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China Jo-Jo Drugstores Announces Fiscal Year 2015 First Quarter Financial Results

HANGZHOU, China, Aug. 12, 2014 /PRNewswire/ -- China Jo-Jo Drugstores, Inc. (NASDAQ CM: CJJD) (the "Company"), a retail and wholesale distributor of pharmaceutical and other healthcare products in the People's Republic of China, today announced earnings results for the quarter ended June 30, 2014.

FY 2015 First Quarter Highlights:

  • Online sales contributed $2.6 million in revenue, an increase of 103.5% from the comparable quarter of prior year
  • Retail sales, which includes online sales, accounted for approximately 80.0% of total revenue, and increased by $2.3 million, or 20.7% year over year to $13.2 million
  • Wholesale, which accounted for approximately 20.0% of total revenue, decreased to $3.3 million from $4.4 million for the same quarter of last year
  • Gross margin decreased quarter over quarter from 23.5% to 15.3%
  • Net loss was $0.35 million compared to $0.79 million for the comparable quarter of prior year; Diluted EPS loss was $0.02 compared to $0.06 for the comparable quarter of prior year

The Company's drugstore sales increased in the first quarter of fiscal 2015, primarily due to a 9.8% increase in same-store sales, and revenues from the proliferation of new stores established over the last few years. Retail profit margin decreased to 17.6% from 25.7% in the first quarter of fiscal 2014 due to strong market competition and the implementation of government subsidies to all drugs sold at public hospitals in Zhejiang Province since April 2014. As of June 30, 2014, we have 49 retail drug stores in total with one new store opened in Hangzhou during the quarter.

The Company's online sales continued to grow dramatically in the first quarter of fiscal 2015, reflecting its efforts in expanding collaboration with large business-to-consumer vendors, better products selection for online consumer, and effective cost control. The Company also plans to implement the O2O (online to offline) drug sales model, which provides deliveries to customers from local stores within a few hours of an online purchase. As online shopping becomes widely used, the Company's sales and technical team gains more experiences in searching for potential customers and satisfying products. The Company's management expects an explosive expansion of its online pharmacy sales in the near future.

Mr. Lei Liu, the Company's Chairman and CEO, stated, "We are glad to see the continued improvement in our retail operation, especially the growth in our same-store sales and online store. Wholesale business declined in the first quarter as we have been undergoing restructure of the division in the past few quarters, including a change in sales and management team of wholesale division."

"For the remaining of fiscal 2015," Concluded by Mr. Liu, "we anticipate to grow revenue primarily through our retail operations and online pharmacy while stabilizing our wholesale operations with an eye to achieve bottom line results."

Forward Looking Statement

Statements in this press release regarding the Company that are not historical facts are forward-looking statements and are subject to risks and uncertainties that could cause actual future events or results to differ materially from such statements. Any such forward-looking statements, including, but not limited to, financial guidance, are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements can be identified by the use of forward-looking terminology such as "believe," "expect," "may," "will," "should," "project," "plan," "seek," "intend," "anticipate," the negatives thereof, or comparable terminology. Such statements typically involve risks and uncertainties and may include financial projections or information regarding the progress of new product development. It is routine for the Company's internal projections and expectations to change as the quarter and year progresses, and therefore it should be clearly understood that the internal projections and beliefs upon which the Company bases its expectations may change. Although these expectations may change, the Company is under no obligation to inform you if they do. Actual results could differ materially from the expectations reflected in such forward-looking statements as a result of numerous factors, including the risks associated with the effect of changing economic conditions in the People's Republic of China, variations in cash flow, reliance on collaborative retail partners and on new product development, variations in new product development, risks associated with rapid technological change, and the potential of introduced or undetected flaws and defects in products. Readers are referred to the reports and documents filed from time to time by the Company with the Securities and Exchange Commission for a discussion of these and other important risk factors that could cause actual results to differ from those discussed in forward-looking statements. The Company also routinely posts important information on its corporate websites, which readers can access at www.jiuzhou-drugstore.com  (Chinese) and www.chinajojodrugstores.com  (English).

See Accompanying Tables

 

 

CHINA JO-JO DRUGSTORES, INC AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

 



June 30,



March 31,




2014



2014


A S S E T S







CURRENT ASSETS







Cash


$

3,378,916



$

4,445,276


Restricted cash



3,706,658




3,114,543


Trade accounts receivable, net



5,677,129




6,734,536


Inventories



7,223,808




8,419,132


Other receivables, net



425,983




149,546


Advances to suppliers, net



3,184,527




4,577,194


Other current assets



1,726,872




1,663,102


Total current assets



25,323,893




29,103,329











PROPERTY AND EQUIPMENT, net



9,034,288




9,412,688











OTHER ASSETS









Long-term biological assets



1,373,425




-


Long term deposits



2,764,792




2,786,437


Other noncurrent assets



2,947,235




3,036,930


Intangible assets, net



1,563,347




1,569,443


Total other assets



8,648,799




7,392,810











Total assets


$

43,006,980



$

45,908,827











L I A B I L I T I E S A N D S T O C K H O L D E R S' E Q U I T Y









CURRENT LIABILITIES









Short-term loan payable


$

-



$

162,300


Accounts payable, trade



10,218,415




14,554,726


Notes payable



9,065,063




7,820,718


Other payables



1,825,591




1,282,211


Other payables - related parties



2,808,588




2,384,294


Loan from third parties



234,813




294,042


Customer deposits



3,386,007




3,185,885


Taxes payable



349,562




373,501


Accrued liabilities



823,309




1,208,242


Total current liabilities



28,711,348




31,265,919











Purchase option and warrant liability



155,217




278,916


Total liabilities



28,866,565




31,544,835











COMMITMENTS AND CONTINGENCIES


















STOCKHOLDERS' EQUITY









Preferred stock; $0.001 par value; 10,000,000 shares authorized; nil issued and
   outstanding as of March 31, 2014 and June 30, 2014                                                       



-




-


Common stock; $0.001 par value; 250,000,000 shares authorized; 14,416,022 and    14,416,022 shares issued and outstanding as of June 30, 2014 and March 31, 2014



14,416




14,416


Additional paid-in capital



17,427,911




17,355,555


Statutory reserves



1,309,109




1,309,109


Accumulated deficit



(8,607,504)




(8,260,767)


Accumulated other comprehensive income



3,957,404




3,905,136


Total stockholders' equity



14,101,336




14,323,449











Noncontrolling interests



39,079




40,543


Total equity



14,140,415




14,363,992











Total liabilities and stockholders' equity


$

43,006,980



$

45,908,827


 

 

 

CHINA JO-JO DRUGSTORES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(UNAUDITED)

 



For the three months ended
June 30,




2014



2013


REVENUES, NET


$

16,459,232



$

15,336,519











COST OF GOODS SOLD



13,948,613




11,735,350











GROSS PROFIT



2,510,619




3,601,169











SELLING EXPENSES



1,768,577




1,680,842


GENERAL AND ADMINISTRATIVE EXPENSES



1,081,201




2,640,818


TOTAL OPERATING EXPENSES



2,849,778




4,321,660











LOSS FROM OPERATIONS



(339,159)




(720,491)











OTHER LOSS, NET



(115,836)




(40,413)


CHANGE IN FAIR VALUE OF DERIVATIVE LIABILITIES



123,699




12,665











LOSS BEFORE INCOME TAXES



(331,296)




(748,239)











PROVISION FOR INCOME TAXES



16,141




39,520











NET LOSS



(347,437)




(787,759)











ADD: NET LOSS ATTRIBUTABLE TO NONCONTROLLING INTEREST  



700




243











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



(346,737)




(787,516)











OTHER COMPREHENSIVE INCOME









Foreign currency translation adjustments                                                           



52,268




759,791











COMPREHENSIVE LOSS


$

(294,469)



$

(27,725)











WEIGHTED AVERAGE NUMBER OF SHARES:









Basic



14,416,022




13,609,003


Diluted



14,416,022




13,609,003











LOSSES PER SHARES:









Basic


$

(0.02)



$

(0.06)


Diluted


$

(0.02)



$

(0.06)


 

 

 

CHINA JO-JO DRUGSTORES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

 



Three months ended
June 30,




2014



2013


CASH FLOWS FROM OPERATING ACTIVITIES:







Net loss


$

(347,437)



$

(787,759)


Adjustments to reconcile net (loss) income to net cash provided by (used in) operating   activities:









Depreciation and amortization



502,101




588,936


Stock compensation



71,544




27,338


Bad debt provision



(637,819)




1,181,478


Inventory reserve



4,316




-


Change in fair value of purchase option derivative liability                                                  



(123,699)




(12,665)


Change in operating assets:









Accounts receivable, trade



1,187,128




(190,989)


Notes receivable



-




(290,214)


Inventories and biological assets



(171,784)




(398,271)


Other receivables



(59,183)




(159,171)


Advances to suppliers



1,694,269




(1,111,259)


Other current assets



(61,633)




(782,304)


Long term deposit



25,040




-


Other noncurrent assets



93,294




49,586


Change in operating liabilities:









Accounts payable, trade



(4,347,548)




1,363,429


Other payables and accrued liabilities



155,208




(570,952)


Customer deposits



195,894




365,295


Taxes payable



(24,361)




(2,212)


Net cash used in operating activities



(1,844,670)




(729,734)











CASH FLOWS FROM INVESTING ACTIVITIES:









Purchase of equipment



(104,682)




(2,934)


Additions to leasehold improvements



-




(3,958)


Payments on construction-in-progress



-




(111,152)


Net cash used in investing activities



(104,682)




(118,044)











CASH FLOWS FROM FINANCING ACTIVITIES:









Proceeds from short-term bank loan



-




161,230


Repayment of short-term bank loan



(162,250)




-


Repayment of  third parties loan



(59,500)




-


Change in restricted cash



(587,371)




(1,336,189)


Proceeds from notes payable



1,918,599




650,108


Repayments of notes payable



(685,791)




(816,304)


Proceeds from other payables-related parties



423,752




194,973


Net cash provided by financing activities



847,439




(1,146,182)











EFFECT OF EXCHANGE RATE ON CASH



35,553




181,265











DECREASE IN CASH



(1,066,360)




(1,812,695)











CASH, beginning of period



4,445,276




4,524,094











CASH, end of period


$

3,378,916



$

2,711,399




















SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:









Cash paid for income taxes


$

21,325



$

9,529


Cash paid for interest


$

1,460



$

8,764


 

 

SOURCE China Jo-Jo Drugstores

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