UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



FORM 10-Q



x
Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934



For the quarterly period ended March 31,
2018 or



o
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 0-21384



YBCC,
INC.

(Exact Name of Registrant as Specified in
its Charter)



|Nevada                          |  | 13-3367421         
|------------------------------- |  | -------------------
|(State or Other Jurisdiction of |  | (I.R.S. Employer   
|Incorporation or Organization)  |  | Identification No.)



17800 Castleton Street, Suite 386, City
of Industry, California

(Address of Principal Executive Offices)



91748

(Zip Code)



(626) 213-3945

(Registrant’s Telephone Number, Including
Area Code)



___________________________________________

(Former name, former address and former
fiscal year, if changed since last report)



Indicate by check mark whether the registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements
for the past 90 days.



x
Yeso
No



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



| | Large accelerated filero | Accelerated filero        
| | ------------------------ | --------------------------
| |                          |                           
| | Non-accelerated filero   | Smaller reporting companyx
| |                          |                           
| | Emerging growth companyo |                           



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



Indicate by check mark whether the registrant is a shell company
(as defined in Exchange Act Rule 12b-2 of the Exchange Act).

o
Yesx
No



The number of shares outstanding of the Issuer’s common
stock as of May 15, 2018 was 9,894,214.
















YBCC,
Inc.

and
Subsidiaries



FORM 10-Q for the Quarter Ended March
31, 2018



INDEX



|                               |  | Page                                                                                  |   
|------------------------------ |  | ------------------------------------------------------------------------------------- | --
|PART I - FINANCIAL INFORMATION
|                               |  |                                                                                       |   
|Item 1.                        |  | Financial Statements                                                                  |   
|                               |  |                                                                                       |   
|Item 2.                        |  | Management’s Discussion and Analysis of Financial Condition and Results of Operations |   
|                               |  |                                                                                       |   
|Item 3.                        |  | Quantitative and Qualitative Disclosures About Market Risk                            |   
|                               |  |                                                                                       |   
|Item 4.                        |  | Controls and Procedures                                                               |   
|                               |  |                                                                                       |   
|PART II - OTHER INFORMATION   
|                               |  |                                                                                       |   
|Item 1.                        |  | Legal Proceedings                                                                     |   
|                               |  |                                                                                       |   
|Item 1A.                       |  | Risk Factors                                                                          |   
|                               |  |                                                                                       |   
|Item 2.                        |  | Unregistered Sale of Equity Securities and Use of Proceeds                            |   
|                               |  |                                                                                       |   
|Item 3.                        |  | Defaults Upon Senior Securities                                                       |   
|                               |  |                                                                                       |   
|Item 4.                        |  | Mine Safety Disclosures                                                               |   
|                               |  |                                                                                       |   
|Item 5.                        |  | Other Information                                                                     |   
|                               |  |                                                                                       |   
|Item 6.                        |  | Exhibits                                                                              |   
|                               |  |                                                                                       |   
|Signatures                     |  |                                                                                       | 24











2






PART I - FINANCIAL
INFORMATION



ITEM 1. FINANCIAL
STATEMENTS





YBCC, INC. , AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS





|                                                                                                                                                                                |  | March 31, 2018 |            |   | December 31, 2017 |  
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | -------------- | ---------- | - | ----------------- | -
|                                                                                                                                                                                |  | (unaudited)    |            |   |                   |  
|Assets                                                                                                                                                                          |  |                |            |   |                   |  
|Current assets                                                                                                                                                                  |  |                |            |   |                   |  
|Cash and cash equivalents                                                                                                                                                       |  | $              | 81,372     |   |                   | $
|Accounts receivable - net                                                                                                                                                       |  |                | 64,421     |   |                   |  
|Accounts receivable - Related party                                                                                                                                             |  |                | 13,391     |   |                   |  
|Other receivable                                                                                                                                                                |  |                | 48,049     |   |                   |  
|Advance to suppliers                                                                                                                                                            |  |                | 125,173    |   |                   |  
|Prepaid expenses                                                                                                                                                                |  |                | 50,282     |   |                   |  
|Inventory - net                                                                                                                                                                 |  |                | 266,518    |   |                   |  
|Total current assets                                                                                                                                                            |  |                | 649,206    |   |                   |  
|                                                                                                                                                                                |  |                |            |   |                   |  
|Property, plant, and equipment - net                                                                                                                                            |  |                | 2,579,783  |   |                   |  
|                                                                                                                                                                                |  |                |            |   |                   |  
|Intangible assets - net                                                                                                                                                         |  |                | 748,969    |   |                   |  
|                                                                                                                                                                                |  |                |            |   |                   |  
|Other assets                                                                                                                                                                    |  |                |            |   |                   |  
|Deposits                                                                                                                                                                        |  |                | 6,158      |   |                   |  
|Total other assets                                                                                                                                                              |  |                | 6,158      |   |                   |  
|                                                                                                                                                                                |  |                |            |   |                   |  
|Total assets                                                                                                                                                                    |  | $              | 3,984,116  |   |                   | $
|                                                                                                                                                                                |  |                |            |   |                   |  
|Liabilities and Equity                                                                                                                                                          |  |                |            |   |                   |  
|                                                                                                                                                                                |  |                |            |   |                   |  
|Current liabilities                                                                                                                                                             |  |                |            |   |                   |  
|Accounts payable                                                                                                                                                                |  | $              | 69,266     |   |                   | $
|Accrued expenses                                                                                                                                                                |  |                | 166,957    |   |                   |  
|Customer deposits                                                                                                                                                               |  |                | 125,892    |   |                   |  
|Taxes payble                                                                                                                                                                    |  |                | 100,678    |   |                   |  
|Other payable                                                                                                                                                                   |  |                | 289,768    |   |                   |  
|Loan Payable-unrelated party                                                                                                                                                    |  |                | 66,157     |   |                   |  
|Other payable-related party                                                                                                                                                     |  |                | 3,005,699  |   |                   |  
|Total current liabilities                                                                                                                                                       |  |                | 3,824,417  |   |                   |  
|Total liabilities                                                                                                                                                               |  |                | 3,824,417  |   |                   |  
|                                                                                                                                                                                |  |                |            |   |                   |  
|Equity                                                                                                                                                                          |  |                |            |   |                   |  
|Convertible preferred shares: $0.0001 par value, 50,000,000 shares authorized, 974,370 series A issued and outstanding as of March 31, 2018 and December 31, 2017, respectively |  |                | 98         |   |                   |  
|Common stock $0.001 par value, 900,000,000 shares authorized, 9,894,214 shares issued and outstanding of March 31,
2018 and December 31, 2017, respectively                     |  |                | 9,894      |   |                   |  
|Additional paid in capital                                                                                                                                                      |  |                | 1,162,328  |   |                   |  
|Accumulated foreign currency exchange loss                                                                                                                                      |  |                | (25,484    | ) |                   |  
|Accumulated deficit                                                                                                                                                             |  |                | (1,269,532 | ) |                   |  
|Total YBCC, Inc stockholders' equity                                                                                                                                            |  |                | (122,696   | ) |                   |  
|Non-controlling interest                                                                                                                                                        |  |                | 282,395    |   |                   |  
|Total equity                                                                                                                                                                    |  |                | 159,699    |   |                   |  
|Total liabilities and equity                                                                                                                                                    |  | $              | 3,984,116  |   |                   | $



See accompanying notes to these unaudited consolidated financial statements





3








YBCC, INC., AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

(UNAUDITED)



|                                                                  |  | For The Three Months Ended March 31, |          
|----------------------------------------------------------------- |  | ------------------------------------ | ---------
|                                                                  |  | 2018                                 |          
|Sales revenue                                                     |  | $                                    | 261,180  
|Cost of goods sold                                                |  |                                      | 219,253  
|Gross profit                                                      |  |                                      | 41,927   
|                                                                  |  |                                      |          
|Operating expenses                                                |  |                                      |          
|Selling expenses                                                  |  |                                      | 3,080    
|General & administrative expenses                                 |  |                                      | 144,010  
|Total operating expenses                                          |  |                                      | 147,090  
|                                                                  |  |                                      |          
|Loss from operations                                              |  |                                      | (105,163 
|                                                                  |  |                                      |          
|Other income (expenses)                                           |  |                                      |          
|Other income (expense)                                            |  |                                      | (5,031   
|Interest income                                                   |  |                                      | –        
|Total other income (expenses)                                     |  |                                      | (5,031   
|                                                                  |  |                                      |          
|Loss before income taxes                                          |  |                                      | (110,194 
|Provision for income tax                                          |  |                                      | –        
|Net Loss                                                          |  |                                      | (110,194 
|                                                                  |  |                                      |          
|Less: net loss attributable to non-controlling interest           |  |                                      | (20,339  
|Net loss attributable to the Company                              |  | $                                    | (89,855  
|                                                                  |  |                                      |          
|Net Loss                                                          |  | $                                    | (110,194 
|Other Comprehensive Income                                        |  |                                      |          
|Foreign currency translation gain attributable to the Company     |  |                                      | 11,097   
|Comprehensive loss                                                |  |                                      | (78,758  
|                                                                  |  |                                      |          
|Less: comprehensive loss attributable to non-controlling interest |  |                                      | 5,438    
|Net comprehensive loss attributable to the Company                |  | $                                    | (84,196  
|                                                                  |  |                                      |          
|Loss per weighted average share of common stock - basic& diluted  |  | $                                    | (0.01    
|                                                                  |  |                                      |          
|Weighted average share outstanding - basic & diluted              |  |                                      | 9,894,214



See accompanying notes to these unaudited consolidated financial statements





4








YBCC, INC., AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS





|                                                                                      |  | For The Three Months Ended March 31, |         
|------------------------------------------------------------------------------------- |  | ------------------------------------ | --------
|                                                                                      |  | 2018                                 |         
|                                                                                      |  |                                      |         
|Operating activities                                                                  |  |                                      |         
|Net Loss                                                                              |  | $                                    | (110,194
|                                                                                      |  |                                      |         
|Adjustment to reconcile net loss to net cash provided (used) by operating activities: |  |                                      |         
|Depreciation                                                                          |  |                                      | 57,503  
|Amortization                                                                          |  |                                      | 4,025   
|                                                                                      |  |                                      |         
|Changes in operating assets and liabilities:                                          |  |                                      |         
|Accounts receivable                                                                   |  |                                      | (63,605 
|Accounts receivable-related party                                                     |  |                                      | (13,221 
|Other receivable                                                                      |  |                                      | (13,388 
|Advance to suppliers                                                                  |  |                                      | (103,100
|Prepaid expenses                                                                      |  |                                      | 1,122   
|Inventory                                                                             |  |                                      | (132,744
|Deposits                                                                              |  |                                      | –       
|Accounts payable                                                                      |  |                                      | (96,100 
|Accrued expense                                                                       |  |                                      | 41,469  
|Customer deposit                                                                      |  |                                      | 92,230  
|Customer deposit-related party                                                        |  |                                      | –       
|Tax payable                                                                           |  |                                      | 5,065   
|Other payable                                                                         |  |                                      | (35,256 
|Cash used in operating activities                                                     |  |                                      | (366,194
|                                                                                      |  |                                      |         
|Cash flow used in investing activities:                                               |  |                                      |         
|Deferred cost                                                                         |  |                                      | –       
|Purchase of property and equipment                                                    |  |                                      | (5,123  
|Cash used in investing activities                                                     |  |                                      | (5,123  
|                                                                                      |  |                                      |         
|Cash flow provided (used) by financing activities:                                    |  |                                      |         
|Advance from (repayment to) related party                                             |  |                                      | 10,000  
|Loan payable -unrelated party                                                         |  |                                      | 65,318  
|Cash provided by (used in) financing activities                                       |  |                                      | 75,318  
|                                                                                      |  |                                      |         
|Effects of currency translation on cash                                               |  |                                      | 7,764   
|                                                                                      |  |                                      |         
|Net decrease in cash                                                                  |  |                                      | (288,235
|Cash at beginning of year                                                             |  |                                      | 369,607 
|Cash at end of year                                                                   |  | $                                    | 81,372  
|                                                                                      |  |                                      |         
|Supplementary Disclosures of Cash Flow                                                |  |                                      |         
|Cash paid during the year for                                                         |  |                                      |         
|Income taxes                                                                          |  | $                                    | –       
|Interest                                                                              |  | $                                    | –       
|                                                                                      |  |                                      |         
|Non-cash investing and financing activities:                                          |  |                                      |         
|Issuance of common stock for subscription received previously                         |  | $                                    | –       







See accompanying notes to these unaudited consolidated financial statements





5






ybcc,
Inc. and Subsidiaries

Notes
to Unaudited Consolidated Financial Statements



NOTE 1 - ORGANIZATIONS AND
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES



Organization and Operations
– YBCC, Inc., (The “Company” or “YBAO”), formerly known as International Packaging and Logistic Group,
Inc., a Nevada corporation, was originally incorporated on June 2, 1986, in the state of Delaware. On April 17, 2008, the Company
redomiciled form the State of Delaware to the State of Nevada.



On July 2, 2007, the Company through its
wholly-owned subsidiary, YesRx.com (“YesRx”) acquired all the outstanding shares of H&H Glass, Inc. (“H&H
Glass”), in exchange for 3,915,000 shares of its common stock in a reverse triangular merger.



On May 15, 2016, the Company and Xiuhua
Song (the “Purchaser”) entered into a Stock Purchase Agreement (the “Purchase Agreement”), pursuant to
which IPLO (the “Seller”) would sell to the Purchaser, and the Purchaser will purchase from the Seller, an aggregate
of 3,915,000 newly issued shares of IPLO Common Stock (the “Shares”), which Shares represented 87% of the issued and
outstanding shares of common stock. On July 1, 2016, this transaction was completed.



On July 1, 2016, Standard Resources Ltd.
(“Standard”), previously IPLO’s majority stockholder, and IPLO entered into a share purchase agreement (“H&H
Vend Out”) whereby Standard would cancel 3,915,000 shares of IPLO common stock held by it in exchange for all of the outstanding
shares of H&H Glass. The H&H Glass Vend Out was completed on August 31, 2016.



On July 1, 2016, the Company executed a
Share Exchange Agreement (“Exchange Agreement”) by and among Yibaoccyb Limited, a British Virgin Islands limited
liability company (“Yibaoccyb”), and the stockholders of 51% of Yibaoccyb’s common stock (the “Yibaoccyb
Shareholders”), on the one hand, and the Company, on the other hand. Yibaoccyb owns 100% of YibaoConfucian Co., Ltd.
(“YibaoHK”), a Hong Kong company. YibaoHK will own 100% of Shenzhen Confucian Biologics Co. Ltd. (yet to be
formed, “Yibao”), which will be a wholly foreign-owned enterprise (“WFOE”) under the laws of the
Peoples’ Republic of China (“PRC” or “China”). On August 31, 2016, YibaoHK entered
into a series of contractual arrangements with Shandong Confucian Biologics Co., Ltd. (“Confucian”) which is
a limited liability company headquartered in, and organized under the laws of, the PRC. The contractual arrangements are discussed
below.



The Exchange Agreement was completed on
August 31, 2016 concurrent with the H&H Vend Out. The Company issued 2,040,000 shares of the Company’s common stock (the
“IPLO Shares”) to the Yibaoccyb Shareholders in exchange for 51% of the common stock of Yibaoccyb.



On December 22, 2016, the Company amended
its Certificate of Incorporation (the “Amendment”). As a result of the Amendment, the Company’s corporate name
was changed from International Packaging and Logistics Group, Inc. to YBCC, Inc.



Yibaoccyb is a limited liability company
incorporated under the laws of the British Virgin Islands on May 30, 2016. Other than all the issued and outstanding shares of
YibaoHK, Yibaoccyb has no other assets or operations.



YibaoHK is a limited liability company
incorporated under the laws of the Hong Kong on June 15, 2016, which was formed by Yibaoccyb.



Confucian was founded on October 31, 2012.
Confucian is in the Food Industrial Park inside the economic development Zone of JinXiang County, Jining City in the province of
Shandong in China.



Confucian possesses manufacturing permits
for food product, hygienic products, sanitary products, and health products. The Company's main business includes research and
development of chondroitin and garlic oil; trading, cold storage, and pretreating of garlic, fruit, and vegetables products; trading
of chemical products (excluding hazardous chemicals); import and export of goods and technology (excluding those restricted by
China government); and, the manufacturing and sale of health products including powder, granules, tablets, hard capsule, soft capsule
products.











6






Details of the Company’s
structure as of March 31, 2018 is as follow:







Reverse
Merger Accounting – Since YBCC and Yibaoccyb were entities under Mrs. Song’s common control prior to the
share exchange, the transaction was accounted for as a restructuring transaction in accordance with generally accepted accounting
principles in the United States ("GAAP"). YBCC has recast prior period unaudited consolidated financial statements to
reflect the conveyance of Yibaoccyb’s common shares as if the restructuring transaction had occurred as of the earliest date
of the unaudited consolidated financial statements.



Basis
of Accounting and Presentation - The accompanying unaudited consolidated financial statements have been prepared in
accordance with accounting principles generally accepted in the United States of America.



Principles
of Consolidation - The accompanying unaudited consolidated financial statements are prepared in accordance with generally
accepted accounting principles in the United States of America. Confucian’s functional currency is Chinese Yuan (CNY), however,
the accompanying unaudited consolidated financial statements have been re-measured  and
presented in United States Dollars ($).



The unaudited consolidated financial statements
include the accounts of YBCC and its subsidiaries. The Company’s subsidiaries include 51% of Yibaoccyb, YibaoHK and Confucian,
of which 49% of Yibaoccyb’s consolidated operating results was shown in non-controlling interest on the consolidated balance
sheets.



Intercompany accounts and transactions
have been eliminated upon consolidation.



Use of Estimates -
The preparation of unaudited consolidated financial statements in conformity with accounting principles generally accepted in the
United States of America requires management to make estimate and assumptions that affect certain reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts
of revenues and expenses during the reporting periods. Actual results could differ from those estimates. The most significant estimates
reflected in the consolidated financial statements include allowance for doubtful accounts, allowance for inventory, depreciation,
useful lives of property and equipment, deferred income taxes, useful life of intangible assets, and contingencies. Estimates and
assumptions are periodically reviewed and the effects of revisions are reflected in the unaudited consolidated financial statements
in the period they are determined to be necessary.









7






Cash and Cash Equivalents
– For purpose of the unaudited consolidated statements of cash flows, the Company considers all highly liquid debt instruments
purchased with a maturity of 90 days or less to be cash equivalents.



Accounts Receivable
- The Company extends credit to its customers. Accounts receivable was recorded at the contract amount after deduction of trade
discounts and, allowances, if any, and do not bear interest. The allowance for doubtful accounts, when necessary, is the Company’s
best estimate of the amount of probable credit losses from accounts receivable. The Company determines the allowance based on historical
write-off experience, customer specific facts and economic conditions.



As of March 31, 2018 and December 31, 2017,
accounts receivable were $77,812 and $0, respectively. The Company believes that its accounts receivables are fully collectable
and determined that an allowance for doubtful accounts was not necessary.



Account balances are charged off against
the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. The Company
does not have any off-balance-sheet credit exposure related to its customers.



Inventories - Inventory
is valued at the lower of cost or market. Cost is determined using first-in, first-out method.



Inventory, comprised
principally of finished goods, raw material and packaging material, are valued at the lower of cost or market.



|                   |  | March 31, 2018 |         |  | December 31,  2017 |  
|------------------ |  | -------------- | ------- |  | ------------------ | -
|Finished goods     |  | $              | 21,848  |  |                    | $
|Work in progress   |  |                | 120,665 |  |                    |  
|Raw materials      |  |                | 100,943 |  |                    |  
|Packaging material |  |                | 23,062  |  |                    |  
|Total              |  | $              | 266,518 |  |                    | $



The Company periodically estimates an inventory
allowance for estimated unmarketable inventories. Inventory amounts are reported net of such allowances, if any. There were no
allowances for inventory as of March 31, 2018 and December 31, 2017.



Property, Plant and Equipment
– Property, plant, and equipment are stated at cost less accumulated depreciation. The costs of a constructed asset are accumulated
in the account Construction-in-Progress until the asset is placed into service. When the asset is completed and placed into service,
the account Construction-in-Progress will be credited for the accumulated costs of the asset and will be debited to the appropriate
Property, Plant and Equipment account. Depreciation begins after the asset has been placed into service.



Expenditures for maintenance and repairs
are charged to operations; major expenditures for renewals and betterments are capitalized. Assets that are still kept in service
after reaching the end of their estimated useful lives are depreciated over the estimated useful life of their residual value.
Gain or loss on disposal of property, plant, and equipment is recognized as non-operating income or expenses.



Depreciation is computed by applying the
following methods and estimated lives:



|Category                    | Estimated Life | Method       
|--------------------------- | -------------- | -------------
|Manufacturing
    equipment | 10             | Straight Line
|Office equipment            | 5              | Straight Line
|Buildings                   | 20             | Straight Line



Intangible Assets
- Land use rights represent the exclusive right to occupy and use a piece of land in the PRC during the contractual term of the
land use right. Land use rights are carried at cost and charged to expense on a straight-line basis over the respective periods
of the rights of 50 years or the remaining period of the rights upon acquisition.



Non-Controlling Interest
– The Company accounted for its non-controlling interest of 49% in Yibaoccyb as a separate component of equity. In addition,
net loss, and components of other comprehensive income are attributed to both the Company and non-controlling interest.



Revenue Recognition
- The Company recognizes product revenue in accordance with ASC 605. ASC 605 requires that four basic criteria must be met before
revenue can be recognized: (i) persuasive evidence of an arrangement exists, (ii) delivery has occurred, (iii) the price paid by
the customer is fixed or determinable and (iv) collection of the resulting account receivable is reasonably assured. The Company
recognizes revenue for product sales upon transfer of title to the customer. Customer purchase orders and/or contracts are generally
used to determine the existence of an arrangement. Shipping documents and terms and the completion of any customer acceptance requirements,
when applicable, are used to verify product delivery. The Company assesses whether a price is fixed or determinable based upon
the payment terms associated with the transaction and whether the sales price is subject to refund or adjustment. The Company has
no product returns or sales discounts and allowances because goods delivered and accepted by customers are normally not returnable.











8






Cost of
goods sold- Cost of goods sold includes cost of inventory sold during the period, net of discounts and inventory
allowances, freight and shipping costs, warranty and rework costs, and sales tax.



Impairment
of Long-Live Assets – The Company applies FASB ASC 360, “Property, Plant and Equipment,” which addresses
the financial accounting and reporting for the recognition and measurement of impairment losses for long-lived assets. In accordance
with ASC 360, long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying
amount of an asset may not be recoverable. The Company will recognize the impairment of long-lived assets in the event the net
book value of such assets exceeds the future undiscounted cash flows attributable to those assets. There is no impairment of our
long-lived assets for the three months ended March 31, 2018 and 2017.



Income Taxes
– The Company adopts FASB ASC Topic 740, "Income Taxes,” which requires the recognition of deferred tax assets
and liabilities for the expected future tax consequences of events that have been included in the consolidated financial statements
or tax returns. Under this method, deferred income taxes are recognized for the tax consequences in future years of differences
between the tax bases of assets and liabilities and their financial reporting amounts at each period end based on enacted tax laws
and statutory tax rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances
are established, when necessary, to reduce deferred tax assets to the amount expected to be realized.



In accordance with ASC Topic 740-10, “Accounting
for Uncertainty in Income Taxes — An Interpretation of FASB ASC Topic 740”, which requires income tax positions to
meet a more-likely-than-not recognition threshold to be recognized in the financial statements. Tax positions that previously failed
to meet the more-likely-than-not threshold should be recognized in the first subsequent financial reporting period in which that
threshold is met. Previously recognized tax positions that no longer meet the more-likely-than-not threshold should be derecognized
in the first subsequent financial reporting period in which that threshold is no longer met. As of March 31, 2018, and December
31, 2017, management considered that the Company had no uncertain tax positions, and will continue to evaluate for uncertain positions
in the future.



The application of tax laws and regulations
is subject to legal and factual interpretation, judgment and uncertainty. Tax laws and regulations themselves are subject to change
because of changes in fiscal policy, changes in legislation, the evolution of regulations and court rulings. Therefore, the actual
liability may be materially different from our estimates, which could result in the need to record additional tax liabilities or
potentially reverse previously recorded tax liabilities or deferred tax asset valuation allowance.



The Company has made a comprehensive review
of its portfolio of tax positions in accordance with recognition standards established by ASC 740-10 and has not recognized any
material uncertain tax positions.



In addition, companies in the PRC are required
to pay an Enterprise Income Tax at 25%.



Foreign Currency Translation
- The Company's functional currency is the Chinese Renminbi (RMB). The reporting currency is that of the US Dollar. Assets, liabilities
and owners’ contribution are translated at the exchange rates as of the balance sheet date. Income and expenditures are translated
at the average exchange rate of the year. The RMB is not freely convertible into foreign currency and all foreign currency exchange
transactions must take place through authorized institutions. No representation is made that the RMB amounts could have been, or
could be, converted into US dollar at the rates used in translation.



The exchange rates used to translate amounts
in RMB into USD for the purposes of preparing the financial statements were as follows:



|Balance sheet                                                                               |                     
|------------------------------------------------------------------------------------------- | --------------------
|Balance sheet as of March 31, 2018                                                          | RMB 6.27 to US $1.00
|Balance sheet as of December 31, 2017                                                       | RMB 6.51 to US $1.00
|                                                                                            |                     
|Statement of operation and other comprehensive income                                       |                     
|Statement of operation and other comprehensive income for three months ended March 31, 2018 | RMB 6.35 to US $1.00
|Statement of operation and other comprehensive income for three months ended March 31, 2017 | RMB 6.89 to US $1.00



Fair Value of Financial Instruments
– FASB ASC 820, “Fair Value Measurement” specifies a hierarchy of valuation techniques based upon whether the
inputs to those valuation techniques reflect assumptions other market participants would use based upon market data obtained from
independent sources (observable inputs). In accordance with ASC 820, the following summarizes the fair value hierarchy:













9






Level 1 Inputs— Unadjusted quoted
market prices for identical assets and liabilities in an active market that the Company has the ability to access.



Level 2 Inputs— Inputs other than the quoted prices
in active markets that are observable either directly or indirectly.



Level 3 Inputs— Inputs based on valuation techniques
that are both unobservable and significant to the overall fair value measurements



ASC 820 requires the use of observable
market data, when available, in making fair value measurements. When inputs used to measure, fair value fall within different levels
of the hierarchy, the level within which the fair value measurement is categorized is based on the lowest level input that is significant
to the fair value measurement. Valuation techniques used need to maximize the use of observable inputs and minimize the use of
unobservable inputs.



The Company did not identify any assets
or liabilities that are required to be presented at fair value on a recurring basis. Carrying values of non-derivative financial
instruments, including cash and cash equivalents, accounts receivable, inventories, prepaid expenses, advances from customers,
accounts payable, taxes payable, accrued liabilities and other payables, and loan from bank, approximated their fair values due
to the short maturity of these financial instruments. There were no changes in methods or assumptions during the periods presented.



Net Earnings (Loss) Per Share
– Earnings/(loss) per common share is computed on the weighted average number of common shares outstanding during each year.
Basic earnings per share is computed as net loss applicable to common stockholders divided by the weighted average number of common
shares outstanding for the period. Diluted earnings per share reflects the potential dilution that could occur from common shares
issuable through convertible preferred shares, stock options, warrants and other convertible securities when the effect would be
dilutive. In this case, the Preferred Shares would not be dilutive since the conversion price is $3.00 and the quoted price is
significantly lower than the conversion price. Therefore, there were no dilutive securities for the three months ended March 31,
2018 and 2017, respectively.



Reclassifications
– Certain classifications have been made to the prior year consolidated financial statements to conform to the current year
presentation. The reclassification had no impact on previously reported net loss or accumulated deficit.



Recent
Accounting Pronouncements



In March 2016,
the FASB issued ASU No. 2016-09, Compensation – Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment
Accounting (“ASU 2016-09”), which modifies certain aspects of the accounting for share-based payment transactions,
including income taxes, classification of awards, and classification in the statement of cash flows. The Company will adopt
ASU 2016-09 in its first quarter of 2018. Currently, excess tax benefits or deficiencies from the Company's equity awards are recorded
as additional paid-in capital in its Consolidated Balance Sheets. Upon adoption, the Company will record any excess tax benefits
or deficiencies from its equity awards in its Consolidated Statements of Operations in the reporting periods in which vesting occurs.
As a result, subsequent to adoption the Company's income tax expense and associated effective tax rate will be impacted by fluctuations
in stock price between the grant dates and vesting dates of equity awards. The Company is still in progress of evaluating future
impact of adopting this standard.



In May 2014, the
FASB issued Accounting Standards Update (“ASU”) No. 2014-09, “Revenue from Contracts with Customers (Topic 606),”
(“ASU 2014-09”). ASU 2014-09 supersedes the revenue recognition requirements in ASC 605 - Revenue Recognition (“ASC
605”) and most industry-specific guidance throughout ASC 605. The FASB has issued numerous updates that provide clarification
on a number of specific issues as well as requiring additional disclosures. The core principle of ASC 606 requires that an entity
recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration
to which the company expects to be entitled in exchange for those goods or services. ASC 606 defines a five-step process to achieve
this core principle and, in doing so, it is possible more judgment and estimates may be required within the revenue recognition
process than required under existing U.S. GAAP including identifying performance obligations in the contract, estimating the amount
of variable consideration to include in the transaction price and allocating the transaction price to each separate performance
obligation. The guidance also requires enhanced disclosures regarding the nature, amount, timing and uncertainty of revenue and
cash flows arising from an entity’s contracts with customers. The guidance may be adopted through either retrospective application
to all periods presented in the financial statements (full retrospective approach) or through a cumulative effect adjustment to
retained earnings at the effective date (modified retrospective approach). The Company had evaluated the effected that will result
from adopting the guidance in this standard and concluded that the new revenue standards are not expected to have a material impact
on the amount and timing of revenue recognized in the Company’s consolidated financial statements.











10






In October 2016,
the FASB issued ASU 2016-17, “Consolidation (Topic 810): Interests Held through Related Parties That Are under Common
Control”. These amendments change the evaluation of whether a reporting entity is the primary beneficiary of a variable
interest entity by changing how a reporting entity that is a single decision maker of a variable interest entity treats indirect
interests in the entity held through related parties that are under common control with the reporting entity. If a reporting entity
satisfies the first characteristic of a primary beneficiary (such that it is the single decision maker of a variable interest entity),
the amendments require that reporting entity, in determining whether it satisfies the second characteristic of a primary beneficiary,
to include all of its direct variable interests in a variable interest entity and, on a proportionate basis, its indirect variable
interests in a variable interest entity held through related parties, including related parties that are under common control with
the reporting entity. The amendments in this ASU are effective for public business entities for fiscal years beginning after December
15, 2016, including interim periods within those fiscal years. Early adoption is permitted, including adoption in an interim period.
If an entity adopts the pending content that links to this paragraph in an interim period, any adjustments should be reflected
as of the beginning of the fiscal year that includes that interim period. The adoption of this standard is not expected to have
a material impact on the Company’s consolidated financial position and results of operations.



In November 2016,
the FASB issued ASU 2016-18, “Statement of Cash Flows (Topic 230): Restricted Cash”.These amendments require
that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally
described as restricted cash or restricted cash equivalents. As a result, amounts generally described as restricted cash and restricted
cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total
amounts shown on the statement of cash flows. The amendments do not provide a definition of restricted cash or restricted cash
equivalents. The amendments in this ASU are effective for public business entities for fiscal years beginning after December 15,
2017, and interim periods within those fiscal years. Early adoption is permitted. The amendments should be applied using a retrospective
transition method to each period presented. The Company has evaluated the impact of adopting ASU 2016-18 noting it will only impact
the Company to the extent it has restricted cash in the future.



In July 2017,
the FASB issued ASU 2017-11, Earnings Per Share (Topic 260); Distinguishing Liabilities from Equity (Topic 480); Derivatives
and Hedging (Topic 815):(Part I) Accounting for Certain Financial Instruments with Down Round Features, (Part II) Replacement
of the Indefinite Deferral for Mandatorily Redeemable Financial Instruments of Certain Nonpublic Entities and Certain Mandatorily
Redeemable Noncontrolling Interests with a Scope Exception. For public business entities, the amendments in Part I of this Update
are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. For all other
entities, the amendments in Part I of this Update are effective for fiscal years beginning after December 15, 2019, and interim
periods within fiscal years beginning after December 15, 2020. Early adoption is permitted for all entities, including adoption
in an interim period. If an entity early adopts the amendments in an interim period, any adjustments should be reflected as of
the beginning of the fiscal year that includes that interim period. The amendments in Part II of this Update do not require any
transition guidance because those amendments do not have an accounting effect. The Company is currently in the process of evaluating
the impact of the adoption on its consolidated financial statements.



In February 2018,
the FASB issued ASU No. 2018-02 Income Statement—Reporting Comprehensive Income (Topic 220)—Reclassification of
Certain Tax Effects from Accumulated Other Comprehensive Income.The amendments in this Update allow a reclassification from
accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the Tax Cuts and Jobs Act of
2017. The amendments in this Update affect any entity that is required to apply the provisions of Topic 220, Income Statement-Reporting
Comprehensive Income, and has items of other comprehensive income for which the related tax effects are presented in other comprehensive
income as required by GAAP. The Company is currently in the process of evaluating the impact of the adoption on its consolidated
financial statements.



The Company has
considered all new accounting pronouncements and has concluded that there are no new pronouncements that may have a material impact
on results of operations, financial condition, or cash flows, based on current information.



NOte 2 - going
concern



The Company sustained net losses of $110,194
and $184,477 during the three months ended March 31, 2018 and 2017, respectively. The Company has accumulated deficit of $1,269,532
and $1,179,676 as of March 31, 2018 and December 31, 2017, respectively. The Company’s continuation as a going concern is
dependent on its ability to generate sufficient cash flows from operations to meet its obligations and/or obtain additional financing,
as may be required.



The accompanying unaudited consolidated
financial statements have been prepared assuming the Company will continue as a going concern; however, the above condition raises
substantial doubt about the Company’s ability to do so. The financial statements do not include any adjustments to reflect
the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities
that may result should the Company be unable to continue as a going concern.









11






Management’s Plan to Continue
as a Going Concern



In order to continue as a going concern,
the Company will need, among other things, additional capital resources. Management’s plans to obtain such resources for
the Company include (1) obtaining capital from the sale of its equity securities, (2) sales of the Company’s products, (3)
short-term and long-term borrowings from banks, and (4) short-term borrowings from stockholders or other related party(ies) when
needed. However, management cannot provide any assurance that the Company will be successful in accomplishing any of its plans.



The ability of the Company to continue
as a going concern is dependent upon its ability to successfully accomplish the plans described in the preceding paragraph and
eventually to secure other sources of financing and attain profitable operations.



NOte
3 - concentration of credit risk



We maintain our cash balance in several
banks in China and United States. The consolidated cash balances as of March 31, 2018 and December 31, 2017 were $81,372 and $369,607,
respectively. The cash balances in China as of March 31, 2018 and December 31, 2017 were $29,182 and $307,361, respectively. The
accounts in China were not insured which we believe were exposed to credit risks on cash. As of March 31, 2018, the balance of
our US account was $52,190 which is within federal insured limit of $250,000. As of December 31, 2017, the balance of our US account
was $62,246, which is within federal insured limit of $250,000.



NOTe
4 - other receivable



Total other receivable consists of balances
of VAT receivable of $48,049 and $33,251 as of March 31, 2018 and December 31, 2017, respectively.



NOTe
5 - prepaid expenses



Prepaid expenses were comprised of the
following:



|                  |  | March 31,  2018 |        |  | December 31, 2017 |  
|----------------- |  | --------------- | ------ |  | ----------------- | -
|Utilities         |  | $               | 1,594  |  |                   | $
|Professional fees |  |                 | 45,625 |  |                   |  
|Other             |  |                 | 3,063  |  |                   |  
|Total             |  | $               | 50,282 |  |                   | $



Note
6 - property, plant and equipment



Property, plant and equipment as of March
31, 2018 and December 31, 2017 are summarized as following:



|                                       |  | March 31,  2018 |           |   | December 31, 2017 |  
|-------------------------------------- |  | --------------- | --------- | - | ----------------- | -
|Buildings                              |  | $               | 1,928,126 |   |                   | $
|Vehicles                               |  |                 | 12,355    |   |                   |  
|Manufacturing equipment                |  |                 | 1,180,373 |   |                   |  
|Office equipment                       |  |                 | 97,265    |   |                   |  
|Property, plant, and equipment - total |  |                 | 3,218,119 |   |                   |  
|Less: accumulated depreciation         |  |                 | (638,336  | ) |                   |  
|Fixed assets, net                      |  | $               | 2,579,783 |   |                   | $



For the three months ended March 31, 2018
and 2017, depreciation expenses were $57,503 and $48,914, respectively.



note
7 - intangible assets -net



All land in the PRC is owned by the government
and cannot be sold to any individual or entity. Instead, the government grants landholders a "land use right" after a
purchase price for such "land use right" is paid to the government. The "land use right" allows the holder
to use the land for 50 years and enjoys all the incidents of ownership of the land. As of March 31, 2018 and December 31, 2017,
the land use rights net of accumulated amortization was $748,969 and $726,043, respectively. The use term was 50 years.











12






The summary of land use rights as of March
31, 2018 and December 31, 2017 are summarized as following:



|The land use right term        |  | March 31,  2018 |         |   | December 31, 2017 |  
|------------------------------ |  | --------------- | ------- | - | ----------------- | -
|May, 2013 - Apr. 2063          |  | $               | 573,910 |   |                   | $
|Dec. 2015 - Sept. 2065         |  |                 | 215,208 |   |                   |  
|Dec. 2015 – Sept. 2065         |  |                 | 26,192  |   |                   |  
|Intangible assets- total       |  |                 | 815,310 |   |                   |  
|Less: accumulated amortization |  |                 | (66,341 | ) |                   |  
|Intangible assets, net         |  | $               | 748,969 |   |                   | $



For the three months ended March 31, 2018 and 2017, amortization
expenses were $4,025 and $3,714, respectively.



NOTE 8 - COMMITMENTS AND CONTINGENCIES



The Company’s current lease is in City of Industry, California.
The lease period started on October 1, 2016 and expires on September 1, 2018. On October 1, 2016, the Company started this lease
at $2,802 per month from October 1, 2016 to September 1, 2017. From September 2, 2017 to August 31, 2018, the monthly lease is
$3,063, resulting in the following future commitments:



|                   |  | Amount |       
|------------------ |  | ------ | ------
|2018 calendar year |  | $      | 15,315
|Total              |  | $      | 15,315



NOTE 9 - INCOME TAX



At March 31, 2018
and December 31, 2017, based on the weight of available evidence, management determined that it was unlikely that the Company's
deferred tax assets would be realized and have provided for a full valuation allowance associated with the net deferred tax assets.



The Company periodically
analyzes its tax positions taken and expected to be taken and has determined that since inception there has been no need to record
a liability for uncertain tax positions. The Company classifies income tax penalties and interest, if any, as part of selling,
general and administrative expenses in the accompanying statements of operations. There was no accrued interest or penalties as
of March 31, 2018 and December 31, 2017.



The Company is
neither under examination by any taxing authority, nor has it been notified of any impending examination.



Under the Law
of People’s Republic of China on Enterprise Income Tax (“EIT Law”), which was effective from January 1, 2008,
domestically-owned enterprises and foreign-invested enterprises are subject to a uniform tax rate of 25%. The potential benefit
of the Company’s net operating losses has not been recognized in these financial statements because it is more likely-than-not
the Company will not utilize the net operating losses carried forward as it does not expect to generate sufficient taxable
income in future or the amount involved is not significant.



|                                                             |  | For the Three Months ended |        
|------------------------------------------------------------ |  | -------------------------- | -------
|                                                             |  | March, 31                  |        
|                                                             |  | 2018                       |        
|Current                                                      |  |                            |        
|USA                                                          |  | $                          | –      
|China                                                        |  |                            | –      
|                                                             |  |                            |        
|Deferred                                                     |  |                            |        
|USA                                                          |  |                            |        
|Deferred tax assets for NOL carryforwards                    |  |                            | 14,424 
|Valuation allowance                                          |  |                            | (14,424
|Net changes in deferred income tax under non-current portion |  |                            | –      
|                                                             |  |                            |        
|China                                                        |  |                            |        
|NOL carryforwards                                            |  |                            | 10,377 
|Valuation allowance                                          |  |                            | (10,377
|Net changes in deferred income tax under non-current portion |  |                            | –      
|                                                             |  |                            |        
|Total provision for income tax                               |  | $                          | –      











13






The tax effects
of temporary differences that gave rise to significant portions of deferred tax assets at March 31, 2018 and December 31, 2017
are as follows:



|                                  |  | March 31,  2018 |          |   | December 31, 2017 |  
|--------------------------------- |  | --------------- | -------- | - | ----------------- | -
|Deferred Tax Assets:              |  |                 |          |   |                   |  
|Net operating loss carry forwards |  | $               | 352,111  |   |                   | $
|Valuation allowance               |  |                 | (352,111 | ) |                   |  
|Net deferred tax assets           |  | $               | –        |   |                   | $



A reconciliation
between the income tax computed at the U.S. statutory rate and the Company’s provision for income tax in the PRC is as follows:



|                                        |  | March 31,  2018 |     |    | December 31,  2017 | 
|--------------------------------------- |  | --------------- | --- | -- | ------------------ | 
|Tax expense at statutory rate-US        |  |                 | 21% |    |                    | 
|Foreign income not recognized in the US |  |                 | (21 | )% |                    | 
|PRC enterprise income tax rate          |  |                 | 25% |    |                    | 
|Loss not subject to income tax          |  |                 | (25 | )% |                    | 
|Effective income tax rates              |  |                 | –   |    |                    | 



On December 22,
2017, the Tax Cuts and Jobs Act (the Tax Act) was enacted, significantly altering U.S. corporate income tax law. The SEC issued
Staff Accounting Bulletin 118, which allows companies to record reasonable estimates of enactment impacts where all of the underlying
analysis and calculations are not yet complete. The provisional estimates must be finalized within a one-year measurement period.
The Company reduced its net domestic deferred tax asset balance by $88,781 due to the reduction in corporate tax rate from 34%
to 21%. These adjustments are fully offset by a change in the Company’s U.S. valuation allowance.



note
10 - equity



Common Stock:



On July 1, 2016,
the Company issued 3,915,000 shares of common stock to Ms. Song in connection with the change of control.



On August 31,
2016, the Company cancelled 3,915,000 shares of outstanding shares belonging to Standard.



On August 31,
2016, the Company issued 2,040,000 shares to Yibaoccyb Shareholders in exchange for 51% of the common stock of Yibaoccyb to complete
the share exchange and restructuring of entities under common control.



On December 22,
2016, the Company issued 350,000 shares for legal counsel services valued at $35,000.



On December 23,
2016, the Company received cash payment of $300,000 in advance for issuance of 3,000,000 shares of common stock, or $0.10 per share.
On January 3, 2017, 3,000,000 shares were issued to seven investors, none of which is a related-party to the Company.



As a result of
all common stock issuances, the total issued and outstanding shares of common stock were 9,894,214 as of March 31, 2018
and December 31, 2017, respectively.



Series A Preferred
Shares:



The Series A Preferred
shares are convertible into common shares on a 1:1 ratio at a fixed rate of $3 per share. Preferred shares have no voting rights,
have no redemption rights and earn no dividends. Holders of Series A Convertible Preferred Stock are not permitted to convert their
stock into common shares until the Company’s market capital reaches $15,000,000. Upon dissolution, liquidation or winding
up of the Company, whether voluntary or involuntary, the holders of the then outstanding shares of Series A Convertible Preferred
Stock shall be entitled to receive out of the assets of the Company the sum of $0.0001 per share (the “Liquidation Rate”)
before any payment or distribution shall be made on any other class of capital stock of the Company ranking junior to the Series
A Convertible Preferred Stock.











14






ASC Topic 480,
“Distinguishing Liabilities from Equity,” establishes standards for how an issuer classifies and measures certain financial
instruments with characteristics of both liabilities and equity.



A mandatorily
redeemable financial instrument shall be classified as a liability unless the redemption is required to occur only upon the liquidation
or termination of the reporting entity. A financial instrument issued in the form of shares is mandatorily redeemable if it embodies
an unconditional obligation requiring the issuer to redeem the instrument by transferring its assets at a specified or determinable
date (or dates) or upon an event certain to occur. A financial instrument that embodies a conditional obligation to redeem the
instrument by transferring assets upon an event not certain to occur becomes mandatorily redeemable—and, therefore becomes
a liability—if that event occurs, the condition is resolved, or the event becomes certain to occur.



The Company determined
that the preferred shares are not mandatorily or conditionally redeemable and are properly classified as permanent equity in the
accompanying unaudited consolidated financial statements.



Series B Preferred Shares



During the year
ended December 31, 2015, the Company received the 400,000 shares of Series B Preferred Shares being returned to the Company. As
a result, there were no shares of Series B Preferred Shares issued and outstanding as of March 31, 2018 and December 31, 2017.



NOTE 11 - NON-CONTROLLING
INTEREST



On July 1, 2016,
the Company executed the Exchange Agreement with Yibaoccyb and the Yibaoccyb Shareholders. From and after the Closing Date, Yibaoccyb
became a 51% owned subsidiary of the Company. Yibaoccyb owns 100% of YibaoHK. YibaoHK will own 100% of Shenzhen Confucian Biologics
Co. Ltd. (yet to be formed, “Yibao WFOE”), which will be wholly foreign-owned enterprise (“WFOE”) under
the laws of the Peoples’ Republic of China (“PRC” or “China”). On August 31, 2016, YibaoHK entered
into a series of contractual arrangements with Confucian and currently is 100% owner of Confucian.



Non-controlling
interest consisted of the following:



|                                                                                  |  | March 31, |         |   | December 31, |  
|--------------------------------------------------------------------------------- |  | --------- | ------- | - | ------------ | -
|                                                                                  |  | 2018      |         |   | 2017         |  
|Beginning balance                                                                 |  | $         | 292,072 |   |              | $
|Net loss attributed to non-controlling interest                                   |  |           | (20,339 | ) |              |  
|Foreign currency translation gain (loss) attributable to non-controlling interest |  |           | 10,662  |   |              |  
|Ending balance                                                                    |  | $         | 282,395 |   |              | $



note
12 - related party transactions



The related parties of the Company
with whom transactions are reported in these financial statements are as follows:



|Name of Entity or Individual                   |                                             | Relationship with the Company and subsidiaries                 
|---------------------------------------------- | ------------------------------------------- | ---------------------------------------------------------------
|Shandong Yibao Biologics Co, Ltd               |                                             | Affiliated company with common shareholders                    
|Shandong Yibao Import & Export Trading Co, Ltd | Affiliated company with common shareholders
|Ms. Xiuhua Song                                |                                             | Director and controlling beneficiary shareholder of the Company
|Mr. Hengchun Zhang                             |                                             | Owner of Shandong Confucian Biologics                          



Transactions:



|                                          |  | For the Three Months Ended March 31, |        
|----------------------------------------- |  | ------------------------------------ | -------
|                                          |  | 2018                                 |        
|Sales to Shandong Yibao Biologics Co. Ltd |  | $                                    | 128,612
|Total                                     |  | $                                    | 128,612



|                                               |  | For the Three Months Ended March 31, |  
|---------------------------------------------- |  | ------------------------------------ | -
|                                               |  | 2018                                 |  
|Purchase from Shandong Yibao Biologics Co. Ltd |  | $                                    | –
|Total                                          |  | $                                    | –











15






Accounts receivable from related party



|                                                          |  | March 31, 2018 |        |  | December 31, 2017 |  
|--------------------------------------------------------- |  | -------------- | ------ |  | ----------------- | -
|Accounts receivable from Shandong Yibao Biologics Co. Ltd |  | $              | 13,391 |  |                   | $
|Total                                                     |  | $              | 13,391 |  |                   | $

Due to related
parties

|                  |  | March 31,  2018 |           |  | December 31, 2017 |  
|----------------- |  | --------------- | --------- |  | ----------------- | -
|To Xiuhua Song    |  | $               | 2,725,658 |  |                   | $
|To Hengchun Zhang |  |                 | 280,042   |  |                   |  
|Total             |  | $               | 3,005,699 |  |                   | $



NOTE
13 - MAJOR SUPPLIERS AND CUSTOMERS



The Company purchases majority of its inventory
and packaging supplies from three suppliers which accounted for 31.40%, 9.51% and 8.70% of the total purchases for the three months
ended March 31, 2018.



The Company had
four major customers for the three months ended March 31, 2018: Shandong Yibao Biologics for 49.24% of revenue, Ping Xiang Import
and Export Company accounted for 24.77% of revenue, Anhui Xiancheng Import and Export Company accounted for 15.33% of revenue,
Wuhan Youni Biologics Co. Ltd accounted for 10.30% of revenue for the three months ended March 31, 2018.



The Company purchases
majority of its inventory and packaging supplies from two suppliers which accounted for 49.38% and 12.77% of the total purchases
for the three months ended March 31, 2017.



The Company had
four major customers for the three months ended March 31, 2017: Nanjing Hejian Biologics accounted for 35.10%, Ping Xiang Import
and Export Company accounted for 18.55% of revenue and Shandong Yibao Biologics for 16.23% of revenue for the three months ended
March 31, 2017.



NOTE 14 - SUBSEQUENT
EVENTS



Management has evaluated subsequent events
through May 15, 2018, the date which the consolidated financial statements were available to be issued. All subsequent events requiring
recognition as of March 31, 2018 have been incorporated into these consolidated financial statements and there are no subsequent
events that require disclosure in accordance with FASB ASC Topic 855, “Subsequent Events.”



















16






|ITEM 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations
|------- | -------------------------------------------------------------------------------------



SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS



The information contained in this Form
10-Q is intended to update the information contained in our Annual Report on Form 10-K for the year ended December 31, 2017 and
presumes that readers have access to, and will have read, the “Management’s Discussion and Analysis of Financial Condition
and Results of Operations” and other information contained in such Form 10-K. The following discussion and analysis also
should be read together with our financial statements and the notes to the financial statements included elsewhere in this Form
10-Q.



The following discussion contains certain
statements that may be deemed “forward-looking statements” within the meaning of the Private Securities Litigation
Reform Act of 1995. Such statements appear in a number of places in this Report, including, without limitation, “Management’s
Discussion and Analysis of Financial Condition and Results of Operations.” These statements are not guarantees of future
performance and involve risks, uncertainties and requirements that are difficult to predict or are beyond our control. Forward-looking
statements speak only as of the date of this quarterly report. You should not put undue reliance on any forward-looking statements.
We strongly encourage investors to carefully read the factors described in our Annual Report on Form 10-K for the year ended December
31, 2017 in the section entitled “Risk Factors” for a description of certain risks that could, among other things,
cause actual results to differ from these forward-looking statements. We assume no responsibility to update the forward-looking
statements contained in this quarterly report on Form 10-Q. The following should also be read in conjunction with the unaudited
consolidated Financial Statements and notes thereto that appear elsewhere in this report.



Overview



The Company is a manufacture and research
based bio-science company. It has large capacity in manufacturing tablets, granule, oral liquid, powders, soft gels and capsules
products. The Company distributes its products through its own network and white label products. It also has access to a member-based
distribution system owned by its affiliated company.



The Company possesses manufacturing permits
for food product, hygienic products, sanitary products, and health products. The Company's main business scope include technology
study and transfer of Chondroitin and Garlic Oil; trading, cold storage, and pretreating of Garlic, fruit, and vegetables products;
trading of Chemical products (excluding hazardous chemicals); Import and export of goods and technology (excluding those restricted
by government); the manufacturing and sale of health products including powder, granules, tablets, hard capsule, soft capsule products.



Product Overview



The Company’s main products can be
divided into two groups, one is health food products and the other is hygienic products



Health Food Products



| | · | Phytocholesterol tabletting candy,
| | - | ----------------------------------



Phytosterol has strong anti-inflammatory
effects to the human body, which can inhibit the absorption of cholesterol for human and biochemical synthesis of cholesterol.
Promote the degradation and metabolism of cholesterol. Phytosterol can be used for prevention & therapy of coronary atherosclerosis
heart disease. In treating ulcers, skin squamous carcinoma and cervical cancer has obvious curative effect. Can promote wound healing,
make muscle proliferation, enhance capillary circulation; also can be used as blocking agent of formation of gallstones.



| | · | Polydextrose tabletting candy,
| | - | ------------------------------



Regulating blood lipid, reduce fat accumulationpreventing
the fat.



| | · | Dunaliella salina haematococcus pluvialis tabletting candy,
| | - | -----------------------------------------------------------



Replenishing the body's astaxanthin,
Natural carotene and variety of minerals, have a great effect of antioxidant activity, protect skin, protect vision and
improve immunity.



| | · | Dunaliella salina Gum Base candy,
| | - | ---------------------------------



Dunaliella salina is rich in antioxidant
needed by the human body health, resistance to radiation and enhance human immunity of natural carotenoids and 70 kinds of minerals
and trace elements.











17






| | · | Haematococcus pluvialis Gum candy,
| | - | ----------------------------------



The main components of Haematococcus Pluvialis
is astaxanthin. It has nine anti-aging effect: can be Anti-aging and protect the skin; Protect the eye health; helps to support
the cardiovascular system, maintain a healthy joints and connective tissue; increases strength and endurance.



| | · | Fish Oil Gum candy,
| | - | -------------------



Adjusting blood liquid, prevent blood clots,
cerebral thrombosis, cerebral hemorrhage and stroke; prevent arthritis and alzheimer's disease, improve the memory and vision,
control presbyopia.



| | · | Earthworm Protein tabletting candy,
| | - | -----------------------------------



Improve blood circulation,
inhibiting platelet aggregation, reduce glucose concentrations, prevent blood clots, has the very good control efficiency for
coronary heart disease, arteriosclerosis, and other hematologic disorders.



| | · | Collagen Protein tabletting candy,
| | - | ----------------------------------



It is rich in glycine, proline hydroxyproline
and other amino acid needed for human body. Have a good health care effect for skin, hair, bones and muscles.



| | · | Krill Oil Gum candy,
| | - | --------------------



It is rich in EPA and DHA. Enhancing health
effects, including cardiovascular, nerve, bones, joints, vision, skin care, etc.



| | · | Phosphatidylserine tabletting candy,
| | - | ------------------------------------



Improve the function of brain; help to
repair the injure of brain; promote the recovery of brainfag; protect central nervous system. Used for auxiliary treatment dementia
and agedness memory loss.



| | · | Milk Powder tabletting candy.
| | - | -----------------------------



Milk tablet is kind of leisure food. Supplement
of the nutrition of human needed in specific environment.



Hygienic Products



The hygienic product line includes the
following products:



| | · | Gel for women,
| | - | --------------



Anti-bacteria product. Auxiliary treatment
bacterial, mould sex vaginitis.



| | · | Skin comfortable liquid
| | - | -----------------------



Anti-bacteria product. Used for sterilization,
antibacterial of skin. Inhibit the bromhidrosis and relief beriberi itch.



Confucian owns 100,000 stage purification
workshops, advanced production lines and manufacturing equipment. The Company has a higher capacity for OEM processing of tablets,
hard capsules, soft capsules, oral liquid, granules, and powders.



Plan of Operations



By following the Company motto of "being
passionate for health industry, bringing together the world's resources, focusing on consumer demand, creating a “win-win
situation", the Company is eager to develop businesses in the international health and pharmaceutical market.



The Company’s near-term goal is to
reach breakeven within a six-month period time. In order to reach such goal, the Company is increasing its sales and production
volume through arrangements and networking with its existing customers and its affiliated companies. Additionally, it plans to
increase the size of its sales department to develop new customers.













18






The Company’s ultimate goal is to
make the business profitable and competitive in the international health and pharmaceutical market. To achieve such goal, the Company
needs to cooperate with other businesses having capital, market, technology, or products, recruit sufficient workforce and various
talents to serve the company, and actively develop new technology and new product through research and development.



Results of Operations



Three Months Ending March 31, 2018 Compared to
March 31, 2017



Revenue:



For the three months ended March 31, 2018
and 2017, revenues were $261,180 and $280,430 respectively, for a decrease of $19,250 over the same period in 2017. The decrease
is mainly due to unstable international market conditions and decrease in export orders.



Cost of Goods Sold:



Cost of goods sold for the three months
ended March 31, 2018 and 2017 were $219,253 and $278,526 respectively, for a decrease of $59,273 over the same period in 2017.
This decrease is mainly due to the reduction of sales orders, production is reduced accordingly.



Gross Profit:



Gross profit was $41,927 and $1,904 for
the three months ended March 31, 2018 and 2017, an increase of $40,023 over the same period in 2017. The gross profit margin
as a percent of sales for the three months ending March 31, 2018 and 2017 was 16% and 1% respectively, with an increase of 15%
mainly due to improved worker proficiency and improved production management.



Operating Expenses:



Operating expenses for the three-month
period ended March 31, 2018 and 2017 were $147,090 and $189,379 respectively for a decrease of $42,289 or 22% from the same period
of prior year. The major expenses for the three-month period ended March 31, 2018 and 2017 consist of payroll, professional fees
and depreciation. The decrease of $42,289 was mainly due to a decrease in payroll expense of $13,408 and decrease in professional
fee of $26,247.



Other Income (Expense):



Other income (expense) consists of interest
income and expenses and other non-operation related income and expenses. Other income (expense) for the three months ended March
31, 2018 and 2017 were ($5,031) and $2,998 respectively for a decrease of $8,029 over the same period in 2017.



Liquidity and Capital Resources



The Company suffered recurring losses from
operations and has an accumulated deficit of $1,269,532 at March 31, 2018. The Company has a cash balance of $81,372 and a negative
working capital of $3,175,211 as of March 31, 2018. The Company has incurred losses of $110,194 and $184,477 for the three months
ended March 31, 2018 and 2017, respectively. The Company has not continually generated significant revenues. Unless our operations
continue to generate significant revenues and cash flows from operating activities, our continued operations will depend on whether
we are able to raise additional funds through various sources, such as equity and debt financing, other collaborative agreements
and strategic alliances. Our management is actively engaged in seeking additional capital to fund our operations in the short to
medium term. Such additional funds may not become available on acceptable terms and there can be no assurance that any additional
funding that we do obtain will be sufficient to meet our needs in the long term.



Net cash used in operating activities for
the three months ended March 31, 2018 amounted to $366,194, compared to $5,966 used in operating activities for the three months
ended March 31, 2017. The increase of $360,228 in the net cash used in our operating activities was primarily due to the decrease
in the change of accounts receivable of $199,868, decrease in the change of accounts receivable-related party of $13,221, decrease
in the change of advance to suppliers of $44,703, decrease in the change of inventory of $34,952, decrease in the change of accounts
payable of $88,529, decrease in change of tax payable of $31,205, and decrease in change of other payable of $136,370; partially
offset by the increase in net loss of $74,283 from operations, increase in change of accrued expense of $26,803, increase in change
of prepaid expenses of $20,250, and increase in the change of customer deposit-related party of $34,666.











19






Net cash used in investing activities for
the three months ended March 31, 2018 amounted at $5,123 compared to net cash used in investing activities of $10,337 for the three
months ended March 31, 2017, resulting in an increase of $5,214. The increase was mainly due to increase in deferred cost for three
months ended March 31, 2018 by $6,586; partially offset by increase of purchase of property and equipment by $1,372.



Net cash provided by financing activities
for the three months ended March 31, 2018 amounted at $75,318, compared to net cash used in financing activities of $66,376 in
the three months ended March 31, 2017, resulting in a net increase of $141,694. The increase in net cash provided by financing
activities was mainly due to advances received from related party and a loan received from unrelated party.



Going Concern



The accompanying unaudited consolidated
financial statements have been prepared assuming the Company will continue as a going concern; however, the above condition raises
substantial doubt about the Company’s ability to do so. The financial statements do not include any adjustments to reflect
the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities
that may result should the Company be unable to continue as a going concern.



In order to continue as a going concern,
the Company will need, among other things, additional capital resources. Management’s plans to obtain such resources for
the Company include (1) obtaining capital from the sale of its equity securities, (2) sales of the Company’s products, (3)
short-term and long-term borrowings from banks, and (4) short-term borrowings from stockholders or other related party(ies) when
needed. However, management cannot provide any assurance that the Company will be successful in accomplishing any of its plans.



The ability of the Company to continue
as a going concern is dependent upon its ability to successfully accomplish the plans described in the preceding paragraph and
eventually to secure other sources of financing and attain profitable operations.



Capital Resources



Over the next twelve months, management
believes there will not be sufficient working capital obtained from operations due to the Company in its early development stage.



Off-Balance Sheet Arrangements



As of September 30, 2017, we did not have
any off-balance sheet arrangements as defined in Item 303(a)(4)(ii) of Regulation S-K.



|ITEM 3. | Quantitative and Qualitative Disclosures about Mark Risk
|------- | --------------------------------------------------------



As a “smaller reporting company”
as defined by Item 10 of Regulation S-K, the Company is not required to provide the information required by this Item



|ITEM 4. | Controls and Procedures.
|------- | ------------------------



Evaluation of Disclosure Controls and Procedures:



As of March 31, 2018, we conducted an evaluation under
the supervision and with the participation of the Company's Chief Executive Officer and the Chief Financial Officer, management
has evaluated the effectiveness of the design and operation of the Company's disclosure controls and procedures. Based on that
evaluation and because of the material weaknesses in our internal control over financial reporting described below, the Chief Executive
Officer and the Chief Financial Officer have concluded that the Company's disclosure controls and procedures were not effective
as of March 31, 2017.



Management identified the following control
deficiencies that constitute material weaknesses that are not fully remediated as of the filing date of this report:



Our size has prevented us from being able
to employ sufficient resources to enable us to have an adequate level of supervision and segregation of duties within our internal
control system. There is mainly one person involved in processing of transactions. Therefore, it is difficult to effectively segregate
accounting duties. We have hired an additional administrative person and retained an outside professional firm to assist in mitigating
the separation of duties issues on an ongoing basis. The use of the outside firm has proven successful in assisting in the separation
of duties. However, additional people are not needed to do the administrative work therefore segregation of duties will continue
to be an ongoing weakness.











20






Similarly, the Shandong Confucian Biologic
Co., Ltd. operation also has a material weakness due to lack of segregation of duties. Its size has prevented us from being able
to employ sufficient resources to enable us to have an adequate level of supervision and segregation of duties within our internal
control system. We have retained an outside professional firm to assist in the separation of duties on an ongoing basis. The use
of the outside firm has proven successful in assisting in the separation of duties.



Limitations on the Effectiveness
of Internal Controls



Disclosure controls and procedures, no
matter how well designed and implemented, can provide only reasonable assurance of achieving an entity's disclosure objectives.
The likelihood of achieving such objectives is affected by limitations inherent in disclosure controls and procedures. These include
the fact that human judgment in decision-making can be faulty and that breakdowns in internal control can occur because of human
failures such as simple errors or mistakes or intentional circumvention of the established process.



Changes in Internal Control over
Financial Reporting



There were no changes in internal control
over financial reporting that occurred during the current quarter covered by this report that have materially affected, or are
reasonably likely to affect, the Company's internal control over financial reporting.













21






PART II. OTHER INFORMATION



|ITEM 1. | Legal Proceedings
|------- | -----------------



None



|ITEM 1A. | Risk Factors
|-------- | ------------



As a “smaller reporting company” as defined by Item
10 of Regulation S-K, the Company is not required to provide the information required by this Item.



|ITEM 2. | Unregistered Sales of Equity Securities and Use of Proceeds
|------- | -----------------------------------------------------------



On December 23, 2016, the Company
received cash payment of $300,000 in advance for issuance of 3,000,000 shares of common stock, or $0.10 per share. On January 3,
2017, 3,000,000 shares were issued to seven investors, none of which is a related-party to the Company.



|ITEM 3. | Defaults Upon Senior Securities
|------- | -------------------------------



Not Applicable



|ITEM 4. | Mine Safety Disclosures
|------- | -----------------------



None



|ITEM 5. | Other Information
|------- | -----------------



None



















22






|ITEM 6. | Exhibits
|------- | --------



a) Exhibits



| | 2.1      | Share Exchange Agreement among IPLO, Yibaoccyb and Xiuhua Song dated July 1, 2016 (Incorporated by reference to Exhibit 2.1 to the Current Report on Form 8-K filed with the Securities and Exchange Commission on July 11, 2016.)                                                                                            
| | -------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 10.1     | Stock Purchase Agreement between IPLO and Xiuhua Song dated May 15, 2016. (Incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed with the Securities and Exchange Commission on July 11, 2016.)                                                                                                   
| | 10.2     | Stock Purchase Agreement among IPLO, Standard Resources Ltd., and H&H Glass Inc. dated July 1, 2016.  (Incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K filed with the Securities and Exchange Commission on July 11, 2016.)                                                                       
| | 10.3     | Consulting Services Agreement between YibaoHK and Shandong Confucian Biologics Co. Ltd. dated August 31, 2016 (Incorporated by reference to Exhibit 99.6 to the Current Report on Form 8-K/A filed with the Securities and Exchange Commission on September 6, 2016.)                                                         
| | 10.4     | Equity Pledge Agreement between YibaoHK, Shandong Confucian Biologics Co. Ltd. and the owners of Shandong Confucian Biologics Co. Ltd. dated August 31, 2016 (Incorporated by reference to Exhibit 99.7 to the Current Report on Form 8-K/A filed with the Securities and Exchange Commission on September 6, 2016.)          
| | 10.5     | Operating Agreement between YibaoHK, Shandong Confucian Biologics Co. Ltd. and the owners of Shandong Confucian Biologics Co. Ltd. dated August 31, 2016 (Incorporated by reference to Exhibit 99.8 to the Current Report on Form 8-K/A filed with the Securities and Exchange Commission on September 6, 2016.)              
| | 10.6     | Voting Rights and Proxy Agreement between YibaoHK, Shandong Confucian Biologics Co. Ltd. and the owners of Shandong Confucian Biologics Co. Ltd. dated August 31, 2016 (Incorporated by reference to Exhibit 99.9 to the Current Report on Form 8-K/A filed with the Securities and Exchange Commission on September 6, 2016.)
| | 10.7     | Option Agreement between YibaoHK, Shandong Confucian Biologics Co. Ltd. and the owners of Shandong Confucian Biologics Co. Ltd. dated August 31, 2016 (Incorporated by reference to Exhibit 99.10 to the Current Report on Form 8-K/A filed with the Securities and Exchange Commission on September 6, 2016.)                
| | 31.1     | Certification of the Chief Executive Officer pursuant to Rule 13a-14(a) (Section 302 of the Sarbanes-Oxley Act of 2002)                                                                                                                                                                                                       
| | 31.2     | Certification of the Chief Financial Officer pursuant to Rule 13a-14(a) (Section 302 of the Sarbanes-Oxley Act of 2002)                                                                                                                                                                                                       
| | 32.1     | Certification of the Chief Executive Officer pursuant to 18 U.S.C.ss.1350 (Section 906 of the Sarbanes-Oxley Act of 2002)                                                                                                                                                                                                     
| | 32.2     | Certification of the Chief Financial Officer pursuant to 18 U.S.C.ss.1350 (Section 906 of the Sarbanes-Oxley Act of 2002)                                                                                                                                                                                                     
| | 101.INS* | XBRL Instance Document                                                                                                                                                                                                                                                                                                        
| | 101.SCH* | XBRL Schema Document                                                                                                                                                                                                                                                                                                          
| | 101.CAL* | XBRL Calculation Linkbase Document                                                                                                                                                                                                                                                                                            
| | 101.DEF* | XBRL Definition Linkbase Document                                                                                                                                                                                                                                                                                             
| | 101.LAB* | XBRL Label Linkbase Document                                                                                                                                                                                                                                                                                                  
| | 101.PRE* | XBRL Presentation Linkbase Document                                                                                                                                                                                                                                                                                           



* To be filed by amendment









23






SIGNATURES



Pursuant to the requirements of Section 13
or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.



|                    |     | YBCC, INC.                               | 
|------------------- | --- | ---------------------------------------- | 
|                    |     | (Registrant)                             | 
|                    |     |                                          | 
|                    |     |                                          | 
|Dated: May 15, 2018 | By: | /s/ Xiuhua song                          | 
|                    |     | Xiuhua Song                              | 
|                    |     | Chief Executive Officer                  | 
|                    |     | Principal Financial Officer and Director | 
|                    |     |                                          | 





















24