UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

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

FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2021

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 [X] 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 [X] No [  ]

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

Large accelerated filer	[  ]	Accelerated filer	[  ]
Non-accelerated filer	[X]	Smaller reporting company	[X]
		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 provided 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 [X]

Securities registered pursuant to Section 12(b) of the Act: None

As of May 14, 2021, there were 51,700,000 shares, $0.001 par value per share, of the registrant’s common stock outstanding.

YEW BIO-PHARM GROUP, INC.

FORM 10-Q

FOR THE THREE-MONTH PERIOD ENDED MARCH 31, 2021

TABLE OF CONTENTS

		Page Number
PART I. FINANCIAL INFORMATION
ITEM 1.	CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)	1
	CONSOLIDATED BALANCE SHEETS AS OF MARCH 31, 2021 (UNAUDITED) AND DECEMBER 31, 2020	1
	CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (UNAUDITED) FOR THE THREE-MONTH PERIODS ENDED MARCH 31, 2021 AND 2020	2
	CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) FOR THE THREE-MONTH PERIODS ENDED MARCH 31, 2021 AND 2020	3
	CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY (UNAUDITED) FOR THE THREE-MONTHS ENDED MARCH 31, 2021 AND 2020	4
	NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS	5
ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	20
ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	29
ITEM 4.	CONTROLS AND PROCEDURES	29
PART II. OTHER INFORMATION
ITEM 1.	LEGAL PROCEEDINGS	30
ITEM 1A.	RISK FACTORS	30
ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	30
ITEM 3.	DEFAULTS UPON SENIOR SECURITIES	30
ITEM 4.	MINE SAFETY DISCLOSURES	30
ITEM 5.	OTHER INFORMATION	30
ITEM 6.	EXHIBITS	30

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 13 of our Annual Report on Form 10-K for the year ended December 31, 2020 filed with the Securities & Exchange Commission (“SEC”) on March 30, 2021.

ii

PART I

FINANCIAL INFORMATION

ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

YEW BIO-PHARM GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

	March 31,			December 31,
	2021			2020
ASSETS
CURRENT ASSETS:
Cash	$	127,330		$	563,792
Accounts receivable		212,689			217,689
Accounts receivable - related parties, net		14,974,413			9,045,669
Inventories, net		14,162			14,608
Prepaid expenses and other receivables		78,187			90,989
VAT input credit		350,416			56,637
Total Current Assets		15,757,197			9,989,384
LONG-TERM ASSETS:
Long-term inventories, net		794,236			784,784
Property and equipment, net		506,001			516,921
Land use rights and yew forest assets, net		41,423,561			41,952,483
Long-term advance for yew forest assets		122,520			15,415
Long-term advance for yew forest assets - related parties		3,008,065			4,854,273
Operating lease right-of-use assets		317,881			333,402
Total Long-term Assets		46,172,264			48,457,278
Total Assets	$	61,929,461		$	58,446,662
LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable for acquisition of yew forests and others	$	1,165,124		$	423,881
Accounts payable for acquisition of yew forests and others - related parties		42,665			-
Accrued expenses and other payables		1,288,657			404,494
Due to related parties		636,813			651,360
Short-term borrowings		9,160,579			8,979,899
Operating lease liabilities, current		42,945			65,476
Total Current Liabilities		12,336,783			10,525,110
NONCURRENT LIABILITIES:
Taxes payable		-			973,647
Long-term deferred income		1,167,548			1,172,928
Operating lease liabilities, noncurrent		282,312			292,409
Total Noncurrent Liabilities		1,449,860			2,438,984
Total Liabilities		13,786,643			12,964,094
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS’ EQUITY:
Common Stock ($0.001 par value; 140,000,000 shares authorized; 51,700,000 shares issued and outstanding at March 31, 2021 and December 31, 2020)		51,700			51,700
Additional paid-in capital		9,644,731			9,644,731
Retained earnings		34,333,743			31,415,605
Statutory reserves		3,762,288			3,762,288
Accumulated other comprehensive income		356,132			608,244
Total Yew Bio-Pharm Group, Inc Shareholders’ Equity		48,148,594			45,482,568
Noncontrolling interest		(5,776	)		-
Total Equity		48,142,818			45,482,568
Total Liabilities and Shareholders’ Equity	$	61,929,461		$	58,446,662

The accompanying notes are an integral part of these unaudited consolidated financial statements

1

YEW BIO-PHARM GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

(UNAUDITED)

	For the Three Months Ended March 31
	2021			2020
REVENUES:
Revenues	$	545		$	21,789
Revenues - related parties		8,736,769			2,007,393
Total Revenues		8,737,314			2,029,182
COST OF REVENUES:
Cost of revenues		13,000			41,366
Cost of revenues - related parties		7,767,341			1,545,561
Total Cost of Revenues		7,780,341			1,586,927
GROSS PROFIT		956,973			442,255
OPERATING EXPENSES:
Selling, general and administrative		273,773			281,527
Bad debt expense		(2,283,507	)		3,340
Total Operating Expenses		(2,009,734	)		284,867
INCOME (LOSS) FROM OPERATIONS		2,966,707			157,388
OTHER INCOME (EXPENSES):
Interest expense		(127,827	)		(111,977	)
Other income		45,372			13,490
Exchange gains		27,714			92,510
Total Other Expenses		(54,741	)		(5,976	)
INCOME BEFORE PROVISION FOR INCOME TAXES		2,911,966			151,412
PROVISION FOR INCOME TAXES		-			-
NET INCOME	$	2,911,966		$	151,412
Less: Net (loss) attributable to noncontrolling interest		(6,172	)		-
NET INCOME ATTRIBUTABLE TO YEW BIO-PHARM GROUP, INC		2,918,138			151,412
COMPREHENSIVE INCOME (LOSS):
NET INCOME	$	2,911,966		$	151,412
OTHER COMPREHENSIVE INCOME (LOSS):
Foreign currency translation adjustment		(252,112	)		(816,044	)
COMPREHENSIVE INCOME (LOSS)	$	2,659,854		$	(664,632	)
Less: comprehensive income attributable to non-controlling interest		396			-
COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO YEW BIO-PHARM GROUP, INC		2,659,458			(664,632	)
NET INCOME PER COMMON SHARE:
Basic	$	0.06		$	0.00
Diluted	$	0.06		$	0.00
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
Basic		51,700,000			51,700,000
Diluted		51,700,000			51,700,000

The accompanying notes are an integral part of these unaudited consolidated financial statements

2

YEW BIO-PHARM GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

	For the Three Months Ended March 31,
	2021			2020
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	2,911,966		$	151,412
Adjustments to reconcile net income to net cash provided by operating activities:
Bad debt (recovery) expense		(2,287,713	)		3,340
Depreciation		14,482			8,649
Loss on disposal of property and equipment		18,044			-
Inventory write-down		12,555			69,757
Amortization of land use rights and yew forest assets		668,765			613,811
Sale of yew forest assets as inventory		1,987,202			950,431
Changes in operating assets and liabilities:		-			-
Accounts receivable		3,838			127,847
Accounts receivable - related parties		(3,766,113	)		(534,754	)
Prepaid expenses and other current assets		(4,608	)		(105,862	)
Prepaid expenses - related parties		-			5,819
Inventories		(19,815	)		70,509
VAT input credit		(297,860	)		-
Accounts payable		57,196			(18,479	)
Accounts payable - related parties		-			(16,598	)
Accrued expenses and other payables		(88,583	)		44,942
Advance from customer		-			64,472
Due to related parties		8,970			(12,065	)
Taxes payable		(656	)		(1,566	)
NET CASH PROVIDED (USED IN) BY OPERATING ACTIVITIES		(776,330	)		1,421,665
CASH FLOWS FROM INVESTING ACTIVITIES:
Prepayments made for purchase of yew forest assets		(108,569	)		(591,294	)
Prepayments made to related parties for purchase of yew forest assets		1,847,650			(399,725	)
Purchase of property and equipment		(24,882	)		(644	)
Purchase of land use rights and yew forest assets		(1,577,123	)		(428,890	)
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES		137,076			(1,420,553	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from short-term borrowings		1,543,567			1,200,607
Repayments of short-term borrowings		(1,256,464	)		(1,485,962	)
Proceeds from related parties		(22,955	)		1,040
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES		264,148			(284,315	)
EFFECT OF EXCHANGE RATE ON CASH		(61,356	)		(81,442	)
NET INCREASE (DECREASE) IN CASH		(436,462	)		(364,645	)
CASH - Beginning of the year		563,792			742,294
CASH - End of the year	$	127,330		$	377,649
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for:
Interest	$	121,023		$	118,675
Income taxes	$	-		$	-
NON-CASH INVESTING AND FINANCING ACTIVITIES
Operating expense paid by related party	$	-		$	430
Payable for acquisition of yew forests	$	737,965		$	-

The accompanying notes are an integral part of these unaudited consolidated financial statements

3

YEW BIO-PHARM GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

	Common Stock, Par Value $0.001				Additional						Accumulated Other			Total
	Number of Shares		Amount		paid-in Capital		Retained Earnings		Statutory Reserve		Comprehensive Income (Loss)			Shareholders’ Equity
Balance, December 31, 2019		51,700,000	$	51,700	$	9,819,828	$	29,950,723	$	3,762,288	$	(2,190,844	)	$	41,393,695
Net income		-		-		-		151,412		-		-			151,412
Foreign currency translation adjustment		-		-		-		-		-		(816,044	)		(816,044	)
Balance, March 31, 2020		51,700,000	$	51,700	$	9,819,828	$	30,102,135	$	3,762,288	$	(3,006,888	)	$	40,729,063

	Common Stock, Par Value $0.001				Additional						Accumulated Other			Total
	Number of Shares		Amount		paid-in Capital		Retained Earnings		Statutory Reserve		Comprehensive Income (Loss)			Shareholders’ Equity			Noncontrolling interest			Total Equity
Balance, December 31, 2020		51,700,000	$	51,700	$	9,644,731	$	31,415,605		3,762,288	$	608,244		$	45,482,568			-			45,482,568
Net income		-		-		-		2,918,138		-		-			2,918,138			(6,172	)		2,911,966
Foreign currency translation adjustment		-		-		-		-		-		(252,112	)		(252,112	)		396			(251,716	)
Balance, March 31, 2021		51,700,000	$	51,700	$	9,644,731	$	34,333,743		3,762,288	$	356,132		$	48,148,594			(5,776	)		48,142,818

The accompanying notes are an integral part of these unaudited consolidated financial statements

4

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, 2020 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, 2020.

In the opinion of management, all adjustments (which include normal recurring adjustments) necessary to present a fair statement of the financial position as of March 31, 2021, and the results of operations and cash flows for the three-month periods ended March 31, 2021 and 2020, 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.

Certain amounts 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.

5

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 June 8, 2016			100	%(2)	Sales of yew oil candles and yew oil soaps
Harbin Jingchibai Bio-Technology Development Co., Limited (“JCB”)	PRC March 18, 2020	RMB1,000,000		51	%(3)	Sales of yew oil candles and yew oil soaps, no active operation since its incorporation
Yew (Guangzhou) Bio-Technology Co., Ltd (“YBT”)	PRC December 24, 2020	RMB10,000,000		80	%	Cosmetic marketing and sales

(1) Wholly-owned subsidiary of HDS

(2)	51% owned by YBP and 49% owned by HDS
(3)	JCB was cancelled of its registration on December 3, 2020

6

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. Certain reclassifications have been made to the consolidated financial statements for prior year to the current year’s presentation. Such reclassifications have no effect on net income as previously reported.

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.

7

● 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 representative, 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.

8

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 March 31, 2021 and December 31, 2020, 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:

	March 31, 2021		December 31, 2020
Assets
Cash	$	104,687	$	549,771
Accounts receivable		250,000		250,000
Accounts receivable - related parties, net		14,974,413		9,045,669
Other current assets		3,982,376		5,418,495
Property and equipment, net		474,075		483,139
Long-term investment in an affiliate		4,306,238		4,172,550
Land use rights and yew forest assets, net		41,423,561		41,952,483
Operating lease right of use assets		232,192		236,833
Total assets of VIE and its subsidiary	$	65,747,542	$	62,108,940
Liabilities
Accounts payable for acquisition of yew forests and others	$	1,073,075	$	389,028
Accounts payable for acquisition of yew forests and others - related parties		42,665		-
Other current liabilities		193,900		272,297
Short-term borrowings		9,142,579		8,899,979
Operating lease liability, current and noncurrent		237,790		259,686
Long-term deferred income		1,167,548		1,172,928
Due to related parties and VIE holding companies		105,488		97,461
Total liabilities of VIE and its subsidiary	$	11,963,045	$	11,091,379

9

Recent Accounting Pronouncements Adopted

In January 2017, the FASB issued ASU No. 2017-04, “Intangibles and Other (Topic 350): Simplifying the Test for Goodwill Impairment”, which eliminates the requirement to calculate the implied fair value of goodwill, but rather requires an entity to record an impairment charge based on the excess of a reporting unit’s carrying value over its fair value. This amendment is effective for annual or interim goodwill impairment tests in fiscal years beginning after December 15, 2019. Early adoption is permitted. The Company adopted ASU No. 2017-04 on January 01, 2020 and the adoption did not have an impact on the Company’s financial position and results of operations.

Recent Accounting Pronouncements Not Adopted

In June 2016, the FASB issued ASU 2016-13, “Financial Instruments—Credit Losses”. The standard, including subsequently issued amendments (ASU 2018-19, ASU 2019-04, ASU 2019-05, ASU 2019-10 and ASU 2019-11), requires a financial asset measured at amortized cost basis, such as accounts receivable and certain other financial assets, to be presented at the net amount expected to be collected based on relevant information about past events, including historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amount. In November 2019, the FASB issued ASU No. 2019-10 to postpone the effective date of ASU No. 2016-13 for public business entities eligible to be smaller reporting companies defined by the SEC to fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. The Company is evaluating the impact of this guidance on its consolidated financial statements.

In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes which is intended to simplify various aspects related to accounting for income taxes. The standard is effective for fiscal years, and interim periods within those years, beginning after December 15, 2020, with early adoption permitted. The standard will be adopted upon the effective date for us beginning January 1, 2021. The Company is currently evaluating the effects of the standard on our consolidated financial statements and related disclosures.

In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. The standard provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions in which the reference LIBOR or another reference rate are expected to be discontinued as a result of the Reference Rate Reform. The standard is effective for all entities. The standard may be adopted as of any date from the beginning of an interim period that includes or is subsequent to March 12, 2020 through December 31, 2022. The Company is currently evaluating the effects of the standard on our consolidated financial statements and related disclosures.

The management does not believe that other than disclosed above, accounting pronouncements the recently issued but not yet adopted will have a material impact on its financial position, results of operations or cash flows.

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”).

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.

10

NOTE 4 - TAXES

(a) Federal Income Tax and Enterprise Income Taxes

The table below summarizes the difference between the U.S. statutory federal tax rate and the Company’s effective tax rate for the three months ended March 31, 2021 and 2020:

	Three Months Ended March 31,
	2021			2020
U.S. federal income tax rate		21.0	%		21.0	%
Tax rate difference		4.2	%		9.6	%
Loss not subject income tax		1.2	%		-	%
PRC tax exemption and reduction		(26.4	)%		(30.6	)%
GILTI		-	%		-	%
Others		-	%		-	%
Effective tax rate		-	%		-	%

In Accordance with the U.S. Tax Cuts and Jobs Act (the “Tax Act”), the Company recognized a one-time transition tax of $1,431,835 during 2018 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 March 31, 2021, and December 31, 2020, the Company had current income tax payable of $1,088,249 and $115,327, and noncurrent income tax payable of $nil and $973,647, respectively.

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 income. 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 three months ended March 31, 2021 and 2020, the GILTI tax expense was nil, and the Company had no GILTI tax payable outstanding as of March 31, 2021, and December 31, 2020.

The Company’s subsidiary, JSJ, and VIE and its subsidiary, HDS and HYF, 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.

11

NOTE 5 - SHORT-TERM BORROWINGS

Loans from China Everbright Bank

On December 22, 2016, HDS entered into a credit agreement with China Everbright Bank (“CEB”) which agreed to provide a line of credit of $2,800,000 (approximately RMB20 million) to the Company for the period of three years. On February 25, 2020, the Company entered into another credit agreement with CEB, pursuant to which CEB provides another line of credit of RMB20 million (approximately $2,820,000) to the Company for the period of three years. These loans carry interest rates ranging from 4.30% to 5.65% per annum and the interests are payable when the loans are due. 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 personal guarantees to the loans. HDS paid two $1,400,000 back in March and April 2020, totaling $2,800,000 under the initial line of credit, resulted the initial line of credit was paid off in its entirety. As of March 31, 2021 and December 31, 2020, the Company held approximately $3.0 million and $2.8 million loans from CEB, respectively.

Loans from Bank of Yingkou

On July 26, 2019, HDS entered into a loan agreement with Bank of Yingkou Harbin Branch (“Yingkou Bank”), through which HDS obtained a bank loan in the amount of RMB15 million (approximately $2,153,000), payable on July 25, 2020. The loan carried an interest rate of 6.525% 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. In addition, HEFS, HBP, Yew Pharmaceutical, and ZTC provided guarantees to the loan. HDS renewed the RMB15 million (approximately $2,200,000) bank loan with Yingkou Bank on July 24, 2020 with the expiration date on July 23, 2021. As of March 31, 2021 and December 31, 2020, approximately $2.3 million (RMB 15 million) were outstanding under the loan agreement.

On August 20, 2019, HDS entered into another loan agreement with Yingkou Bank, pursuant to which HDS obtained a bank loan in the amount of RMB5 million (approximately $718,000), payable on August 19, 2020. The loan carries an interest rate of 6.525% per annum and is payable monthly. 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. In addition, HEFS, HBP, Yew Pharmaceutical, and ZTC provided guarantees to the loan. HDS renewed the RMB5 million (approximately $735,000) for another year with maturity date on July 23, 2021. As of March 31, 2021 and December 31, 2020, approximately $800,000 (RMB5 million) and $800,000 (RMB5 million) were outstanding under the loan agreement, respectively.

Loan from Postal Saving Bank of China

On May 13, 2019, HDS entered into a credit agreement with Postal Saving Bank of China who agreed to provide a line of credit of RMB20 million (approximately $2,830,000) to the Company for the period of ten years. These loans have interest rate of 5.22% per annum payable monthly. Zhiguo Wang and his wife Madame Qi, pledged buildings and land use rights they owned with Postal Saving Bank of China to secure the loans. In addition, Zhiguo Wang and his wife Madame Qi, Yicheng Wang and Lei Zhang provided personal guarantees to the loans. As of March 31, 2021 and December 31, 2020, approximately $3.0 million (RMB20 million) was outstanding under the line of credit.

SBA loans

On May 1, 2020, the Company got a Promissory Note (the “Note”) of $70,920 from Paycheck Protection Program (the “PPP Loan”) through Bank of America (the “Lender”) under the CARES Act excused by government due to the COVID-19 crisis. The interest rate on this Note is a fixed rate of 1.00% per annum. The loan will be due in one payment of all outstanding principal plus all accrued unpaid interest in two years after the date of this Note (“Maturity Date”). According to the program terms, the PPP loan will be fully forgiven if the funds are used for payroll costs, interest on mortgages, rent, and utilities. Loan payments will also be deferred for six months. No collateral or personal guarantees are required. On July 2020, the Company received advances of the SBA Economic Injury Disaster Loans (“EIDL”) totaling $9,000 under the CARES Act. $61,920 in principal was forgiven on December 15, 2020 by Small Business Administration which was recognized as other income for the three months ended March 31, 2021. As of March 31, 2021 and December 31, 2020, $18, 000 and $79,920 SBA loans outstanding, respectively.

Other loan

On January 30, 2020, Yicheng Wang entered into a loan agreement with the Company, pursuant to which the Company lent RMB600,000 to Yicheng Wang for the period from January 30, 2020 to January 29, 2021 at the interest rate of 5.00%. On February 24 and 25, 2020, Yicheng Wang paid the entire loan amount off.

During the three months ended March 31, 2021 and 2020, interest expense was $127,827 and $111,977, respectively.

12

NOTE 6 - STOCKHOLDERS’ EQUITY

Stock option activities for the three months ended March 31, 2021 was summarized in the following table.

	Number of Stock Options		Weighted Average Exercise Price		Weighted Average Remaining Contractual Life in Years
Balance at beginning of period		7,738,737		0.22		1.00
Issued		-		-
Exercised		-		-
Forfeited		-		-
Balance at end of period		7,738,737		0.22		0.75
Option exercisable at end of period		7,738,737		0.22		0.75

The Company’s outstanding stock options and exercisable stock options had intrinsic value in the amount of $nil, based upon the Company’s closing stock price of $0.12 as of March 31, 2021. Stock option expense recognized during the three months ended March 31, 2021 and 2020 was $nil.

Note 7 - Leases

The Company leases office space from third parties and related parties.

Leases is classified as operating at inception of the lease. Operating leases result in the recognition of ROU assets and lease liabilities on the balance sheet. ROU assets represent the Company’s right to use the leased asset for the lease term and lease liabilities represent the obligation to make lease payments. The liability is calculated as the present value of the remaining minimum rental payments for existing operating leases using either the rate implicit in the lease or, if none exists, the Company’s incremental borrowing rate. The Company uses incremental borrowing rate at 6.44% annum. Lease expense for these leases is recognized on a straight-line basis over the lease term.

The components of lease expense consist of the following:

	Classification	Three Months Ended March 31, 2021		Three Months Ended March 31, 2020
Operating lease cost	Selling, general and administrative expense	$	20,044	$	19,319
Net lease cost		$	20,044	$	19,319

13

Balance sheet information related to leases consists of the following:

	Classification	March 31, 2021			December 31, 2020
Assets
Operating lease ROU assets	Right-of-use assets	$	317,881		$	333,402
Total leased assets		$	317,881		$	333,402
Liabilities
Current
Operating	Current maturities of operating lease liabilities	$	42,945		$	65,476
Non-current
Operating	Operating lease liabilities		282,312			292,409
Total lease liabilities		$	325,257		$	357,885
Weighted average remaining lease term
Operating leases			10.7 years			10.9 years
Weighted average discount rate
Operating leases			6.44	%		6.44	%

14

Cash flow information related to leases consists of the following:

	Three Months Ended March 31, 2021		Three Months Ended March 31, 2020
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	38,812	$	34,725

The minimum future lease payments as of March 31, 2021 are as follows:

Years Ending December 31,	Operating Leases
The remaining of 2021	$	44,741
2022		82,244
2023		35,511
2024		31,250
2025		28,034
After 2025		227,993
Total lease payments		449,772
Less: Interest		(122,515	)
Present value of lease liabilities	$	325,257

15

NOTE 8 - CONCENTRATIONS OF CREDIT RISK AND MAJOR CUSTOMERS

Customers

For the three months ended March 31, 2021 and 2020, major customers whose sales and accounts receivable accounted for 10% or more of the Company’s total revenue and accounts receivable, respectively, were as follows:

	For the Three Months Ended March 31,
Customers	2021			2020
A (Yew Pharmaceutical, a related party)		41	%		99	%
D (LIFEFORFUN LIMITED, a related party)		59	%		-	%

	Accounts receivable as of
Customers	March 31, 2021			December 31, 2020
A (Yew Pharmaceutical, a related party)		37	%		*	%
B (HongKong YIDA Commerce Co., Limited, a related party)		-	%		91	%
D (LIFEFORFUN LIMITED, a related party)		62	%		-	%

* Less than 10%

Suppliers

For the three months ended March 31, 2021 and 2020, major suppliers accounting for 10% or more of the Company’s total purchase and major suppliers whose accounts payable accounted for 10% or more of the Company’s total accounts payable were as follows:

	For the Three Months Ended March 31,
Suppliers	2021			2020
A (Yew Pharmaceutical, a related party)		71	%		*	%

	Accounts payable as of
Suppliers	March 31, 2021			December 31, 2020
E (Haixiang Liu)		30	%		*	%
F (Changhai Yu)		32	%		91	%
G (Xingcai Shi)		25	%		*	%

* Less than 10%

At March 31, 2021 and December 31, 2020, the Company’s cash balances by geographic area were as follows:

	March 31, 2021		December 31, 2020
Country
United States	$	12,711	$	3,071
China		114,619		560,721
Total Cash	$	127,330	$	563,792

In China, a depositor has up to RMB500,000 insured by the People’s Bank of China Financial Stability Bureau (“FSD”). In the United States, the standard insurance amount is $250,000 per depositor in a bank insured by the Federal Deposit Insurance Corporation (“FDIC”). As of March 31, 2021 and December 31, 2020, approximately $127,330 and $242,000 of the Company’s cash held by financial institutions were insured, and the remaining balance of approximately $nil and $322,000 were not insured, respectively.

16

NOTE 9 - RELATED PARTY TRANSACTIONS

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

Company	Ownership
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
Wonder Genesis Global Ltd.	Jinguo Wang is the Company’s director.
DMSU Digital Technology Limited(“DMSU”)	Significantly influenced by the Company
HongKong YIDA Commerce Co., Limited(“YIDA”)	Significantly influenced by the Company
LIFEFORFUN LIMITED	Significantly influenced by the Company
Jinguo Wang	Management of HDS and Legal person of Xinlin
Zhiguo Wang	Principal shareholder and CEO of the Company
Guifang Qi	Principal shareholder and the wife of CEO
Cai Wang	Employee of the Company
Weihong Zhang	Employee of the Company
Xue Wang	Employee of the Company
Chunping Wang	Employee of the Company
Jimin Lu	Employee of the Company

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 $146,000) 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. The Company has not renewed the Development Agreement with Yew Pharmaceutical yet. We currently enter into individual agreement for each single transaction.

For the three months ended March 31, 2021 and 2020, total revenues from Yew Pharmaceutical under the above agreement amounted to $3,574,369 and $2,007,393, respectively. At March 31, 2021 and December 31, 2020, the Company had $5,596,013 and $2,982,114 accounts receivable from Yew Pharmaceutical, respectively.

For the three months ended March 31, 2021 and 2020, the total purchase of yew candles and mixed essential oil from Yew Pharmaceutical amounted to approximately $5,667,979 and $nil, respectively.

17

Transactions with HBP

For the three months ended March 31, 2021 and 2020, HBP paid off operation expense on behalf of HYF in the amount of $nil and $430, respectively. As of March 31, 2021 and December 31, 2020, HYF had due to HBP in the amount of $95,840 and $96,282, respectively, which was included in due to related parties in the accompanying consolidated balance sheets.

Transactions with Chunping Wang

During the three months ended March 31, 2021 and 2020, HDS purchased yew forest assets from Chunping Wang in the amount of $188,315 and $nil, respectively.

Transactions with Weihong Zhang

During the three months ended March 31, 2021 and 2020, HDS purchased yew forest assets from Weihong Zhang in the amount of $43,220 and $nil, respectively. On March 31, 2021 and December 31, 2020, payable to Weihong Zhang for purchase of yew forest assets amounted to $42,665 and $nil, respectively, included in payable for acquisition of yew forests in the accompanying consolidated balance sheets.

Transactions with Xue Wang

During the three months ended March 31, 2021 and 2020, HDS purchased yew forest assets from Xue Wang in the amount of $202,207 and $nil respectively.

18

Operating Leases

On March 25, 2005, the Company entered into an Agreement for the Lease of Seedling Land with ZTC (the “ZTC Lease and leased 361 mu of land for a period of 30 years, expiring on March 24, 2035. Annual payments under the ZTC Lease are RMB 162,450 (approximately $24,000).

On January 1, 2010, the Company entered into a lease for office space with Mr. Wang (the “Office Lease”) with the annual payments of RMB15,000 (approximately $2,000). The term of the Office Lease is 15 years and expires on December 31, 2025.

On July 1, 2012, the Company entered into a lease for office space with Zhiguo Wang (the “JSJ Lease”) with the annual rent is RMB10,000 (approximately $1,500) annually. The renewed term of the JSJ Lease expires on June 30, 2021.

On January 1, 2015, HYF entered into a lease agreement with HBP to lease a warehouse and a workshop 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 with a term of 23 years and expires on March 19, 2025. The annum lease amount is RMB25,000 which is due before December 2025 for the lease period from March 2017 to March 2025.

For the three months ended March 31, 2021 and 2020, the total rent expense related to the lease agreements listed above $8,199 and $7,596, respectively. As of March 31, 2021 and December 31, 2020, the total unpaid rent were $8,104 and $nil, respectively, which was included in (due to related parties) prepaid expenses-related parties in the accompanying consolidated balance sheets.

Due to Related Parties

The following summarized the Company’s due to related parties as of March 31, 2021 and December 31, 2020:

	March 31, 2021		December 31, 2020
Zhiguo Wang and Guifang Qi		533,832		555,078
HBP		95,840		96,282
Others		7,141		-
Total	$	636,813	$	651,360	*

NOTE 10 – SEGMENT INFORMATION

The Company managed and reviewed its business as two operating segments: PRC segment and USA segment. PRC and USA segments retain all of the reported consolidated amounts. The geographical distributions of the Company’s financial information for the three months ended March 31, 2021 and 2020 were as follows:

	For the Three Months Ended   March 31,
Geographic Areas	2021			2020
Revenue
PRC		8,736,769			2,007,393
USA		545			76,809
Elimination Adjustment		-			(55,020	)
Total Revenue	$	8,737,314		$	2,029,182
Net income (loss)
PRC	$	3,038,564		$	361,683
USA		(126,598	)		(210,271	)
Total net income (loss)	$	2,911,966		$	151,412

The geographical distribution of the Company’s financial information as of March 31, 2021 and December 31, 2020 were as follows:

	As of March 31,			As of December 31,
Geographic Areas	2021			2020
Reportable assets
PRC	$	65,003,945		$	62,362,889
USA		1,245,153			1,278,250
Elimination adjustment		(4,331,637	)		(4,194,477	)
Total reportable assets	$	61,929,461		$	58,446,662

NOTE 11 - COMMITMENTS AND CONTINGENCIES

Operating Lease

See future minimum lease payments in Note 7.

NOTE 12 - SUBSEQUENT EVENTS

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

19

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 three months ended March 31, 2021 and 2020, and consolidated financial conditions as of March 31, 2021 and December 31, 2020 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, 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. In the third quarter of 2016, we started to sell handmade yew essence oil soaps and candles.

We operated in two reportable business segments. The business of HDS, JSJ, HYF and YBT in PRC was managed and reviewed as PRC segment. The business of YBP, Yew Bio-Pharm (HK), and MC was managed and reviewed as USA segment.

For the three months ended March 31, 2021 and 2020, revenues from the PRC segment accounted for approximately 99.99% and 98.93%, respectively, of consolidated revenue; revenues from USA segment accounted for approximately 0.01% and 1.07% of consolidated revenue.

YBP’s revenues were mostly generated by HDS and in the PRC. The expenses 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 March 31, 2021, YBP had $10,178 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 $10,373, including approximately $9,932 in cash on March 31, 2021. JSJ also holds the VIE interests in HDS through the contractual arrangements (the “Contractual Arrangements”) described in Notes to Unaudited 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 drink. As of March 31, 2021, HYF had started pilot production with a limited amount of sales. On December 24, 2020, HDS acquired 80% ownership of a new subsidiary, Yew (Guangzhou) Bio-Technology Co., Ltd (“YBT”), to marketing and sell cosmetics. As of March 31, 2021, YBT had not started sales. In the event that we are unable to enforce the Contractual Agreements, we may not be able to exert effective control over HDS, HYF and YBT, 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 June 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 three months ended March 31, 2021.

In December 2019, COVID-19 was reported in China. Since then, COVID-19 has spread globally, to include the United States and several European countries. Many countries around the world have imposed quarantines and restrictions on travel and mass gatherings to slow the spread of the virus and have closed non-essential businesses. The pandemics could result in increased travel restrictions, market downturns and changes in the behavior of the terminal customers of our products related to pandemic fears. In addition, our certain customers could decrease the demand on our products due to the outbreak of the COVID-19. To date, our business is impact by the outbreak of the coronavirus (COVID-19) in China. The extent to which the coronavirus impacts our results will depend on future developments and reactions in China, which are highly uncertain and will include emerging information concerning the severity of the coronavirus and the actions taken by governments to attempt to contain the coronavirus. Any decreased collectability of accounts receivable, or reduction of purchase orders could further negatively impact our results of operations.

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 land use rights and yew forest assets, recovery of long-lived assets, 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.

20

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 the risk of loss from HDS activities and is entitled to receive 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.

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.

Inventories

Inventories consisted of raw materials, work-in-progress, finished goods-handicrafts, yew seedlings, yew candles and other trees (consisting 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.

21

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.

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	10 - 20 years
Machinery and equipment	3 - 10 years
Office equipment	2 - 5 years
Motor vehicles	4 - 10 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 15 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.

22

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.

The Company accounts for share-based compensation awards to nonemployees in accordance with FASB ASC 718 and FASB ASC 505-50. Under FASB ASC 718 and FASB ASC 505-50, stock compensation granted to non-employees has been determined as the fair value of the consideration received or the fair value of equity instrument issued, whichever is more reliably measured and is recognized as an expense as the goods or services are received.

Leases

The Company adopted Topic 842 on its effective date of January 1, 2019 using a modified retrospective transition approach. Topic 842 established a right-of-use (“ROU”) model that requires a lessee to record a ROU asset and lease liability on the balance sheet for all leases with terms longer than 12 months. Leases are classified as either finance or operating, with classification affecting the pattern of expense recognition in the statement of operations. This guidance also expanded the requirements for lessees to record leases embedded in other arrangements and the required quantitative and qualitative disclosures surrounding leases.

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.

23

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 March 31,
	2021			2020
Revenues - third parties	$	545		$	21,789
Revenues - related parties		8,736,769			2,007,393
Total revenues		8,737,314			2,029,182
Cost of revenues - third parties		13,000			41,366
Cost of revenues - related parties		7,767,341			1,545,561
Total cost of revenues		7,780,341			1,586,927
Gross profit		956,973			442,255
Operating expenses		(2,009,734	)		284,867
Income from operations		2,966,707			157,388
Other expenses, net		(54,741	)		(5,976	)
Income Tax		-			-
Net income		2,911,966			151,412
Other comprehensive income:
Foreign currency translation adjustment		(252,112	)		(816,044	)
Comprehensive income	$	2,659,854		$	(664,632	)

24

Three Months Ended March 31, 2021 Compared to Three Months Ended March 31, 2020

Revenues

For the three months ended March 31, 2021, we had total revenues of $8,737,314, as compared to $2,029,182 for the three months ended March 31, 2020, an increase of $6,708,132 or 330.58%. The increase in total revenue was attributable to the increase in revenues in the TCM raw materials and Extracts.

	Three Months Ended March 31,							Percentage
Total revenue is summarized as follows:	2021		2020		Increase			Change
TCM raw materials	$	3,575,519	$	2,007,393	$	1,568,126			78.12	%
Handicrafts		-		-		-			-	%
Extracts		5,161,250		-		5,161,250			100.00	%
Others		545		21,789		(21,244	)		(97.50	)%
Total	$	8,737,314	$	2,029,182	$	6,708,132			330.58	%

For the three months ended March 31, 2021 compared to March 31, 2020, the increase in revenue of TCM raw material was mainly attributable to the increase in demand from our related party, Yew Pharmaceutical. The increase in Extracts was mainly attributable to the increase in demand for pine needle extract, complex taxus cuspidate extract, and composite northeast yew extract.

Cost of Revenues

For the three months ended March 31, 2021, cost of revenues amounted to $7,780,341 as compared to $1,586,927 for the three months ended March 31, 2020, an increase of $6,193,414 or 390.28%. For the three months ended March 31, 2021, cost of revenues accounted for 89.05% of total revenues compared to 78.21% of total revenues for the three months ended March 31, 2020.

Cost of revenues by product categories is as follows:

	Three Months Ended March 31,							Percentage
	2021		2020			Increase		Change
TCM raw materials	$	2,750,122	$	1,695,884		$	1,054,238		68.06	%
Handicrafts		-		-			-		-	%
Extracts		5,017,219		-			5,017,219		100.00	%
Others		13,000		(108,957	)		121,957		111.93	%
Total	$	7,780,341	$	1,586,927		$	6,193,414		390.28	%

The increase in our cost of revenues for the three months ended March 31, 2021 as compared to the three months ended March 31, 2020 was in line with the increase in revenue.

Gross Profit

For the three months ended March 31, 2021, gross profit was $956,973 as compared to $442,255 for the three months ended March 31, 2020, representing gross profit margins of 10.95% and 21.79%, respectively. Gross profit margins by categories are as follows:

	Three Months Ended March 31,
	2021			2020			Increase
TCM raw materials		23.08	%		15.52	%		7.56	%
Handicrafts		-	%		-	%		-	%
Extracts		2.79	%		-			2.79	%
Others		(14,95	)%		600.06	%		(622.92	)%
Total		10.95	%		21.79	%		(10.84	)%

The decrease in our overall gross profit margin for the three months ended March 31, 2021 as compared to the three months ended March 31, 2020 were primarily attributable to the Extracts sales during the three months ended March 31, 2021, which had low gross margin yielded during the three months ended March 31, 2021.

25

Operating Expenses

For the three months ended March 31, 2021, operating expenses amounted to $(2,009,734), as compared to $284,867 for the three months ended March 31, 2020, a decrease of $2,294,601 or 805.50%. The decrease was mainly due to the bad debt recovery of $2,283,507 during three months ended March 31, 2021.

Income from Operations

For the three months ended March 31, 2021, income from operations was $2,966,707, as compared to income from operations of $157,388 for the three months ended March 31, 2020, an increase of $2,809,319, or 1,784.96%. The increase was primarily attributable to the increase in gross profit and bad debt recovery.

Other Expenses

For the three months ended March 31, 2021, total other expenses was $54,741 as compared to total other expenses of $5,976 for the three months ended March 31, 2020. The increase was primarily attributable to the decrease in currency exchange gain.

Net Income

As a result of the factors described above, our net income was $2,911,966 or $0.06 per share (basic and diluted), for the three months ended March 31, 2021, as compared to net income of $151,412 or $0.00 per share (basic and diluted), for the three months ended March 31, 2020.

Foreign Currency Translation Adjustment

For the three months ended March 31, 2021, we reported an unrealized loss on foreign currency translation of $252,112, as compared to a loss of $816,044 for the three months ended March 31, 2020. The change reflects the effect of the value of the U.S. dollar in relation to the RMB. As described elsewhere herein, the functional currency of our subsidiary, JSJ, and our VIE, HDS, is the RMB. The accompanying unaudited 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 March 31, 2021, comprehensive income of $2,659,854 was derived from the sum of our net income of $2,911,966 with foreign currency translation loss of $252,112. For the three months ended March 31, 2020, comprehensive loss of $664,632 was derived from the sum of our net income of $151,412 with foreign currency translation loss of $816,044.

Segment Information

For the three months ended March 31, 2021 as compared to the three months ended March 31, 2020, we operated in two reportable business segments. The business of HDS, JSJ, HYF and YBT in PRC was managed and reviewed as PRC segment. The business of YBP, Yew Bio-Pharm (HK), and MC was managed and reviewed as USA segment.

26

Information with respect to these reportable business segments for the three months ended March 31, 2021 and 2020 was as follows:

	For the three months March 31, 2021						For the three months March 31, 2020
	Revenues- third parties		Revenues – related party		Total		Revenues- third parties		Revenues – related party		Total
Revenues:
PRC	$		$	8,736,769	$	8,736,769	$		$	2,007,393	$	2,007,393
USA		545		-		545		21,789		-		21,789
Total revenues	$	545	$	8,736,769	$	8,737,314	$	21,789	$	2,007,393	$	2,029,182

During the three months ended March 31, 2021 and 2020, the revenue from PRC segment was $8,736,769 and $2,007,393, respectively, increase of $6,729,376 or 335.23% due to the increase demand on Asia market from our related parties.

During the three months ended March 31, 2021 and 2020, the revenue from USA segment was $545 and $21,789, respectively, decrease of $21,244 or 97.50%. The decrease in USA segment was due to the decrease in revenue resulted from pandemic impact.

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. On March 31, 2021 and December 31, 2020, we had cash balances of $127,330 and $563,792, 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. Our working capital increased by $3,956,140 to $3,420,414 on March 31, 2021, from working capital of $(535,726) on December 31, 2020.

For the three months ended March 31, 2021, net cash flow used in operating activities was $776,330, as compared to net cash flow provided by operating activities of $1,422,047 for the three months ended March 31, 2020, a decrease of $2,198,377. 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 three months ended March 31, 2021, net cash flow used in operating activities of $776,330 was primarily attributable to:

● net income of approximately $2,912,000 adjusted for the add-back of non-cash items, such as bad debt recovery of approximately $2,282,000, amortization of land use rights and yew forest assets of approximately $669,000, and sale of yew forest assets as inventory of approximately 1,987,000; and

● changes in operating assets and liabilities, such as an increase in accounts receivable-related parties of approximately $3,766,000, and an increase in VAT input credit of approximately 298,000.

27

For the three months ended March 31, 2020, net cash flow provided by operating activities of $1,422,047 was primarily attributable to:

● net income of approximately $151,000 adjusted for the add-back of non-cash items, such as inventory write-down of approximately $70,000, amortization of land use rights and yew forest assets of approximately $614,000, and sale of yew forest assets as inventory of approximately 950,000; and

● changes in operating assets and liabilities, such as an increase in accounts receivable-related parties of approximately $535,000, a decrease in accounts receivable of approximately 128,000, and an increase prepaid expenses and other current assets of $113,000.

Net cash flow provided by investing activities was $137,076 for the three months ended March 31, 2021. During the three months ended March 31, 2021, our prepayment in purchase of yew forest assets to third parties decreased by approximately $1,848,000. We also have made payment in approximately $1,577,000 for purchase of land use right and yew forest assets. Net cash flow used in investing activities was $1,420,553 for the three months ended March 31, 2020. During the three months ended March 31, 2020, we have made prepayment in purchase of yew forest assets of approximately $591,000 to third parties and approximately $400,000 to related parties. We also have made payment in approximately $429,000 for purchase of land use right and yew forest assets.

Net cash flow provided by financing activities was approximately $264,000 for the three months ended March 31, 2021 due to proceeds of approximately $1,544,000 from short-term borrowings and partially offset by repayment of short-term borrowings of approximately $1,256,000. Net cash flow used in financing activities was approximately $284,000 for the three months ended March 31, 2020 due to repayment of short-term borrowings of approximately $1,486,000, and partially offset by proceeds of approximately $1,201,000 from short-term borrowings.

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.

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 March 31, 2021 and December 31, 2020, approximately $53.0 million and $50.3 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.

28

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 $252,112 and of a loss of $816,044 for the three months ended March 31, 2021 and March 31, 2020, 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 March 31, 2021 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

29

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.

30

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/ ZHIGUO WANG
	Zhiguo Wang
	Chief Financial Officer

Date: May 17, 2021

31

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.

32