China Jo Jo Drugstores : Reports Fiscal Year 2021 Financial Results (Form 8-K)

China Jo-Jo Drugstores Reports Fiscal Year 2021 Financial Results

HANGZHOU, China, June 29, 2021 /PRNewswire/ -- 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 sold in large quantity at its retail stores, to other vendors at competitive prices.

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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, 2021, 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%, respectively, for the fiscal year ended March 31, 2021, compared to gross margins for retail drugstores, online pharmacy and wholesale of 28.1%, 10.6%, and 11.0%, respectively, 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, 2021, 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, 2021, 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, 2021, 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, 2021 and 2020, respectively.

Net loss

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.

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Financial Condition

As of March 31, 2021, 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, 2021, 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, 2021, compared to $4.84 million for the prior fiscal year. Net cash provided by financing activities was $3.08 million for the fiscal year ended March 31, 2021, 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 in China. 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
[phone]
[e-mail]

Investor Relations Contact:
Tina Xiao
Ascent Investor Relations LLC
[phone]
[e-mail]

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CHINA JO-JO DRUGSTORES, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

		March 31,			March 31,
		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			3,528,056				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			29,895,830				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 March 31, 2021 and March 31, 2020			41,752				32,937
Preferred stock; $0.001 par value; 10,000,000 shares authorized; nil issued and outstanding as of March 31, 2021 and March 31, 2020			-				-
Additional paid-in capital			66,516,033				54,209,301
Statutory reserves			1,309,109				1,309,109
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				18,778,129
Total liabilities and stockholders' equity		$	106,310,631			$	99,516,233

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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			10,897,629				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	)			(7,526,217	)
WEIGHTED AVERAGE NUMBER OF SHARES:
Basic			40,780,762				32,816,567
Diluted			40,780,762				32,816,567
LOSS PER SHARES:
Basic		$	(0.20	)		$	(0.18	)
Diluted		$	(0.20	)		$	(0.18	)

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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		$	(8,375,578	)		$	(6,457,677	)
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			228,506				628,192
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 financial assets available for sale			75,973				14,356
Acquisition of equipment and building			(126,766	)			(656,297	)
Investment in a joint venture			(1,470,119	)			(2,567,083	)
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			9,287,100				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			$	30,982,606
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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