UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C.

20549

FORM 10-Q

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

For the quarterly period ended ~~December~~June 3130, ~~2017~~2018

☐ 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: 0-53600

CHINA YCT INTERNATIONAL GROUP, INC.

(Exact name of registrant as specified in its charter)

Delaware	6530-~~2954561~~0781441
(State or other jurisdiction of incorporation or organization)	(IRS Employer Identification No.)

c/o Shandong Spring Pharmaceutical Co., Ltd Economic Development Zone.
Gucheng Road Sishui County Shandong Province PR China	273200
(Address of principal executive offices)	(Zip Code)

c/o Shandong Spring Pharmaceutical Co., Ltd.

Economic Development Zone, Gucheng Road,

Sishui County, Shandong Province 373200

People's Republic of China

(Address of principal executive offices)

Issuer's telephone number: ~~406~~ +86 0537-~~282-3188~~4268271

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

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

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

Large accelerated filer ☐	Accelerated filer ☐
Non-accelerated filer ☐ (Do not check if a smaller reporting company)	Smaller reporting company ☒
Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided to Section 7(a)(2)(B) of the Securities Act. ☐

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

The number of shares outstanding of the issuer's common stock on ~~February~~August 14, ~~2017~~2018 was 29,~~789~~839,168.

CHINA YCT INTERNATIONAL GROUP, INC.

CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE AND NINE MONTHS ENDED DECEMBER 31, 2017 AND 2016

(UNAUDITED)

Table of Contents

	Page
Consolidated Balance Sheets as of December 31, 2017 and March 31, 2017 (Unaudited)	1
Consolidated Balance Sheets as of June 30, 2018 and March 31, 2018 (Unaudited)	F1
Consolidated Statements of Comprehensive Income (Loss) for the Three and Nine Months Ended December 31, 2017 and 2016 (Unaudited)	2
Consolidated Statements of Comprehensive Income (Loss) for the Three Months Ended June 30, 2018 and 2017 (Unaudited)	F2
Consolidated Statements of Cash Flows for the Nine Months Ended December 31, 2017 and 2016 (Unaudited)	3
Consolidated Statements of Cash Flows for the Three Months Ended June 30, 2018 and 2017 (Unaudited)	F3
Notes to Consolidated Financial Statements (Unaudited)	4F4- 9F9

CHINA YCT INTERNATIONAL GROUP, INC.

CONSOLIDATED BALANCE SHEETS

(Unaudited)

	DECEMBER 31, 2017			MARCH 31, 2017
	JUNE 30,			MARCH 31,
	2018			2018
Assets
Current assets:
Cash and cash equivalents	$	1827,~~768~~863,~~536~~079		$	1025,~~308~~353,~~622~~360
Accounts receivable		~~209~~364,~~784~~809			1174,~~134,967~~558
Inventories		3,~~442~~164,~~024~~358			52,~~483~~383,~~040~~382
Purchase deposit to vendors		-			650,790
Purchase deposit to related party		1,208,005			1,412,864
Purchase deposit to related party		1,304,919			-
Prepaid leases – current portion		633,732			741,583
Prepaid expenses		180,473			-
Total current assets		33,233,983			30,065,747
Prepaid leases – current portion		785,582			900,547
Prepaid leases		457,876			641,349
Total current assets		24,691,318			18,477,966
Development cost of acer truncatum bunge planting		46,730,621			48,984,881
Prepaid leases		770,737			1,265,252
Plant, property, and equipment, net		15,687,813			16,793,413
Development cost of acer truncatum bunge planting		47,384,846			42,055,972
Intangible assets, net		10,952,043			11,862,017
Plant, property, and equipment, net		16,501,938			14,487,135
Deferred tax assets		169,314			200,387
Intangible assets, net		11,740,353			12,042,758
Security deposit to related party		1,511,350			1,590,305
Deferred tax assets		261,277			508,521
Total assets	$	108,743,000		$	110,138,099
Security deposit to related party		1,530,409			1,449,422
Total assets	$	102,880,878		$	90,287,026
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable to related party	$	-		$	706,048
Accounts payable and other accrued expenses	$	135,556		$	372,782
Accounts payable and other accrued expenses		282,982			251,307
Advance from customers		-			445,829
Taxes payable		1,~~079~~321,~~580~~890			21,~~028~~164,~~190~~198
Total current liabilities		1,~~362~~457,~~562~~446			21,~~985~~982,~~545~~809
Stockholders' Equity
Preferred stock, par value $500 per share; 45 shares authorized, issued and outstanding at December 31, 2017 and March 31, 2017.		22,500			22,500
Preferred stock, par value $0.001 per share; 5,000,000 shares authorized, zero shares issued and outstanding		-			-
Common stock, par value $0.001 per share; 100,000,000 shares authorized; 29,789,168 shares issued and outstanding at December 31, 2017 and March 31, 2017.		29,789			29,789
12% Preferred stock, par value $500 per share; 45 shares authorized, issued and outstanding		22,500			22,500
Additional paid-in capital		4,322,838			4,322,838
Common stock, par value $0.001 per share; 100,000,000 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			1,828,504
Retained earnings		9198,~~884~~935,~~263~~764			8394,~~061~~447,~~604~~937
Accumulated other comprehensive income (loss)		~~582~~(916,~~006~~224	)		(4,~~386~~455,~~845~~017	)
Total stockholders' equity attributable to the Company		98104,~~669~~264,~~900~~171			84105,~~878~~106,~~390~~585
Noncontrolling interest		23,~~848~~021,~~416~~383			23,~~423~~048,~~091~~705
Total stockholders' equity		~~101~~107,~~518~~285,~~316~~554			87108,~~301~~155,~~481~~290
Total liabilities and stockholders' equity	$	~~102~~108,~~880~~743,~~878~~000		$	90110,~~287~~138,~~026~~099

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

F - 1

CHINA YCT INTERNATIONAL GROUP, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

OF COMPREHENSIVE INCOME (LOSS)

(Unaudited)

	THREE MONTHS ENDED DECEMBER 31,						NINE MONTHS ENDED DECEMBER 31,
	THREE MONTHS ENDED
	2017			2016			2017		2016
	JUNE 30,
Sales	$	17,211,156		$	14,171,624		$	48,212,805	$	35,478,603
	2018			2017
Cost of Goods Sold (including $3,623,226 and $2,590,947 from a related party for the three months ended December 31, 2017 and 2016, respectively; including $10,932,869 and $6,648,948 from a related party for the nine months ended December 31, 2017 and 2016, respectively)		10,422,916			8,358,123			29,521,454		21,281,950
Sales	$	20,888,847		$	17,134,865
Gross profit		6,788,240			5,813,501			18,691,351		14,196,653
Cost of Goods Sold (including $4,390,324 and $4,288,935 from a related party for the three months ended June 30, 2018 and 2017, respectively)		11,964,700			10,287,148
Operating expenses
Gross profit		8,924,147			6,847,717
Selling expenses		1,278,544			969,495			3,596,983		2,525,178
Operating expenses
General and administrative expenses		1,445,469			1,137,609			3,222,132		2,722,468
Selling expenses		1,391,603			1,236,292
Research and development expenses		280,229			279,589			406,640		754,485
General and administrative expenses		1,081,049			908,405
Total operating expenses		3,004,242			2,386,693			7,225,755		6,002,131
Research and development expenses		322,733			64,378
Income from operations		3,783,998			3,426,808			11,465,596		8,194,522
Total operating expenses		2,795,385			2,209,075
Gain on disposal of acer truncatum bunge plants		-			-			573,092		-
Income from operations		6,128,762			4,638,642
Interest income		32,376			11,073			88,678		43,222
Gain on disposal of acer truncatum bunge plants		-			573,092
Income before income tax provision		3,816,374			3,437,881			12,127,366		8,237,744
Interest income		40,073			25,103
Income tax provision		954,093			849,716			3,031,841		2,078,344
Income before income tax provision		6,168,835			5,236,837
Net income		2,862,281			2,588,165			9,095,525		6,159,400
Income tax provision		1,542,209			1,309,209
Less: Net income attributable to noncontrolling interest		85,869			-			272,866		-
Net income		4,626,626			3,927,628
Net income attributable to the Company		2,776,412			2,588,165			8,822,659		6,159,400
Less: Net income attributable to noncontrolling interest		138,799			117,829
Other comprehensive income (loss):
Net income attributable to the Company		4,487,827			3,809,799
Foreign currency translation adjustment		1,557,010			(3,096,813	)		5,121,310		(5,747,120	)
Other comprehensive income (loss):
Comprehensive income (loss)		4,419,291			(508,648	)		14,216,835		412,280
Foreign currency translation adjustment		(5,537,362	)		1,655,501
Less: Comprehensive income attributable to noncontrolling interest		132,578			-			425,325		-
Comprehensive income (loss)		(910,736	)		5,583,129
Comprehensive income (loss) attributable to the Company	$	4,286,713		$	(508,648	)	$	13,791,510	$	412,280
Less: Comprehensive income (loss) attributable to noncontrolling interest		(27,322	)		166,315
Earnings per common share
Comprehensive income (loss) attributable to the Company	$	(883,414	)	$	5,416,814
Basic and Diluted	$	0.09		$	0.09		$	0.30	$	0.21
Earnings per common share
Weighted average number of common shares outstanding
Basic and Diluted	$	0.15		$	0.13
Basic and Diluted		29,789,168			29,764,168			29,789,168		29,761,322
Weighted average number of common shares outstanding
Basic and Diluted		29,804,003			29,789,168

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

F - 2

CHINA YCT INTERNATIONAL GROUP, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

	NINE MONTHS ENDED DECEMBER 31,
	THREE MONTHS ENDED
	2017			2016
	JUNE 30,
	2018			2017
Cash Flows From Operating Activities:
Net income	$	94,~~095~~626,~~525~~626		$	63,~~159~~927,~~400~~628
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization of plant, property and equipment		~~951~~352,~~711~~766			~~534~~287,~~567~~248
Amortization of intangible assets		~~949~~333,~~886~~014			~~830~~309,~~262~~948
Amortization of prepaid leases		~~654~~230,~~324~~963			~~697~~210,~~741~~588
Issuance of common shares for services		-			10,609
Stock-based compensation		41,000			-
Stock-based compensation expenses		-			101,026
Deferred taxes		21,912			167,355
Deferred taxes		268,475			(10,893	)
Gain on disposal of acer truncatum bunge plants		-			(573,092	)
Gain on disposal of acer truncatum bunge plants		(573,092	)		-
Changes in operating assets and liabilities:
Advance payment to vendors		669,250			-
Purchase deposit to vendors		-			655,130
Inventory		2(932,~~286,222~~817	)		(12,~~739~~315,~~711~~657	)
Accounts receivable		~~962~~(206,~~842~~330	)		(91,~~878~~080,011	)
Cancellation of lease		57,137			-
Cash received from cancellation of lease		-			55,932
Prepaid expenses		(175,771	)		-
Taxes payable		223,523			(908,641	)
Taxes payable		(1,034,267	)		645,178
Purchase deposit and accounts payable to related party, net		139,733			(2,014,308	)
Purchase deposit and accounts payable to related party, net		(1,996,995	)		132,348
Advance from customers		(439,483	)		-
Accounts payable and other accrued expenses		17(226,~~174~~868	)		~~(67~~40,~~505~~790	)
Net cash provided by operating activities		124,~~132~~164,~~421~~039			75,~~283~~554,~~144~~246
Cash flows from investing activities:
Cash Flows From Investing Activities:
Acquisition of property, plant and equipment		(270,~~125,638~~793	)		(12,~~374~~080,~~790~~416	)
Proceeds from disposal of acer truncatum bunge plants		~~2,129,638~~-			-2,084,706
Development cost of acer truncatum bunge planting		(4184,~~457,916~~358	)		(31,~~133~~215,~~278~~128	)
Net cash used in investing activities		(4255,~~453,916~~151	)		(41,~~508~~210,~~068~~838	)
Effect of exchange rate changes on cash and cash equivalents		~~781~~(1,~~409~~399,169	)		~~(629~~240,~~729~~841	)
Net increase in cash and cash equivalents		82,~~459~~509,~~914~~719			24,~~145~~584,~~347~~249
Cash and cash equivalents at beginning of period		1025,~~308~~353,~~622~~360			710,~~639~~308,~~084~~622
Cash and cash equivalents at end of period	$	1827,~~768~~863,~~536~~079		$	914,~~784~~892,~~431~~871
Supplemental disclosures of cash flow information:
Cash paid during the periods for:
Interest	$	-		$	-
Income taxes	$	31,~~495~~053,~~744~~618		$	1,~~663~~389,~~060~~829

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

F - 3

CHINA YCT INTERNATIONAL GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 1 - ORGANIZATION AND PRINCIPAL ACTIVITIES

China YCT International Group, Inc. ("China YCT") ~~was~~or ~~incorporated in~~ "the ~~State of Florida, in the United States of America (the~~ Company"~~USA"~~) ~~in January 1989, and reincorporated in the State of Delaware on April 4, 2007. China YCT,~~ through its 100% owned subsidiary Landway Nano Bio-Tech, Inc. ("Landway Nano"), incorporated in Delaware, ~~owns~~own 97% of Shandong Spring Pharmaceutical Co., Ltd. ("Shandong Spring Pharmaceutical "), incorporated in the People's Republic of China ("PRC"). ~~China YCT International Group, Inc. and its subsidiaries are collectively referred to as the "Company".~~ The Company, through its 97% owned subsidiary, Shandong Spring Pharmaceutical, ~~engages~~is engaged in the business of ~~research~~(i) distributing health care supplement products, (ii) developing, manufacturing, and selling ~~traditional~~Huoliyuan ~~Chinese~~capsules, a prescription medicine, and ~~other~~(iii) ~~healthcare~~developing ~~products~~the acer truncatum bunge planting bases and selling acer truncatum seed oil in ~~China~~the PRC. Acer truncatum bunge plants are a species of maple tree.

NOTE 2 – BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of presentation

The unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and the rules and regulations of the Securities and Exchange Commission. In the opinion of management, the unaudited financial statements have been prepared on the same basis as the annual financial statements and reflect all adjustments, which include only normal recurring adjustments, necessary to present fairly the financial position as of ~~December~~June 3130, ~~2017~~2018 and the results of operations and cash flows for the periods ended ~~December~~June 3130, ~~2017~~2018 and ~~2016~~2017. The financial data and other information disclosed in these notes to the interim financial statements related to these periods are unaudited. The results for the three ~~and nine~~ months ended ~~December~~June 3130, ~~2017~~2018 are not necessarily indicative of the results to be expected for any subsequent periods or for the entire year ending March 31, ~~2018~~2019. The balance sheet on March 31, ~~2017~~2018 has been derived from the audited financial statements at that date.

Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States have been condensed or omitted pursuant to the Securities and Exchange Commission's rules and regulations. These unaudited financial statements should be read in conjunction with our audited financial statements and notes thereto for the year ended March 31, ~~2017~~2018 as included in our Annual Report on Form 10-K.

Certain amounts have been reclassified to conform to current year presentation.

Principles of consolidation

The consolidated financial statements include the financial statements of China YCT International Group, Inc., Landway Nano and its 97% owned subsidiary, Shandong Spring Pharmaceutical. All inter-company transactions and balances are eliminated in consolidation.

Use of estimates

The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements, as well as the reported amounts of revenues and expenses during the reporting period. Actual results may differ from those estimates. Significant accounting estimates reflected in the Company's consolidated financial statements include: the valuation of inventory, the estimated useful lives and impairment of property, equipment, intangible assets, and the valuation of deferred tax assets.

F - 4

Foreign currency translation

The accounts of the Company's Chinese subsidiary are maintained in RMB and the accounts of the U.S. companies are maintained in USD. The accounts of the Chinese subsidiary were translated into USD in accordance with Accounting Standards Codification ("ASC") Topic 830 "Foreign Currency Matters". According to Topic 830, all assets and liabilities were translated at the exchange rate on the balance sheet date; stockholders' equity is translated at historical rates and statement of comprehensive income items are translated at the weighted average exchange rate for the period. The resulting translation adjustments are reported under other comprehensive income in accordance with ASC Topic 220, "Comprehensive Income." Gains and losses resulting from the foreign currency transactions are reflected in the statements of comprehensive income.

The following exchange rates were used to translate the amounts from RMB into United States dollars ("USD$") for the respective periods:

	December 31,		December 31,
	June 30		June 30
	2017		2016
	2018		2017
Period End Exchange Rate (RMB/USD)		6.~~5342~~6166		6.~~937~~7744
Average Period Exchange Rate (RMB/USD)		6.~~709~~3789		6.~~6785~~8536

Recent accounting pronouncements

The Company's management has evaluated all the recently issued accounting pronouncements ~~through the filing date of these consolidated financial statements~~ and does not believe that they will have a material effect on the Company's consolidated financial position and results of operations.

NOTE 3 ~~– PREPAID EXPENSES~~- INVENTORIES

The prepaid expenses consist of the payments that the Company has made in advance for the advertising services to be received in the future. On September 19, 2017, the Company signed an advertising contract with Shenzhen Henghe Media Co., Ltd. In pursuant to the contract, in September 2017, the Company made approximately $450,000 (RMB 3 Million) advance payment to Shenzhen Henghe Media Co., Ltd for the advertising services to be received within the period from September 2017 to December 31, 2018. The prepaid expenses are amortized over the service period and unamortized balance as of December 31, 2017 was $180,473.

NOTE 4 - INVENTORY

The components of inventories were as follows:

	December 31,		March 31,
	June 30,		March 31,
	2017		2017
	2018		2018
Raw materials	$	1,~~449~~860,~~623~~208	$	1233,~~276,254~~138
Packaging materials		~~556~~508,~~574~~304		~~476~~652,~~803~~179
Work-in-process		~~475~~163,~~074~~378		1686,~~373,919~~234
Finished goods		~~960~~632,~~753~~468		2811,~~356,064~~831
Total inventories	$	3,442,024	$	5,483,040
Total Inventories	$	3,164,358	$	2,383,382

F - 5

NOTE 54 – PLANT, PROPERTY, AND EQUIPMENT, NET

The components of plant, property and equipment were as follows:

	December 31,			March 31,
	June 30,			March 31,
	2017			2017
	2018			2018
Machinery and equipment	$	3,~~459~~416,~~466~~384		$	23,~~254~~594,~~813~~861
Office equipment		739,992			717,259
Office equipment and automobiles		799,630			769,589
Building		1312,~~094~~931,~~246~~177			1213,~~401~~606,~~320~~722
Leasehold improvements		4,~~080~~030,~~854~~033			24,~~803~~240,~~052~~568
Subtotal		21,~~374~~177,~~558~~224			1822,~~176~~211,~~444~~740
Less: Accumulated depreciation and amortization		(45,~~872~~489,~~620~~411	)		(35,~~689~~418,~~309~~327	)
Total plant, property and equipment, net	$	1615,~~501~~687,~~938~~813		$	1416,~~487~~793,~~135~~413

The depreciation and amortization expense for the three months ended ~~December~~June 3130, ~~2017~~2018 and ~~2016~~2017 was $~~336~~352,~~599~~766 and $~~176~~287,~~755~~248, respectively.

~~The~~NOTE ~~depreciation~~5 ~~and~~- ~~amortization~~TAXES ~~expense for the nine months ended December 31, 2017 and 2016 was $951,711 and $534,567, respectively.~~PAYABLE

~~NOTE~~Taxes 6payable –at ~~DEVELOPMENT~~June OF30, ~~ACER~~2018 ~~TRUNCATUM~~and ~~BUNGE~~March 31, 2018 were as follows:

Development costs primarily include land development cost incurred for land leveling, irrigation, and fertilization, the purchase costs of acer truncatum bunge trees, and acer truncatum bunge planting fee.

	June 30,		March 31,
	2018		2018
Corporate income tax - foreign	$	943,978	$	519,875
Value-added tax - foreign		343,098		580,429
Other tax and fees - foreign		34,814		63,894
Total tax payable	$	1,321,890	$	1,164,198

~~Since~~NOTE ~~July 2013, the Company has developed the acer truncatum bunge planting bases. As of March 31, 2017, the Company had completed planting of~~ 6~~,080~~ Mu- ~~(1Mu~~INCOME is equal to approximately 666.67 square meters) at four leased farmlands. On April 1, 2017, the Company entered an agreement with Zhongce No.4 Village to terminate the lease for the 200 Mu farmland because the parcel of farmland was recalled by the local government to build a new urban district. Based on the agreement, the Company received the refund of the remaining prepaid lease payments of approximately $56,000 (RMB383,333) and compensation of approximately $350,000 (RMB2,400,000) from the government for the early termination of the lease. On May 1, 2017, the Company signed two contracts with third parties to sell all of the plants from the farmland for approximately $1,974,000 (RMB13,527,000). The total capitalized cost of the acer truncatum bunge planting in Zhongce No.4 Village farmland was approximately $1,512,000 (RMB10,360,000). In addition, the Company incurred approximately $239,000 (RMB1,639,260) in expenses to pack the plants for sale. The gain from disposal of the acer truncatum bunge plants was approximately $573,000. As a result of the lease termination, the Company's acer truncatum bunge planting acreage was reduced to 5,880 Mu at December 31, 2017 from 6,080 Mu at March 31, 2017.TAXES

6China YCT International Group, Inc. and Landway Nano were incorporated in the United States of America and are subject to United States federal taxation. No provisions for income taxes have been made, as there was no taxable income from U.S. operations for the three months ended June 30, 2018 and 2017. The Company has net loss carryforward of approximately $22,000, which will expire in 2037. The Company has set up 100% valuation allowance on deferred tax assets resulting from net operating loss incurred in the U.S.

~~NOTE~~The 7U.S. Tax Cuts and Jobs Act (the "Act") was enacted on December 22, 2017 and introduces significant changes to U.S. income tax law. Effective in 2018, the Tax Act reduces the U.S. statutory tax rate from 35% to 21% and creates new taxes on certain foreign-sourced ~~TAXES~~earnings ~~PAYABLE~~and certain related-party payments, which are referred to as the global intangible low-taxed income tax and the base erosion tax, respectively.

~~Taxes~~The ~~payable~~Company's atChinese ~~December~~subsidiary ~~31,~~is ~~2017~~governed by the Income Tax Law of the PRC concerning the privately run and ~~March~~foreign 31invested enterprises, ~~2017~~which ~~were~~are asgenerally ~~follows:~~subject to tax at a statutory rate of 25% on income reported in the statutory financial statements after appropriate tax adjustments.

	As of
	December 31,			March 31,
	2017			2017
Corporate income tax		$	707,653		$	1,382,382
Value-added tax			334,843			576,086
Other tax & fees			37,084			69,722
Total tax payable		$	1,079,580		$	2,028,190

NOTE 8 - INCOME TAXES

China YCT and Landway Nano were incorporated in the United States of America and are subject to United States federal taxation. No provisions for income taxes have been made, as there was no taxable income from U.S. operations for the three and nine months ended December 31, 2017 and 2016. The Company has a net loss carryforward of approximately $22,000 which will expire in 2047. The Company has established a 100% valuation allowance on deferred tax assets resulting from the net operation loss incurred in the U.S.

The Company's Chinese subsidiaries are governed by the Income Tax Law of the PRC concerning privately run and foreign invested enterprises, which are generally subject to tax at a statutory rate of 25% on income reported in the statutory financial statements after appropriate tax adjustments.

The Company has not provided deferred taxes on undistributed earnings attributable to its PRC subsidiaries as they are to be permanently reinvested. On February 22, 2008, MOF, and SAT, jointly issued Cai Shui 2008 Circular 1, "Circular 1." According to Article 4 of Circular 1, distributions of accumulated profits earned by foreign investment enterprises, ("FIE") prior to January 1, 2008 to their foreign investors will be exempt from withholding tax, ("WHT") while distribution of the profits earned by a FIE after January 1, 2008 to its foreign investors shall be subject to WHT.

Dividend payments by PRC subsidiaries are limited by certain statutory regulations in the PRC. No dividends may be paid by PRC subsidiaries without first receiving prior approval from SAFE. Dividend payments are restricted to 90% of after tax profits.

~~Should~~F ~~the~~- Company's PRC subsidiaries distribute all their profits generated after December 31, 2007, the aggregate withholding tax amount will be $9,188,426 and $8,306,160 as of December 31, 2017 and March 31, 2017, respectively.6

~~Prior~~The to the new Tax Cut and Jobs Act (the "New Law"), since Shandong Spring intends to reinvest its earnings to further expand its businesses in mainland China, it does not intend to declare dividends to their immediate foreign holding companies in the foreseeable future. Accordingly, the Company ~~has~~had not ~~recorded~~provided ~~any~~ deferred taxes ~~in relation to US tax~~ on ~~the cumulative amount of~~ undistributed ~~retained~~ earnings ~~since~~attributable ~~January~~to 1,its ~~2008.~~PRC ~~Under~~subsidiaries ~~the~~as ~~"#1703.~~they ~~Treatment~~were ~~of deferred foreign income upon transition~~ to ~~new~~be ~~participation~~permanently ~~exemption system-deemed repatriation" of the New Law, U~~reinvested.S. ~~shareholders~~On ~~owning~~February ~~at least 10% of foreign subsidiary general must include in income~~22, ~~for the subsidiary's last tax year beginning before 2018~~2008, the ~~shareholder's~~Ministry ~~pro rata share~~ of ~~the~~Finance ~~accumulated~~and ~~post-'86~~State ~~historical~~Administration ~~E&P~~ of ~~the~~Taxation ~~foreign~~jointly ~~subsidiary~~issued asCai ofShui ~~the~~2008 ~~"measurement~~Circular ~~date~~1, "Circular ~~to the extent such E&P has not been previously subject to U~~1.~~S. tax. The measurement date~~" isAccording ~~November~~to 2,Article ~~2017,~~4 ~~or December 31, 2017, whichever date produces a greater result. The portion~~ of ~~the~~Circular ~~E&P comprising cash or cash equivalents is taxed at a reduced rate of 15.5%~~1, ~~while~~distributions ~~any remaining E&P is taxed at a reduced rate~~ of ~~8%.~~accumulated Atprofits ~~the~~earned ~~election~~by offoreign ~~the~~investment ~~U.S.~~enterprises ~~shareholder,~~("FIE") ~~the~~prior ~~tax liability is payable over a period of up~~ to ~~eight~~January ~~years. The payments for each of the first five years equal 8% of the net tax liability. The amount of the sixth installment is 15% of the net tax liability~~1, ~~increasing~~2008 to ~~20%~~their ~~for~~foreign ~~the~~investors ~~seventh~~would ~~installment~~be ~~and~~exempt ~~the~~from ~~remaining~~withholding ~~balance of 25% in the eighth year. The Company is still estimating the~~ tax ~~liability~~("WHT"), aswhile ~~result~~distribution of the ~~New~~profits ~~Law~~earned ~~being~~by ~~effective~~a onFIE ~~December~~after ~~22,~~January ~~2017. If such liability is determined~~1, ~~the~~2008 ~~Company will make adjustments~~ to its ~~liabilities~~foreign atinvestors ~~the~~should ~~year~~be ~~ended~~subject ~~March~~to ~~31, 2018 in accordance with the provisions of ASC Topic 740, Income Taxes~~WHT.

7Prior to the enactment of the Act, since Shandong Spring Pharmaceutical intends to reinvest its earnings to further expand its businesses in mainland China, it does not intend to declare dividends to their immediate foreign holding companies in the foreseeable future. Accordingly, the Company has not recorded any deferred taxes in relation to US tax on the cumulative amount of undistributed retained earnings since January 1, 2008. Under the "#1703. Treatment of deferred foreign income upon transition to new participation exemption system-deemed repatriation" of the Act, U.S. shareholders owning at least 10% of a foreign subsidiary generally must include income, for the subsidiary's last tax year beginning before 2018, the shareholder's pro rata share of the accumulated post-'86 historical E&P of the foreign subsidiary as of the "measurement date" to the extent such E&P has not been previously subject to U.S. tax. The Company has conducted an assessment of its income tax effects of the Act, and based on the analysis, the Company concluded that it had no one-time transition tax liability on its cumulative amount of undistributed retained earnings since January 1, 2008 as the Company had sufficient foreign tax credits available to offset the resulting incremental tax. However, further regulatory guidance related to the Act may be expected to be issued during 2018, which may result in changes to the Company's estimates. In this case, additional analysis of the Act and the impact to the Company will be performed, and any impact will be finalized no later than the fourth calendar quarter of 2018.

The reconciliation of income tax expense at the U.S. statutory rate of 21% and 35% in 2018 and 2017, to the Company's effective tax rate is as follows:

	Nine Months Ended
	Three Months Ended
	December 31,
	June 30,
	2017				2016
	2018				2017
U.S. Statutory rate		$	41,~~244~~295,~~578~~455			$	21,~~883~~832,~~210~~893
Tax rate difference between China and U.S.			(1246,~~212,737~~754	)			(~~823~~523,~~774~~684	)
Permanent difference			-				18,908
Effective tax rate		$	1,542,209			$	1,309,209
Effective tax rate		$	3,031,841			$	2,078,344

The provisions for income taxes are summarized as follows:

	Nine Months Ended
	Three Months Ended
	December 31,
	June 30,
	2017			2016
	2018			2017
Current		$	21,~~763~~520,~~366~~297		$	21,~~089~~141,~~237~~854
Deferred			~~268~~21,~~475~~912			~~(10~~167,~~893~~355	)
Total		$	31,~~031~~542,~~841~~209		$	21,~~078~~309,~~344~~209

~~NOTE~~F 9 - ~~RELATED PARTY TRANSACTIONS AND BALANCES~~7

NOTE 7 - STOCKHOLDERS' EQUITY

On June 4, 2018, the Company issued 50,000 shares of common stock to a consultant for marketing consulting services, which were valued at $41,000 based on the quoted market price at issuance.

NOTE 8 - RELATED PARTY TRANSACTIONS AND BALANCES

Balances:

(i) Security deposit to related party:

The security deposit -to related party of $1,~~530~~511,~~409~~350 represents the deposit paid to Shandong Yongchuntang ~~Bioengineering~~Group Co., Ltd. ("Shandong Yongchuntang") on January 4, 2017 for using the direct-sales license issued to Shandong Yongchuntang. The amount is non-interest bearing and not secured. Shandong Yongchuntang owns 3% of the ~~common~~equity ~~stock~~ of Shandong Spring Pharmaceutical.

(ii) Trade related balance with related party:

On ~~December~~June 30, 2018 and March 31, ~~2017~~2018, ~~the~~ purchase deposit to related party of $1,~~304~~208,~~919~~005 and $1,412,864, respectively, pertains to a purchase deposit paid in respect of the purchase of healthcare products from Shandong Yongchuntang.

~~On March 31, 2017, accounts payable balance of $706,048 pertains to payable in respect of the purchase of healthcare products from Shandong Yongchuntang.~~Transactions:

(i) Purchase from related party (See Note 8)

(iii) Sales to related party:

During the three and nine months ended December 31, 2017, the Company sold acer truncatum oil product to Shandong Yongchuntang for $131,906.

(iv) Purchase from related party:

See Note 10 for details.

Contingency:

The Company is authorized by Shandong Yongchuntang to sell Shandong Yongchuntang's products using the direct-sales license issued to Shandong Yongchuntang. As a condition for using the direct-sales license, the Company needs to ~~increase~~make a 20% sales increase each year based on ~~the~~ 95% of sales ofin the year 2014. If the Company cannot meet this sales target in any year from April 1, 2017 to June 30, 2020, ~~the~~a ~~Company~~security ~~needs~~deposit toof ~~pay~~ approximately $1.56 million will be used as an annual fee for using the direct-sales license. There is a risk that the Company may fail to meet the sales target and may need to pay ~~approximate~~approximately $1.56 million in ~~one~~the ~~or more~~ subsequent years.

~~NOTE~~F 10 - ~~MAJOR CUSTOMER AND VENDOR~~8

~~The Company sold products through~~NOTE ~~ten distributors~~9 ~~during~~- ~~the~~MAJOR ~~three~~CUSTOMERS ~~and~~AND nine months ended December 31, 2017 and 2016. Sales to five distributors represented 17%, 14%, 12%, 11%, and 11% of total sales for the three months ended December 31, 2017 and sales to three distributors represented 19%, 15%, and 12% of total sales for the three months ended December 31, 2016, respectively.VENDORS

The Company's ~~sales~~sold products through ~~four~~ten distributors during the three months ended June 30, 2018 and 2017. Sales to six distributors represented 1715%, 1614%, 1312%, 12%, 10%, and 1210% of total sales for the ~~nine~~three months ended ~~December~~June 3130, ~~2017~~2018. Sales to ~~three~~four distributors represented 2019%, 1516%, 11% and 1311% of total sales for the ~~nine~~three months ended ~~December~~June 3130, ~~2016~~2017.

The Company sold 11 and 710 products during the three months ended ~~December~~June 3130, ~~2017~~2018 and ~~2016~~2017, respectively. Sales of ~~two~~three products represented 37%, 3825%, and 2411% of total sales for the three months ended ~~December~~June 3130, ~~2017~~2018. Sales of ~~three~~four products represented 4637%, 2017%, 11%, and 1411% of total sales for the three months ended ~~December~~June 3130, ~~2016~~2017.

The Company ~~sold~~purchases 11its products from Shandong Yongchuntang, a related party, according to the purchase contract signed between the Company and 7Shandong Yongchuntang. Pursuant to the renewed one-year contract dated February 20, 2017, the Company agreed to purchase nine products ~~during~~from Shandong Yongchuntang at fixed prices. On February 21, 2018, the Company further renewed the purchase contract with Shandong Yongchuntang for a term of one year ending on February 25, 2019. Pursuant to this most recently renewed one-year contract, the Company continue to purchase the nine products from Shandong Yongchuntang at fixed prices without changes in any terms of the previous contract. Total purchases from Shandong YCT represented 37% and 54% of our total purchases during the three months ended ~~December~~June 3130, ~~2017~~2018 and ~~2016~~2017, respectively. ~~Sales~~The ofpurchases from three ~~products~~other vendors represented 4131%, 1710% and 10% of the Company's total ~~sales~~purchases for the ~~nine~~three months ended ~~December~~June 3130, ~~2017~~2018. ~~Sales~~ ofThe ~~three~~purchases ~~products~~from two other vendors represented 4819%, ~~17%,~~ and 1614% of the Company's total ~~sales~~purchases for the ~~nine~~three months ended ~~December~~June 3130, ~~2016~~2017.

The Company purchases its products from Shandong Yongchuntang, a related party, according to the purchase contract signed between the Company and Shandong Yongchuntang. Pursuant to the renewed one year contract dated February 20, 2017, the Company agreed to purchase nine products from Shandong Yongchuntang at fixed prices. Total purchases from Shandong Yongchuntang represented 33% and 30% of our total purchases during the three months ended December 31, 2017 and 2016, respectively. The purchases from three other vendors represented 33%, 13%, and 11% of the Company's total purchases for the three months ended December 31, 2017. The purchases from three other vendors represented 33%, 16%, and NOTE 10% of– ~~the~~SUBSEQUENT ~~Company's total purchases for the three months ended December 31, 2016.~~EVENTS

Total purchases from Shandong Yongchuntang represented 42% and 32% of our total purchases during the nine months ended December 31, 2017 and 2016, respectively. The purchases from two other vendors represented 25% and 14% of the Company's total purchases for the nine months ended December 31, 2017. The purchases from two other vendors represented 25% and 17% of the Company's total purchases for the nine months ended December 31, 2016.The Company has evaluated subsequent events that have occurred after the date of the balance sheet through the date of issuance of these consolidated financial statements and determined that no subsequent event requires recognition or disclosure to the consolidated financial statements.

NOTE 11 – SUBSEQUENT EVENTS

The Company has evaluated subsequent events that have occurred after the date of the balance sheet through the date of issuance of these consolidated financial statements and determined that no subsequent event requires recognition or disclosure to the consolidated financial statements.

F - 9

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operation

You should read the following discussion together with our consolidated financial statements and the related notes included elsewhere in this Form 10-Q and our audited financial statements included in our Annual Report on Form 10-K. This discussion contains forward-looking statements. These forward-looking statements are based on information available at the time the statements are made and/or management's belief as of that time with respect to future events and involve risks and uncertainties that could cause actual results and outcomes to be materially different. Important factors that could cause such differences include but are not limited to: competitive factors, general economic conditions, customer relations, relationships with vendors, the interest rate environment, governmental regulation and supervision, seasonality, distribution networks, product introductions and acceptance, technological change, changes in industry practices, onetime events and other factors described herein and in other filings made by the company with the Securities and Exchange Commission. While we may elect to update forward-looking statements at some point in the future, we specifically disclaim any obligation to do so, and therefore, you should not rely on these forward-looking statements as representing our views as of any date subsequent to the date this Form 10-Q is filed with the Securities and Exchange Commission.

Overview

~~China~~We ~~YCT~~were ~~International Group, Inc. ("China YCT") was~~ incorporated in the State of Florida in January 1989, and reincorporated in the State of Delaware on April 4, 2007. ~~China~~We ~~YCT~~operate principally ~~operates~~ through ~~its~~our wholly-owned subsidiary, Landway Nano Bio-Tech, Inc. ("Landway Nano"), incorporated in Delaware, which, in turn, owns 97% of Shandong Spring Pharmaceutical Co., Ltd. ("Shandong Spring Pharmaceutical "), incorporated in the People's Republic of China (the "PRC"). ~~China YCT International Group~~We, ~~Inc. and its subsidiaries are collectively referred to as the "Company". China YCT,~~ through Shandong Spring Pharmaceutical, isare engaged in the business of (i) distributing health care supplement products ~~manufactured by Shandong Yongchuntang~~, (ii) developing, manufacturing, and selling Huoliyuan ~~Capsules~~capsules, a prescription medicine, and (iii) developing the acer truncatum bunge planting bases and selling acer truncatum seed ~~oilin~~oil in the PRC. Acer truncatum bunge plants are a species of maple tree.

~~Since~~The ~~July 2015, the~~ Company's ~~has~~proprietary ~~produced~~product, ~~acer~~Huoliyuan ~~truncatum~~capsule, ~~bunge~~is ~~seed~~a ~~oil~~China Food and ~~sold~~Drug ~~the~~Administration ~~product~~("CFDA") toapproved ~~customers~~prescription ~~through~~TCM anthat ~~internet~~has ~~direct~~a ~~sales~~wide ~~system~~range ~~operated~~of bytherapeutic ~~the Company pursuant to an agreement with Shandong Yongchuntang~~benefits. ~~The~~ ~~acer~~It ~~truncatum~~is ~~bunge~~the ~~seed~~only ~~oil~~TCM ~~was~~of ~~extracted~~its ~~from~~kind ~~acer~~made ~~truncatum~~in ~~pods that were purchased from third party vendors. The Company's self~~slow-~~grown~~release ~~acer~~capsule ~~truncatum~~form ~~pods will not be ready to be used~~ for ~~production~~improved ~~until~~absorption ~~approximately~~rate ~~the~~and ~~fall~~therapeutic ~~of 2018~~effects.

Since July 2015, the Company has also produced acer truncatum bunge seed oil and sold the product to customers through an Internet direct sales system operated by the Company pursuant to an agreement with Shandong Yongchuntang. Currently, the acer truncatum bunge seed oil is extracted from acer truncatum pods that are purchased from third party vendors. The Company's self-grown acer truncatum pods will not be ready to be used for production until approximately the fall of 2018. The Company currently has a 5,880 mu (approximately 2,324.77 acres) acer truncatum bunge plantation base coupled with modern production facilities. We believe it is the only company in China able to achieve industrial-scale production and vertically integrated capability for acer truncatum bunge seed oil products.

On March 18, 2017, the Company entered into an Acquisition Agreement on Acer Truncatum Industrial Project (the "Agreement") with Shandong Yongchuntang. Pursuant to the Agreement, the Company agreed to transfer a 3% equity interest in Shandong Spring Pharmaceutical in exchange for tangible and intangible assets related to the Acer Truncatum Industrial Project (the "Project"), which were owned by Shandong Yongchuntang. As a result of this transaction, Shandong Yongchuntang has become a 3% shareholder of Shandong Spring Pharmaceutical.

Results of Operations

The following table sets forth information from our statements of comprehensive income (loss) for the three months ended ~~December~~June 3130, ~~2017~~2018 and ~~2016~~2017, in dollars:

	Three Months Ended
	December 31,						$			%
	June 30,						$			%
	2017			2016			Change			Change
	2018			2017			Change			Change
Sales		1720,~~211~~888,~~156~~847			1417,~~171~~134,~~624~~865			3,~~039~~753,~~532~~982			21.49	%
Cost of Goods sold		10,422,916			8,358,123			2,064,793			24.7	%
Cost of Goods Sold		(11,964,700	)		(10,287,148	)		(1,677,552	)		16.3	%
Gross Profit		68,~~788~~924,~~240~~147			56,~~813~~847,~~501~~717			~~974~~2,~~739~~076,430			1630.83	%
Operating Expenses		3(2,~~004~~795,~~242~~385	)		(2,~~386~~209,~~693~~075	)		~~617~~(586,~~549~~310	)		2526.95	%
Operating Income		36,~~783~~128,~~998~~762			34,~~426~~638,~~808~~642			~~357~~1,~~190~~490,120			1032.41	%
Interest Income		3240,~~376~~073			1125,~~073~~103			2114,~~303~~970			~~192~~59.46	%
Income Tax Provision		954,093			849,716			104,377			12.3	%
Gain on Disposal of Acer Truncatum Bunge Plants		-			573,092			(573,092	)		(100.0	)%
Net Income		2,862,281			2,588,165			274,116			10.6	%
Income Tax Provision		(1,542,209	)		(1,309,209	)		(233,000	)		17.8	%
Comprehensive Income (Loss)		4,419,291			(508,648	)		4,927,939			(968.8	)%
Net Income		4,626,626			3,927,628			698,998			17.8	%
Comprehensive Income (Loss)		(910,736	)		5,583,129			(6,493,865	)		(116.3	)%

The following table sets forth information from our statements of comprehensive income for the nine months ended December 31, 2017 and 2016, in dollars:

	Nine Months Ended
	December 31,				$		%
	2017		2016		Change		Change
Sales		48,212,805		35,478,603		12,734,202		35.9	%
Cost of Goods sold		29,521,454		21,281,950		8,239,504		38.7	%
Gross Profit		18,691,351		14,196,653		4,494,698		31.7	%
Operating Expenses		7,225,755		6,002,131		1,223,624		20.4	%
Operating Income		11,465,596		8,194,522		3,271,074		39.9	%
Interest Income		88,678		43,222		45,456		105.2	%
Gain on Disposal of Acer Truncatum Bunge Plants		573,092		-		573,092		100.0	%
Income Tax Provision		3,031,841		2,078,344		953,497		45.9	%
Net Income		9,095,525		6,159,400		2,936,125		47.7	%
Comprehensive Income		14,216,835		412,280		13,804,555		3,348.3	%

Revenue

During the three months ended ~~December~~June 3130, ~~2017~~2018, we realized $1720,~~211~~888,~~156~~847 in revenue, representing an increase of 21.49% or $3,~~039~~753,~~532~~982 as compared to $1417,~~171~~134,~~624~~865 for the same period in ~~2016~~2017. ~~However,~~The ~~the actual~~ increase in revenue in RMB was 1813.35% as compared to the ~~same~~three ~~period~~months inended ~~2016~~June 30, ~~but~~2017. 3The other 8.14% of the increase ~~was~~in ~~caused~~dollar bydenominated ~~higher~~revenue ~~USD~~was ~~converted~~attributable ~~from RMB due~~ to athe RMB appreciation ~~that occurred~~ during the ~~quarter~~three months ended ~~December~~June 3130, ~~2017,~~2018 compared with the same period in ~~2016~~2017. The 18total 13.35% revenue increase in RMB was due to the increased sales of ~~health care products,~~ acer ~~truncetum~~truncatum bunge seed oil and ~~Huoliyan~~Huoliyuan ~~Capsules. During the nine months ended December 31~~Capsule, ~~2017,~~offset weby ~~realized~~decreased ~~$48,212,805 in revenue, representing an increase of 35.9% or $12,734,202 as compared to $35,478,603 for the same period in 2016. The 35.9% revenue increase was due to the increased~~ sales of health care products~~, acer truncatum bunge seed oil, and Huoliyuan Capsules~~.

~~Our~~Part ~~revenues~~of ~~for~~our ~~the~~revenues ~~three~~was ~~months~~generated ~~and~~by ~~nine~~us ~~months ended December 31, 2017 include $6,603,431 and $19,967,630, respectively, that we generated~~ as the distributor offor the health care products manufactured by Shandong Yongchuntang. We purchase the products from Shandong Yongchuntang, a related party, according to the purchase contract signed between the Company and Shandong Yongchuntang. OnPursuant to the renewed one-year contract dated February 20, 2017, the Company agreed to purchase nine products from Shandong Yongchuntang at fixed prices. On February 21, 2018, the Company further renewed the purchase contract with Shandong Yongchuntang for a term of one year ending on February 25, ~~2018~~2019. Pursuant to ~~the~~this most recently renewed one -year contract, the Company ~~agreed~~continues to purchase the nine products from Shandong Yongchuntang at fixed prices without changes in any terms of the previous contract. During the three months ended ~~December~~June 3130, ~~2017~~2018, 38.4% of our total revenue was generated as the distributor of Shandong Yongchuntang, as compared to 3345.48% during the three months ended ~~December~~June 3130, ~~2016~~2017. ~~During~~For the ~~nine~~three months ended ~~December~~June 3130, ~~2017~~2018, ~~41.4%~~our revenue from sales of ~~our~~the ~~total~~health ~~revenue~~care products was ~~generated~~$8,010,598, asrepresenting ~~the~~an ~~distributor~~increase of ~~Shandong~~2.1% ~~Yongchuntang~~or $165,597 as compared to 34$7,845,001 for the same period in 2017.2 The revenue from sales of health care products measured in RMB was decreased by 5.0% but was offset by 7.1% increase due to more USD converted from RMB because a significant RMB appreciation occurred during the ~~nine~~three months ended ~~December~~June 3130, ~~2016~~2018 compared with the same period in 2017. The decrease in sales of the health care products in RMB was primarily due to decrease in sales of several more traditional health care products.

112

~~For~~The sales of Huoliyuan Capsule accounted for 36.5% of our revenue during the three months ended ~~December~~June 3130, ~~2017~~2018, ~~our~~compared ~~revenue~~to ~~from~~37.3% during the three months ended June 30, 2017. The sales of the ~~health~~Huoliyuan ~~care~~Capsule ~~products~~during ofthe three months ended June 30, 2018 were $67,~~603~~630,~~431~~290, ~~represented~~ an increase of 3919.73% or $1,~~877~~235,~~837~~248 as compared to ~~$4,725,594~~the ~~for~~three ~~the~~months ~~same~~ended ~~period~~June in30, ~~2016~~2017. The ~~increase~~revenue infrom sales of ~~the~~Huoliyuan ~~health~~Capsule ~~care~~denominated ~~products~~in ~~was~~RMB ~~primarily~~increased ~~due~~by to11.1%. The ~~the~~other ~~growth~~8.2% of ~~our customer base and~~ the ~~internet~~increase ~~direct-sales.~~in ~~For~~dollar ~~the~~denominated ~~nine months ended December 31, 2017, our~~ revenue ~~from~~was ~~sales~~attributable ofto the ~~health~~RMB ~~care~~appreciation ~~products~~during ~~of$19,967,630~~the ~~represented~~three anmonths ~~increase~~ended ofJune ~~64.4% or $7~~30,~~821,081~~ as2018 compared towith ~~$12,146,549 for~~ the same period in ~~2016~~2017. The ~~significant~~ increase in sales of ~~the~~Huoliyuan ~~health~~Capsule ~~care~~in ~~products~~RMB was primarily due to the ~~growth~~stabilization of ~~our customer base and~~ the ~~internet~~market ~~direct-sales~~competition.

~~The~~Since ~~sales~~July ~~of the~~2015, ~~Huoliyuan~~we ~~Capsule~~have ~~accounted~~produced ~~for~~acer ~~37.7%~~truncatum ofbunge ~~our~~seed ~~revenue~~oil ~~during~~and sold the ~~three~~product ~~months~~to ~~ended~~customers ~~December~~through ~~31,~~our ~~2017,~~distributors. The ~~compared~~acer totruncatum ~~45.5%~~bunge ~~during~~seed oil was extracted from the ~~three~~acer ~~months~~truncatum ~~ended~~pods ~~December~~that ~~31,~~were ~~2016~~purchased from third party vendors. ~~The~~Our ~~sales~~self-grown acer truncatum pods will not be ready to be used for production until approximately the fall of 2018. During the ~~Huoliyuan~~three ~~Capsule~~months ~~accounted~~ended ~~for~~June 4130, 2018, 25.01% of our total revenue ~~during~~was generated from the ~~nine~~sales ~~months~~of ~~ended~~acer ~~December~~truncatum ~~31,~~oil ~~2017~~products, compared to 4816.29% during the ~~nine~~same ~~months~~period ~~ended~~in ~~December~~2017. ~~31,~~During ~~2016. The~~the ~~sales~~three ofmonths ~~the~~ended ~~Huoliyuan~~June ~~Capsule~~30, in2018, the ~~three~~sales ~~months~~of acer ~~ended~~truncatum ~~December~~bunge ~~31,~~seed ~~2017~~oil was $65,~~494~~247,~~994~~959, arepresenting ~~slight~~an increase of 081.73% or $422,~~088~~353,137 as compared to $2,894,822 for the same period ~~for~~in ~~the prior year~~2017. ~~However,~~The ~~the~~revenue ~~actual~~from sales of acer truncatum seed oil products denominated in RMB ~~for~~increased by 68.7%. The other 12.6% of the increase in dollar denominated revenue was attributable to the RMB appreciation during the three months ended ~~December~~June 3130, ~~2017~~2018 ~~decreased by 2.3%~~ compared towith the same period in ~~2016~~2017. ~~but~~The ~~offsetting~~increase byin 3%sales of ~~the~~acer ~~increase~~truncatum ~~that~~seed oil products in RMB was ~~caused~~primarily bydue ~~higher~~to ~~USD~~the ~~converted~~continuing ~~from~~promotion ~~RMB~~of ~~due~~our toacer atruncatum ~~RMB~~bunge ~~appreciation~~seed ~~occurred~~oil ~~during~~by ~~the~~organizing ~~quarter~~conferences ~~ended~~to ~~December~~introduce ~~31,~~the ~~2017,~~features ~~compared~~and ~~with~~benefits of the ~~same~~product ~~period~~to inour ~~2016~~distributors and customers.

~~Since July 2015, the Company has produced acer truncatum bunge seed oil and sold the product to customers through its distributors.~~ The ~~acer~~following ~~truncatum~~is ~~bunge seed oil was extracted from~~ the acer truncatum pods that were purchased from third party vendors. Our self-grown acer truncatum pods will not be ready to be used for production until approximately the fall of 2018. During the three months ended December 31, 2017, 23.9% of our total revenue was generated from the sales ofbreakdown ~~acer~~by ~~truncatum oil~~ products, ~~compared to 21.1%~~ during the ~~same period in 2016. During the~~ three months ended ~~December~~June 3130, ~~2017,~~2018 the sales of acer truncatum bunge seed oil was $4,112,731, representing an increase of 37.4% or $1,119,607 compared to $2,993,124 for the same period in 2016. During the nine months ended December 31, 2017, 17.6% of our total revenue was generated from the sales of acer truncatum oil products, compared to 17.6% during the same period in 2016. During the nine months ended December 31, 2017, the sales of acer truncatum bunge seed oil was $8,498,770, representing an increase of 36.1% or $2,254,334 compared to $6,244,436 for the same period in 2016. The increase in sales of acer truncatum oil products was primarily due to the increased promotion of our acer truncatum bunge seed oil by organizing conferences to introduce the features and ~~benefits of the product to our distributors and customers through internet direct sales. .~~2017:

The following is the sales breakdown by products during the three months ended December 31, 2017 and 2016:

	For the Three Months Ended June 30,
	2018				2017
Health care supplements		8,010,598	38.4	%		7,845,001	45.8	%
Drugs (Huoliyuan Capsule)		7,630,290	36.5	%		6,395,042	37.3	%
Acer truncatum oil		5,247,959	25.1	%		2,894,822	16.9	%
Total		20,888,847	100.0	%		17,134,865	100.0	%

	For the Three Months Ended December 31,
Sales	2017				2016
Health care supplements		6,603,431	38.4	%		4,725,594	33.4	%
Drugs (Huoliyuan Capsule)		6,494,994	37.7	%		6,452,906	45.5	%
Acer truncatum oil		4,112,731	23.9	%		2,993,124	21.1	%
Total		17,211,156	100	%		14,171,624	100	%

The following is the sales breakdown by products during the nine months ended December 31, 2017 and 2016:

	For the Nine Months Ended December 31,
Sales	2017				2016
Health care supplements		19,967,630	41.4	%		12,146,549	34.2	%
Drugs (Huoliyuan Capsule)		19,746,405	41.0	%		17,087,618	48.2	%
Acer truncatum oil		8,498,770	17.6	%		6,244,436	17.6	%
Total		48,212,805	100	%		35,478,603	100	%

Cost of Goods Sold

Our ~~cost~~costs of goods sold ~~were~~ comprised primarily of the cost of finished goods that we purchased from Shandong Yongchuntang, the raw materials ~~that~~ we purchased from third party vendors ~~to produce Huoliyuan Capsules and acer truncatum bunge seed oil~~, and the manufacturing costs of acer truncatum bunge seed oil and Huoliyuan ~~Capsules~~capsule. ~~The cost of manufacturing the Huoliyuan Capsules was approximately 43.3% and 49.8% of the total cost of goods sold during the three months ended December 31, 2017 and 2016, respectively.~~ The cost of manufacturing ~~the~~ Huoliyuan Capsule was approximately 4645.54% and 5242.52% of the total cost of goods sold during the ~~nine months ended December 31, 2017 and 2016, respectively. The cost of manufacturing acer truncatum bunge seed oil was approximately 21.6% and 18.7% of the total cost of goods sold during the~~ three months ended ~~December~~June 3130, ~~2017~~2018 and ~~2016~~2017, respectively. The cost of manufacturing acer truncatum bunge seed oil was approximately 1617.03% and 15.76% of the total cost of goods sold during the ~~nine~~three months ended ~~December~~June 3130, ~~2017~~2018 and ~~2016~~2017, respectively.

During the three months ended ~~December~~June 3130, ~~2017~~2018, our cost of goods sold totaled $1011,~~422~~964,~~916~~700, representing an increase of $21,~~064~~677,~~793~~552 or 2416.73% as compared to $810,~~358~~287,~~123~~148 during the three months ended ~~December~~June 3130, ~~2016~~2017. ~~However,~~There ~~the~~was 24an 8.73% increase in cost ~~was~~in aRMB. ~~net~~The ~~result~~other 8.0% of the ~~actual~~ increase in dollar denominated cost ~~and~~was ~~the~~attributable ~~appreciation~~to ofthe RMB. ~~There~~appreciation ~~was~~during ~~21.4%~~the ~~actual~~three ~~increase~~months inended ~~cost~~June ~~due~~30, to2018 ~~the~~compared ~~increased~~with ~~sales of~~ the ~~acer~~same ~~truncetum~~period ~~bunge~~in ~~seed~~2017. ~~oil~~The ~~and~~percentages of the ~~health~~costs ~~care~~of ~~products~~goods ~~and~~sold ~~the~~to ~~decreased~~total ~~sales~~revenues ofdecreased ~~the~~from ~~Huoliyuan capsules but 3~~60.30% offor the ~~increase~~three ~~was~~months ~~caused~~ended byJune ~~higher USD~~30, ~~converted~~2017 ~~from RMB due~~ to a57.3% ~~RMB~~for ~~appreciation occurred during~~ the three months ended ~~December~~June 3130, ~~2017,~~2018. ~~compared~~The ~~with~~decrease ~~the same period~~ in ~~2016.~~the ~~The~~ percentages of the ~~cost~~costs of goods sold to total revenues ~~increased~~was ~~slightly~~primarily ~~from~~due ~~59.0%~~to ~~for~~ the ~~three~~decreased ~~months~~raw ~~ended December 31~~material, ~~2016~~packaging toand ~~60.6%~~manufacturing cost for ~~the~~acer ~~three~~truncatum ~~months~~bunge ~~ended~~seed ~~December~~oil ~~31, 2017~~products.

During the nine months ended December 31, 2017, our cost of goods sold totaled $29,521,454, representing an increase of $8,239,504 or 38.7% as compared to $21,281,950 during the nine months ended December 31, 2016. However, the 38.7% increase in cost was a net result of the actual increase in cost and the depreciation of RMB. There was 39.4% actual increase in cost due to the increased sales of all products, but 0.7% of the increase in cost was offset by fewer USD converted from RMB due to a RMB depreciation occurred during the nine months ended December 31, 2017, compared with the same period in 2016. The percentages of the cost of goods sold to total revenues increased slightly from 60.0% for the nine months ended December 31, 2016 to 61.2% for the nine months ended December 31, 2017.3

Gross Profit

Gross profit for the three months ended ~~December~~June 3130, ~~2017~~2018 was $68,~~788~~924,~~240~~147, an increase of 1630.83% or $~~974~~2,~~739~~076,430 as compared to the same period for the prior year. The overall gross profit as a percentage of net revenues was approximately 3942.47% for the three months ended ~~December~~June 3130, ~~2017~~2018, a slight ~~decreased~~increase from 4140.0% for the same period of ~~2016~~2017. The gross profit as percentage of net revenues for the health care products was approximately 44.54% for the three months ended ~~December~~June 3130, ~~2017~~2018, a slight ~~increase~~decrease from 44.37% for the same period of ~~2016~~2017. The gross profit as percentage of net revenues for Huoliyuan ~~Capsules~~ was approximately 3028.67% for the three months ended ~~December~~June 3130, ~~2017~~2018, adecreased ~~decrease~~ from 3532.61% for the same period of ~~2016~~2017. The gross profit as percentage of net revenues for acer truncatum bunge seed oil was approximately 4560.45% for the three months ended ~~December~~June 3130, ~~2017~~2018, aincreased ~~decrease~~ from 4744.75% for the same period of ~~2016~~2017. The lower gross profit as percentage of net revenue for Huoliyuan ~~Capsules~~ during the three months ended ~~December~~June 3130, ~~2017~~2018 was primarily due to the increased raw material and manufacturing costs. The ~~lower~~higher gross profit as percentage of net revenue for the acer truncatum bunge seed oil during the three months ended ~~December~~June 3130, ~~2017~~2018 was primarily due to the decreased ~~sales~~raw ~~price~~material, ~~offset~~packaging byand ~~the~~manufacturing ~~decreased raw material~~ cost.

13The comparison of the gross profits for the three months ended June 30, 2018 and 2017 as follows:

The comparison of the gross profits for the three months ended December 31, 2017 and 2016 as follows:

	June 30, 2018		Gross Profit Margin			June 30, 2017		Gross Profit Margin			Change in $		Variance
Health care supplements		3,557,291		44.4	%		3,508,114		44.7	%		49,177		1.4	%
Drugs (Huoliyuan Capsule)		2,193,667		28.7	%		2,051,767		32.1	%		141,900		6.9	%
Acer truncatum oil		3,173,189		60.5	%		1,287,836		44.5	%		1,885,353		146.4	%
Total		8,924,147		42.7	%		6,847,717		40.0	%		2,076,430		30.3	%

	December 31, 2017		Gross Profit Margin			December 31, 2016		Gross Profit Margin			Change in $			Variance
Health care supplements		2,935,950		44.5	%		2,092,442		44.3	%		843,508			40.3	%
Drugs (Huoliyuan Capsule)		1,986,669		30.6	%		2,294,172		35.6	%		(307,503	)		(13.4	)%
Acer truncatum oil		1,865,621		45.4	%		1,426,887		47.7	%		438,734			30.7	%
Total		6,788,240		39.4	%		5,813,501		41.0	%		974,739			16.8	%

Gross profit for the nine months ended December 31, 2017 was $18,691,351, an increase of 31.7% or $4,494,698 as compared to the same period for the prior year. The overall gross profit as a percentage of net revenues was approximately 38.8% for the nine months ended December 31, 2017, slightly decreased from 40.0% for same period of 2016. The gross profit as percentage of net revenues for the health care products was approximately 44.6% for the nine months ended December 31, 2017, a slight increase from 44.4% for the same period of 2016. The gross profit as percentage of net revenues for Huoliyuan Capsules was approximately 30.4% for the nine months ended December 31, 2017, a decrease from 34.6% for the same period of 2016. The gross profit as a percentage of net revenues for acer truncatum bunge seed oil was approximately 44.5% for the nine months ended December 31, 2017, a decrease from 46.4% for the same period of 2016. The lower gross profit as percentage of net revenue for Huoliyuan Capsules during the nine months ended December 31, 2017 was due to the increased raw material and manufacturing costs. The lower gross profit as percentage of net revenue for the acer truncatum bunge seed oil during the nine months ended December 31, 2017 was primarily due to the net impact of decreased sales price offset by the decreased raw material cost.

The comparison of the gross profits for the nine months ended December 31, 2017 and 2016 as follows:

	December 31, 2017		Gross Profit Margin			December 31, 2016		Gross Profit Margin			Change in $		Variance
Health care supplements		8,900,597		44.6	%		5,393,886		44.4	%		3,506,711		65.0	%
Drugs (Huoliyuan Capsule)		6,008,881		30.4	%		5,906,331		34.6	%		102,550		1.7	%
Acer truncatum oil		3,781,873		44.5	%		2,896,436		46.4	%		885,437		30.6	%
Total		18,691,351		38.8	%		14,196,653		40.0	%		4,494,698		31.7	%

Research and Development Expenses

Our R&D expenses for the three months ended ~~December~~June 3130, ~~2017~~2018 were $~~280~~322,~~229~~733 or ~~approximately~~approximate 1.65% of total corresponding revenue, an increase of $~~640~~258,355 or 0401.23%, as compared to $~~279~~64,~~589~~378 or approximately 2.0.4% of total corresponding revenue for the three months ended ~~December~~June 3130, ~~2016. Our R&D expenses for the nine months ended December 31,~~ 2017 ~~were $406,640 or approximate 0~~.~~8% of total corresponding revenue, a decrease of $347,845 or 46.1%, as compared to $754,485 or approximately 2.1% of total corresponding revenue for the nine months ended December 31, 2016.~~ The ~~lower~~increase ~~R&D~~in ~~expense and the decrease on the percentage of~~ R&D ~~expense~~expenses ~~over total revenue compared with the same period of the prior year~~ was ~~mainly~~primarily due to the ~~decreased~~increased ~~purchase~~cost of the materials ~~that were~~ used inby the R&D department.

14Our long-term goal is to utilize advanced biological technology to refine and extract the beneficial compounds in plants that have traditionally been known to have medicinal benefits, primarily gingko and acer trunkatum bunge plants. As of June 30, 2018, we had 27 staff in R&D department.

Our long-term goal is to utilize advanced biological technology to refine and extract the beneficial compounds in plants that have traditionally been known to have medicinal benefits, primarily gingko and acer trunkatum bunge plants. As of December 31, 2017, we had 27 employees in the in the research and development department.

Operating expenses

Our selling expenses consist primarily of sales commissions, advertising and promotion expenses, freight charges and related compensation. Our selling expenses for the three months ended ~~December~~June 3130, ~~2017~~2018 were $1,~~278~~391,~~544~~603 or 76.47% of our total revenue for the period, representing slight ~~increase~~decrease on the percentage of total revenue from 67.82% for the prior year's quarter ended ~~December~~June 3130, ~~2016~~2017. Our selling expenses for the three months ended ~~December~~June 3130, ~~2017~~2018 increased by 3112.96% or $~~309~~155,~~049~~311 as compared to the same period in the prior year. There was a 4.8% increase in selling expenses in RMB. The other 7.8% of the increase in dollar denominated amount was attributable to the RMB appreciation during the three months ended June 30, 2018 compared with the same period in 2017. The increase in selling expenses was primarily due to the increase in shipping ~~cosst,~~cost and sales commission as a result of increased sales, and ~~increased~~salary ~~advertising costs~~expense.

Our ~~selling~~G&A expenses for the ~~nine~~three months ended ~~December~~June 3130, ~~2017~~2018 were $31,~~596~~081,~~983~~049 or 7.5.2% of our total revenue for the period, representing ana ~~increase~~slight decrease on the percentage of total revenue from 75.13% for the prior year's ~~nine~~quarter ~~months~~ ended ~~December~~June 3130, ~~2016~~2017. Our ~~selling~~G&A expenses for the ~~nine~~three months ended ~~December~~June 3130, ~~2017~~2018 increased by 4219.40% or $1172,~~071,805~~644 as compared to the same period in the prior year. There ~~The~~was a 10.8% increase in ~~selling~~G&A expenses ~~was~~in ~~primarily~~RMB. ~~due~~The toother 8.2% of the increase in ~~shipping~~dollar ~~costs~~denominated amount was attributable to the RMB appreciation during the three months ended June 30, ~~sales~~2018, ~~commission~~compared aswith athe ~~result~~same ofperiod ~~increased~~in ~~sales~~2017. ~~and~~The ~~increased~~increase ~~advertising~~in ~~costs~~G&A expenses was primarily due to the increase in depreciation and consulting expenses.

~~Our G&A expenses for the three months ended December 31, 2017 were $1,445,469 or 8.~~4% of our total revenue for the period, representing a slight increase on the percentage of total revenue from 8.0% for the prior year's quarter ended December 31, 2016. Our G&A expenses for the three months ended December 31, 2017 increased by 27.1% or $307,860 as compared to the same period in the prior year. The increase in G&A expenses was primarily due to the increase in depreciation and amortization expenses and legal and consulting fees.

Our G&A expenses for the nine months ended December 31, 2017 were $3,222,132 or 6.7% of our total revenue for the period, representing a decrease on the percentage of total revenue from 7.7% for the prior year's nine months ended December 31, 2016. Our G&A expenses for the nine months ended December 31, 2017 increased by 18.4% or $499,664 as compared to the same period in the prior year. The increase in G&A expenses was primarily due to the increase in depreciation and amortization expenses and legal and consulting fees offset by the decrease of stock options amortization.

Income Taxes

Income tax expense increased by $104,377 during the three months ended December 31, 2017, as compared to the prior year's quarter ended December 31, 2016, as a result of the increase in income from operation.

Income tax expense increased by $953,497 during the nine months ended December 31, 2017, as compared to the nine months ended December 31, 2016, as a result of the increase in income from operations and the gain from disposal of acer truncatum bunge plants.

Net Income

As a result of ~~the~~ above, during the three months ended ~~December~~June 3130, ~~2017~~2018, we realized net income of $24,~~862~~626,~~281~~626, representing a 1017.68% or $~~274~~698,~~116~~998 increase, compared to $23,~~588~~927,~~165~~628 during the three months ended ~~December~~June 3130, ~~2016~~2017. The increase was mainly due to the higher revenue from sales of ~~health care products and~~ acer truncatum bunge seed oil, inand Huoliyuan Capsule and the ~~three~~lower ~~months~~production ~~ended~~cost ~~December~~for ~~31,~~acer ~~2017~~truncatum bunge seed oil.

~~During~~Income the nine months ended December 31, 2017, we realized net income of $9,095,525, representing a 47.7% or $2,936,125 increase, compared to $6,159,400 during the nine months ended December 31, 2016. The increase was mainly due to the higher revenue from sales of all products, the lower R&D expenses and the gain from disposal of acer truncatum bunge plants in the nine months ended December 31, 2017.Taxes

15Income tax expense increased by $233,000 during the three months ended June 30, 2018, as compared to the prior quarter ended June 30, 2017, as a result of the increase in income from operation.

Comprehensive Income (Loss)

Our business operates entirely in Chinese RMB, but we report our results in our SEC filings in ~~USD~~U.S. Dollars. The conversion of our accounts from RMB to ~~USD~~Dollars results in translation adjustments, which are reported as a middle step between net income and comprehensive income. The net income is added to the retained earnings on our balance sheet while the translation adjustment is added to a line item on our balance sheet labeled "Accumulated other comprehensive income (loss)," since it is more reflective of changes in the relative values of U.S. and Chinese currencies than of the success of our business. During the three months ended ~~December~~June 3130, ~~2017~~2018, the effect of converting our financial results to ~~USD~~Dollars was ~~income~~a loss of $15,~~557~~537,~~010~~362 to our other comprehensive income, as compared to aincome ~~loss~~ of $31,~~096~~655,~~813~~501 during the three months ended ~~December~~June 3130, ~~2016~~2017 as a result of the currency exchange rate fluctuation.

During the nine months ended December 31, 2017, the effect of converting our financial results to USD was income of $5,121,310 to our other comprehensive income, as compared to a loss of $5,747,120 during the nine months ended December 31, 2016 as a result of the currency exchange rate fluctuation.

Noncontrolling interest

InSince March 18, 2017, Shandong Yongchuntang ~~became~~ has become a 3% shareholder of Shandong Spring. During the three months ended ~~December~~June 3130, ~~2017~~2018, $~~132~~27,~~578~~322 of comprehensive ~~income~~loss was attributable to Shandong Yongchuntang.

During the nine months ended December 31, 2017, $425,325 of comprehensive income was attributable to Shandong Yongchuntang.

Liquidity and Capital Resources

Our principal ~~source~~sources of liquidity were generated from our operations. As of ~~December~~June 3130, ~~2017~~2018, we had $2331,~~328~~776,~~756~~537 in working capital, an increase of $73,~~836~~693,~~335~~599 or 5013.62% as compared to $1528,~~492~~082,~~421~~938 in working capital as of March 31, ~~2017~~2018. ~~Based~~The onincrease ~~our~~in ~~current~~working ~~operating~~capital ~~plan,~~primarily weresulted ~~believe~~from ~~that~~our ~~existing~~increased cash ~~and~~inflow ~~cash~~from ~~equivalents~~higher ~~balances,~~net income and the ~~funds~~decreased tobalances bein ~~generated~~purchase bydeposits ~~operations will be sufficient~~ to ~~meet~~related ~~our~~party ~~working capital~~ and ~~capital~~increased ~~requirements~~balance ~~for~~in ~~our~~tax ~~current~~payable ~~operations~~offset ~~for~~by atincreased ~~least the next 12 months. Our operations produced positive~~ cash ~~flow of $12~~outflow,~~132,421~~ ~~during~~resulting ~~the~~from ~~nine~~increased ~~months~~balance ~~ended~~in ~~December 31, 2017. We had~~ accounts receivable ~~of $209~~,~~784~~ ~~outstanding~~inventory ~~as of December 31, 2017. We expect our marketing activities to continue to help generate positive cash flow. The operations of our own manufacturing since fiscal year 2010~~ and ~~the~~decreased ~~development~~balance ofin ~~our~~accounts ~~own~~payable ~~acer truncatum bunge planting bases have put some pressure on our cash flow. We may be required to seek additional capital~~ and ~~reduce~~advance ~~certain~~from ~~spending~~customers as ~~needed~~of onJune an30, ~~on-going basis~~2018. ~~There can be no assurance that any additional financing will be available on acceptable terms.~~

InBased ~~order~~on ~~to fully implement~~ our ~~business~~current operating plan, ~~however~~we believe that existing cash and cash equivalents balances, weand ~~will~~the ~~require~~funds ~~additional~~to ~~capital~~be ~~contributions.~~generated ~~Our~~by ~~budget~~operations will be sufficient to ~~increase~~meet our ~~capacity~~working tocapital ~~manufacture~~and ~~blended~~capital ~~edible~~requirements ~~oil~~for ~~products~~our iscurrent $5operations ~~million~~for at least the next 12 months. Our ~~expectation~~operations produced positive cash flow of $4,164,039 ~~therefore~~during the three months ended June 30, is2018. toWe ~~access~~had ~~the~~accounts ~~capital~~receivable ~~markets~~of in$364,809 ~~the~~outstanding Uas of June 30, 2018.S. ~~and~~We ~~China~~expect our marketing activities to ~~obtain~~continue ~~the~~to ~~funds~~help wegenerate ~~need~~positive cash flow. The Atdevelopment ~~present~~of weour own acer truncatum bunge planting bases and expanded manufacturing of acer truncatum bunge seed oil products have noput ~~firm~~some ~~commitment~~pressure ~~from~~on ~~any~~our ~~source~~cash ~~for~~flow. We may be required to seek additional ~~funds~~capital and ~~there~~reduce certain spending as needed on an ongoing basis. There can be no assurance that ~~the~~any ~~funds~~additional financing will be available on ~~terms~~ acceptable ~~to us~~terms.

	For the Nine Months Ended December 31,
	2017			2016			Change in $		Change in %
Net cash provided by operating activities	$	12,132,421		$	7,283,144			4,849,277		66.6	%
Net cash used in investing activities	$	(4,453,916	)	$	(4,508,068	)		54,152		(1.2	)%
Effect of exchange rate change on cash and cash equivalents	$	781,409		$	(629,729	)		1,411,138		(224.1	)%
Net increase in cash and cash equivalents	$	8,459,914		$	2,145,347			6,314,567		294.3	%
Cash and cash equivalents, beginning balance	$	10,308,622		$	7,639,084			2,669,538		34.9	%
Cash and cash equivalents, ending balance	$	18,768,536		$	9,784,431			8,984,105		91.8	%

In order to fully implement our business plan, however, we will require capital contributions far in excess of our current asset value. Our budget for bringing our manufacturing facility to an operating level that assures profitability is $5 million. Our expectation, therefore, is that we will seek to access the capital markets in both the U.S. and China to obtain the funds we need. At present we have no commitment from any source for additional funds and there can be no assurance that the funds will be available on terms acceptable to us.

The following table sets forth a summary of our cash flows for the periods indicated:

	For the Three Months Ended June 30,
	2018			2017			Change in $			Change in %
Net cash provided by operating activities	$	4,164,039		$	5,554,246			(1,390,207	)		(25.0	)%
Net cash used in investing activities	$	(255,151	)	$	(1,210,838	)		955,687			(78.9	)%
Effect of exchange rate change on cash and cash equivalents	$	(1,399,169	)	$	240,841			(1,640,010	)		(681.0	)%
Net increase in cash and cash equivalents	$	2,509,719		$	4,584,249			(2,074,530	)		(45.3	)%
Cash and cash equivalents, beginning balance	$	25,353,360		$	10,308,622			15,044,738			145.9	%
Cash and cash equivalents, ending balance	$	27,863,079		$	14,892,871			12,970,208			87.1	%

Operating Activities

Net cash provided by operating activities was $124,~~132~~164,~~421~~039 for the ~~nine~~three months ended ~~December~~June 3130, ~~2017~~2018, which was ana ~~increase~~decrease of 6625.60% or $41,~~849~~390,~~277~~207 from the $75,~~283~~554,~~144~~246 net cash provided by operating activities for the same period of the prior year. The ~~increase~~decrease ~~was~~ primarily ~~due~~resulted ~~to the increase~~ from increased cash ~~inflow~~outflow from ~~sales~~the ~~revenue~~increased ~~and~~balance in accounts receivable, and ~~the~~inventory ~~decrease~~and decreased balance in advance from customers and accounts payable offset by increased cash ~~out~~inflow, ~~flow~~resulting from ~~inventory~~higher net income and decreased balance in purchase deposit to related party and increased balance in tax payable.

Investing Activities

During the ~~nine~~three months ended ~~December~~June 3130, ~~2017~~2018, our net cash used in investing activities was $4255,~~453~~151,~~916,~~ as compared to $41,~~508~~210,~~068~~838 of net cash used for the ~~nine~~three months ended ~~December~~June 3130, ~~2016~~2017. The cash used in investing activities for the ~~nine~~three months ended ~~December~~June 3130, 2018 of $255,151 was primarily attributable to the acquisition of property, plant and equipment of $70,793, and capital expenditures of $184,358 in acer truncatum bunge planting. The cash used in investing activities for the three months ended June 30, 2017 of $41,~~453~~210,~~916~~838 was primarily attributable to the acquisition of property, plant and equipment of $2,~~125~~080,~~638~~416, and capital expenditures of $41,~~457~~215,~~916~~128 in acer truncatum bunge planting, and offsetting by a cash receipt of $2,~~129~~084,~~638~~706 from ~~the~~ disposal of acer truncatum bunge plants. The decrease in net cash used by investing activities was primarily due to the lower capital expenditures in acquisition of property, plant and equipment and acer truncatum planting during the three months ended June 30, 2018 compared with the same period in 2017.

Financing Activities

No net cash was generated or used by financing activities over the three ~~and nine~~ months ended ~~December~~June 3130, ~~2017~~2018 and ~~2016~~2017.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

A smaller reporting company is not required to provide the information required by this Item.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

The term "disclosure controls and procedures" (defined in SEC Rule 13a-15(e)) refers to the controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files under the Securities Exchange Act of 1934 (the "Exchange Act") is recorded, processed, summarized and reported within required time periods. The Company's management, with the participation of the Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of the Company's disclosure controls and procedures as of the end of the period covered by this quarterly report on Form 10-Q (the "Evaluation Date"). Based on that evaluation, the Company's Chief Executive Officer and Chief Financial Officer have concluded that, as of the Evaluation Date, such controls and procedures were not effective. Our material weaknesses in internal control over financial reporting and efforts to correct such weaknesses are discussed in Item 9A of our Annual Report on Form 10-K for the year ended March 31, 2018 filed on June 29, 2018.

Changes in Internal Controls

The term "internal control over financial reporting" (defined in SEC Rule 13a-15(f)) refers to the process of a company that is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. The Company's management, with the participation of the Chief Executive Officer and Chief Financial Officer, has evaluated any changes in the Company's internal control over financial reporting that occurred during the quarter ended ~~December~~June 3130, ~~2017~~2018, and they have concluded that there was no change to the Company's internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting.

167

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

There are no material pending legal proceedings to which the Company is a party.

Item 1A. Risk Factors

A smaller reporting company is not required to provide the information required by this Item.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Not Applicable

Item 3. Defaults Upon Senior Securities.

None

Item 4. Removed and Reserved

Item 5. Other Information

None

Item 6. Exhibits

31.1	Rule 13a-14(a)/ 15d-14(a) Certification of Chief Executive Officer

31.2	Rule 13a-14(a)/ 15d-14(a) Certification of Chief Financial Officer

32	Section 1350 Certification of Chief Executive Officer and Chief Financial Officer

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.

SIGNATURES

In accordance with Section 13 or 15(d) of the Exchange Act, the Registrant has caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

CHINA YCT INTERNATIONAL GROUP, LTD.

Date: ~~February~~August 14, 2018

/s/ ~~Yan~~ Tinghe Yan

~~Yan~~ Tinghe Yan, Chief Executive Officer (Principal Executive Officer)

/s/ Li Chuanmin Li

Li Chuanmin Li, Chief Financial Officer (Principal Financial Officer)

18 9

Filing Compare · SPRING PHARMACEUTICAL GROUP, INC.