HANGZHOU, China, Aug. 14, 2017 /PRNewswire/ -- China Jo-Jo Drugstores, Inc. (NASDAQ: CJJD,
"China Jo-Jo" or "the Company") today announced financial
results for its first fiscal quarter ended June 30, 2017.
FY 2018 First Quarter Highlights:
- Revenue increased to $21.7
million from $20.9 million a
year ago
- Wholesale revenue increased by $2,357,715 or 74.7% year-over-year
- Gross profit was $4.2 million
with gross margin of 19.3% compared to $4.5
million and 21.4% a year ago
- GAAP net loss was $1.4 million or
$0.06 per diluted share compared to
net income of $131,153 or
$0.01 per diluted share a year
ago
China Jo-Jo's Chairman and CEO,
Mr. Liu Lei commented, "We continued
to expand our retail pharmacies footprint as we believe this is the
right strategy to benefit from the ongoing medical reform in
China diverting drug sales from
public hospitals to other retail outlets. We grew our retail
drugstores to 71 during the quarter and stabilized our retail
drugstores sales through promotional campaigns and
direct-to-patient opportunities. We continued to seek alternative
referral arrangement with providers of Pharmacy Benefit Management
("PBM") and implement strategies to increase our online pharmacy
sales."
Net revenues for the first fiscal quarter were $21.7 million compared to $20.9 million in the same quarter a year ago, an
increase of $734,453 or 3.5%. Retail
drugstores sales were $13.0 million,
an increase of 2.5% compared to the prior year period. The increase
in retail drugstore sales was primarily due to promotional
campaigns, incremental DTP (Direct-to-Patient) business benefiting
from ongoing hospital reforms, and growing demand for healthcare
products from local consumers. The pharmacy store count increased
to 71 as of June 30, 2017, compared
to 61 stores a year ago.
Online pharmacy sales for the quarter were $3.1 million compared to $5.1 million in the same quarter a year ago, a
decrease of $1.9 million or 38.2%.
The decrease was primarily the result of a decline in business
referred from Yikatong, a popular pharmacy and health insurance
benefit card run by a PBM provider in China, and a decline in sales made via various
e-commerce platforms during the quarter. The Company is proactively
seeking referral arrangements with alternative providers of
PBM.
Wholesale revenue increased by $2,357,715 or 74.7%, primarily through the resale
of certain products for which the Company's retail stores had
prepared large orders to other vendors. Because these retail
drugstores achieved large sales quantities for certain brand name
merchandise, the Company was able to negotiate lower than market
purchase prices for those items. As a result, certain vendors who
were unable to obtain a better price will purchase those items,
resulting in growth in the Company's wholesale sales volumes.
Gross profit decreased by $304,143
or 6.8% year over year primarily as a result of lower gross profit
provided by online sale. Gross margin was 21.4% compared to 19.3%
due to lower online profit margins.
Net loss was $1.4 million or
$0.06 per diluted share compared to
last year's first quarter net income of $131,153 or $0.01
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
June 30, 2017, the Company had 71
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). The Company routinely provides important
information on its website.
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)
|
|
|
|
|
|
|
|
|
|
June 30,
|
|
|
March 31,
|
|
|
|
2017
|
|
|
2017
|
|
ASSETS
|
|
|
|
|
|
|
CURRENT
ASSETS
|
|
|
|
|
|
|
Cash
|
|
$
|
14,359,565
|
|
|
$
|
18,364,424
|
|
Restricted
cash
|
|
|
10,127,165
|
|
|
|
9,431,386
|
|
Financial assets available for sale
|
|
|
162,303
|
|
|
|
87,068
|
|
Notes
receivable
|
|
|
171,156
|
|
|
|
253,394
|
|
Trade accounts
receivable
|
|
|
8,794,199
|
|
|
|
8,561,596
|
|
Inventories
|
|
|
10,481,496
|
|
|
|
9,923,101
|
|
Other receivables,
net
|
|
|
2,166,616
|
|
|
|
2,269,193
|
|
Advances to
suppliers
|
|
|
4,968,236
|
|
|
|
5,504,141
|
|
Other current
assets
|
|
|
1,659,801
|
|
|
|
1,566,155
|
|
Total current
assets
|
|
|
52,890,537
|
|
|
|
55,960,458
|
|
|
|
|
|
|
|
|
|
|
PROPERTY AND
EQUIPMENT, net
|
|
|
4,407,849
|
|
|
|
4,263,157
|
|
|
|
|
|
|
|
|
|
|
OTHER
ASSETS
|
|
|
|
|
|
|
|
|
Long-term
investment
|
|
|
36,293
|
|
|
|
46,152
|
|
Farmland
assets
|
|
|
730,843
|
|
|
|
718,787
|
|
Long term
deposits
|
|
|
3,115,537
|
|
|
|
2,294,848
|
|
Other noncurrent
assets
|
|
|
1,360,796
|
|
|
|
1,177,005
|
|
Intangible assets,
net
|
|
|
2,832,043
|
|
|
|
2,712,611
|
|
Total other
assets
|
|
|
8,075,512
|
|
|
|
6,949,403
|
|
|
|
|
|
|
|
|
|
|
Total
assets
|
|
$
|
65,373,898
|
|
|
$
|
67,173,018
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCK
HOLDERS' EQUITY
|
|
|
|
|
|
|
|
|
CURRENT
LIABILITIES
|
|
|
|
|
|
|
|
|
Accounts payable,
trade
|
|
|
18,230,169
|
|
|
|
19,441,195
|
|
Notes
payable
|
|
|
13,181,779
|
|
|
|
12,691,575
|
|
Other
payables
|
|
|
2,640,499
|
|
|
|
2,916,283
|
|
Other payables -
related parties
|
|
|
849,075
|
|
|
|
927,052
|
|
Customer
deposits
|
|
|
2,804,020
|
|
|
|
2,675,030
|
|
Taxes
payable
|
|
|
511,680
|
|
|
|
681,939
|
|
Accrued
liabilities
|
|
|
663,160
|
|
|
|
679,350
|
|
Total current
liabilities
|
|
|
38,880,382
|
|
|
|
40,012,424
|
|
|
|
|
|
|
|
|
|
|
Purchase option and
warrants liability
|
|
|
445,893
|
|
|
|
496,217
|
|
Total
liabilities
|
|
|
39,326,275
|
|
|
|
40,508,641
|
|
|
|
|
|
|
|
|
|
|
COMMITMENTS AND
CONTINGENCIES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
STOCKHOLDERS'
EQUITY
|
|
|
|
|
|
|
|
|
Common stock; $0.001
par value; 250,000,000 shares authorized; 25,214,678 and 25,214,678
shares issued and outstanding as of June 30, 2017 and March 31,
2017
|
|
|
25,215
|
|
|
|
25,215
|
|
Preferred stock;
$0.001 par value; 10,000,000 shares authorized; nil issued and
outstanding as of June 30, 2017 and March 31, 2017
|
|
|
-
|
|
|
|
-
|
|
Additional paid-in
capital
|
|
|
36,924,729
|
|
|
|
36,581,248
|
|
Statutory
reserves
|
|
|
1,309,109
|
|
|
|
1,309,109
|
|
Accumulated
deficit
|
|
|
(14,020,561)
|
|
|
|
(12,601,257)
|
|
Accumulated other
comprehensive income
|
|
|
1,809,131
|
|
|
|
1,350,062
|
|
Total stockholders'
equity
|
|
|
26,047,623
|
|
|
|
26,664,377
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and
stockholders' equity
|
|
$
|
65,373,898
|
|
|
$
|
67,173,018
|
|
CHINA JO-JO
DRUGSTORES, INC. AND SUBSIDIARIES
|
|
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
(LOSS)
|
|
(UNAUDITED)
|
|
|
|
|
|
|
|
For the three months
ended
June 30,
|
|
|
|
2017
|
|
|
2016
|
|
REVENUES,
NET
|
|
$
|
21,670,368
|
|
|
$
|
20,935,915
|
|
|
|
|
|
|
|
|
|
|
COST OF GOODS
SOLD
|
|
|
17,492,707
|
|
|
|
16,454,111
|
|
|
|
|
|
|
|
|
|
|
GROSS
PROFIT
|
|
|
4,177,661
|
|
|
|
4,481,804
|
|
|
|
|
|
|
|
|
|
|
SELLING
EXPENSES
|
|
|
3,916,859
|
|
|
|
2,682,721
|
|
GENERAL AND
ADMINISTRATIVE EXPENSES
|
|
|
1,725,443
|
|
|
|
1,918,482
|
|
TOTAL OPERATING
EXPENSES
|
|
|
5,642,302
|
|
|
|
4,601,203
|
|
|
|
|
|
|
|
|
|
|
LOSS FROM
OPERATIONS
|
|
|
(1,464,641)
|
|
|
|
(119,399)
|
|
|
|
|
|
|
|
|
|
|
INTEREST
INCOME
|
|
|
44,899
|
|
|
|
224,422
|
|
INTEREST
EXPENSE
|
|
|
-
|
|
|
|
(439)
|
|
OTHER (EXPENSE)
INCOME, NET
|
|
|
(29,348)
|
|
|
|
87,199
|
|
CHANGE IN FAIR VALUE
OF PURCHASE OPTION AND WARRANTS LIABILITY
|
|
|
50,324
|
|
|
|
(32,196)
|
|
|
|
|
|
|
|
|
|
|
(LOSS) INCOME BEFORE
INCOME TAXES
|
|
|
(1,398,766)
|
|
|
|
159,587
|
|
|
|
|
|
|
|
|
|
|
PROVISION FOR INCOME
TAXES
|
|
|
20,538
|
|
|
|
28,434
|
|
|
|
|
|
|
|
|
|
|
NET (LOSS)
INCOME
|
|
|
(1,419,304)
|
|
|
|
131,153
|
|
|
|
|
|
|
|
|
|
|
FOREIGN CURRENCY
TRANSLATION ADJUSTMENTS
|
|
|
459,069
|
|
|
|
114,869
|
|
|
|
|
|
|
|
|
|
|
COMPREHENSIVE (LOSS)
INCOME
|
|
|
(960,235)
|
|
|
|
246,022
|
|
|
|
|
|
|
|
|
|
|
WEIGHTED AVERAGE
NUMBER OF SHARES:
|
|
|
|
|
|
|
|
|
Basic
|
|
|
25,214,678
|
|
|
|
18,239,065
|
|
Diluted
|
|
|
25,214,678
|
|
|
|
18,276,565
|
|
|
|
|
|
|
|
|
|
|
(LOSS) EARNINGS PER
SHARES:
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
(0.06)
|
|
|
$
|
0.01
|
|
Diluted
|
|
$
|
(0.06)
|
|
|
$
|
0.01
|
|
CHINA JO-JO
DRUGSTORES, INC. AND SUBSIDIARIES
|
|
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
|
(UNAUDITED)
|
|
|
|
|
|
|
|
For the three months
ended
June 30,
|
|
|
|
2017
|
|
|
2016
|
|
CASH FLOWS FROM
OPERATING ACTIVITIES:
|
|
|
|
|
|
|
Net income
|
|
$
|
(1,419,304)
|
|
|
$
|
131,153
|
|
Adjustments to
reconcile net income to net cash provided by operating
activities:
|
|
|
|
|
|
|
|
|
Bad debt direct
write-off and provision
|
|
|
212,199
|
|
|
|
70,736
|
|
Depreciation and
amortization
|
|
|
289,058
|
|
|
|
246,499
|
|
Stock based
compensation
|
|
|
343,480
|
|
|
|
590,651
|
|
Change in fair value
of purchase option derivative liability
|
|
|
(50,324)
|
|
|
|
32,196
|
|
Accounts receivable,
trade
|
|
|
(537,768)
|
|
|
|
(1,360,690)
|
|
Notes
receivable
|
|
|
85,434
|
|
|
|
(40,252)
|
|
Inventories and
biological assets
|
|
|
(387,176)
|
|
|
|
(251,067)
|
|
Other
receivables
|
|
|
365,954
|
|
|
|
(202,805)
|
|
Advances to
suppliers
|
|
|
450,107
|
|
|
|
(605,769)
|
|
Other current
assets
|
|
|
(66,556)
|
|
|
|
(414,770)
|
|
Long term
deposit
|
|
|
(772,661)
|
|
|
|
-
|
|
Other noncurrent
assets
|
|
|
(162,049)
|
|
|
|
(358,242)
|
|
Accounts payable,
trade
|
|
|
(1,518,372)
|
|
|
|
(679,734)
|
|
Other payables and
accrued liabilities
|
|
|
(346,903)
|
|
|
|
(47,600)
|
|
Customer
deposits
|
|
|
83,096
|
|
|
|
164,352
|
|
Taxes
payable
|
|
|
(179,483)
|
|
|
|
(40,087)
|
|
Net cash provided by
operating activities
|
|
|
(3,611,268)
|
|
|
|
(2,765,429)
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM
INVESTING ACTIVITIES:
|
|
|
|
|
|
|
|
|
Purchase of
financial assets available for sale
|
|
|
(72,875)
|
|
|
|
-
|
|
Acquisition of
equipment
|
|
|
(17,340)
|
|
|
|
(9,372)
|
|
Increase in
construction-in-progress
|
|
|
(336,882)
|
|
|
|
-
|
|
Increase intangible
assets
|
|
|
(80,162)
|
|
|
|
-
|
|
Additions to
leasehold improvements
|
|
|
-
|
|
|
|
(26,532)
|
|
Net cash used in
investing activities
|
|
|
(507,259)
|
|
|
|
(35,904)
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM
FINANCING ACTIVITIES:
|
|
|
|
|
|
|
|
|
Change in restricted
cash
|
|
|
(531,031)
|
|
|
|
6,951,672
|
|
Proceeds from notes
payable
|
|
|
8,684,688
|
|
|
|
7,768,165
|
|
Repayment of notes
payable
|
|
|
(8,410,741)
|
|
|
|
(13,368,248)
|
|
Changes in other
payables-related parties
|
|
|
(87,449)
|
|
|
|
36,662
|
|
Net cash provided
by (used in) financing activities
|
|
|
(344,533)
|
|
|
|
1,388,251
|
|
|
|
|
|
|
|
|
|
|
EFFECT OF EXCHANGE
RATE ON CASH
|
|
|
458,201
|
|
|
|
(200,700)
|
|
|
|
|
|
|
|
|
|
|
INCREASE IN
CASH
|
|
|
(4,004,859)
|
|
|
|
(1,613,782)
|
|
|
|
|
|
|
|
|
|
|
CASH, beginning of
year
|
|
|
18,364,424
|
|
|
|
6,671,873
|
|
|
|
|
|
|
|
|
|
|
CASH, end of
year
|
|
$
|
14,359,565
|
|
|
$
|
5,058,091
|
|
|
|
|
|
|
|
|
|
|
SUPPLEMENTAL
DISCLOSURE OF CASH FLOW INFORMATION:
|
|
|
|
|
|
|
|
|
Cash paid for
interest
|
|
$
|
-
|
|
|
$
|
412
|
|
Cash paid for income
taxes
|
|
$
|
26,853
|
|
|
$
|
17,973
|
|
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
June 30,
|
|
2017
|
2016
|
Net income
|
$(1,419,304)
|
$131,153
|
Non-GAAP
adjustments:
|
|
|
Share based
compensation expense
|
343,480
|
590,651
|
Change in fair value
of derivative liabilities
|
(50,324)
|
32,196
|
Adjusted net income
(loss)
|
(1,126,148)
|
754,000
|
Adjusted net income
per share - diluted
|
(0.04)
|
0.04
|
Investor Relations Contact:
Steve Liu
86-18367166379
steve.liu@jojodrugstores.com
View original
content:http://www.prnewswire.com/news-releases/china-jo-jo-drugstores-reports-fiscal-2018-first-quarter-results-300503684.html
SOURCE China Jo-Jo Drugstores,
Inc.