China Jo-Jo Drugstores Reports Fiscal Year 2021 Financial Results

HANGZHOU,China,June 29,2021 -- 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 in China,today announced its financial results for the fiscal year ended March 31,2021.

Mr. Lei Liu,Chairman and CEO of Jo-Jo Drugstores,commented,"We are pleased to present our financial results for the fiscal year 2021. Our revenue and gross profit record $133.13 million and $29.24 million for the fiscal year 2021,up 13.5% and 14.6% compared to the fiscal year 2020. Revenue from retail drugstores,online pharmacy,and wholesale segments increased by 2.7%,66.1% and 16.3%,respectively,demonstrating that we successfully executed our multifaceted growth strategy and strategic transformation."

Mr. Liu continued,"The project of 'Healthy China 2030' brings us new opportunities since it will advance the healthcare sector reforms and greatly enhance overall medical service quality and efficiency in China. To realize the potential of our business model in this trend,we enhanced various information and data systems,continued to develop the management system for patients with chronic diseases,upgraded our 'Medical + Medicine' business model,introduced digital services,developed 24-hour service stores,launched a new Office Automation system,and accelerated comprehensive budget management. We aim to build a strong foundation for sustainable growth and engage with consumers from various platforms. As a leading consumer brand in China with a diversified portfolio of essential healthcare businesses,we are confident that we are on the right track to deliver significant value to all of our investors."

Fiscal Year 2021 Financial Highlights

For the Year Ended March 31,

($ millions,except per share data)

2021

2020

% Change

Revenue

133.13

117.33

13.5%

Retail drugstores

76.10

74.08

2.7%

Online pharmacy

22.48

13.54

66.1%

Wholesale

34.55

29.71

16.3%

Gross profit

29.24

25.53

14.6%

Gross margin

22.0%

21.8%

0.2 pp*

Loss from operations

(8.84)

(7.00)

-26.2%

Net loss

(8.38)

(6.46)

-29.7%

Loss per share

(0.20)

(0.18)

-11.1%

*Notes: pp represents percentage points

Revenue increased by 13.5% to $133.13 million for the fiscal year ended March 31,2021 from $117.33 million for the prior fiscal year.

Gross profit increased by 14.6% to $29.24 million for the fiscal year ended March 31,2021 from $25.53 million for the prior fiscal year.

Gross margin increased slightly by 0.2 percentage points to 22.0% for the fiscal year ended March 31,2021 from 21.8% for the prior fiscal year.

Net loss was $8.38 million,or $0.20 per basic and diluted share,for the fiscal year ended March 31,2021,compared to net loss of $6.46 million,or $0.18 per basic and diluted share,for the prior fiscal year.

Fiscal Year 2021 Financial Results

Revenue

Revenue for the fiscal year ended March 31,2021 increased by $15.80 million,or 13.5%,to $133.13 million from $117.33 million for the prior fiscal year. The increase in revenue was primarily due to the growth in retail drugstores business,online pharmacy and wholesale business.

For the Year Ended March 31,

2021

2020

($ millions)

Revenue

Cost of

Goods

Gross

Margin

Revenue

Cost of

Goods

Gross

Margin

Retail drugstores

76.10

53.09

30.2%

74.08

53.24

28.1%

Online pharmacy

22.48

20.15

10.4%

13.54

12.11

10.6%

Wholesale

34.55

30.65

11.3%

29.71

26.45

11.0%

Total

133.13

103.89

22.0%

117.33

91.80

21.8%

Revenue from the retail drugstores business increased by $2.02 million,or 2.7%,to $76.10 million for the fiscal year ended March 31,2021 from $74.08 million for the prior fiscal year. However,after removing the impact of exchange rate fluctuation,the actual retail drugstores sales decreased by 1.5%. The actual decrease in retail drugstore sales was primarily due to the negative effect on the overall economy from COVID-19 and the Company's strategic decision to cease selling certain low-profit margin products that are eligible for reimbursement by National Healthcare Security Administration since September 1,2020.

Revenue from the online pharmacy business increased by $8.94 million,or 66.1%,to $22.48 million for the fiscal year ended March 31,2021 from $13.54 million for the prior fiscal year. The increase was primarily caused by an increase in the sales of prescription drugs via e-commerce platforms such as Tmall. In the past,prescription drugs cannot be sold online due to safety concern. After the nation lifted the ban order,online prescription drug sales became popular. As a result,the sale of prescription drugs was $8.24 million in the year ended March 31,2021 as compared to $1.45 million in the year ended March 31,2020. Additionally,the Company maintained a membership care program targeted at customers with chronic disease. The Company has closely interacted with its members via WeChat to provide healthcare knowledge,and to remind them 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 $4.84 million,or 16.3%,to $34.55 million for the fiscal year ended March 31,2021 from $29.71 million for the prior fiscal year. The increase was primarily accomplished by Company's ability to sell certain products,which were soldin large quantity at its retail stores,to other vendors at competitive prices.

Gross profit and gross margin

Total cost of goods sold increased by $12.09 million,or 13.2%,to $103.89 million for the fiscal year ended March 31,2021 from $91.80 million for the prior fiscal year. Gross profit increased by $3.71 million,or 14.6%,to $29.24 million for fiscal year ended March 31,2021 from $25.53 million for the prior fiscal year.Overall gross margin increased slightly by 0.2 percentage points to 22.0% for the fiscal year ended March 31,from 21.8% for the prior fiscal year.

Gross margins for retail drugstores,online pharmacy and wholesale were 30.2%,10.4%,and 11.3%,compared to gross margins for retail drugstores,online pharmacy and wholesale of 28.1%,10.6%,and 11.0%,for the prior fiscal year.

Loss from operations

Selling and marketing expenses increased by $3.16 million,or 13.3%,to $26.95 million for the fiscal year ended March 31,2021 from $23.79 million for the prior fiscal year. The increase in selling and marketing expenses was primarily due to increase in employee's salary and rent for office leases.

General and administrative expenses increased by 2.79 million,or 34.4%,to $10.90 million for the fiscal year ended March 31,2021 from $8.11 million for the prior fiscal year. The increase in general and administrative expenses was primarily due to the increase in stock-based compensation,offset by the decrease in bad debt expense. In December 2020,the Company issued a total of 3,790,000 shares of common stock and recorded stock-based compensation of approximately $3.9 million.In the year ended March 31,the Company recorded the reduction in the allowance for bad debts of $1.0 million as compared to increase in bad debt expense in of $0.1 million in fiscal year 2020.

The Company recorded an impairment of long-lived assets of $0.23 million and $0.63 million for the year ended March 31,2021 and 2020,respectively. In the year ended March 31,the Company evaluated the forest land use rights and recorded an impairment of $0.23 million. In the year ended March 31,2020,the Company evaluated the licenses of insurance applicable drugstores acquired in the past based on their discounted positive cash value.

Loss from operations was $8.84 million for the fiscal year ended March 31,compared to loss from operations of $7.00 million for the prior fiscal year. Operating margin was (6.6) % and (6.0)% for the fiscal year ended March 31,respectively.

Net loss

Net loss was $8.38 million,or $0.20 per basic and diluted share for the fiscal year ended March 31,or $0.18 per basic and diluted share for the prior fiscal year.

Financial Condition

As of March 31,the Company had cash of $22.05 million,compared to $16.18 million as of March 31,2020. Net cash used in operating activities was $0.06 million for the fiscal year ended March 31,compared to $6.91 million for the prior fiscal year. Net cash used in investing activities was $2.00 million for the fiscal year ended March 31,compared to $4.84 million for the prior fiscal year. Net cash provided by financing activities was $3.08million for the fiscal year ended March 31,compared to $19.01 million for the prior fiscal 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

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

CONSOLIDATED BALANCE SHEETS

March31,

March31,

2021

2020

ASSETS

CURRENT ASSETS

Cash and cash equivalents

$

22,045,628

$

16,176,318

Restricted cash

12,627,016

14,806,288

Financial assets available for sale

91,472

157,159

Notes receivable

39,392

57,005

Trade accounts receivable

13,423,728

9,770,656

Inventories

16,972,965

12,247,004

Other receivables,net

5,051,960

5,069,442

Advances to suppliers

421,963

1,174,800

Other current assets

1,560,119

1,528,540

Total current assets

72,234,243

60,987,212

PROPERTY AND EQUIPMENT,net

6,549,035

7,633,740

OTHER ASSETS

Long-term investment

3,981,986

2,544,451

Farmland assets

835,427

742,347

Long term deposits

1,546,764

1,456,384

Other noncurrent assets

856,391

1,046,763

Operating lease right-of-use assets

16,778,729

21,711,376

Intangible assets,net

3,056

3,393,960

Total other assets

27,527,353

30,895,281

Total assets

$

106,310,631

$

99,516,233

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES

Short-term bank loan

762,270

1,410,130

Accounts payable,trade

29,830

21,559,494

Notes payable

25,663,633

26,605,971

Other payables

2,940,000

2,522,330

Other payables - related parties

445,305

490,218

Customer deposits

1,146,247

708,140

Taxes payable

197,733

119,247

Accrued liabilities

501,111

753,612

Long-term loan payable-current portion

2,557,634

2,287,742

Current portion of operating lease liabilities

788,171

981,090

Total current liabilities

64,897,934

57,437,974

Long-term loan payable

1,892,269

4,115,958

Long term operating lease liabilities

15,118,083

19,049,575

Employee Deposits

-

70,507

Purchase option and warrants liability

-

64,090

Total liabilities

81,908,286

80,738,104

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' EQUITY

Common stock; $0.001 par value; 250,000,000 shares authorized; 41,751,790 and

32,936,786 shares issued and outstanding as of March31,2021 and March 31,

2020

41,752

32,937

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

outstanding as of March31,2020

-

-

Additional paid-in capital

66,033

54,209,301

Statutory reserves

1,309,109

1,109

Accumulated deficit

(44,942,374)

(36,400,837)

Accumulated other comprehensive income

2,818,185

1,440,424

Total stockholders' equity

25,742,705

20,590,934

Noncontrolling interests

(1,340,360)

(1,812,805)

Total equity

24,402,345

18,129

Total liabilities and stockholders' equity

$

106,233

CHINA JO-JO DRUGSTORES,INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

For the years ended

March 31,

2021

2020

REVENUES,NET

$

133,134,633

$

117,327,689

COST OF GOODS SOLD

103,890,824

91,801,259

GROSS PROFIT

29,243,809

25,526,430

SELLING EXPENSES

26,954,914

23,793,603

GENERAL AND ADMINISTRATIVE EXPENSES

10,629

8,108,377

IMPAIRMENT OF LONG-LIVED ASSETS

228,506

628,192

TOTAL OPERATING EXPENSES

38,081,049

32,530,172

LOSS FROM OPERATIONS

(8,837,240)

(7,003,742)

OTHER EXPENSE:

INTEREST INCOME

707,878

1,063,747

INTEREST EXPENSE

(455,187)

(698,518)

OTHER

176,519

(204,064)

CHANGE IN FAIR VALUE OF PURCHASE OPTION AND WARRANTS

LIABILITY

64,090

401,158

LOSS BEFORE INCOME TAXES

(8,343,940)

(6,441,419)

PROVISION FOR INCOME TAXES

31,638

16,258

NET LOSS

(8,375,578)

(6,457,677)

LESS: NET LOSS ATTRIBUTABLE TO NONCONTROLLING INTEREST

(255,716)

(644,308)

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

(8,119,862)

(5,813,369)

OTHER COMPREHENSIVE LOSS

FOREIGN CURRENCY TRANSLATION ADJUSTMENTS

1,377,761

(1,068,540)

COMPREHENSIVE LOSS

(6,997,817)

(7,217)

WEIGHTED AVERAGE NUMBER OF SHARES:

Basic

40,780,762

32,816,567

Diluted

40,567

LOSS PER SHARES:

Basic

$

(0.20)

$

(0.18)

Diluted

$

(0.20)

$

(0.18)

CHINA JO-JO DRUGSTORES,INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

For the years ended

March 31,

2021

2020

CASH FLOWS FROM OPERATING ACTIVITIES:

Net income

$

(8,578)

$

(6,677)

Adjustments to reconcile net income to net cash used in operating activities:

Bad debt direct write-off and provision

(706,862)

446,354

Depreciation and amortization

1,750,890

2,082,817

Impairment of long lived assets

228,192

Stock based compensation

3,941,600

34,560

Change in fair value of purchase option derivative liability

(64,090)

(401,158)

Change in operating assets:

Accounts receivable,trade

(3,307,946)

(1,567,774)

Notes receivable

21,539

112,803

Inventories and biological assets

(3,615,017)

979,935

Other receivables

468,967

(1,010,722)

Advances to suppliers

1,893,857

148,638

Long term deposit

26,910

596,209

Other current assets

1,004,448

(1,278,833)

Other noncurrent assets

38,142

87,065

Change in operating liabilities:

Accounts payable,trade

6,380,115

(317,755)

Other payables and accrued liabilities

(183,111)

(967,751)

Customer deposits

368,690

(22,963)

Taxes payable

66,648

115

Net cash used in operating activities

(62,292)

(6,907,945)

CASH FLOWS FROM INVESTING ACTIVITIES:

Disposal of financialassetsavailableforsale

75,973

14,356

Acquisition of equipmentand building

(126,766)

(656,297)

Investment in a joint venture

(1,470,119)

(2,083)

Purchases of intangible assets

(97,802)

(871,145)

Additions to leasehold improvements

(379,611)

(756,444)

Net cash used in investing activities

(1,998,325)

(4,836,613)

CASH FLOWS FROM FINANCING ACTIVITIES:

Proceeds from short-term bank loan

738,315

1,435,620

Repayment of short-term bank loan

(1,476,630)

-

Proceeds from third parties loan

-

7,178,100

Repayment of third parties loan

(2,395,629)

(658,645)

Proceeds from notes payable

48,292,231

48,974,772

Repayment of notes payable

(51,295,776)

(46,896,917)

Increase in financial liability

(73,832)

(7,178)

Exercise of warrants

77,500

-

Proceeds from sale of stock and warrants

9,100

9,273,077

Repayment of other payables-related parties

(73,426)

(285,123)

Net cash provided by financing activities

3,079,853

19,013,706

EFFECT OF EXCHANGE RATE ON CASH

2,670,802

(1,031,744)

INCREASE IN CASH AND CASH EQUIVALENTS AND RESTRICTED CASH

3,690,038

6,237,404

CASH AND CASH EQUIVALENTS AND RESTRICTED CASH,beginning of year

30,982,606

24,745,202

CASH AND CASH EQUIVALENTS AND RESTRICTED CASH,end of year

$

34,672,644

$

30,606

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:

Cash paid for income taxes

$

37,738

$

17,198

Cash paid for interest

455,187

108,098

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