Joint Venture Agreement for Planting of Yew Trees

9 Months Ended

Sep. 30, 2018

Joint Venture Agreement For Planting Of Yew Trees [Abstract]

JOINT VENTURE AGREEMENT FOR PLANTING OF YEW TREES

NOTE 14 - JOINT VENTURE AGREEMENT FOR PLANTING OF YEW TREES

On June 14, 2018, HDS entered into a Joint Venture Planting Agreement (the “Joint Venture Agreement”) with Qing’An National Forestry Administration (“Qing’An Forestry”), pursuant to which the Qing’An Forestry has given HDS access to 10,729.5 mu of forest land located in Qing’An County, Suihua City, Heilongjiang Province to develop yew tree forests and produce yew seedlings. 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. The Company accounts for this Joint Venture Agreement as a collaborative arrangement under ASC 808, “Collaborative Arrangements” and related topics and will record revenue on a gross basis as the prime contractor. For the nine months ended September 30, 2018, the Company has not generated any revenues or activities on this land.

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Subsequent Events

9 Months Ended

Sep. 30, 2018

Subsequent Events [Abstract]

SUBSEQUENT EVENTS

NOTE 15 – SUBSEQUENT EVENTS

On October, 18 2018, HDS repaid the loan from SPD Bank in an amount of RMB 10,000,000 (approximately $1,509,000).

On October 15, 2018, HDS repaid the loan to CEB in an amount of $359,000 and draw down additional borrowings from CEB in a total amount of $1,090,000.

The Company has evaluated all other subsequent events through the date these consolidated financial statements were issued and determine that there were no other subsequent events or transactions that require recognition or disclosures in the consolidated financial statements.

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Organization and Principal Activities (Tables)

9 Months Ended

Sep. 30, 2018

Organization and Principal Activities [Abstract]

Schedule of company's subsidiaries, variable interest entity ("VIE") and VIE's subsidiary

Name	Domicile and Date of Incorporation	Registered Capital	Effective Ownership			Principal Activities
Heilongjiang Jinshangjing Bio-Technology Development Co., Limited (“JSJ”)	PRC  October 29, 2009	US$100,000		100	%	Holding company
Yew Bio-Pharm Holdings Limited (“Yew Bio-Pharm (HK)”)	Hong Kong  November 29, 2010	HK$10,000		100	%	Holding company of JSJ
Harbin Yew Science and Technology Development Co., Ltd. (“HDS”)	PRC  August 22, 1996	RMB45,000,000		Contractual arrangements		Sales of yew tree components for use in pharmaceutical industry; sales of yew tree seedlings; the manufacture of yew tree wood handicrafts; and the sales of candle, pine needle extract, yew essential oil soap, complex taxus cuspidate extract, and northeast yew extract
Harbin Yew Food Co., Ltd (“HYF”)	PRC  November 4, 2014	RMB100,000		100	%(1)	Sales of wood ear mushroom drink
MC Commerce Holding Inc. (“MC”)	State of California,  United State  September 8, 2016			100	%(2)	Sales of yew oil candles and yew oil soaps

(1) Wholly-owned subsidiary of HDS

(2) 51% owned by YBP and 49% owned by HDS

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Principles of Consolidation (Tables)

9 Months Ended

Sep. 30, 2018

Principles of Consolidation [Abstract]

Schedule of carrying amount and classification of the assets and liabilities in the Company's balance sheets that relate to the Company's VIE and VIE's subsidiary

	September 30, 2018		December 31, 2017
Assets
Cash	$	487,809	$	798,514
Accounts receivable		6,616,158		9,841,841
Accounts receivable - related parties		6,592,266		21,847,733
Inventories (current and long-term), net		6,077,191		10,680,304
Prepaid expenses and other assets		44,115		26,637
Prepaid expenses - related parties		35,488		57,202
Property and equipment, net		522,009		573,563
Land use rights and yew forest assets, net		31,042,461		6,326,529
VAT recoverables		1,056,483		170,564
Total assets of VIE and its subsidiary	$	52,473,980	$	50,322,887
Liabilities
Accrued expenses and other payables	$	303,357	$	162,004
Accounts payable		534,247		17,727
Accounts payable - related parties		14,563		357,708
Advance from customers		27,602		-
Due to VIE holding companies		559,343		590,300
Short-term borrowings		6,512,038		6,099,876
Deferred income		340,785		359,646
Due to related parties		109,991		145,474
Total liabilities of VIE and its subsidiary	$	8,401,926	$	7,732,735

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Inventories (Tables)

9 Months Ended

Sep. 30, 2018

Inventories [Abstract]

Schedule of inventories

	September 30, 2018									December 31, 2017
	Current portion			Long-term portion			Total			Current portion			Long-term portion			Total
Raw materials	$	39,807		$	2,512,232		$	2,552,039		$	62,548		$	2,651,272		$	2,713,820
Finished goods		6,745,331			577,373			7,322,704			2,475,709			588,444			3,064,153
Yew seedlings and Other trees		-			1,203,700			1,203,700			47,913			10,036,658			10,084,571
Total		6,785,138			4,293,305			11,078,443			2,586,170			13,276,374			15,862,544
Inventory write-down		(300	)		(2,592,508	)		(2,592,808	)		(6,980	)		(2,729,726	)		(2,736,706	)
Inventories, net	$	6,784,838		$	1,700,797		$	8,485,635		$	2,579,190		$	10,546,648		$	13,125,838

Schedule of inventory purchased from related parties

	September 30,		December 31,
	2018		2017
Inventories, net	$	962,185	$	1,022,452
Inventories - related parties, net		5,822,653		1,556,738
Total	$	6,784,838	$	2,579,190

	September 30,		December 31,
	2018		2017
Long-term inventories, net	$	1,700,797	$	3,375,247
Long-term inventories - related parties, net		-		7,171,401
Total	$	1,700,797	$	10,546,648

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Taxes (Tables)

9 Months Ended

Sep. 30, 2018

Taxes [Abstract]

Summary of difference between the U.S. statutory federal tax rate and company's effective tax rate

	Nine Months Ended September 30,
	2018			2017
U.S. federal income tax rate		21.00	%		34.00	%
Foreign income not recognized in the U.S.		(21.00	)%		(34.00	)%
PRC EIT rate		25.00	%		25.00	%
PRC tax exemption and reduction		(37.81	)%		(26.20	)%
Income tax difference under different tax jurisdictions		12.66	%		1.08	%
Valuation allowance		0.15	%		0.12	%
Effective tax rate		-			-

Summary of net deferred tax assets

	September 30, 2018			December 31, 2017
Net operating loss carry-forwards	$	140,000		$	2,541,363
Inventory write-down		648,127			614,625
Valuation allowance		(788,127	)		(3,155,988	)
Non-current deferred tax assets	$	-		$	-

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Stockholders' Equity (Tables)

9 Months Ended

Sep. 30, 2018

Stockholders' Equity [Abstract]

Schedule of stock option activities

	Nine Months Ended September 30, 2018				Nine Months Ended September 30, 2017
	Number of Stock Options		Weighted Average Exercise Price		Number of Stock Options		Weighted Average Exercise Price
Balance at beginning of period		24,872,212		0.22		25,325,512		0.22
Issued		-		-		50,000		0.25
Exercised		200,000		-		-		-
Expired		15,503,475		0.22		-		-
Forfeited		-		-		-		-
Balance at end of period		9,168,737		0.22		25,375,512		0.22
Option exercisable at end of period		9,068,737		0.22		24,465,012		0.22

Schedule of common stock issuable upon exercise of options outstanding

Stock Options Outstanding								Stock Options Exercisable
Range of Exercise Price		Number Outstanding at September 30, 2018		Weighted Average Remaining Contractual Life (Years)		Weighted Average Exercise  Price		Number Exercisable at September 30, 2018		Weighted Average Exercise  Price
$	0.20-0.25		9,168,737		1.25	$	0.22		9,068,737	$	0.22

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Earnings Per Share (Tables)

9 Months Ended

Sep. 30, 2018

Earnings Per Share [Abstract]

Schedule of reconciliation of basic and diluted net income per share

	For the Three Months Ended September 30,					For the Nine Months Ended  September 30,
	2018			2017		2018		2017
Net income (loss) available to common stockholders for basic and diluted net income per share of common stock	$	(380,818	)	$	614,407	$	1,381,376	$	11,039,824
Weighted average common stock outstanding - basic		52,018,478			51,875,000		51,923,352		51,875,000
Effect of dilutive securities:
Non-vested restricted common stock		-			-		-		-
Stock options issued to directors/officers/employees		-			2,686,533		2,884,928		2,090,264
Weighted average common stock outstanding - diluted		52,018,478			54,561,533		54,808,280		53,965,264
Net income per common share - basic	$	(0.01	)	$	0.01	$	0.03	$	0.21
Net income per common share - diluted	$	(0.01	)	$	0.01	$	0.03	$	0.20

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Concentrations of Credit Risk and Major Customers (Tables)

9 Months Ended

Sep. 30, 2018

Customers [Member]

Concentration Risk [Line Items]

Schedule of major customers and suppliers

	For the Nine Months Ended September 30,
Customer	2018			2017
A (Yew Pharmaceutical, a related party)		56.7	%		48.5	%
B		*	%		47.5	%
T		21.9	%		*	%

* Less than 10%

Suppliers [Member]

Concentration Risk [Line Items]

Schedule of major customers and suppliers

	For the Nine Months Ended September 30,
Supplier	2018			2017
A (Yew Pharmaceutical, a related party)		38.5	%		62	%
C (Changzhi Du, a related party)		*	%		10	%
Q (Heilongjiang Zishan Technology Co., Ltd., a related party)		12	%		*	%

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Related Party Transactions (Tables)

9 Months Ended

Sep. 30, 2018

Related Party Transactions [Abstract]

Schedule of company's transactions with the related parties

Company	Nature of Relationship
Heilongjiang Zishan Technology Co., Ltd. (“ZTC”)	51% owned by Heilongjiang Hongdoushan Ecology Forest Co., Ltd., 34% owned by Zhiguo Wang, Chairman and Chief Executive Officer, 11% owned by Guifang Qi, the wife of Mr. Wang and director of the Company, and 4% owned by third parties.
Heilongjiang Yew Pharmaceutical Co., Ltd. (“Yew Pharmaceutical”)	95% owned by Heilongjiang Hongdoushan Ecology Forest Stock Co., Ltd., and 5% owned by Madame Qi.
Shanghai Kairun Bio-Pharmaceutical Co., Ltd. (“Kairun”)	60% owned by Heilongjiang Zishan Technology Co., Ltd., 20% owned by Heilongjiang Hongdoushan Ecology Forest Stock Co., Ltd., and 20% owned by Mr. Wang.
Heilongjiang Hongdoushan Ecology Forest Co., Ltd. (“HEFS”)	63% owned by Mr. Wang, 34% owned by Madame Qi, and 3% owned by third parties.
Hongdoushan Bio-Pharmaceutical Co., Ltd. (“HBP”)	30% owned by Mr. Wang, 19% owned by Madame Qi and 51% owned by HEFS
Heilongjiang Pingshan Hongdoushan Development Co., Ltd. (“HDS Development”)	80% owned by HEFS and 20% owned by Kairun
Wuchang City Xinlin Forestry Co., Ltd. (Xinlin)	98% owned by ZTC and 2% owned by HEFS effective March 21, 2016
Changzhi Du	Legal person of Xinlin before March 1, 2017
Jinguo Wang	Management of HDS, legal person of Xinlin before February 9, 2018, and director of ZTC effective February 1, 2018.
Others	Individuals who have significant influence on the Company
Wonder Genesis Global Ltd.	Jinguo Wang is the Company’s director before June 10, 2018
Lifeforfun Limited	Yuqi Mao, the former family member of Yicheng Wang, is the Lifeforfun Limited’s director.

Schedule of land use rights and yew forest assets purchased from related parties

	September 30,		December 31,
	2018		2017
Land use rights, net	$	305,369	$	325,737
Yew forest assets, net		10,897,297		3,210,195
Yew forest assets - related parties, net		19,885,154		2,834,006
Total	$	31,087,820	$	6,369,938

Schedule of lease payment

Period	Annual lease amount		Payment due date
March 2002 to February 2012	RMB	25,000	Before December 2012
March 2012 to February 2017	RMB	25,000	Before December 2017
March 2017 to March 2025	RMB	25,000	Before December 2025

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Segment Information (Tables)

9 Months Ended

Sep. 30, 2018

Segment Information [Abstract]

Schedule of reportable business segments

	For the Nine Months Ended September 30,
	2018			2017
Revenues:
TCM raw materials	$	19,917,303		$	17,011,006
Yew trees		31,766			9,906
Handicrafts		1,520			5,284
Others		11,940,154			18,018,559
	$	31,890,743		$	35,044,755
Cost of revenues:
TCM raw materials	$	15,254,214		$	5,031,434
Yew trees		19,747			7,897
Handicrafts		1,328			4,663
Others		11,318,025			18,141,202
	$	26,593,314		$	23,185,196
Depreciation and amortization:
TCM raw materials	$	364,903		$	130,262
Yew trees		31,501			31,778
Handicrafts		709			679
Others		12,703			18,487
	$	409,816		$	181,206
Net income (loss):
TCM raw materials	$	4,069,973		$	11,834,671
Yew trees		11,073			1,924
Handicrafts		146			576
Others		(1,267,980	)		(797,347	)
	$	2,813,212		$	11,039,824

	For the Three Months Ended September 30,
	2018			2017
Revenues:
TCM raw materials	$	5,168,573		$	2,939,959
Yew trees		-			9,906
Handicrafts		212			2,916
Others		8,870,452			8,612,134
	$	14,039,237		$	11,564,915
Cost of revenues:
TCM raw materials	$	4,236,907		$	2,021,300
Yew trees		-			7,897
Handicrafts		87			2,487
Others		8,337,666			8,783,315
	$	12,574,660		$	10,814,999
Depreciation and amortization:
TCM raw materials	$	171,415		$	114,482
Yew trees		10,125			31,778
Handicrafts		226			676
Others		4,512			(12,228	)
	$	186,278		$	134,708
Net income (loss):
TCM raw materials	$	1,519,823		$	1,021,374
Yew trees		1,019			1,924
Handicrafts		177			417
Others		(470,001	)		(408,704	)
	$	1,051,018		$	615,011

Schedule of identifiable long-lived assets, net

	September 30, 2018
	TCM raw materials		Yew trees		Handicrafts		Others		Total
Identifiable long-lived assets, net	$	31,087,820	$	420,329	$	10,905	$	95,185	$	31,614,239

	December 31, 2017
	TCM raw materials		Yew trees		Handicrafts		Others		Total
Identifiable long-lived assets, net	$	6,369,938	$	474,961	$	12,066	$	92,530	$	6,949,495

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Organization and Principal Activities (Details) - 9 months ended Sep. 30, 2018		USD ($)	HKD ($)	CNY (¥)
Heilongjiang Jinshangjing Bio-Technology Development Co., Limited ("JSJ") [Member]
Schedule of company's subsidiaries, variable interest entity ("VIE") and VIE's subsidiary
Domicile and Date of Incorporation		PRC October 29, 2009
Registered Capital | $		$ 100,000
Effective Ownership, Percentage		100.00%
Principal Activities		Holding company
Yew Bio-Pharm Holdings Limited ("Yew Bio-Pharm (HK)") [Member]
Schedule of company's subsidiaries, variable interest entity ("VIE") and VIE's subsidiary
Domicile and Date of Incorporation		Hong Kong November 29, 2010
Registered Capital | $			$ 10,000
Effective Ownership, Percentage		100.00%
Principal Activities		Holding company of JSJ
Harbin Yew Science and Technology Development Co., Ltd. ("HDS") [Member]
Schedule of company's subsidiaries, variable interest entity ("VIE") and VIE's subsidiary
Domicile and Date of Incorporation		PRC August 22, 1996
Registered Capital | ¥				¥ 45,000,000
Effective Ownership		Contractual arrangements
Principal Activities		Sales of yew tree components for use in pharmaceutical industry; sales of yew tree seedlings; the manufacture of yew tree wood handicrafts; and the sales of candle, pine needle extract, yew essential oil soap, complex taxus cuspidate extract, and northeast yew extract
Harbin Yew Food Co., Ltd ("HYF") [Member]
Schedule of company's subsidiaries, variable interest entity ("VIE") and VIE's subsidiary
Domicile and Date of Incorporation		PRC November 4, 2014
Registered Capital | ¥				¥ 100,000
Effective Ownership, Percentage	[1]	100.00%
Principal Activities		Sales of wood ear mushroom drink
MC Commerce Holding Inc.("MC") [Member]
Schedule of company's subsidiaries, variable interest entity ("VIE") and VIE's subsidiary
Domicile and Date of Incorporation		State of California, United State September 8, 2016
Effective Ownership, Percentage	[2]	100.00%
Principal Activities		Sales of yew oil candles and yew oil soaps

[1] Wholly-owned subsidiary of HDS

[2] 51% owned by YBP and 49% owned by HDS

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Organization and Principal Activities (Details Textual)	Sep. 30, 2018
Yew Bio-Pharm Holdings Limited ("Yew Bio-Pharm (HK)") [Member]
Organization and Principal Activities (Textual)
Effective Ownership, Percentage	51.00%
Harbin Yew Science and Technology Development Co., Ltd. ("HDS") [Member]
Organization and Principal Activities (Textual)
Effective Ownership, Percentage	49.00%

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Principles of Consolidation (Details) - USD ($)	Sep. 30, 2018	Dec. 31, 2017
Assets
Total assets of VIE and its subsidiary	$ 52,473,980	$ 50,322,887
Liabilities
Total liabilities of VIE and its subsidiary	8,401,926	7,732,735
Cash [Member]
Assets
Total assets of VIE and its subsidiary	487,809	798,514
Accounts receivable [Member]
Assets
Total assets of VIE and its subsidiary	6,616,158	9,841,841
Accounts receivable - related parties [Member]
Assets
Total assets of VIE and its subsidiary	6,592,266	21,847,733
Inventories (current and long-term), net [Member]
Assets
Total assets of VIE and its subsidiary	6,077,191	10,680,304
Prepaid expenses and other assets [Member]
Assets
Total assets of VIE and its subsidiary	44,115	26,637
Prepaid expenses - related parties [Member]
Assets
Total assets of VIE and its subsidiary	35,488	57,202
Property and equipment, net [Member]
Assets
Total assets of VIE and its subsidiary	522,009	573,563
Land use rights and yew forest assets, net [Member]
Assets
Total assets of VIE and its subsidiary	31,042,461	6,326,529
VAT recoverables [Member]
Assets
Total assets of VIE and its subsidiary	1,056,483	170,564
Accrued expenses and other payables [Member]
Liabilities
Total liabilities of VIE and its subsidiary	303,357	162,004
Accounts payable [Member]
Liabilities
Total liabilities of VIE and its subsidiary	534,247	17,727
Accounts payable - related parties [Member]
Liabilities
Total liabilities of VIE and its subsidiary	14,563	357,708
Advance from customers [Member]
Liabilities
Total liabilities of VIE and its subsidiary	27,602
Due to VIE holding companies [Member]
Liabilities
Total liabilities of VIE and its subsidiary	559,343	590,300
Short-term borrowings [Member]
Liabilities
Total liabilities of VIE and its subsidiary	6,512,038	6,099,876
Deferred income [Member]
Liabilities
Total liabilities of VIE and its subsidiary	340,785	359,646
Due to related parties [Member]
Liabilities
Total liabilities of VIE and its subsidiary	$ 109,991	$ 145,474

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Principles of Consolidation (Details Textual)	9 Months Ended
	Sep. 30, 2018 CNY (¥)
Principles of Consolidation (Textual)
Monthly consulting service fee as percentage of net income of HDS paid to JSJ	100.00%
HDS obligation within 30 days after the end of each month, description	Within 30 days after the end of each month, HDS shall (a) deliver to JSJ the management accounts and operating statistics of HDS for such month, including the net income of HDS during such month (the "Monthly Net Income"), and (b) pay 80% of such Monthly Net Income to JSJ (each such payment, a "Monthly Payment").
HDS obligation within 90 days after the end of each year, description	Within ninety (90) days after the end of each fiscal year, HDS shall (a) deliver to JSJ financial statements of HDS for such fiscal year, which shall be audited and certified by an independent certified public accountant approved by JSJ, and (b) pay an amount to JSJ equal to the shortfall, if any, of the aggregate net income of HDS for such fiscal year, as shown in such audited financial statements, as compared to the aggregate amount of the Monthly Payments paid by HDS to JSJ in such fiscal year.
Additional monthly payment to JSJ as percentage of net income of HDS	80.00%
Business cooperation agreement, term	10 years
Business cooperation agreement, expiration date	Nov. 05, 2020
Notice period for termination of contract	30 days
Execution of any major contract is limited under option agreement	Over RMB500,000
Exclusive option agreement, term	10 years
Exclusive option agreement, commencing date	Nov. 05, 2020
Description of notice period for remedies for any breach in terms agreement	Within 20 days after the giving of notice of breach.
Shareholder's equity interests in HDS	¥ 10

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Inventories (Details) - USD ($)	9 Months Ended	12 Months Ended
	Sep. 30, 2018	Dec. 31, 2017
Schedule of inventories
Inventories, net, Current portion	$ 6,784,838	$ 2,579,190
Inventories, net, Long-term portion	1,700,797	10,546,648
Inventory write-down, Current portion	(300)	(6,980)
Inventory write-down, Long-term portion	(2,592,508)	(2,729,726)
Inventory write-down, Total	(2,592,808)	(2,736,706)
Inventories, net, Total	8,485,635	13,125,838
Raw materials [Member]
Schedule of inventories
Inventories, net, Current portion	39,807	62,548
Inventories, net, Long-term portion	2,512,232	2,651,272
Inventories, net, Total	2,552,039	2,713,820
Finished goods [Member]
Schedule of inventories
Inventories, net, Current portion	6,745,331	2,475,709
Inventories, net, Long-term portion	577,373	588,444
Inventories, net, Total	7,322,704	3,064,153
Yew seedlings and Other trees [Member]
Schedule of inventories
Inventories, net, Current portion		47,913
Inventories, net, Long-term portion	1,203,700	10,036,658
Inventories, net, Total	1,203,700	10,084,571
Total [Member]
Schedule of inventories
Inventories, net, Current portion	6,785,138	2,586,170
Inventories, net, Long-term portion	4,293,305	13,276,374
Inventories, net, Total	$ 11,078,443	$ 15,862,544

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Inventories (Details 1) - USD ($)	Sep. 30, 2018	Dec. 31, 2017
Inventories [Abstract]
Inventories, net	$ 962,185	$ 1,022,452
Inventories - related parties, net	5,822,653	1,556,738
Total	6,784,838	2,579,190
Long-term inventories, net	1,700,797	3,375,247
Long-term inventories - related parties, net		7,171,401
Total	$ 1,700,797	$ 10,546,648

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Taxes (Details)	9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017
Summary of difference between U.S. statutory federal tax rate and Company's effective tax rate
U.S. federal income tax rate	21.00%	34.00%
Foreign income not recognized in the U.S.	(21.00%)	(34.00%)
PRC EIT rate	25.00%	25.00%
PRC tax exemption and reduction	(37.81%)	(26.20%)
Income tax difference under different tax jurisdictions	12.66%	1.08%
Valuation allowance	0.15%	0.12%
Effective tax rate

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Taxes (Details 1) - USD ($)	Sep. 30, 2018	Dec. 31, 2017
Summary of net deferred tax assets
Net operating loss carry-forwards	$ 140,000	$ 2,541,363
Inventory write-down	648,127	614,625
Valuation allowance	(788,127)	(3,155,988)
Non-current deferred tax assets

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Taxes (Details Textual)	1 Months Ended	3 Months Ended	9 Months Ended
	Dec. 22, 2017	Sep. 30, 2018	Sep. 30, 2018	Sep. 30, 2017
Taxes (Textual)
United States federal income tax rate			21.00%	34.00%
PRC EIT rate			25.00%	25.00%
Description of tax exemption date			HDS has been named as a leading enterprise in the agricultural industry and awarded with a tax exemption through December 31, 2058.
U.S. corporate income tax, description		The Company recognized a one-time transition tax of $1,431,836 that represented management's estimate of the amount of U.S. corporate income tax based on the deemed repatriation to the United States of the Company's share of previously deferred earnings of certain non-U.S. subsidiaries of the Company mandated by the U.S. Tax Reform. The Company elected to pay the one-time transition tax over eight years commencing in 2018.
Controlled foreign corporations, description		GILTI is the excess of the shareholder's net CFC tested income over the net deemed tangible income return, which is currently defined as the excess of (1) 10 percent of the aggregate of the U.S. shareholder's pro rata share of the qualified business asset investment of each CFC with respect to which it is a U.S. shareholder over (2) the amount of certain interest expense taken into account in the determination of net CFC-tested income.
Maximum [Member]
Taxes (Textual)
United States federal income tax rate	35.00%
Minimum [Member]
Taxes (Textual)
United States federal income tax rate	21.00%
Hong Kong [Member]
Taxes (Textual)
Tax rate percentage			16.50%

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Short-Term Borrowings (Details)	3 Months Ended		9 Months Ended
	Sep. 30, 2018 USD ($)	Sep. 30, 2017 USD ($)	Sep. 30, 2018 USD ($)	Sep. 30, 2017 USD ($)	Aug. 06, 2018 USD ($)	Aug. 06, 2018 CNY (¥)	Dec. 31, 2017 USD ($)	Nov. 15, 2017 USD ($)	Nov. 15, 2017 CNY (¥)	Dec. 22, 2016 USD ($)	Dec. 22, 2016 CNY (¥)	May 31, 2016 USD ($)	May 31, 2016 CNY (¥)
Short-Term Borrowings (Textual)
Loan interest rate								4.10%	4.10%			5.873%	5.873%
Loans borrowed from CEB			$ 7,331,599	$ 7,881,105
Interest expense	$ (45,549)	$ (52,105)	$ (182,659)	(139,450)
Minimum [Member]
Short-Term Borrowings (Textual)
Loan interest rate	4.30%		4.30%
Maximum [Member]
Short-Term Borrowings (Textual)
Loan interest rate	4.60%		4.60%
BOCOM [Member]
Short-Term Borrowings (Textual)
Bank loan amount												$ 1,471,000	¥ 10,000,000
Loan interest rate												5.873%	5.873%
SPD Bank [Member]
Short-Term Borrowings (Textual)
Bank loan amount								$ 1,509,000	¥ 10,000,000
Loan interest rate								4.10%	4.10%
CEB [Member]
Short-Term Borrowings (Textual)
Bank loan amount										$ 2,880,000	¥ 20,000,000
Loans borrowed from CEB			$ 4,406,000	6,410,000
Total amount paid off			5,133,000	$ 3,540,000
Balance of short-term loans	$ 2,143,000		$ 2,143,000				$ 2,870,000
Yingkou Bank [Member]
Short-Term Borrowings (Textual)
Bank loan amount					$ 2,192,000	¥ 15,000,000
Loan interest rate					5.4375%	5.4375%

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Stockholders' Equity (Details) - $ / shares	9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017
Summary of stock option activities
Number of Stock Options, Beginning balance	24,872,212	25,325,512
Number of Stock Options, Issued		50,000
Number of Stock Options, Exercised	200,000
Number of Stock Options, Expired	15,503,475
Number of Stock Options, Forfeited
Number of Stock Options, Ending balance	9,168,737	25,375,512
Number of Stock Options, Options exercisable	9,068,737	24,465,012
Weighted Average Exercise Price, Beginning balance	$ 0.22	$ 0.22
Weighted Average Exercise Price, Issued		0.25
Weighted Average Exercise Price, Exercised
Weighted Average Exercise Price, Expired	0.22
Weighted Average Exercise Price, Forfeited
Weighted Average Exercise Price, Ending balance	0.22	0.22
Weighted Average Exercise Price, Options exercisable	$ 0.22	$ 0.22

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Stockholders' Equity (Details 1)	9 Months Ended
	Sep. 30, 2018 $ / shares shares
Summary of common stock issuable upon exercise of options outstanding
Stock Options Outstanding, Range of Exercise Price, Minimum	$ 0.20
Stock Options Outstanding, Range of Exercise Price, Maximum	$ 0.25
Stock Options Outstanding, Number Outstanding | shares	9,168,737
Stock Options Outstanding, Weighted Average Remaining Contractual Life (Years)	1 year 2 months 30 days
Stock Options Outstanding, Weighted Average Exercise Price	$ 0.22
Stock Options Exercisable, Number Exercisable | shares	9,068,737
Stock Options Exercisable, Weighted Average Exercise Price	$ 0.22

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Stockholders' Equity (Details Textual) - USD ($)		1 Months Ended		9 Months Ended
	Jul. 19, 2018	Jul. 20, 2018	May 20, 2018	Sep. 30, 2018	Sep. 30, 2017
Stockholders' Equity (Textual)
Stock option expense				$ 1,067,548	$ 94,177
Closing stock price				$ 0.20
Weighted average remaining contractual life changed				1 year 2 months 30 days
Zhiguo Wang [Member]
Stockholders' Equity (Textual)
Recognized incremental compensation cost				$ 1,059,987
Stock options issued			5,000,000
Common stock issued			5,000,000
Stock Option [Member]
Stockholders' Equity (Textual)
Stock options issued			2,488,737
Dividend yield				0.00%
Common stock issued			2,488,737
Stock Option [Member] | Xuehai Wu [Member]
Stockholders' Equity (Textual)
Stock options exercise price		$ 0.20
Proceeds amount received	$ 40,000	$ 200,000
Maximum [Member] | Stock Option [Member]
Stockholders' Equity (Textual)
Volatility rate				212.00%
Risk free rate				2.58%
Expected term				3 years 11 days
Minimum [Member] | Stock Option [Member]
Stockholders' Equity (Textual)
Volatility rate				91.00%
Risk free rate				0.14%
Expected term				1 month 13 days

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Earnings Per Share (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Earnings Per Share [Abstract]
Net income (loss) available to common stockholders for basic and diluted net income per share of common stock	$ (380,818)	$ 614,407	$ 1,381,376	$ 11,039,824
Weighted average common stock outstanding - basic	52,018,478	51,875,000	51,923,352	51,875,000
Effect of dilutive securities:
Non-vested restricted common stock
Stock options issued to directors/officers/employees		2,686,533	2,884,928	2,090,264
Weighted average common stock outstanding - diluted	52,018,478	54,561,533	54,808,280	53,965,264
Net income per common share - basic	$ (0.01)	$ 0.01	$ 0.03	$ 0.21
Net income per common share - diluted	$ (0.01)	$ 0.01	$ 0.03	$ 0.20

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Earnings Per Share (Details Textual) - shares	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Earnings Per Share (Textual)
Anti-dilutive including option to purchase common shares	0	1,961,436	0	244,322

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Concentrations of Credit Risk and Major Customers (Details) - Customers [Member]	9 Months Ended
	Sep. 30, 2018		Sep. 30, 2017
A (Yew Pharmaceutical, a related party) [Member]
Summary of major customer accounting for 10% or more of the company's revenue
Concentration of credit risk, percentage	56.70%		48.50%
B [Member]
Summary of major customer accounting for 10% or more of the company's revenue
Concentration of credit risk, percentage		[1]	47.50%
T [Member]
Summary of major customer accounting for 10% or more of the company's revenue
Concentration of credit risk, percentage	21.90%			[1]

[1] Less than 10%

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Concentrations of Credit Risk and Major Customers (Details 1) - Suppliers [Member]	9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017
A (Yew Pharmaceutical, a related party) [Member]
Summary of major suppliers
Concentration of credit risk, percentage	38.50%	62.00%
C (Changzhi Du, a related party) [Member]
Summary of major suppliers
Concentration of credit risk, percentage		10.00%
Q (Heilongjiang Zishan Technology Co., Ltd., a related party) [Member]
Summary of major suppliers
Concentration of credit risk, percentage	12.00%

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Concentrations of Credit Risk and Major Customers (Details Textual)	9 Months Ended		12 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Dec. 31, 2017
Accounts payable [Member]
Concentrations of Credit Risk and Major Customer (Textual)
Concentration of credit risk, percentage	10.00%	10.00%
Accounts payable [Member] | Supplier D [Member]
Concentrations of Credit Risk and Major Customer (Textual)
Concentration of credit risk, percentage			60.20%
Accounts payable [Member] | Supplier K [Member]
Concentrations of Credit Risk and Major Customer (Textual)
Concentration of credit risk, percentage			11.60%
Accounts payable [Member] | Supplier J [Member]
Concentrations of Credit Risk and Major Customer (Textual)
Concentration of credit risk, percentage			13.40%
Accounts payable [Member] | Supplier I [Member]
Concentrations of Credit Risk and Major Customer (Textual)
Concentration of credit risk, percentage	63.50%
Accounts receivable [Member]
Concentrations of Credit Risk and Major Customer (Textual)
Concentration of credit risk, percentage	10.00%	10.00%
Accounts receivable [Member] | Yew Pharmaceutical [Member]
Concentrations of Credit Risk and Major Customer (Textual)
Concentration of credit risk, percentage	76.90%		99.30%
Accounts receivable [Member] | Customer B [Member]
Concentrations of Credit Risk and Major Customer (Textual)
Concentration of credit risk, percentage	27.70%		68.30%
Accounts receivable [Member] | Customer T [Member]
Concentrations of Credit Risk and Major Customer (Textual)
Concentration of credit risk, percentage	49.20%

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Related Party Transactions (Details)	9 Months Ended
	Sep. 30, 2018
Heilongjiang Zishan Technology Co., Ltd. ("ZTC") [Member]
Schedule of company's transactions with the related parties
Nature of Relationship, description	51% owned by Heilongjiang Hongdoushan Ecology Forest Co., Ltd., 34% owned by Zhiguo Wang, Chairman and Chief Executive Officer, 11% owned by Guifang Qi, the wife of Mr. Wang and director of the Company, and 4% owned by third parties.
Heilongjiang Yew Pharmaceutical Co., Ltd. ("Yew Pharmaceutical") [Member]
Schedule of company's transactions with the related parties
Nature of Relationship, description	95% owned by Heilongjiang Hongdoushan Ecology Forest Stock Co., Ltd., and 5% owned by Madame Qi.
Shanghai Kairun Bio-Pharmaceutical Co., Ltd. ("Kairun") [Member]
Schedule of company's transactions with the related parties
Nature of Relationship, description	60% owned by Heilongjiang Zishan Technology Co., Ltd., 20% owned by Heilongjiang Hongdoushan Ecology Forest Stock Co., Ltd., and 20% owned by Mr. Wang.
Heilongjiang Hongdoushan Ecology Forest Co., Ltd. ("HEFS") [Member]
Schedule of company's transactions with the related parties
Nature of Relationship, description	63% owned by Mr. Wang, 34% owned by Madame Qi, and 3% owned by third parties.
Hongdoushan Bio-Pharmaceutical Co., Ltd. ("HBP") [Member]
Schedule of company's transactions with the related parties
Nature of Relationship, description	30% owned by Mr. Wang, 19% owned by Madame Qi and 51% owned by HEFS
Heilongjiang Pingshan Hongdoushan Development Co., Ltd. ("HDS Development") [Member]
Schedule of company's transactions with the related parties
Nature of Relationship, description	80% owned by HEFS and 20% owned by Kairun
Wuchang City Xinlin Forestry Co., Ltd. (Xinlin) [Member]
Schedule of company's transactions with the related parties
Nature of Relationship, description	98% owned by ZTC and 2% owned by HEFS effective March 21, 2016
Changzhi Du [Member]
Schedule of company's transactions with the related parties
Nature of Relationship, description	Legal person of Xinlin before March 1, 2017
Jinguo Wang [Member]
Schedule of company's transactions with the related parties
Nature of Relationship, description	Management of HDS, legal person of Xinlin before February 9, 2018, and director of ZTC effective February 1, 2018.
Others [Member]
Schedule of company's transactions with the related parties
Nature of Relationship, description	Individuals who have significant influence on the Company
Wonder Genesis Global Ltd. [Member]
Schedule of company's transactions with the related parties
Nature of Relationship, description	Jinguo Wang is the Company's director before June 10, 2018
Lifeforfun Limited [Member]
Schedule of company's transactions with the related parties
Nature of Relationship, description	Yuqi Mao, the former family member of Yicheng Wang, is the Lifeforfun Limited's director.

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Related Party Transactions (Details 1) - USD ($)	Sep. 30, 2018	Dec. 31, 2017
Related Party Transactions [Abstract]
Land use rights, net	$ 305,369	$ 325,737
Yew forest assets, net	10,897,297	3,210,195
Yew forest assets - related parties, net	19,885,154	2,834,006
Total	$ 31,087,820	$ 6,369,938

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Related Party Transactions (Details 2) - A'cheng Lease [Member]	9 Months Ended
	Sep. 30, 2018 CNY (¥)
March 2002 to February 2012 [Member]
Operating Leased Assets [Line Items]
Annual lease amount	¥ 25,000
Payment due date	Before December 2012
March 2012 to February 2017 [Member]
Operating Leased Assets [Line Items]
Annual lease amount	¥ 25,000
Payment due date	Before December 2017
March 2017 to March 2025 [Member]
Operating Leased Assets [Line Items]
Annual lease amount	¥ 25,000
Payment due date	Before December 2025

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Related Party Transactions (Details Textual)													3 Months Ended		9 Months Ended		12 Months Ended
	Jul. 03, 2018 USD ($)	Jul. 03, 2018 CNY (¥)	May 15, 2015 USD ($)	Jan. 01, 2015	Jul. 01, 2012 USD ($) m²	Jul. 01, 2012 CNY (¥) m²	Jan. 09, 2010 USD ($)	Jan. 09, 2010 CNY (¥)	Jan. 01, 2010 USD ($)	Jan. 01, 2010 CNY (¥)	Mar. 25, 2005 USD ($) a	Mar. 25, 2005 CNY (¥) a	Sep. 30, 2018 USD ($)	Sep. 30, 2017 USD ($)	Sep. 30, 2018 USD ($)	Sep. 30, 2017 USD ($)	Dec. 31, 2017 USD ($)	Nov. 15, 2017	Jun. 30, 2017 USD ($)	May 31, 2016
Related Party Transactions (Textual)
Accounts receivable - related parties													$ 6,592,266		$ 6,592,266		$ 21,847,733
Operating leases, rent expense															25,006	$ 14,000
Prepaid expenses - related party																	0
Accounts payable													0		0		357,708
Unpaid rent													3,421		3,421		1,881
Debt interest rate																		4.10%		5.873%
Repayment of debt															(4,432,593)	(3,617,764)
Cost of revenues to the third party													12,574,660	$ 10,814,999	26,593,314	23,185,196
Revenues from related party													6,035,593	$ 4,292,619	$ 23,712,429	18,363,666
HDS [Member]
Related Party Transactions (Textual)
Agreement expiration date															Mar. 19, 2025
Agreement expiration period															23 years
Agreement of Seedling Land with ZTC [Member]
Related Party Transactions (Textual)
Agreement expiration date											Mar. 24, 2035	Mar. 24, 2035
Agreement expiration period											30 years	30 years
Leased area of land (Metric acre "Mu") | a											361	361
Annual payments under operating lease											$ 26,000	¥ 162,450
Operating leases, rent expense															$ 18,705	17,902
Office Lease [Member]
Related Party Transactions (Textual)
Agreement expiration date									Dec. 31, 2025	Dec. 31, 2025
Agreement expiration period									15 years	15 years
Annual payments under operating lease									$ 2,000	¥ 15,000
Operating leases, rent expense															1,727	1,653
JSJ Lease [Member]
Related Party Transactions (Textual)
Agreement expiration date	Jun. 30, 2021	Jun. 30, 2021			Sep. 30, 2015	Sep. 30, 2015
Agreement expiration period	3 years	3 years			3 years	3 years
Leased Area | m²					30	30
Annual payments under operating lease	$ 1,600	¥ 10,000			$ 1,600	¥ 10,000
Operating leases, rent expense															1,151	1,102
Unpaid rent													6,189		6,189		5,380
Xinlin [Member]
Related Party Transactions (Textual)
Amount payment to related party															2,622,473	0
Accounts payable													0		0		0
A'cheng Lease [Member]
Related Party Transactions (Textual)
Operating leases, rent expense															2,879	2,635
Unpaid rent													4,551		4,551		1,921
Yew Pharmaceutical [Member]
Related Party Transactions (Textual)
Accounts receivable - related parties													3,728,148		3,728,148		21,647,828
Amount payment to related party															18,033,411	14,934,540
Amount includes cost of revenue															11,042,307	17,804,944
Yew Pharmaceutical [Member] | Harbin Yew Food Co., Ltd [Member]
Related Party Transactions (Textual)
Accounts payable													0		0		50,318
Unsecured loan													0		0		39,974
Amount includes cost of revenue															482	20,698
Yew Pharmaceutical [Member] | Cooperation and Development Agreement [Member]
Related Party Transactions (Textual)
Agreement expiration date							Jan. 09, 2020	Jan. 09, 2020
Agreement expiration period							10 years	10 years
Cultivation price per metric ton							$ 158,000	¥ 1,000,000
Sales															18,075,032	17,011,006
Cost of revenues to the third party															13,863,380	5,031,433
Kairun [Member] | Technology Agreement [Member]
Related Party Transactions (Textual)
Agreement expiration period									2 years	2 years
Payment made under agreement									$ 32,000	¥ 200,000
Madam Qi [Member]
Related Party Transactions (Textual)
Subordinated promissory note			$ 648,000
Debt interest rate			2.00%
Due date of borrowing debt			Nov. 15, 2015
Total borrowings including the interest amount													428,095		428,095		428,095
Repayment of debt															0	75,875
ZTC [Member]
Related Party Transactions (Textual)
Prepaid expenses - related party													35,488		35,488		56,177
Amount payment to related party															5,616,194	0
Accounts payable													0		0		0
Zhiguo Wang [Member]
Related Party Transactions (Textual)
Due to other shareholders													41,051		41,051		41,051
Zhiguo Wang [Member] | HDS [Member]
Related Party Transactions (Textual)
Amount payment to related party															1,289,590	0
Accounts payable													0		0		0
HBP [Member]
Related Party Transactions (Textual)
Lease agreement, description				Leases a warehouse, with an area of 225 square meters, and a workshop, with an area of 50 square meters, both of which are located at No.1 Zisan Road, Shangzhi economic development district, Shangzhi City, Heilongjiang Province, to HYF in exchange for no consideration for the period from January 1, 2015 to December 31, 2020.
HBP [Member] | Harbin Yew Food Co., Ltd [Member]
Related Party Transactions (Textual)
Amount payment to related party															5,834	34,341
Unsecured loan													101,898		101,898		101,697
Changzhi Du [Member] | HDS [Member]
Related Party Transactions (Textual)
Amount payment to related party															1,317,224	2,395,051
Accounts payable													0		0		0
Jinguo Wang [Member] | HDS [Member]
Related Party Transactions (Textual)
Amount payment to related party															1,426,873	25,934
Accounts payable													0		0		0
Wonder Genesis Global Ltd [Member]
Related Party Transactions (Textual)
Sales															2,591,681	1,352,660
Accounts receivable - related parties													0		0		199,905
Cost of revenues to the third party															2,574,537	1,422,036
Guifang Qi [Member] | HDS [Member]
Related Party Transactions (Textual)
Amount payment to related party															1,869,130	0
Accounts payable													0		0		0
Others [Member] | HDS [Member]
Related Party Transactions (Textual)
Sales															27,082	0
Accounts receivable - related parties													0		0		0
Prepaid expenses - related party													35,488		35,488				$ 0
Amount payment to related party															3,549,966	8,743,172
Accounts payable													0		0		307,390
Cost of revenues to the third party															$ 19,144	0
Jixing [Member]
Related Party Transactions (Textual)
Agreement expiration date															Sep. 30, 2018
Agreement expiration period															1 year
Operating leases, rent expense															$ 1,151	980
Ms. Qi [Member]
Related Party Transactions (Textual)
Operating leases, rent expense																121	1,025
Lifeforfun Limited [Member]
Related Party Transactions (Textual)
Sales															1,176,975	0
Accounts receivable - related parties													1,116,503		1,116,503		0
Cost of revenues to the third party															1,144,367	0
HDS Development [Member]
Related Party Transactions (Textual)
Sales															1,842,271	0
Accounts receivable - related parties													$ 1,747,615		1,747,615		$ 0
Cost of revenues to the third party															$ 1,390,834	$ 0

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Segment Information (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017	Dec. 31, 2017
Summary of reportable business segments
Revenues:	$ 14,039,237	$ 11,564,915	$ 31,890,743	$ 35,044,755
Cost of revenues:	12,574,660	10,814,999	26,593,314	23,185,196
Depreciation and amortization:	186,278	134,708	409,816	181,206
Net income (loss):	(380,818)	614,407	1,381,376	11,039,824
Segment reporting information, Additional information
Identifiable long-lived assets, net	31,614,239		31,614,239		$ 6,949,495
TCM raw materials [Member]
Summary of reportable business segments
Revenues:	5,168,573	2,939,959	19,917,303	17,011,006
Cost of revenues:	4,236,907	2,021,300	15,254,214	5,031,434
Depreciation and amortization:	171,415	114,482	364,903	130,262
Net income (loss):	1,519,823	1,021,374	4,069,973	11,834,671
Segment reporting information, Additional information
Identifiable long-lived assets, net	31,087,820		31,087,820		6,369,938
Yew trees [Member]
Summary of reportable business segments
Revenues:		9,906	31,766	9,906
Cost of revenues:		7,897	19,747	7,897
Depreciation and amortization:	10,125	31,778	31,501	31,778
Net income (loss):	1,019	1,924	11,073	1,924
Segment reporting information, Additional information
Identifiable long-lived assets, net	420,329		420,329		474,961
Handicrafts [Member]
Summary of reportable business segments
Revenues:	212	2,916	1,520	5,284
Cost of revenues:	87	2,487	1,328	4,663
Depreciation and amortization:	226	676	709	679
Net income (loss):	177	417	146	576
Segment reporting information, Additional information
Identifiable long-lived assets, net	10,905		10,905		12,066
Others [Member]
Summary of reportable business segments
Revenues:	8,870,452	8,612,134	11,940,154	18,018,559
Cost of revenues:	8,337,666	8,783,315	11,318,025	18,141,202
Depreciation and amortization:	4,512	(12,228)	12,703	18,487
Net income (loss):	(470,001)	$ (408,704)	(1,267,980)	$ (797,347)
Segment reporting information, Additional information
Identifiable long-lived assets, net	$ 95,185		$ 95,185		$ 92,530

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Segment Information (Details Textual) - Segments	9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017
Segment Information (Textual)
Number of business segments	4	4

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Commitments and Contingencies (Details)			1 Months Ended				9 Months Ended
	Jun. 14, 2018	May 01, 2017 USD ($)	Apr. 30, 2018	Feb. 01, 2018	Feb. 01, 2015 USD ($)	Nov. 25, 2010 Seedlings	Sep. 30, 2018 USD ($)	Sep. 30, 2017 USD ($)
Commitments and Contingencies (Textual)
Term of lease	20 years				3 years
Lease expiration date	Jun. 13, 2038				Jan. 31, 2018
Rent expense related to U.S. principal office lease amount					$ 3,039		$ 35,687	$ 30,348
Payments of lease each month of second year					3,150
Payments of lease each month of third year					$ 3,261
Percentage of HDS's publicly-published wholesale prices						90.00%
Number of yew seedlings purchase annually by Xinlin | Seedlings						10,000
Lease for product exhibition and promotion related rent expense		$ 2,800
Lease agreement, description				The Company renewed the lease and the lease expires on January 31, 2020. Pursuant to the renewed lease agreement, the monthly payment is $3,521 from February 1, 2018 to January 1, 2019, and $3,669 from February 1, 2019 to January 31, 2020.
Rent expense							25,006	14,000
Retail store [Member]
Commitments and Contingencies (Textual)
Term of lease, description			The lease term is from May 11, 2018 to April 30, 2019.
Lease agreement, description			Pursuant to the lease agreement, the base monthly rent payment is $1,761 from May 11, 2018 to May 31, 2018, $2,600 from June 1, 2018 to October 30, 2018 and from January 1, 2019 to April 30, 2019, and $4,600 from November 1, 2018 to December 31, 2018.
Rent expense							$ 14,761

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Joint Venture Agreement for Planting of Yew Trees (Details)	Jun. 14, 2018 a
Qingan Forestry [Member]
Joint Venture Agreement For Planting Of Yew Trees [Line Items]
Forest the land	10,729.5
Joint Venture Agreement [Member]
Joint Venture Agreement For Planting Of Yew Trees [Line Items]
Yew trees land period, description	The Company is required to plant yew trees on this land from June 14, 2018 to June 13, 2038.
Profits and other agriculture distributed, description	Any gross revenues from the planting of yew tree shall be distributed 80% to the Company and 20% to the Qing'An Forestry.

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Subsequent Events (Details)		1 Months Ended		9 Months Ended
	Oct. 15, 2018 USD ($)	Oct. 18, 2018 USD ($)	Oct. 18, 2018 CNY (¥)	Sep. 30, 2018 USD ($)	Sep. 30, 2017 USD ($)	Nov. 15, 2017 USD ($)	Nov. 15, 2017 CNY (¥)	Dec. 22, 2016 USD ($)	Dec. 22, 2016 CNY (¥)
CEB Bank [Member]
Subsequent Events (Textual)
Repaid the loan amount				$ 5,133,000	$ 3,540,000
Additional borrowings from CEB								$ 2,880,000	¥ 20,000,000
SPD Bank [Member]
Subsequent Events (Textual)
Additional borrowings from CEB						$ 1,509,000	¥ 10,000,000
Subsequent Event [Member] | CEB Bank [Member]
Subsequent Events (Textual)
Repaid the loan amount	$ 359,000
Additional borrowings from CEB	$ 1,090,000
Subsequent Event [Member] | SPD Bank [Member]
Subsequent Events (Textual)
Repaid the loan amount		$ 1,509,000	¥ 10,000,000