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Yew Bio-Pharm Group Reports 2016 Fourth Quarter and Full Year Financial Results

EL MONTE, Calif., March 31, 2017 /PRNewswire/ — Yew Bio-Pharm Group, Inc. (“Yew Bio” or the “Company”) (YEWB), a major grower and seller of yew trees, yew raw materials used in the manufacture of traditional Chinese medicine, handicraft products made from yew timber and yew candle and soap made with yew essence oil in China, today reported financial results for the three- and twelve-months ended December 31, 2016.

2016 Fourth Quarter Results

Three Months Ended December 31,

Twelve Months Ended December 31,

2016

2015

2016

2015

Revenues:

TCM Raw Materials

$4,703,017

$8,757,989

$28,766,815

$16,470,213

Yew Trees

(387)

(5,534)

22,859

1,134,412

Handicrafts

643

46,394

98,203

156,525

Wood Ear Mushroom

1,208,546

2,648,180

Others

7,297,231

7,259,835

22,460,205

9,164,478

Total Revenues

$12,000,504

$17,267,230

$51,348,082

$29,573,808

Total revenue for the fourth quarter of 2016 decreased 30.5% to $12.0 million from $17.3 million a year ago. Sales of TCM raw materials amounted to 39.2% of total revenues, sales of others segment consisting with yew candle, yew essence oil soap and pine needle extracts amounted to 60.8% of total revenues. We did not make sales of yew trees in the fourth quarter of 2016 which was mainly attributable to the Company’s strategy adjustment to reserve more yew trees for future TCM raw materials sales. The Company temporarily stopped selling wood ear mushroom to our related party, Yew Pharmaceutical, from the first quarter of 2016 and therefore the sales decreased significantly for the fourth quarter of 2016 compared to the fourth quarter of 2015. We did not have sales for the handicraft segment for the fourth quarter of 2016 due to the market demand decreasing.

For the 2016 fourth quarter, gross profit was a loss of $1.2 million, compared with a profit of $1.8 million, or 10.2% of total revenues for the comparable 2015 quarter. The loss for the fourth quarter of 2016 was primarily impacted by a one-time impairment of yew log value from our current inventory. According to the market research, the demands of handicraft and high end furniture are not as desired that we expected in the past years. The Company decided to temporarily stop the business division for handicraft manufactures and therefore write down the yew log inventory for the handicraft segment.

Operating expenses decreased 65.4% to $156,546 for the 2016 fourth quarter, from $452,164 in the year-ago quarter. The decreasing was primarily attributable to the decreases in compensation and related benefits and professional fees.

Net income in the fourth quarter of 2016 was a loss of $1.4 million, or a loss of $0.03 per diluted share, compared with a net income of $1.4 million in the year-ago quarter, or $0.03 per diluted share.

2016 Results

Total revenues for the 2016 fiscal year were $51.3 million, a 73.6% increase from $29.6 million a year earlier. Sales of TCM raw materials amounted to 56.0% of total revenues, sales of yew trees amounted to 0% of total revenues, sales of handicrafts amounted to 0.2 % of total revenues and sales of others consisting with yew candle, yew essence oil soap and pine needle extracts made up the remaining 43.8%. We did not have sales for the mood ear mushroom segment for the year of 2016.

Gross profit was $3.2 million, or 6.3% of total revenues, for the full year, compared with $7.0 million, or 23.8% of total revenues in 2015.

Operating expenses decreased 41.2% to $1.1 million for the year ended December 31, 2016, from 1.9 million a year earlier. The decreasing was primarily attributable to the decreases in compensation and related benefits and professional fees.

Net income for 2016 decreased to $2.0 million, or 0.04 per diluted share, from $5.3 million, or $0.10 per diluted share for 2015.

“We have made a great progress in the sales of TCM and Others segments during the year of 2016, and these two segments have been taken growing proportions of the Company’s total revenues,” said Mr. Zhiguo Wang, Chairman and Chief Executive Officer of Yew Bio-Pharm Group, Inc. “We started to explore various types of products since from the fourth quarter of 2015, and we already launched yew candle, Auri Essence dietary supplement, Yew Essence oil soap and pine needle extracts. Since then, the new products arrival contributed great revenues for the Company in the past one year.”

“We are exploring the transformation of the Company’s business model from a forestry company to a high value-added manufacturer mainly utilizes the yew tree raw materials as basis. In the year of 2017, we expect to develop another five new products which would be launched into the U.S. market during the second half year of 2017. Meanwhile, our new e-commerce website will be ready and formally released in the early of April. Looking ahead in 2017, we will continue to enrich our products mix and develop more value-added products for the Company, and we expect the Company to achieve sustained growth with the new business.”

ABOUT YEW BIO-PHARM GROUP, INC

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

SAFE HARBOR

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

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

(financial tables follow)

YEW BIO-PHARM GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

December 31,

2016

2015

ASSETS

CURRENT ASSETS:

Cash

$

278,991

$

681,608

Restricted cash

303,511

Accounts receivable

14,467,852

3,857,968

Accounts receivable – related party

6,941,931

6,489,495

Inventories, net

10,296,792

4,665,549

Prepaid expenses – related party

76,035

106,370

Prepaid expenses and other assets

75,743

64,174

VAT recoverables

1,655,954

699,258

Total Current Assets

33,793,298

16,867,933

LONG-TERM ASSETS:

Long-term inventories, net

7,151,613

12,334,261

Property and equipment, net

692,116

702,764

Land use rights and yew forest assets, net

4,558,234

13,906,379

Total Long-term Assets

12,401,963

26,943,404

Total Assets

$

46,195,261

$

43,811,337

LIABILITIES AND SHAREHOLDERS’ EQUITY

CURRENT LIABILITIES:

Accounts payable

$

2,700,148

$

11,345

Accounts payable – related party

638,318

41,319

Accrued expenses and other payables

379,294

124,686

Notes payable

1,156,444

607,022

Taxes payable

16,520

14,261

Due to related parties

883,596

761,236

Short-term borrowings

1,723,865

3,081,332

Total Current Liabilities

7,498,185

4,641,201

NONCURRENT LIABILITIES:

Deferred income

120,973

Total Noncurrent Liabilities

120,973

Total Liabilities

7,619,158

4,641,201

SHAREHOLDERS’ EQUITY:

Common Stock ($0.001 par value; 140,000,000 shares authorized; 51,875,000 shares issued and outstanding at December 31, 2016 and 2015)

51,875

51,875

Additional paid-in capital

9,654,024

9,622,558

Retained earnings

27,074,624

25,067,733

Statutory reserves

3,762,288

3,762,288

Accumulated other comprehensive income (loss)

(1,966,708)

665,682

Total Shareholders’ Equity

38,576,103

39,170,136

Total Liabilities and Shareholders’ Equity

$

46,195,261

$

43,811,337

YEW BIO-PHARM GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

For the Years Ended December 31,

2016

2015

REVENUES:

Revenues

$

22,581,267

$

12,794,005

Revenues – related party

28,766,815

16,779,803

Total Revenues

51,348,082

29,573,808

COST OF REVENUES:

Cost of revenues

24,688,860

11,104,169

Cost of revenues – related party

23,424,644

11,436,423

Total Cost of Revenues

48,113,504

22,540,592

GROSS PROFIT

3,234,578

7,033,216

OPERATING EXPENSES:

Selling

34,828

28,624

General and administrative

1,078,392

1,864,654

Total Operating Expenses

1,113,220

1,893,278

INCOME FROM OPERATIONS

2,121,358

5,139,938

OTHER INCOME (EXPENSES):

Interest expense

(140,844)

(121,170)

Government grants

282,252

Other income

44,386

56

Total Other Income (Expenses)

(96,458)

161,138

INCOME BEFORE PROVISION FOR INCOME TAXES

2,024,900

5,301,076

PROVISION FOR INCOME TAXES

(18,009)

(16,488)

NET INCOME

$

2,006,891

$

5,284,588

COMPREHENSIVE INCOME:

NET INCOME

$

2,006,891

$

5,284,588

OTHER COMPREHENSIVE INCOME (LOSS):

Foreign currency translation adjustment

(2,632,390)

(2,080,703)

COMPREHENSIVE INCOME (LOSS)

$

(625,499)

$

3,203,885

NET INCOME PER COMMON SHARE:

Basic

$

0.04

$

0.10

Diluted

$

0.04

$

0.10

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:

Basic

51,875,000

52,069,863

Diluted

51,875,000

52,113,807

YEW BIO-PHARM GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Years Ended December 31,

2016

2015

CASH FLOWS FROM OPERATING ACTIVITIES:

Net income

$

2,006,891

$

5,284,588

Adjustments to reconcile net income to net cash provided by (used in) operating activities:

Depreciation

112,282

143,486

Amortization of land use rights and yew forest assets

8,819,008

7,599,023

Stock-based compensation

31,466

967,744

Inventory write-down

2,499,563

Issuance of common stock for professional service

65,856

Changes in operating assets and liabilities:

Accounts receivable

(11,345,374)

(3,112,659)

Accounts receivable – related party

(915,034)

(6,438,017)

Prepaid and other current assets

(14,438)

(49,815)

Prepaid expenses – related party

24,443

(105,316)

Inventories, net

(4,080,175)

(5,737,554)

VAT recoverables

(1,047,212)

(729,984)

Accounts payable

2,807,954

11,844

Accounts payable – related party

626,557

43,135

Accrued expenses and other payables

362,600

46,807

Due to related parties

9,635

478

Notes payable

615,408

633,695

Deferred income

126,392

Taxes payable

3,065

4,320

NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES

643,031

(1,372,369)

CASH FLOWS FROM INVESTING ACTIVITIES:

Proceeds from disposal of property and equipment

3,594

Change in restricted cash

296,419

(316,848)

Loan made to related party

(35,384)

Repayment from related party

35,384

Purchase of property and equipment

(61,509)

(31,497)

Purchase of land use rights and yew forest assets

(2,018,014)

NET CASH USED IN INVESTING ACTIVITIES

234,910

(2,362,765)

CASH FLOWS FROM FINANCING ACTIVITIES:

Proceeds from short-term borrowings

1,809,189

3,216,727

Repayments of short-term borrowings

(3,022,055)

Advances and loans from related parties

81

718,120

Repayments to related parties

(49,030)

Contribution from shareholders-transfer of property and equipment to entity under common control with proceeds over carrying amount

31,052

NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES

(1,261,815)

3,965,899

EFFECT OF EXCHANGE RATE ON CASH

(18,743)

(37,097)

NET INCREASE (DECREASE) IN CASH

(402,617)

193,668

CASH – Beginning of the year

681,608

487,940

CASH – End of the year

$

278,991

$

681,608

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:

Cash paid for:

Interest

$

145,452

$

75,196

Income taxes

$

24,451

$

NON-CASH INVESTING AND FINANCING ACTIVITIES

Operating expense paid by related party

88,088

Property and equipment paid by related party

82,491