HANGZHOU, China, Feb. 10, 2017 /PRNewswire/ -- China Jo-Jo Drugstores, Inc. (NASDAQ: CJJD)
today announced financial results for its third fiscal quarter and
nine months ended December 31,
2016.
Third Quarter Highlights:
- Revenue was $20.6 million
compared to $24.7 million a year
ago
- Retail drugstores sales were $14.1
million compared to $12.9
million a year ago
- Gross margin increased 70 bps year-over-year to 20.3%, retail
pharmacy gross margin increased 410 bps to 25.7% from a year
ago
- GAAP net loss was $834,806 or
$0.04 per diluted share compared to
net loss of $617,529 or $0.04 per diluted share a year ago
Nine Months Highlights:
- Revenue was $61.7 million
compared to $68.6 million a year
ago
- Retail drugstores sales were $39.6
million compared to $38.2
million a year ago
- Gross margin increased 190 bps year-over-year to 21.1%, retail
pharmacy gross margin increased 460 bps to 27.8% from a year
ago
- GAAP net loss was $605,784 or
$0.02 per diluted share compared to
net loss of $355,743 or $0.02 per diluted share a year ago
- Adjusted net income was $1,176,409 or $0.06
per diluted share compared to adjusted net loss of $8,300 or $0.00 per
diluted share a year ago
China Jo-Jo's Chairman and CEO,
Mr. Liu Lei commented, "Our retail
drugstores' sales started to recover during the quarter as we grew
both retail sales and margins year-over-year. We optimized our
drugstores' product mix leading up to the Chinese New Year Holiday and met customer demand
for popular nutritional supplements products. We also continue to
improve our chronic disease management program, which has attracted
many loyal customers who refill their prescriptions and purchase
supplemental products at our stores. We look forward to expanding
our proven retail pharmacy model in Hangzhou in the New Year and bringing
innovative wellness options and expanded access to care to more
pharmacy customers."
Net revenues for the third quarter were $20.6 million compared to $24.7 million in the same quarter a year ago, a
decrease of $4.1 million, or 16.6%.
Lower revenue was mainly due to the decline in online pharmacy
business, which was partially offset by increase in retail
drugstore business.
Retail drugstore sales were $14.1
million compared to $12.9
million in the same quarter last year and $12.8 million in the second quarter of fiscal
2017. To improve same-store sales, the Company continued to
optimize product mix, expand mobile payment, roll out in-pharmacy
virtual doctor clinics, and work with reputable vendors to promote
the sales of third-party brand products. As a result, same-store
sales increased by approximately $728,822, or 6.0% year-over-year, while new
stores contributed approximately $572,876 in revenue in the third quarter. The
pharmacy store count increased to 65 as of December 31, 2016, compared to 59 stores a year
ago.
Online pharmacy sales were $3.4
million compared to $8.6
million in the same quarter a year ago. The decrease was
mainly due to lower sales through third party e-commerce websites
that resulted from the CFDA (China Food and Drug Administration)
suspension of OTC drug sales on third party e-commerce websites and
the decline in referrals from Yikatong, the popular pharmacy and
health insurance benefit card, to the Company's online pharmacy. To
address these challenges, the Company has been redirecting customer
traffic from third party e-commerce websites to its own website to
promote the purchase of OTC products, while adding more non-medical
health products such as nutritional supplements on such third party
e-commerce platforms. Meanwhile, the Company has also been working
with alternative referral vendors of pharmacy benefit management
services.
Gross profit decreased by $663,462
or 13.7% year-over-year to $4.2
million. Gross margin increased from 19.6% to 20.3% due to
higher retail profit margins. Retail gross margin increased
primarily due to higher vendor rebates attributable to our
marketing efforts in promoting brand-name products with large
pharmaceutical suppliers, efforts to renegotiate prices with our
suppliers periodically, and selection of certain higher profit
margin products for retail sale.
Sales and marketing expenses increased by $283,545 or 8.6% year over year, primarily due to
support to new local wholesale clients such as other local
drugstores.
General and administrative expenses decreased by $416,599 or 22.3% year over year, primarily due
to accounts receivable and decrease of $331,180 in advances to vendors allowance in the
third quarter as compared to allowance addition of $190,472 in the same quarter last year. The
difference was caused by collection on certain remaining aged
accounts receivable and advances to suppliers' accounts in the
quarter.
Net loss was $834,806 or
$0.04 per diluted share compared to
last year's third quarter net loss of $617,529 or $0.04
per diluted share.
About China Jo-Jo Drugstores,
Inc.
China Jo-Jo Drugstores, Inc., is
a leading China-based pharmacy that engages in retail, wholesale
and online distribution and sales of pharmaceutical and health care
products, including through its online and retail pharmacies. As of
December 31, 2016, the Company had 65
retail pharmacies in Zhejiang
Province. The Company's wholesale subsidiary supplies its
retail stores and distributes drug and healthcare products to other
drugstores and drug vendors. For more information, please visit:
www.jiuzhou-drugstore.com (Chinese) and www.chinajojodrugstores.com
(English).
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," "estimate," "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. Other
than as required under the securities laws, the Company does not
assume a duty to update these forward-looking statements.
CHINA JO-JO
DRUGSTORES, INC AND SUBSIDIARIES
condensed
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
|
March 31,
|
|
|
|
2016
|
|
|
2016
|
|
ASSETS
|
|
|
|
|
|
|
CURRENT
ASSETS
|
|
|
|
|
|
|
Cash
|
|
$
|
4,643,349
|
|
|
$
|
6,671,873
|
|
Financial assets available for sale
|
|
|
-
|
|
|
|
465,165
|
|
Restricted
cash
|
|
|
8,980,544
|
|
|
|
13,747,990
|
|
Notes
receivable
|
|
|
42,740
|
|
|
|
15,506
|
|
Trade accounts
receivable, net
|
|
|
9,441,386
|
|
|
|
8,054,597
|
|
Inventories
|
|
|
10,565,855
|
|
|
|
10,802,691
|
|
Other receivables,
net
|
|
|
1,440,641
|
|
|
|
1,376,468
|
|
Advances to
suppliers, net
|
|
|
3,839,635
|
|
|
|
4,230,665
|
|
Other current
assets
|
|
|
1,483,431
|
|
|
|
1,518,048
|
|
Total current
assets
|
|
|
40,437,581
|
|
|
|
46,883,003
|
|
|
|
|
|
|
|
|
|
|
PROPERTY AND
EQUIPMENT, net
|
|
|
4,607,201
|
|
|
|
5,543,076
|
|
|
|
|
|
|
|
|
|
|
OTHER
ASSETS
|
|
|
|
|
|
|
|
|
Long-term
investment
|
|
|
40,131
|
|
|
|
108,539
|
|
Farmland
assets
|
|
|
1,484,987
|
|
|
|
1,562,205
|
|
Long term
deposits
|
|
|
2,277,120
|
|
|
|
2,452,056
|
|
Other noncurrent
assets
|
|
|
2,727,401
|
|
|
|
2,595,129
|
|
Intangible assets,
net
|
|
|
2,706,919
|
|
|
|
2,928,779
|
|
Total other
assets
|
|
|
9,236,558
|
|
|
|
9,646,708
|
|
|
|
|
|
|
|
|
|
|
Total
assets
|
|
$
|
54,281,340
|
|
|
$
|
62,072,787
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY
|
|
|
|
|
|
|
|
|
CURRENT
LIABILITIES
|
|
|
|
|
|
|
|
|
Short-term loan
payable
|
|
$
|
28,799
|
|
|
$
|
31,011
|
|
Accounts payable,
trade
|
|
|
14,402,089
|
|
|
|
16,667,396
|
|
Notes
payable
|
|
|
12,215,720
|
|
|
|
17,595,634
|
|
Other
payable
|
|
|
2,064,231
|
|
|
|
1,917,821
|
|
Other payable -
related parties
|
|
|
922,192
|
|
|
|
2,199,775
|
|
Customer
deposits
|
|
|
2,485,944
|
|
|
|
2,610,151
|
|
Taxes
payable
|
|
|
594,315
|
|
|
|
483,770
|
|
Accrued
liabilities
|
|
|
577,418
|
|
|
|
615,056
|
|
Total current
liabilities
|
|
|
33,290,708
|
|
|
|
42,120,614
|
|
|
|
|
|
|
|
|
|
|
Warrant
liability
|
|
|
510,859
|
|
|
|
636,301
|
|
Total
liabilities
|
|
|
33,801,567
|
|
|
|
42,756,915
|
|
|
|
|
|
|
|
|
|
|
STOCKHOLDERS'
EQUITY
|
|
|
|
|
|
|
|
|
Preferred stock; $0.001 par value; 10,000,000 shares
authorized; 0 issued and outstanding as of December 31,
2016 and March 31, 2016
|
|
|
|
|
|
|
|
|
Common stock; $0.001
par value; 250,000,000 shares
authorized; 20,374,678 and 17,735,504 shares issued and
outstanding as of December 31, 2016 and March 31,
2016
|
|
|
20,375
|
|
|
|
17,736
|
|
Additional paid-in
capital
|
|
|
25,597,019
|
|
|
|
22,088,267
|
|
Statutory
reserves
|
|
|
1,309,109
|
|
|
|
1,309,109
|
|
Accumulated
deficit
|
|
|
(7,562,837)
|
|
|
|
(6,957,053)
|
|
Accumulated other
comprehensive income
|
|
|
1,116,107
|
|
|
|
2,857,813
|
|
Total stockholders'
equity
|
|
|
20,479,773
|
|
|
|
19,315,872
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and
stockholders' equity
|
|
$
|
54,281,340
|
|
|
$
|
62,072,787
|
|
CHINA JO-JO
DRUGSTORES, INC. AND SUBSIDIARIES
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE
LOSS
(UNAUDITED)
|
|
|
|
For the three
months
ended
December 31,
|
|
|
For the nine
months
ended
December 31,
|
|
|
|
2016
|
|
|
2015
|
|
|
2016
|
|
|
2015
|
|
REVENUES,
NET
|
|
$
|
20,610,024
|
|
|
$
|
24,708,046
|
|
|
$
|
61,706,774
|
|
|
$
|
68,596,964
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
COST OF GOODS
SOLD
|
|
|
16,426,153
|
|
|
|
19,860,713
|
|
|
|
48,688,092
|
|
|
|
55,396,941
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GROSS
PROFIT
|
|
|
4,183,871
|
|
|
|
4,847,333
|
|
|
|
13,018,682
|
|
|
|
13,200,023
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SELLING
EXPENSES
|
|
|
3,570,182
|
|
|
|
3,286,637
|
|
|
|
9,276,225
|
|
|
|
9,801,761
|
|
GENERAL AND
ADMINISTRATIVE EXPENSES
|
|
|
1,451,849
|
|
|
|
1,868,448
|
|
|
|
4,752,981
|
|
|
|
3,628,520
|
|
TOTAL OPERATING
EXPENSES
|
|
|
5,022,031
|
|
|
|
5,155,085
|
|
|
|
14,029,206
|
|
|
|
13,430,281
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LOSS FROM
OPERATIONS
|
|
|
(838,160)
|
|
|
|
(307,752)
|
|
|
|
(1,010,524)
|
|
|
|
(230,258)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INTEREST
INCOME
|
|
|
54,003
|
|
|
|
62,337
|
|
|
|
339,460
|
|
|
|
253,074
|
|
INTEREST
EXPENSE
|
|
|
(415)
|
|
|
|
(2,945)
|
|
|
|
(1,285)
|
|
|
|
(156,951)
|
|
OTHER INCOME (LOSS),
NET
|
|
|
(99,485)
|
|
|
|
(349,514)
|
|
|
|
5,139
|
|
|
|
(315,894)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CHANGE IN FAIR VALUE OF DERIVATIVE
LIABILITIES
|
|
|
67,296
|
|
|
|
15,444
|
|
|
|
125,389
|
|
|
|
173,510
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INCOME BEFORE INCOME TAXES
|
|
|
(816,761)
|
|
|
|
(582,430)
|
|
|
|
(541,821)
|
|
|
|
(276,519)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PROVISION FOR INCOME
TAXES
|
|
|
18,045
|
|
|
|
35,099
|
|
|
|
63,963
|
|
|
|
79,224
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET LOSS
|
|
|
(834,806)
|
|
|
|
(617,529)
|
|
|
|
(605,784)
|
|
|
|
(355,743)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OTHER COMPREHENSIVE
LOSS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency
translation adjustments
|
|
|
(1,768,854)
|
|
|
|
(268,795)
|
|
|
|
(1,741,706)
|
|
|
|
(1,043,348)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
COMPREHENSIVE
LOSS
|
|
$
|
(2,603,660)
|
|
|
$
|
(886,324)
|
|
|
$
|
(2,347,490)
|
|
|
$
|
(1,399,091)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
WEIGHTED AVERAGE NUMBER OF SHARES:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
19,941,439
|
|
|
|
17,180,830
|
|
|
|
19,188,867
|
|
|
|
16,459,195
|
|
Diluted
|
|
|
19,941,439
|
|
|
|
17,180,830
|
|
|
|
19,188,867
|
|
|
|
16,459,195
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EARNINGS PER
SHARES:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
(0.04)
|
|
|
$
|
(0.04)
|
|
|
$
|
(0.02)
|
|
|
$
|
(0.02)
|
|
Diluted
|
|
$
|
(0.04)
|
|
|
$
|
(0.04)
|
|
|
$
|
(0.02)
|
|
|
$
|
(0.02)
|
|
CHINA JO-JO
DRUGSTORES, INC. AND SUBSIDIARIES
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
|
|
|
|
Nine months ended
December 31,
|
|
|
2016
|
|
|
2015
|
CASH FLOWS FROM
OPERATING ACTIVITIES:
|
|
|
|
|
|
Net income
|
|
$
|
(605,784)
|
|
|
|
(355,743)
|
Adjustments to reconcile net (loss) income to net cash provided by (used in)
operating activities:
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
|
|
891,542
|
|
|
|
1,163,994
|
Stock-based
compensation
|
|
|
1,907,582
|
|
|
|
520,953
|
Bad debt
provision
|
|
|
(505,117)
|
|
|
|
(1,369,786)
|
Change in fair value
of warrant derivative liability
|
|
|
(125,441)
|
|
|
|
(173,510)
|
Change in operating
assets:
|
|
|
|
|
|
|
|
Accounts receivable,
trade
|
|
|
(1,130,490)
|
|
|
|
243,666
|
Notes
receivable
|
|
|
(29,484)
|
|
|
|
99,199
|
Inventories
|
|
|
(555,388)
|
|
|
|
(413,472)
|
Other
receivables
|
|
|
64,419
|
|
|
|
(142,734)
|
Advances to
suppliers
|
|
|
(683,980)
|
|
|
|
(413,238)
|
Other current
assets
|
|
|
(76,656)
|
|
|
|
678,339
|
Other noncurrent
assets
|
|
|
(330,217)
|
|
|
|
-
|
Change in operating
liabilities:
|
|
|
|
|
|
|
|
Accounts payable,
trade
|
|
|
(1,119,770)
|
|
|
|
(93,695)
|
Other payables and
accrued liabilities
|
|
|
296,298
|
|
|
|
277,298
|
Customer
deposits
|
|
|
64,508
|
|
|
|
(1,146,504)
|
Taxes
payable
|
|
|
150,910
|
|
|
|
205,734
|
Net cash used in
operating activities
|
|
|
(1,787,068)
|
|
|
|
(919,499)
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM
INVESTING ACTIVITIES:
|
|
|
|
|
|
|
|
Purchase of
equipment
|
|
|
(115,463)
|
|
|
|
(171,314)
|
Decrease in Financial
assets available for sale
|
|
|
449,403
|
|
|
|
1,279,200
|
Investment in a joint
venture
|
|
|
(74,900)
|
|
|
|
(111,930)
|
Termination of a joint
venture
|
|
|
69,802
|
|
|
|
|
Additions to leasehold
improvements
|
|
|
(200,428)
|
|
|
|
-
|
Net cash provided by
investing activities
|
|
|
128,414
|
|
|
|
995,956
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM
FINANCING ACTIVITIES:
|
|
|
|
|
|
|
|
Proceeds from
short-term bank loan
|
|
|
-
|
|
|
|
23,115
|
Repayment of
short-term bank loan
|
|
|
-
|
|
|
|
(55,095)
|
Change in restricted
cash
|
|
|
3,939,366
|
|
|
|
(4,423,287)
|
Repayments of notes
payable
|
|
|
(24,600,434)
|
|
|
|
(15,415,543)
|
Proceeds from notes
payable
|
|
|
20,309,469
|
|
|
|
17,711,172
|
Proceeds from other
payables-related parties
|
|
|
375,395
|
|
|
|
(179,934)
|
Proceeds from equity
financing
|
|
|
-
|
|
|
|
2,699,500
|
Net cash provided
by financing activities
|
|
|
23,796
|
|
|
|
359,928
|
|
|
|
|
|
|
|
|
EFFECT OF EXCHANGE
RATE ON CASH
|
|
|
(393,666)
|
|
|
|
(120,694)
|
INCREASE IN
CASH
|
|
|
(2,028,524)
|
|
|
|
315,691
|
CASH, beginning of
period
|
|
|
6,671,873
|
|
|
|
4,023,581
|
CASH, end of
period
|
|
$
|
4,643,349
|
|
|
$
|
4,339,272
|
|
|
|
|
|
|
|
|
SUPPLEMENTAL
DISCLOSURE OF CASH FLOW INFORMATION:
|
|
|
|
|
|
|
|
Cash paid for
interest
|
|
$
|
1,348
|
|
|
$
|
151,258
|
Cash paid for income
taxes
|
|
$
|
57,688
|
|
|
$
|
48424
|
Non-cash financing
activities:
|
|
|
|
|
|
|
|
Issuance of common stocks to
exchange for the debt to a shareholder
|
|
|
1,603,810
|
|
|
|
-
|
Issuance of stock
purchase options to an investment bank
|
|
|
-
|
|
|
$
|
147,728
|
Use of non-GAAP financial measures
To supplement China Jo-Jo's
consolidated financial results presented in accordance with GAAP,
China Jo-Jo uses the following
measures defined as non-GAAP financial measures by the SEC: net
income (loss) excluding share-based compensation expenses and
change in fair value of derivative liabilities, and diluted net
income (loss) per share excluding share-based compensation expenses
and change in the fair value of derivatives liabilities. The
presentation of these non-GAAP financial measures is not intended
to be considered in isolation or as a substitute for the financial
information prepared and presented in accordance with GAAP.
China Jo-Jo believes that these
non-GAAP financial measures provide meaningful supplemental
information regarding its performance and liquidity by excluding
share-based compensation expenses and change in fair value of
derivative liabilities that may not be indicative of its operating
performance from a cash perspective. China
Jo-Jo believes that both management and investors benefit
from referring to these non-GAAP financial measures in assessing
its performance and when planning and forecasting future periods.
These non-GAAP financial measures also facilitate management's
internal comparisons to China
Jo-Jo's historical performance and liquidity. China Jo-Jo computes its non-GAAP financial
measures using the same consistent method from quarter to quarter.
China Jo-Jo believes these non-GAAP
financial measures are useful to investors in allowing for greater
transparency with respect to supplemental information used by
management in its financial and operational decision-making. A
limitation of using these non-GAAP measures is that they exclude
share-based compensation and change in fair value of derivative
liabilities charge that has been and will continue to be for the
foreseeable future a significant recurring expense in our business.
Management compensates for these limitations by providing specific
information regarding the GAAP amounts excluded from each non-GAAP
measure. The table under the heading Reconciliation to non-GAAP
Financial Measures in the beginning of the release has more details
on the reconciliations between GAAP financial measures that are
most directly comparable to non-GAAP financial measures.
Reconciliation to non-GAAP Financial Measures
|
Three Months
Ended
December
31
|
Nine Months
Ended
December
31
|
|
2016
|
2015
|
2016
|
2015
|
Net loss
|
$(834,806)
|
$(617,529)
|
$(605,784)
|
$(355,743)
|
Non-GAAP
adjustments:
|
|
|
|
|
Share based
compensation expense
|
578,008
|
312,503
|
1,907,582
|
520,953
|
Change in fair value
of derivative liabilities
|
(67,296)
|
(15,444)
|
(125,441)
|
(173,510)
|
Adjusted net
loss
|
(324,094)
|
(320,470)
|
1,176,357
|
(8,300)
|
Adjusted net income
(loss) per share diluted
|
(0.02)
|
(0.02)
|
0.06
|
0.00
|
Investor Relations Contact:
Steve Liu
steve.liu@jojodrugstores.com
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/china-jo-jo-drugstores-reports-fiscal-2017-third-quarter-results-300405547.html
SOURCE China Jo-Jo Drugstores,
Inc.