China Jo-Jo Drugstores Reports First Quarter 2021 Financial Results

HANGZHOU,China,Aug. 14,2020 -- China Jo-Jo Drugstores,Inc. (NASDAQ: CJJD) ("Jo-Jo Drugstores" or the "Company"),a leading online and offline retailer,wholesale distributor of pharmaceutical and other healthcare products and healthcare provider inChina,today announced its financial results for the first fiscal quarter ended June 30,2020.

Mr. Lei Liu,Chairman and CEO of Jo-Jo Drugstores,commented,"We're proud of our strong first-quarter performance,despite unprecedented volatility and uncertainty in the market and across the globe. Our revenue and gross profit recorded $31.05 million and $7.98 million for the first fiscal quarter of 2021,up 22.8% and 31.7% compared to same period of fiscal year 2020. Revenue year-over-year from retail drugstores,online pharmacy,and wholesale segments increased by 12.4%,101.1% and 20.1% respectively. We are rolling out our transformation strategy of 'Medical Linkage & Technology Empowerment' with the goal of providing quality medical services to commercial insurance customers from state-owned enterprises. We focus on stabilizing the medical supply in the market and protecting people's safety,allowing us to increase brand awareness,maintain revenues and expand margins."

First Quarter of Fiscal 2021 Financial Highlights

For the Three Months Ended June 30,

($ millions,except per share data)

2020

2019

% Change

Revenue

31.05

25.28

22.8%

Retail drugstores

18.81

16.74

12.4%

Online pharmacy

4.91

2.44

101.1%

Wholesale

7.33

6.10

20.1%

Gross profit

7.98

6.06

31.7%

Gross margin

25.7%

24.0%

1.7 pp*

Loss from operations

(0.41)

(2.76)

85.1%

Net loss

(0.39)

(2.38)

83.7%

Loss per share

(0.01)

(0.07)

85.7%

*Notes: pp represents percentage points

Revenue increased by 22.8% to $31.05 million for the three months ended June 30,2020 from $25.28 million for the same period of last year.

Gross profit increased by 31.7% to $7.98 million for the three months ended June 30,2020 from $6.06 million for the same period of last year.

Gross margin increased by 1.7 percentage points to 25.7% for the three months ended June 30,2020 from 24.0% for the same period of last year.

Net loss was $0.39 million,or $0.01 per basic and diluted share,for the three months ended June 30,2020,compared to net loss of $2.38 million,or $0.07 per basic and diluted share,for the same period of last year.

First Quarter of Fiscal 2021 Financial Results

Revenue

Revenue for the three months ended June 30,2020 increased by $5.77 million,or 22.8%,to $31.05 million from $25.28 million for the same period of last year. The increase in revenue was primarily due to the growth in retail drugstores,online pharmacy and wholesale business.

For the Three Months Ended June 30,

2020

2019

($ millions)

Revenue

Cost of

Goods

Gross

Margin

Revenue

Cost of

Goods

Gross

Margin

Retail drugstores

18.81

12.40

34.1%

16.74

11.68

30.2%

Online pharmacy

4.91

4.23

13.9%

2.44

2.10

14.2%

Wholesale

7.33

6.44

12.1%

6.10

5.44

10.9%

Total

31.05

23.07

25.7%

25.28

19.22

24.0%

Revenue from the retail drugstores business increased by $2.07million,or 12.4%,to $18.81 million for the three months ended June 30,2020 from $16.74million for the same period of last year. The increase was primarily attributable to the consumer-facing benefits,such as emphasis on on-site medical care,chronic disease management services,incremental DTP (Direct-to-Patient) business caused by continuous hospital medical reform,and maturing of stores opened a year ago.

Revenue from the online pharmacy business increased by $2.47 million,or 101.1%,to $4.91 million for the three months ended June 30,2020 from $2.44 million for the same period of last year. The increase was primarily caused by an increase in sales of prescription drugs via e-commerce platforms such as Tmall. Prescription drugs used to be prohibited from sales online due to safety concern. However,because the nation has lifted the ban order,online prescription drug sales become popular. As a result,the sale of prescription drugs was $1.87 million in the three months ended June 30,2020 as compared to none in the three month ended June 30,2019. Additionally,the Company maintained a membership care program targeted at chronic disease customers. The Company has closely interacted with its members via WeChat by providing healthcare knowledge and reminding its customers to refill medicine. By implementing a personalized customer care program,the Company was able to promote its sales.

Revenue from the wholesale business increased by $1.23 million,or 20.1%,to $7.33 million for the three months ended June 30,2020 from $6.10 million for the same period of last year. The increase was primarily a result of the Company's ability to resell certain products,which the Company sold in large quantities at its retail stores,to other vendors at competitive prices.

Gross profit and gross margin

Total cost of goods sold increased by $3.85 million,to $23.07 million for the three months ended June 30,2020 from $19.22 million for the same period of last year. Gross profit increased by $1.92million,or 31.7%,to $7.98 million for three months ended June 30,2020 from $6.06 million for the same period of last year.Overall gross margin increased by 1.7 percentage points to 25.7% for the three months ended June 30,from 24.0% for the same period of last year.

Gross margins for retail drugstores,online pharmacy and wholesale were 34.1%,13.9%,and 12.1%,respectively,compared to the corresponding gross margins of 30.2%,14.2%,and 10.9% for the same period of last year.

Loss from operations

Selling and marketing expenses increased by $0.30 million,or 5.1%,to $6.27 million for the three months ended June 30,2020 from $5.97 million for the same period of last year,primarily due to increase in fee charged by various platforms as a result of sale increase in our online pharmacy.

General and administrative expenses decreased by $0.73 million,or 25.7%,to $2.12million for the three months ended June 30,2020 from $2.85 million for the same period of last year. In the three months ended June 30,the Company recorded bad debt allowance expense of $18,320 as compared to $758,231 in the same period of last year. Excluding such an effect,the general and administrative expenses increased by $8,465 period over period.

Loss from operations was $0.41million for the three months ended June 30,compared to loss from operations of $2.76million for the same period of last year. Operating margin was (1.3)%and (10.9)% for the three months ended June 30,2020 and 2019 respectively.

Net loss

Net loss was $0.39million,or $0.01 per basic and diluted share for the three months ended June 30,or $0.07 per basic and diluted share for the same period of last year.

Financial Condition

As of June 30,the Company had cash of $18.48 million,compared to $16.18 million as of March 31,2020. Net cash used in operating activities was $5.48million for the three months ended June 30,compared to $8.16 million for the same period of last year. Net cash used in investing activities was $1.60 million for the three months ended June 30,compared to $1.17 million for the same period of last year. Net cash provided by financing activities was $9.47 million for the three months ended June 30,compared to $8.02 million for the same period of last year.

About China Jo-Jo Drugstores,Inc.

China Jo-Jo Drugstores,Inc. ("Jo-Jo Drugstores" or the "Company"),is a leading online and offline retailer and wholesale distributor of pharmaceutical and other healthcare products and a provider of healthcare services inChina. Jo-Jo Drugstores currently operates an online pharmacy and retail drugstores with licensed doctors on site for consultation,examination and treatment of common ailments at scheduled hours. It is also a wholesale distributor of products similar to those carried in its pharmacies. For more information about the Company,please visit http://jiuzhou360.com.The Company routinely posts important information on its website.

Forward-Looking Statements

This press release contains information about the Company's view of its future expectations,plans and prospects that constitute forward-looking statements.Actual results may differ materially from historical results or those indicated by these forward-looking statements as a result of a variety of factors including,but not limited to,risks and uncertainties associated with its ability to raise additional funding,its ability to maintain and grow its business,variability of operating results,its ability to maintain and enhance its brand,its development and introduction of new products and services,the successful integration of acquired companies,technologies and assets into its portfolio of products and services,marketing and other business development initiatives,competition in the industry,general government regulation,economic conditions,dependence on key personnel,the ability to attract,hire and retain personnel who possess the technical skills and experience necessary to meet the requirements of its clients,and its ability to protect its intellectual property.The Company's encourages you to review other factors that may affect its future results in the Company's annual reports and in its other filings with the Securities and Exchange Commission.

For more information,please contact:

Company Contact:

Frank Zhao

Chief Financial Officer

+86-571-88077108

frank.zhao@jojodrugstores.com

Steve Liu

Investor Relations Director

steve.liu@jojodrugstores.com

Investor Relations Contact:

Tina Xiao

Ascent Investor Relations LLC

+1-917-609-0333

tina.xiao@ascent-ir.com

CHINA JO-JO DRUGSTORES,INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

June30,

March31,

2020

2020

ASSETS

CURRENT ASSETS

Cash and cash equivalents

$

18,477,212

$

16,176,318

Restricted cash

15,095,116

14,806,288

Financial assets available for sale

157,644

157,159

Notes receivable

28,290

57,005

Trade accounts receivable

8,984,595

9,770,656

Inventories

11,141,411

12,247,004

Other receivables,net

5,599,565

5,069,442

Advances to suppliers

2,237,720

1,174,800

Other current assets

1,835,927

1,528,540

Total current assets

63,557,480

60,987,212

PROPERTY AND EQUIPMENT,net

7,690

7,633,740

OTHER ASSETS

Long-term investment

3,963,758

2,544,451

Farmland assets

752,257

742,347

Long term deposits

1,447,547

1,456,384

Other noncurrent assets

1,049,184

1,046,763

Operating lease right-of-use assets

19,351,247

21,711,376

Intangible assets,net

3,358,407

3,393,960

Total other assets

29,922,400

30,895,281

Total assets

$

100,575,570

$

99,516,233

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES

Short-term bank loan

2,121,410,130

Accounts payable,trade

16,107,594

21,559,494

Notes payable

26,715,374

26,605,971

Other payables

2,992

2,522,330

Other payables - related parties

491,300

490,218

Customer deposits

795,903

708,140

Taxes payable

328,237

119,247

Accrued liabilities

672,469

753,612

Long-term loan payable-current portion

2,300,271

2,287,742

Current portion of operating lease liabilities

466,213

981,090

Total current liabilities

52,073

57,437,974

Long-term loan payable

3,551,507

4,115,958

Long-term operating leaseliabilities

16,917,159

19,575

Employee Deposits

14,145

70,507

Purchase option and warrants liability

68,980

64,090

Total liabilities

72,727,864

80,738,104

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' EQUITY

Common stock; $0.001 par value; 250,000,000 shares authorized; 37,961,790 and

32,936,786 shares issued and outstanding as of June30,2020 and March 31,2020

37,962

32,937

Preferred stock; $0.001 par value; 10,000 shares authorized; nil issued and

outstanding as of June30 and March 31,2020

-

-

Additional paid-in capital

63,568,876

54,209,301

Statutory reserves

1,309,109

1,109

Accumulated deficit

(36,632,346)

(36,400,837)

Accumulated other comprehensive income

1,533,993

1,440,424

Total stockholders' equity

29,817,594

20,590,934

Noncontrolling interests

(1,969,888)

(1,812,805)

Total equity

27,847,706

18,778,129

Total liabilities and stockholders' equity

$

100,233

CHINA JO-JO DRUGSTORES,INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(UNAUDITED)

Forthethreemonthsended

June 30,

2020

2019

REVENUES,NET

$

31,054,312

$

25,280,784

COST OF GOODS SOLD

23,074,093

19,219,346

GROSS PROFIT

7,980,219

6,061,438

SELLING EXPENSES

6,272,407

5,968,551

GENERAL AND ADMINISTRATIVE EXPENSES

2,120,166

2,851,612

TOTAL OPERATING EXPENSES

8,392,573

8,820,163

LOSS FROM OPERATIONS

(412,354)

(2,758,725)

OTHER INCOME (EXPENSE):

INTEREST INCOME

163,588

47,873

INTEREST EXPENSE

(127,387)

-

OTHER

50,021

(62,485)

CHANGE IN FAIR VALUE OF PURCHASE OPTION AND WARRANTS

LIABILITY

(4,890)

403,555

LOSS BEFORE INCOME TAXES

(331,022)

(2,369,782)

PROVISION FOR INCOME TAXES

57,570

8,388

NET LOSS

(388,592)

(2,378,170)

LESS: NET LOSS ATTRIBUTABLE TO NONCONTROLLING INTEREST

(157,083)

(243,219)

NET LOSS ATTRIBUTABLE TO CHINA JO-JO DRUGSTORES,INC.

(231,509)

(2,134,951)

OTHER COMPREHENSIVE LOSS

FOREIGN CURRENCY TRANSLATION ADJUSTMENTS

93,569

(405,238)

COMPREHENSIVE LOSS

(295,023)

(2,783,408)

WEIGHTED AVERAGE NUMBER OF SHARES:

Basic

34,428,271

32,453,269

Diluted

34,269

LOSS PER SHARES:

Basic

$

(0.01)

$

(0.07)

Diluted

$

(0.01)

$

(0.07)

CHINA JO-JO DRUGSTORES,INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

Forthethreemonthsended

June 30,

2020

2019

CASH FLOWS FROM OPERATING ACTIVITIES:

Net loss

$

(388,592)

$

(2,170)

Adjustments to reconcile net income to net cash provided by operating activities:

Bad debt direct write-off and provision

18,320

758,231

Depreciation and amortization

760,540

499,175

Stock based compensation

-

34,560

Change in fair value of purchase option derivative liability

4,890

(403,555)

Accounts receivable,trade

444,672

(959,680)

Notes receivable

28,824

81,326

Inventories and biological assets

1,140,697

2,652

Other receivables

(293,466)

371,054

Advances to suppliers

(952,166)

242,652

Other current assets

(583,285)

(450,042)

Long term deposit

13,299

58,630

Other noncurrent assets

806

(8,631)

Accounts payable,trade

(5,505,493)

(8,168)

Other payables and accrued liabilities

(435,365)

(105,522)

Customer deposits

85,379

116,398

Taxes payable

182,583

95,326

Net cash used in operating activities

(5,478,357)

(8,164,764)

CASH FLOWS FROM INVESTING ACTIVITIES:

Disposal of financialassetsavailableforsale

-

14,658

Acquisition of equipment

(10,536)

(210,356)

Increase in intangible assets

(19,474)

(433,111)

Investment in a joint venture

(1,408,155)

-

Additions to leasehold improvements

(159,272)

(542,734)

Net cash used in investing activities

(1,597,437)

(1,171,543)

CASH FLOWS FROM FINANCING ACTIVITIES:

Proceeds from short-term bank loan

705,585

-

Repayment ofthird parties loan

(570,338)

-

Proceeds from notes payable

14,242

15,372,260

Repayment of notes payable

(14,364,978)

(16,167,012)

Decrease in Employee Deposits

(56,447)

-

Exercise of warrants

77,500

-

Proceeds from equity financing

9,100

9,273,077

Repayment of other payables-related parties

-

(460,000)

Net cash provided by financing activities

9,470,664

8,018,325

EFFECT OF EXCHANGE RATE ON CASH

194,852

(277,067)

INCREASE(DECREASE) IN CASH AND CASH EQUIVALENTS AND RESTRICTED CASH

2,589,722

(1,595,049)

CASH AND CASH EQUIVALENTS AND RESTRICTED CASH,beginning of period

30,982,606

24,745,202

CASH AND CASH EQUIVALENTS AND RESTRICTED CASH,end of period

$

33,572,328

$

23,150,153

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:

Cash paid for interest

127,387

-

Cash paid for income taxes

$

-

$

29,176

View original content:/news-releases/china-jo-jo-drugstores-reports-first-quarter-2021-financial-results-301112420.html