China YCT International Group Reports Financial Results for the Fiscal Quarter Ended June 30, 2018

JINING,China,Aug. 15,2018 -- China YCT International Group,Inc. (OTCQB: CYIG) (the "Company") today announced its financial results for the three months ended June 30,2018.

Total revenues increased by 21.9% year-over-year to $20.89 million with growth in sales from both acer truncatum seed oil and Huoliyuan capsules. The increase in revenues also benefitted from favorable exchange rate between RMB to US$ compared to a year ago.

Overall gross margin was 42.7%,compared to 40.0% for the same period of the prior fiscal year. The increase in overall gross margin was mainly due to higher gross margin for acer truncatum seed oil as a result of decreased raw material,packaging and manufacturing costs.

Net income attributable to the Company was $4.49 million,or $0.15 per share,compared to $3.81 million,or $0.13 per share,for the same period of the prior fiscal year.

"We started the new fiscal year on a high note with revenues and net income increasing by 21.9% and 17.8%,respectively,for the first fiscal quarter that ended June 30,2018. Gross and operating margins also increased on a year-over-year basis. The acer truncatum seed oil segment was particularly strong,with revenues growing by 81.3% to $5.25 million. Gross margin for acer truncatum seed oil also reached record level of 60.5% for the fiscal quarter ended June 30,2018," said Mr. Tinghe Yan,Chairman and Chief Executive Officer of the Company.

"As our order trend suggests continuing growth momentum,we are optimistic about the near-term outlook of our business and believe that we can extend our streak of five consecutive years of top-line growth in fiscal year 2019," concluded Mr. Yan.

Fiscal Quarter Ended June 30,2018 Financial Results

For the Three Months Ended June 30,

($ millions,except per share data)

2018

2017

% Change

Revenues

$20.89

$17.13

21.9%

Gross profit

$8.92

$6.85

30.3%

Gross margin

42.7%

40.0%

2.8 pp

Operating income

$6.13

$4.64

32.1%

Operating margin

29.3%

27.1%

2.3 pp

Net income attributable to CYIG

$4.49

$3.81

17.8%

Earnings per share

$0.15

$0.13

17.7%

Revenues

For the three months ended June 30,total revenues increased by $3.75 million,or 21.9%,to $20.89 million from $17.13 million for the same period of the prior fiscal year. The increase in total revenues was mainly due to increase in sales for acer truncatum seed oil and also benefited from RMB appreciation versus US$ compared to a year ago.

Revenues from health care products increased by $0.17 million,or 2.1%,to $8.01 million for the three months ended June 30,2018 from $7.85 million for the same period of the prior fiscal year. The revenue from sales of health care products measured in RMB decreased by 5.0% but was offset by a 7.1% increase due to favorable US currency exchange rates. The decrease in sales of the health care products in RMB was primarily due to decreases in sales of other traditional health care products.

Revenues from Huoliyuan capsules increased by $1.24 million,or 19.3%,to $7.63 million for the three months ended June 30,2018 from $6.40 million for the same period of the prior fiscal year. The increase in sales of Huoliyuan capsules was primarily due to improved market share performance.

Revenues from acer truncatum seed oil increased by $2.35 million,or 81.3%,to $5.25 million for the three months ended June 30,2018 from $2.89 million for the same period of the prior fiscal year. The increase in sales of acer truncatum seed oil was primarily due to continuing promotions of acer truncatum seed oil at conferences highlighting features and benefits of the product to our distributors and customers. Since July 2015,the Company has produced and sold acer truncatum seed oil extracted from the acer truncatum pods purchased from third party vendors. Our crops of acer truncatum pods will not be ready for production until approximately the fall of 2018.

The sales of health care products,Huoliyuan capsules,and acer truncatum Parliament seed oil accounted for 38.3%,36.5%,and 25.1%,of total revenues for the three months ended June 30,compared to 45.8%,37.3%,and 16.9%,for the same period of the prior fiscal year.

The following table summarizes revenues and gross profit by products for the three months ended June 30,2018 and 2017,respectively:

For the Three Months Ended June 30,

2018

2017

Revenues

($M)

Gross Profit

($M)

Gross Margin

(%)

Revenues

($M)

Gross Profit

($M)

Gross Margin

(%)

Health care supplements

8.01

3.56

44.4%

7.85

3.51

44.7%

Drugs (Huoliyuan capsule)

7.63

2.19

28.7%

6.40

2.05

32.1%

Acer truncatum oil

5.25

3.17

60.5%

2.89

1.29

44.5%

Total

20.89

8.92

42.7%

17.13

6.85

40.0%

Cost of Goods Sold

Cost of goods sold comprised primarily the cost of finished goods purchased from Shandong Yongchuntang,raw materials purchased from third party vendors,and the manufacturing cost of acer truncatum seed oil and Huoliyuan capsules. For the three months ended June 30,total cost of goods sold increased by $1.68 million,or 16.3%,to $11.96 million from $10.29 million for the same period of the prior fiscal year. As a percentage of revenues,total cost of goods sold was 57.3% for the three months ended June 30,compared to 60.0% for the same period of the prior fiscal year. The decrease was primarily due to decreased raw material,packaging and manufacturing costs for acer truncatum seed oil.

Cost of goods sold for health care products,and acer truncatum seed oil were $4.45 million,$5.44 million and $2.07 million,respectively for the three months ended June 30,compared to $4.34 million,$4.34 million,and $1.61 million,for the same period of the prior fiscal year.

Gross Profit

Gross profit increased by $2.08 million,or 30.3%,to $8.92 million for the three months ended June 30,from $6.85 million for the same period of the prior fiscal year. Gross profit for health care products,and acer truncatum Parliament seed oil were $3.56 million,$2.19 million,and $3.17 million,for the three months ended June 30,compared to $3.51 million,$2.05 million,and $1.29 million,for the same period of the prior fiscal year.

Overall gross margin was 42.7%,with gross margins for health care products,and acer truncatum seed oil being 44.4%,28.7%,and 60.5%,2018. Overall gross margin was 40.0%,and gross margins for health care products,and acer truncatum seed oil were 44.7%,32.1%,and 44.5%,for the same period of the prior fiscal year. The increase in overall gross margin was mainly due to acer truncatum seed oil as a result of decreased raw material,packaging,and manufacturing costs.

Operating Expenses

Selling expenses consist primarily of sales commissions,advertising and promotion,freight charges,and related compensation. For the three months ended June 30,selling expenses increased by $0.16 million,or 12.6%,to $1.40 million,from $1.24 million for the same period of the prior fiscal year. The increase in selling expenses was primarily due to increases in shipping cost and sales commission from increased sales and salary expense.

General and administrative expenses increased by $0.17 million,or 19.0%,to $1.08 million for the three months ended June 30,2018 from $0.91 million for the same period of the prior fiscal year. The increase in general and administrative expenses was primarily due to the increase in depreciation and consulting expenses.

Research and development expenses were $0.32 million for the three months ended June 30,compared to $0.06 million for the same period of the prior fiscal year. The increase in research and development expenses was mainly due to the increased cost of the materials used by the R&D department. As of June 30,the Company had a staff of 27 in the R&D department.

As a result,total operating expenses increased by $0.59 million,or 26.5%,to $2.80 million for the three months ended June 30,from $2.21 million for the same period of the prior fiscal year.

Operating Income

Total operating income increased by $1.49 million,or 32.1%,to $6.13 million for the three months ended June 30,from $4.64 million for the same period of the prior fiscal year. The increase in total operating income was mainly a result of increased gross profit,partially offset by increased operating expenses. Operating margin was 29.3% for the three months ended June 30,compared to 27.1% for the same period of the prior fiscal year.

Income before Income Taxes

Interest income was $40,073 for the three months ended June 30,compared to $25,103 for the same period of the prior fiscal year. The Company also booked gain on disposal of acer truncatum bunge plants of $0.57 million for the three months ended June 30,2017.

Income before income tax provisions increased by $0.93 million,or 17.8%,to $6.17 million for the three months ended June 30,from $5.24 million for the same period of the prior fiscal year.

Net Income

Income tax expense increased by $0.23 million,to $1.54 million for the three months ended June 30,from $1.31 million for the same period of the prior fiscal year.

Net income increased by $0.70 million,to $4.63 million for the three months ended June 30,from $3.93 million for the same period of the prior fiscal year.

After the deduction of non-controlling interest,net income attributable to the Company was $4.49 million,or $0.15 per basic and diluted share for the three months ended June 30,or $0.13 per basic and diluted share,for the same period of the prior fiscal year.

Liquidity and Capital Resources

As of June 30,the Company had cash and cash equivalents of $27.86 million,and inventories of $3.16 million,compared to $25.35 million,and $2.38 million,as of March 31,2018. Total working capital was $31.78 million as of June 30,compared to $28.08 million as of March 31,2018.

Net cash provided by operating activities was $4.16 million for the three months ended June 30,compared to $5.55 million for the same period of the prior fiscal year. Net cash used in investing activities was $0.26 million for the three months ended June 30,compared to $1.21 million for the same period of the prior fiscal year. Net cash provided by financing activities was $nil for the three months ended June 30,respectively.

Recent Developments

On July 17,the Company announced that it has filed a registration statement on Form S-1 with the U.S. Securities and Exchange Commission relating to a proposed public offering of shares of its common stock,par value $0.001 per share,for gross proceeds of $7,500,000,excluding the proceeds from the sale of additional shares of common stock to cover over-allotments,if any. The number of shares to be offered and the price range for the proposed offering have not yet been determined. China YCT International Group,Inc. has applied to list its common stock on The Nasdaq Capital Market. Maxim Group LLC will act as the sole book-running manager for the proposed offering.

About China YCT International Group,Inc.

Based in Jining,Shandong Province and founded in January 1989,China YCT International Group,Inc.,through its subsidiaries,engages in the business of (i) distributing health care supplement products manufactured by Shandong Yongchuntang Group Co.,Ltd. in the PRC,(ii) developing,manufacturing,and selling Huoliyuan capsules,a prescription medicine,(iii) developing acer truncatum bunge planting bases,and manufacturing and selling acer truncatum bunge seed oil in the PRC. Acer truncatum bunge plants are a species of maple tree. For more information about the Company,please visit http://zgyct.yongchuntang.com.

Forward-Looking Statements

This news release contains forward-looking statements as defined by the Private Securities Litigation Reform Act of 1995. Forward-looking statements include statements concerning plans,objectives,goals,strategies,future events or performance,and underlying assumptions and other statements that are other than statements of historical facts. These statements are subject to uncertainties and risks including,but not limited to,product and service demand and acceptance,changes in technology,economic conditions,the impact of competition and pricing,government regulations,and other risks contained in reports filed by the company with the Securities and Exchange Commission. All such forward-looking statements,whether written or oral,and whether made by or on behalf of the Company,are expressly qualified by this cautionary statement and any other cautionary statements which may accompany the forward-looking statements. In addition,the Company disclaims any obligation to update any forward-looking statements to reflect events or circumstances after the date hereof.

For more information,please contact:

At the Company:

Zecheng Shao,Vice President

Phone: +86-156-5377-2006

Email: zc_shao@126.com

Investor Relations:

Tony Tian,CFA

Weitian Group LLC

Phone: +1-732-910-9692

Email: ttian@weitianco.com

CHINA YCT INTERNATIONAL GROUP,INC.

CONSOLIDATED BALANCE SHEETS

(Unaudited)

JUNE 30,

MARCH 31,

2018

2018

Assets

Current assets:

Cash and cash equivalents

$

27,863,079

$

25,353,360

Accounts receivable

364,809

174,558

Inventories

3,164,358

2,383,382

Purchase deposit to related party

1,208,005

1,412,864

Prepaid leases – current portion

633,732

741,583

Total current assets

33,233,983

30,065,747

Prepaid leases

457,876

641,349

Development cost of acer truncatum bunge planting

46,730,621

48,984,881

Plant,property,and equipment,net

15,687,813

16,793,413

Intangible assets,net

10,952,043

11,862,017

Deferred tax assets

169,314

200,387

Security deposit to related party

1,511,350

1,590,305

Total assets

$

108,743,000

$

110,138,099

Liabilities and Stockholders' Equity

Current liabilities:

Accounts payable and other accrued expenses

$

135,556

$

372,782

Advance from customers

-

445,829

Taxes payable

1,321,890

1,198

Total current liabilities

1,457,446

1,982,809

Stockholders' Equity

Preferred stock,par value $0.001 per share; 5,000

shares authorized,zero shares issued and outstanding

-

-

12% Preferred stock,par value $500 per share; 45 shares

authorized,issued and outstanding

22,500

22,500

Common stock,par value $0.001 per share; 100,000

shares authorized;29,839,168 and 29,789,168 shares

issued and outstanding at June 30,2018 and March 31,

2018,respectively

29,839

29,789

Additional paid-in capital

4,363,788

4,322,838

Statutory reserve

1,828,504

1,504

Retained earnings

98,935,764

94,447,937

Accumulated other comprehensive income (loss)

(916,224)

4,455,017

Total stockholders' equity attributable to the Company

104,264,171

105,106,585

Noncontrolling interest

3,021,383

3,048,705

Total stockholders' equity

107,285,554

108,155,290

Total liabilities and stockholders' equity

$

108,099

CHINA YCT INTERNATIONAL GROUP,INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(Unaudited)

THREE MONTHS ENDED

JUNE 30,

2018

2017

Sales

$

20,888,847

$

17,134,865

Cost of Goods Sold (including $4,390,324 and

$4,288,935 from a related party for the three months

ended June 30,respectively)

11,964,700

10,287,148

Gross profit

8,924,147

6,847,717

Operating expenses

Selling expenses

1,391,603

1,236,292

General and administrative expenses

1,081,049

908,405

Research and development expenses

322,733

64,378

Total operating expenses

2,795,385

2,209,075

Income from operations

6,128,762

4,638,642

Gain on disposal of acer truncatum bunge plants

-

573,092

Interest income

40,073

25,103

Income before income tax provision

6,168,835

5,837

Income tax provision

1,542,209

1,309,209

Net income

4,626,626

3,927,628

Less: Net income attributable to noncontrolling

interest

138,799

117,829

Net income attributable to the Company

4,487,826

3,809,799

Other comprehensive income (loss):

Foreign currency translation adjustment

(5,537,362)

1,655,501

Comprehensive income (loss)

(910,736)

5,583,129

Less: Comprehensive income (loss) attributable to

noncontrolling interest

(27,322)

166,315

Comprehensive income (loss) attributable to the

Company

$

(883,414)

$

5,416,814

Earningsper common share

Basic and Diluted

$

0.15

$

0.13

Weighted average number of common shares

outstanding

Basic and Diluted

29,804,003

29,168

CHINA YCT INTERNATIONAL GROUP,INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

THREE MONTHS ENDED

JUNE 30,

2018

2017

Cash Flows From Operating Activities:

Net income

$

4,626

$

3,628

Adjustments to reconcile net income to net cash provided by

operating activities:

Depreciation and amortization of plant,property and

equipment

352,766

287,248

Amortization of intangible assets

333,014

309,948

Amortization of prepaid leases

230,963

210,588

Stock-based compensation

41,000

-

Deferred taxes

21,912

167,355

Gain on disposal of acer truncatum bunge plants

-

(573,092)

Changes in operating assets and liabilities:

Purchase deposit to vendors

-

655,130

Inventory

(932,817)

2,315,657

Accounts receivable

(206,330)

1,080,011

Cash received from cancellation of lease

-

55,932

Taxes payable

223,523

(908,641)

Purchase deposit and accounts payable to related party,net

139,733

(2,014,308)

Advance from customers

(439,483)

-

Accounts payable and other accrued expenses

(226,868)

40,790

Net cash provided by operating activities

4,039

5,554,246

Cash Flows From Investing Activities:

Acquisition of property,plant and equipment

(70,793)

(2,416)

Proceedsfrom disposal of acer truncatum bunge plants

-

2,084,706

Development cost of acer truncatum bunge planting

(184,358)

(1,215,128)

Net cash used in investing activities

(255,151)

(1,210,838)

Effect of exchange rate changes on cash and cash equivalents

(1,399,169)

240,841

Net increase in cash and cash equivalents

2,509,719

4,584,249

Cash and cash equivalents at beginning of period

25,360

10,308,622

Cash and cash equivalents at end of period

$

27,079

$

14,892,871

Supplemental disclosures of cash flow information:

Cash paid during the periods for:

Interest

$

-

$

-

Income taxes

$

1,053,618

$

1,389,829

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