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China Jo-Jo Drugstores Announces Fiscal 2014 Third Quarter Financial Results and Schedules Conference Call for February 21,

 China Jo-Jo Drugstores Announces Fiscal 2014 Third Quarter Financial Results
             and Schedules Conference Call for February 21, 2014

PR Newswire

HANGZHOU, China, Feb. 20, 2014

HANGZHOU, China, Feb. 20, 2014 /PRNewswire/ -- China Jo-Jo Drugstores, Inc.
(CJJD) (the "Company"), a retail and wholesale distributor of pharmaceutical
and other healthcare products in China, today announced earnings results for
the three months ended December 31, 2013.

Fiscal Year 2014 Third Quarter Highlights:

  oOnline sales contributed $2.7 million in revenue for the quarter, an
    increase of 199.4% from the same period of FY 2013
  oRetail sales, approximately 74.1% of total revenue for the three months
    ended December 31, 2013, increased by $2.0 million or 17.7% to $13.2
    million from the same period of FY 2013
  oWholesale, approximately 25.9% of total revenue for the three months ended
    December 31, 2013, increased to $4.6 million as compared to $4.3 million
    in Q3 of FY 2013
  oGross margin decreased quarter over quarter from 19.2% to 1.0%
  oQuarterly net loss was $8.7 million, and diluted EPS losses of $0.64

Mr. Lei Liu, the Company's Chairman and CEO, stated, "Primarily due to
increase in same-store sales and revenues from maturing stores that opened in
the last couple of years, our drugstore sales increased slightly quarter over
quarter. Looking forward, we will continue to focus on our competitive
advantages in the retail drugstore segment by hiring additional clinic staff
to better advise on drug selection, looking to open additional clinics next to
our drugstores, applying for government insurance for all of our stores, and
stocking each location to better cater to its neighborhood. Additionally, our
online sales have continued to grow quarter over quarter, reflecting our
efforts in collaborating with large business-to-consumer vendors, identifying
products suitable for online customers and controlling cost of conducting
e-commerce business. Nevertheless, retail profit margin decreased from the
same period last year as we were promoting sales via activities such as
buy-one-get-one-free. In addition, to commemorate our pharmacy's ten-year
anniversary, we rewarded our members with coupons and goods. Although doing so
added significant marketing expense, we believe it will strengthen our
membership loyalty in the long run."

"In the quarter, we experienced significant loss primarily due to several
reasons, including non-recurring promotion activities and membership rewards
for ten-year anniversary, as well as discounted sale in our wholesale
division," commented by Mr. Lei. Additionally, two stores in Shanghai ceased
operations while two stores were opened in Hangzhou in January 2014. As of
February 19, 2014, the Company operated 51 pharmacies, including three in
Shanghai.

Mr. Liu continued, "As we were transitioning into a new sales and management
team for our wholesale business, our regular wholesale business declined
quarter over quarter. However, as the new team has extensive industry-relevant
experience and is actively seeking out potential customers such as hospital
and other drugstores, we are optimistic that our wholesale business can pick
up in the future. During this quarter, as the prior team gradually withdrew,
certain customers and suppliers that worked with that team chose to
discontinue their business with us.In response, we settled certain prepayment
accounts with those suppliers through either their products or cash. Because
some of the products were specifically for the discontinued customers, we
decided not to continue putting significant efforts in marketing such products
and sold them off at discount. We believe that doing so, while affecting our
short-term profitability, may minimize further loss and free up storage space
that our new team may require. In addition, the new team will be freed from
dealing with prior accounts of the discontinued suppliers, which in turn
allows us to better track the new team's performance. As such sales are
non-recurring in nature, we expect our gross margin to recover and net loss to
decline in the future."

"For the remainder of fiscal 2014, we are looking to stabilize and grow our
revenue primarily through our retail operations, and we will continue our
wholesale operations with an eye on bottom line results," concluded Mr. Liu.

Balance Sheet Highlights

As of December 31, 2013, the Company had $3.1 million of cash, $67.5 million
in total assets and $37.6 million in total liabilities.

Fiscal Year 2014 Third Quarter Results

Comparison of three months ended December 31, 2013 and 2012

The following table summarizes our results of operations for the three months
ended December 31, 2013 and 2012:

                       Three months ended December 31,
                       2013                       2012
                                      Percentage                 Percentage

                       Amount         of total    Amount         of total

                                      revenue                    revenue
Revenue                $ 17,833,072   100.0%      $ 15,596,013   100.0%
Gross profit           $ 179,084      1.0%        $ 2,990,302    19.2%
Selling expenses       $ 5,338,404    29.9%       $ 3,179,168    20.4%
General and
administrative         $ 3,700,466    20.8%       $ 3,300,064    21.2%
expenses
Loss from operations   $ (8,859,786)  (49.7)%     $ (3,488,930)  (22.4)%
Other income           $ 130,426      0.7%        $ (25,380)     (0.2)%
(expense), net
Impairment of          $ -            0.0%        $ -            0.0%
goodwill
Change in fair value
of purchase option
derivative             $ (41,944)     (0.2)%      $ (12,095)     (0.1)%

liability
Income tax benefits    $ (35,887)     (0.2)%      $ (39,613)     (0.3)%
Net loss attributable
to controlling         $ (8,735,230)  (49.0)%     $ (3,486,521)  (22.4)%
interest
Net loss attributable
to noncontrolling      $ (187)        (0.0)%      $ (271)        (0.0)%
interest

Revenue

Revenue increased by $2,237,059 or 14.3% period over period, primarily due to
our retail business:

     Retail sales, which accounted for approximately 74.1% of total revenue
     for the three months ended December 31, 2013, increased by $2,022,114 or
     17.7% to $13,209,729.Same-store sales increased by approximately
     $140,000 or 1.4%, while online sales contributed approximately $2,670,000
     in revenue, an increase of 199.4%.The increase in same-store sales
 (1) reflects implementation of key drugstore operational strategies such as
     promoting sale through our doctors and clinics, as well as modest
     economic improvements in China.Gross profit decreased by $2,811,218 to
     $179,084 as compared to the same period a year ago. Retail margin fell
     from 23.3% to 18.5% primarily due to the additional costs incurred to
     commemorate our pharmacy's ten-year anniversary.Our store count
     decreased to 51 as of December 31, 2013, from 52 a year ago.
     Wholesale revenue, which represented 25.9% of total revenue for the three
     months ended December 31, 2013, slightly increased by $254,945 or 5.8%.
     During the three months ended December 31, 2013, we disposed of certain
     products at discounted prices. Excluding the impact from such discounted
     sales, wholesale revenue period-over-period decreased by approximately
     $0.4 million, which was primarily caused by the turnover of our sales and
 (2) management team. While the new team members focused on assuming control
     of all facets of our wholesale operations during the quarter, they were
     unable to make significant progress business-wise. Additionally,
     considerable efforts and time were expended to work with the former team
     on settling certain accounts and inventory. Until the new team can
     develop and establish a new customer base, we do not expect our wholesale
     business to expand significantly in the immediate future.

Revenue by Segment

The following table breaks down the revenue for our three business segments:

                     Three months ended December 31,
                     2013                        2012
                                   %oftotal                %oftotal  Varianceby  %of
                     Amount                    Amount
                                   revenue                   revenue     amount       change
Revenue from retail
business
Revenue from    $ 10,543,897  59.2%       $ 10,337,237  66.5%       $ 206,660    2.0%
drugstores
Revenue from      2,665,832   14.9%         890,378     5.5%          1,775,454  199.4%
online sales
Sub-total
of retail              13,209,729  74.1%         11,227,615  72.0%         2,022,114  17.7%

revenue
Revenue from
wholesale              4,623,343   25.9%         4,368,398   28.0%         254,945    5.8%

business
Revenue
fromfarming           -           0.0%          -           0.0%          -          N/A

business
Total revenue        $ 17,833,072  100%        $ 15,596,013  100%        $ 2,237,059  14.3%

The revenue fluctuation period over period reflected the following combined
factors:

     Drugstore revenue increased by $206,660 or 2.0% period over
     period.Same-store sales increased by approximately $140,000, including
 (1) modest increase in sales of insurance-covered medications. In addition,
     sales attributable to our clinics and from two new stores in Hangzhou and
     Shanghai contributed approximately $175,000 and $168,000 to revenue,
     respectively.
     Wholesale revenue increased by $254,945 or 5.8%. During the three months
     ended December 31, 2013, we discounted sale prices for certain products
     that the Company's new wholesale team decided not to continue expending
     significant efforts to sell in the future. Nevertheless, revenue from
 (2) their sales accounts for approximately $673,000. Excluding these sales,
     wholesale revenue period-over-period decreased by approximately $418,000.
     Due to the transitioning of a new sales and management team for our
     wholesale business since September 2013, we do not expect any rapid
     growth in the business in the near future.
     Online sales increased by $1,775,454 or 199.4% period over period. We
     have been working with business-to-consumer online vendors, including
     Taobao, by posting our products on their online platforms, which direct
 (3) customers back to our website. Such arrangement has exposed our online
     presence to a wider consumer base. In addition, since the end of 2012, we
     have spent considerable efforts in identifying popular products that can
     drive sales. As a result, we have seen steady growth in online sales.

Gross Profit

Gross profit decreased by $2,270,117 or 75.9% period over period.Gross margin
decreased period over period from 12.8% to 4.0%.The average gross margin of
our three business segments are as follows:

                                              Three months ended
                                              December 31,
                                              2013        2012
Average gross margin for retail business     18.5%       23.3%
Average gross margin for wholesale business  (48.9)%     8.6%
Average gross margin for farming business    N/A         N/A

Retail gross margin decreased primarily due to our promotional campaign. To
reward our members during our ten-year anniversary and to attract more
customers in a competitive market, we conducted promotional events such as
buy-one-get-one-free. Accordingly, we recorded approximately $487,000 in cost
of sales associated with such promotions. Excluding the effect of such
customer rewards, gross margin is approximately 22.2%, which is similar to the
same period last year.

Wholesale gross margin decreased primarily because we discounted prices for
certain products that the Company's new wholesale team decided not to continue
expending significant efforts to sell in the future. We have been
transitioning in a new sales and management team for Jiuxin Medicine in the
quarter ended December 31, 2013. As the prior team gradually withdrew, certain
customers and suppliers that worked with that team chose to discontinue their
business with us.In response, we settled certain prepayment accounts with the
withdrawing suppliers through either their merchandise or cash, and received
approximately $6.9 million in products delivered during the quarter. However,
because some of the products were specifically for customers that discontinued
business with the Company, the new team decided not to continue expending
significant efforts to sell them, and began selling them at discount in an
effort to reduce inventory fromthe Company'swarehouse. We believe that such
sales, while affecting our short-term profitability, may minimize further loss
and free up storage space that the new team may require. In addition, such
sales free the new team from dealing with prior accounts of the discontinued
suppliers, which in turn allows us to better track the performance of the new
team.Nevertheless, the recorded cost related to such discounted sales
amounted to approximately $2,065,000, while the sales revenue was
approximately $673,000.As a result, our gross margin became negative.Because
the inventory assessment is ongoing, additional products may be identified and
thus requiring further discounted sales. The cost relating to such additional
discounted sales is estimated by the new team to be approximately $545,836.

Selling and Marketing Expenses

Sales and marketing expenses increased by $2,159,236 or 67.9% period over
period mainly due to promotional activities such as product giveaways to our
members.To commemorate our pharmacy's ten-year anniversary and to foster our
members' loyalty, we rewarded them with complimentary gifts during the six
months ended December 31, 2013, at a cost of approximately $2,960,000. In
contrast, promotional cost for the same period in the prior year is only
approximately $530,000. Such expenses as a percentage of revenue increased to
29.9% from 20.4% for the same period a year ago.

General and Administrative Expenses

General and administrative expenses increased by $400,402 or 12.1% period over
period.However, such expenses as a percentage of revenue decreased to 20.8%
from 21.2% for the same period a year ago as a result of increased sales.As
discussed earlier, certain wholesale suppliers stopped doing business with us
in connection with the transitioning of the sales and management team for our
wholesale business. As a result, we have been actively disposing of our
remaining inventory of such suppliers' products, including products that we
have decided not to sell in the future. As a result, we recorded loss of
approximately $998,000.

Our advances to suppliers balance as of December 31, 2013 decreased by
$4,401,330 as a result of shipments from vendors received during the
quarter.As a result, we reversed approximately $1,167,879 from the allowance
for advance to suppliers account.On the other hand, we tightened our
allowance policy for accounts receivable by reserving 100% for all receivable
accounts over three months old.As a result, we added approximately $1,259,334
of allowance to our accounts receivable.

Loss from Operations

As a result of the above, loss from operations increased by $5,370,856 period
over period.Operating margin for the three months ended December 31, 2013 and
2012 was (49.7)% and (22.4)%, respectively.

Income Taxes

Income tax benefits decreased by $3,726 period over period, as a result of
lower taxable income.

Net Loss

As a result of the foregoing, net loss increased by $5,248,625 period over
period.

Comparison of nine months ended December 31, 2013 and 2012

The following table summarizes our results of operations for the nine months
ended December 31, 2013 and 2012:

                      Nine months ended December 31,
                      2013                        2012
                                      Percentage                 Percentage

                      Amount          of total    Amount         of total

                                      revenue                    revenue
Revenue               $ 50,025,012    100.0%      $ 75,108,458   100.0%
Gross profit          $ 6,728,656     13.5%       $ 11,557,276   15.4%
Selling expenses      $ 9,998,377     20.0%       $ 7,140,013    9.5%
General and
administrative        $ 6,833,265     13.7%       $ 7,456,956    9.9%
expenses
Loss from operations  $ (10,102,986)  (20.2)%     $ (3,039,693)  (4.0)%
Other income, net     $ 127,034       0.3%        $ 22,627       0.0%
Impairment of good    $ -             -%          $ (1,473,606)  (2.0)%
will
Change in fair value
of purchase option
derivative            $ 50,328        0.1%        $ 13,652       0.0%

liability
Income tax expense    $ 43,222        0.0%        $ 3,919        0.0%
Net loss
attributable to       $ (10,068,808)  (20.1)%     $ (4,480,083)  (6.0)%
controlling interest
Net loss
attributable to       $ (694)         (0.0)%      $ (856)        (0.0)%
noncontrolling
interest

Revenue

Revenue decreased by $25,083,446 or 33.4% period over period, primarily due to
our wholesale business, offset by our retail business:

     Retail sales, which accounted for approximately 70.3% of total revenue
     for the nine months ended December 31, 2013, increased by $4,495,041 or
     14.7% to $35,175,061.Same-store sales increased by approximately
     $1,160,000 or 4.3%, while online sales contributed approximately
     $5,530,000 in revenue, an increase of 143.9%. The increase in same-store
     sales reflects implementation of key drugstore operational strategies
 (1) such as promoting sale through our doctors and clinics, as well as modest
     economic growth in China.Gross profit decreased by $4,828,620 to
     $6,728,656 in the nine months ended December 31, 2013 as compared to the
     same period a year ago. Retail margin, however, slightly fell from 25.2%
     to 22.0% as a result of our promotions in celebration of our pharmacy's
     ten-year anniversary.Our store count decreased to 51 as of December 31,
     2013, from 52 a year ago.
     Wholesale revenue, which represented 29.7% of total revenue for the nine
     months ended December 31, 2013, decreased by $27,054,396 or 64.6%. Since
     the third quarter of fiscal 2013, we have been and are focusing on
     profitability rather than sales volume. Although we have been actively
 (2) courting wholesale customers, we have yet to make significant progress.
     Until we can qualify as first-tier distributor status with more vendors,
     we will continue to have limited access to more lucrative sales channels
     such as hospitals, and do not expect our wholesale business to expand
     significantly in the immediate future.

Revenue by Segment

The following table breaks down the revenue for our three business segments:

                     Nine months ended December 31,
                     2013                   2012
                                   % of                   % of     Variance
                                                                                   % of
                     Amount        total    Amount        total    by
                                                                                   change
                                   revenue                revenue  amount
Revenue from retail
business
Revenue from    $ 29,643,637  59.2%    $ 28,411,652  37.9%    $ 1,231,985     4.3%
drugstores
Revenue from      5,531,424   11.1%      2,268,368   2.9%       3,263,056     143.9%
online sales
Sub-total
of retail              35,175,061  70.3%      30,680,020  40.8%      4,495,041     14.7%

revenue
Revenue from
wholesale              14,849,951  29.7%      41,904,347  55.8%      (27,054,396)  (64.6)%

business
Revenue
fromfarming           -           -%         2,524,091   3.4%       (2,524,091)   (100.0)%

business
Total revenue        $ 50,025,012  100%     $ 75,108,458  100%     $ (19,271,743)  (27.8)%

The revenue fluctuation period over period reflected the following combined
factors:

     Drugstore revenue increased by $1,231,985 or 4.3% period over
     period.Same-store sales increased by approximately $1,160,000, including
     modest increase in sales insurance-covered medications.Sales
 (1) attributable to our clinics and from three new stores in Hangzhou and
     Shanghai contributed approximately $855,000 and $208,000 to revenue,
     respectively.On the other hand, we closed 16 stores in the past calendar
     year. Although these stores were underperforming, they contributed
     approximately $1,110,000 in revenue prior to their closures.
     Wholesale revenue decreased by $27,054,396 or 64.6% primarily as a result
     of changing our sales strategy to focus on profitability. In the first
     and second quarter of fiscal 2013,we achieved sales volume of
     approximately $37,535,949 rapidly through competitive pricing. However,
     we incurred loss as result of low profit margin and rising overhead.
     Since the third quarter of fiscal 2013, we no longer engage in low margin
     sales and are focusing on profitability rather than sales volume. As a
     result, sales in the third quarter of fiscal 2013 amounted to
 (2) approximately $4,368,398.Although this strategy may impact our ability
     to achieve first-tier distributor status, we believe that focusing on
     profitability rather than volume is critical for our overall operations
     going forward. Although we continue to focus on profitability in fiscal
     2014, especially in the first two quarters, our gross margin was severely
     impacted by discounted sales during the third quarter. As discussed
     earlier, we had approximately $673,000 in discounted sales from disposing
     of certain inventory from our wholesale business during the quarter ended
     December 31, 2013.
     Online sales increased by $3,263,056 or 143.9% period over period.We
     have been working with business-to-consumer online vendors, including
     Taobao, by posting our products on their online platforms, which direct
 (3) customers back to our website.Such arrangement has exposed our online
     presence to a wider consumer base.In addition, since the end of 2012, we
     have spent considerable efforts in identifying popular products that can
     drive sales.As a result, we have seen steady growth in online sales.

Gross Profit

Gross profit decreased by $1,784,057 or 20.8% period over period.Gross margin
decreased period over period from 15.4% to 14.5%.The average gross margin of
our three business segments are as follows:

                                              Nine months ended

                                              December 31,
                                              2013       2012
Average gross margin for retail business     22.0%      25.2%
Average gross margin for wholesale business  (6.8)%     3.6%
Average gross margin for farming business    N/A        90.9%

Retail gross margin decreased primarily due to our promotional campaign. To
reward our members during our ten-year anniversary and to attract more
customers in a competitive market, we conducted promotional events such as
buy-one-get-one-free. Accordingly, we recorded approximately $487,000 in cost
of sales associated with such promotions. Excluding the effect of such
customer rewards, gross margin is approximately 23.4%, or 1.8% lower than a
year ago, which reflects price adjustments that we made. We also made some
price adjustments to comply with government price controls, as well as to stay
competitive, including with local community hospitals that are able to sell at
or near cost as their pharmacies are indirectly subsidized through the
government. Accordingly, overall retail gross profit margin decreased.

Wholesale gross margin decreased primarily because we discounted prices for
certain products that the new sales and management team decided not to sell in
the future.Products identified by the team were sold at discount at recorded
cost of approximately $2,065,000, and there may be additional cost of
approximately $545,836 as assessment continues.

Selling and Marketing Expenses

Sales and marketing expenses increased by $2,858,364 or 40.0% period over
period mainly due to promotional activities such as product giveaways to our
members.To commemorate our pharmacy's ten-year anniversary and to foster our
members' loyalty, we rewarded them with complimentary gifts during the six
months ended December 31, 2013, at a cost approximately $2,960,000. In
contrast, promotional cost was only approximately $530,000 for the nine months
ended December 31, 2013. Such expenses as a percentage of revenue increased to
20.0% from 9.5% for the same period a year ago.

General and Administrative Expenses

General and administrative expenses decreased by $623,691 or 8.4% period over
period.Such expenses as a percentage of revenue decreased to 13.7% from 21.2%
for the same period a year ago as a result of decreasing sales.Since shifting
our wholesale strategy at the end of 2012, we have reduced both wholesale
staff and administrative expense.We also closed 16 stores in the nine months
ended December 31, 2013, thereby eliminating their associated management
expense. Nevertheless, as discussed earlier, we recorded loss of approximately
$998,000.

Our advances to suppliers balance as of December 31, 2013 decreased by
$4,401,330 as a result of shipments from vendors received during the
quarter.As a result, we reversed approximately $1,192,038 from the allowance
for advance to suppliers account.On the other hand, we tightened our
allowance policy for accounts receivable by reserving 100% for all receivable
accounts over three months old.As a result, we added approximately $1,340,606
of allowance to our accounts receivable. The significant decrease in absolute
dollars mainly reflects decrease in allowance for advances to suppliers.

Loss from Operations

As a result of the above, loss from operations increased by $7,063,293 or
232.4% period over period.Operating margin for the nine months ended December
31, 2013 and 2012 was (20.2)% and (4.0)%, respectively.

Income Taxes

Income tax expense increased by $137,108 period over period.

Net Income

As a result of the foregoing, net loss increased by $5,588,563 period over
period.

Conference Call Information

The Company will host a conference call to discuss its fiscal year 2014 third
quarter results on Friday, February 21, 2014, at 8 a.m. Eastern Time. To
participate in the conference call, please dial 1-877-941-1427 from North
America. International participants can access the call by dialing
1-480-629-9664. A live audio webcast of this conference call will be available
under the Investor Relations section of the Company's website at
http://www.chinajojodrugstores.com. A replay of the call will be available
beginning the same day at approximately 11 a.m. Eastern Time by dialing
1-877-870-5176 or -1-858-384-5517 with pin #4670729. The replay will also be
available on the company website.

About China Jo-Jo Drugstores, Inc.

China Jo-Jo Drugstores, Inc., through its subsidiaries and contractually
controlled affiliates, is a retailer and wholesale distributor of
pharmaceutical and other healthcare products in the People's Republic of
China. As of February 19, 2014, the Company had 51 retail pharmacies in
Hangzhou and Shanghai.

Forward Looking Statement

Safe Harbor Statement under the Private Securities Litigation Reform Act of
1995: Certain of the statements made in the press release constitute
forward-looking statements within the meaning 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," or "anticipate" or the negative
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. Actual results could differ
materially from the expectations reflected in such forward-looking statements
as a result of a variety of 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, and other risk factors detailed in reports
filed with the Securities and Exchange Commission from time to time.



CHINA JO-JO DRUGSTORES, INC AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
                                                    December 31,  March 31,

                                                    2013          2013
A S S E T S
CURRENT ASSETS
Cash                                                $ 3,106,659   $ 4,524,094
Trade accounts receivable, net                        10,192,379    12,978,808
Inventories                                           18,231,126    8,586,999
Other receivables, net                                423,715       157,849
Advances to suppliers, net                            6,678,349     15,523,034
Restricted cash                                       3,229,744     2,162,837
Other current assets                                  2,272,678     1,221,499
Total current assets                                  44,134,650    45,155,120
PROPERTY AND EQUIPMENT, net                           12,597,796    13,288,652
OTHER ASSETS
Long term deposits                                    2,835,137     2,760,665
Other noncurrent assets                               5,443,025     5,431,326
Intangible assets, net                                2,477,648     1,202,258
Total other assets                                    10,755,810    9,394,249
Total assets                                        $ 67,488,256  $ 67,838,021
L I A B I L I T I E SA N DS T O C K H O L D E R S'E Q U I T Y
CURRENT LIABILITIES
Short-term loan payable                             $ 163,700     $ -
Accounts payable, trade                               19,296,244    13,780,211
Notes payable                                         8,045,331     7,186,453
Other payables                                        3,211,101     1,327,454
Other payables - related parties                      2,134,802     1,224,417
Customer deposits                                     4,040,587     4,828,293
Taxes payable                                         465,326       371,633
Accrued liabilities                                   222,203       956,342
Total current liabilities                             37,579,294    29,674,803
Purchase option derivative liability                  101,988       15,609
Total liabilities                                     37,681,282    29,690,412
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Preferred stock; $0.001 par value; 10,000,000
shares authorized; nil issued and
                                                      -             -
outstanding as of December 31, 2013 and
March 31, 2013
Common stock; $0.001 par value; 250,000,000 shares
authorized; 13,959,002
                                                      13,959        13,609
shares issued and outstanding as of
December 31, 2013 and March 31, 2013
Additional paid-in capital                            17,077,556    16,609,747
Statutory reserves                                    1,309,109     1,309,109
Retained earnings                                     7,026,561     17,095,369
Accumulated other comprehensive income                4,342,311     3,121,654
Total stockholders' equity                            29,769,496    38,149,488
Noncontrolling interests                              37,478        (1,879)
Total equity                                          29,806,974    38,147,609
Total liabilities and stockholders' equity          $ 67,488,256  $ 67,838,021



CHINA JO-JO DRUGSTORES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(UNAUDITED)
                   For the three months ended    For the nine months ended

                   December 31,                  December 31,
                   2013           2012           2013            2012
REVENUES, NET      $ 17,833,072   $ 15,596,013   $ 50,025,012    $ 75,108,458
COST OF GOODS        17,653,988     12,605,711     43,296,356      63,551,182
SOLD
GROSS PROFIT         179,084        2,990,302      6,728,656       11,557,276
SELLING EXPENSES     5,338,404      3,179,168      9,998,377       7,140,013
GENERAL AND
ADMINISTRATIVE       3,700,466      3,300,064      6,833,265       7,456,956
EXPENSES
TOTAL OPERATING      9,038,870      6,479,232      16,831,642      14,596,969
EXPENSES
LOSS FROM            (8,859,786)    (3,488,930)    (10,102,986)    (3,039,693)
OPERATIONS
OTHER INCOME         130,426        (25,380)       127,034         (75,178)
(LOSS), NET
GOODWILL             -              -              -               (1,473,606)
IMPAIRMENT LOSS
CHANGE IN FAIR
VALUE OF
DERIVATIVE           (41,944)       (12,095)       (50,328)        13,652

LIABILITIES
LOSS BEFORE          (8,771,304)    (3,526,405)    (10,026,280)    (4,574,825)
INCOME TAXES
PROVISION FOR        (35,887)       (39,613)       43,222          (93,886)
INCOME TAXES
NET LOSS             (8,735,417)    (3,486,792)    (10,069,502)    (4,480,939)
ADD: NET LOSS
ATTRIBUTABLE TO
                     187            271            694             856
NONCONTROLLING
INTEREST
NET LOSS
ATTRIBUTABLE TO
CHINA JO-JO          (8,735,230)    (3,486,521)    (10,068,808)    (4,480,083)

DRUGSTORES, INC.
OTHER
COMPREHENSIVE
INCOME
Foreign currency
translation          259,814        52,538         1,019,605       107,547
adjustments
COMPREHENSIVE      $ (8,475,416)  $ (3,433,983)  $ (9,049,203)   $ (4,372,536)
LOSS
WEIGHTED AVERAGE
NUMBER OF SHARES:
Basic                13,959,003     13,588,569     13,730,742      13,575,550
Diluted              13,959,003     13,588,569     13,730,742      13,575,550
LOSS PER SHARE:
Basic              $ (0.64)       $ (0.26)       $ (0.73)        $ (0.33)
Diluted            $ (0.64)       $ (0.26)       $ (0.73)        $ (0.33)



CHINA JO-JO DRUGSTORES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
                                          Nine months ended

                                          December 31,
                                          2013                  2012
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss                                  $   (10,069,502)      $ (4,480,939)
Adjustments to reconcile net (loss) income to net cash provided
by (used in) operating activities:
Depreciation and amortization                 1,646,066           2,118,133
Stock compensation                            477,284             135,107
Bad debt direct write-off                     252,780             155,797
Allowance for accounts receivables            578,219             1,690,544
Allowance for advances to suppliers           (1,523,882)         319,481
Goodwill Impairment                           -                   1,482,327
Change in fair value of purchase              86,379              (13,652)
option derivative liability
Inventory reserve and write-off               1,539,514           -
Change in operating assets:
Accounts receivable, trade                    2,278,341           (5,581,444)
Notes receivable                              -                   -
Inventories                                   (10,870,349)        (734,011)
Other receivables                             (259,339)           (1,035,445)
Advances to suppliers                         10,706,963          (5,404,917)
Other current assets                          (1,009,632)         607,793
Long term deposit                             -                   422,457
Other noncurrent assets                       133,648             331,544
Change in operating liabilities:
Accounts payable, trade                       5,099,673           6,891,514
Other payables and accrued liabilities        1,074,755           708,621
Customer deposits                             (909,992)           755,387
Taxes payable                                 82,942              (141,984)
Net cash provided by (used in)                (686,132)           (1,773,687)
operating activities
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of equipment                         (457,609)           (252,128)
Purchase of land use right                    (1,355,290)         -
Additions to leasehold improvements           (25,112)            (253,515)
Net cash used in investing activities         (1,838,011)         (505,643)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from short-term bank loan            162,280             -
Change in restricted cash                     (999,814)           3,244
Change in notes payable                       659,246             2,512,678
Change in other payables-related              909,954             (391,664)
parties
Net cash provided byfinancing                731,666             2,124,258
activities
EFFECT OF EXCHANGE RATE ON CASH               375,042             117,484
INCREASE (DECREASE) IN CASH                   (1,417,435)         (37,588)
CASH, beginning of period                     4,524,094           3,833,216
CASH, end of period                       $   3,106,659         $ 3,795,628
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for income taxes                $   9,529             $ 72,024
Charge of property and equipment into     $   -                 $ 76,368
disposal loss at store closing
Transfer from construction-in-progress    $   -                 $ 2,707,183
to leasehold improvement
Good receipts against accounts            $   1,434,043         $ -
receivables



SOURCE China Jo-Jo Drugstores, Inc.

Website: http://www.chinajojodrugstores.com
Contact: China Jo-Jo Drugstores, Inc., Ming Zhao, Chief Financial Officer,
561-372-5555, frank.zhao@jojodrugstores.com
 
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