HANGZHOU, China, Nov. 14, 2016 /PRNewswire/ -- China Jo-Jo Drugstores, Inc. (NASDAQ: CJJD) today announced the financial results
for its second fiscal quarter and six months ended September 30, 2016.
Second Quarter Highlights:
- Revenue was $20.2 million
compared to $22.6 million a year
ago;
- Gross profit increased 9.5% year-over-year to $4.4 million;
- Gross margin increased 4% year-over-year to 21.6%, retail
pharmacy gross margin increased 7.1% to 29.4% from a year ago;
- GAAP net income was $97,870 or
$0.01 per diluted share compared to
net income of $151,175 or
$0.01 per diluted share a year
ago;
- Adjusted net income was $746,504
or $0.04 per diluted share compared
to adjusted net income of $34,689 or
$0.00 per diluted share a year
ago.
Six Months Highlights:
- Revenue was $41.1 million
compared to $43.9 million a year
ago;
- Gross profit increased 5.8% year-over-year to $8.8 million;
- Gross margin increased 2.5% year-over-year to 21.5%, retail
pharmacy gross margin increased 5% to 29.0% from a year ago;
- GAAP net income was $229,023 or
$0.01 per diluted share compared to
net income of $261,786 or
$0.02 per diluted share a year
ago;
- Adjusted net income* was $1,500,504 or $0.08
per diluted share compared to adjusted net income* of $312,170 or $0.02
per diluted share a year ago.
*
|
Please see the note
regarding the use of the non-GAAP financial measures and the table
for the Reconciliation to non-GAAP Financial Measures at the end of
this earnings release.
|
Mr. Lei Liu, China Jo-Jo's
Chairman and CEO, commented, "Our gross margin continued to expand,
benefiting from more vendor rebates attributable to our focused
marketing efforts in promoting brand-name pharmaceutical products,
as we believe selling these products enhances our store popularity
and customer loyalty. During the quarter, we achieved sales volume
with certain brand pharmaceutical suppliers and received
substantial rebates. In addition, now that the G20 summit is behind
us, we have normalized our marketing activities and expect a
rebound in retail sales in the third quarter."
Net revenues for the second quarter were $20.2 million compared to $22.6 million in the same quarter a year ago, a
decrease of $2.4 million, or 10.7%.
Lower revenue was mainly caused by the decline in online pharmacy
business, which was partially offset by the increase in wholesale
business.
Retail drugstores sales were $12.8
million compared to $13.1
million in the same quarter last year and $12.7 million in the first quarter of fiscal
2017. To improve same-store sales, the Company continued to
optimize product mix, enable mobile payment, roll out in-pharmacy
virtual doctor clinics, and work with reputable vendors to promote
the sales of third-party brand products. The pharmacy store count
increased to 62 as of September 30,
2016, compared to 59 stores a year ago.
Online pharmacy sales were $3.8
million compared to $6.6
million in the same quarter a year ago. The decrease was
mainly due to (1) lower sales through third party e-commerce
websites that resulted from the CFDA suspension of OTC drug sales
on these platforms, and (2) the decline in transactions referred
from Yikatong, the popular pharmacy and health insurance benefit
card, in the Company's online pharmacy sales. To address these
challenges, the Company is adding more non-medical health products
such as nutritional supplements on the third party e-commerce
platforms, while actively seeking alternative referral arrangements
from other Pharmacy Benefit Management providers.
Gross profit increased by $376,000
or 9.5% year-over-year to $4.4
million. Gross margin increased from 17.6% to 21.6% 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, continuous efforts to renegotiate prices
with our suppliers periodically, and selection of certain higher
profit margin products.
Net income was $97,870 or
$0.01 per diluted share compared to
net income of $151,175 or
$0.01 per diluted share in the same
quarter a year ago.
Adjusted net income was $746,504
or $0.04 per diluted share compared
to adjusted net income of $34,689
million or $0.00 per diluted
share in the same quarter a year ago. Please see the note
regarding the use of the non-GAAP financial measures and the table
for the Reconciliation to non-GAAP Financial Measures at the end of
this earnings release.
About China Jo-Jo Drugstores,
Inc.
China Jo-Jo Drugstores, Inc. is a
leading China-based pharmacy with retail, wholesale and online
distribution of pharmaceutical and health care products through its
online and retail pharmacies. As of September 30, 2016, the Company had 62 retail
pharmacies in Zhejiang Province,
China. 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
posts important information on its websites.
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
|
CONSOLIDATED BALANCE
SHEETS
|
(UNAUDITED)
|
|
|
|
September
30,
|
|
|
March 31,
|
|
|
|
2016
|
|
|
2016
|
|
ASSETS
|
|
|
|
|
|
|
|
|
CURRENT
ASSETS
|
|
|
|
|
|
|
|
|
Cash
|
|
$
|
8,352,091
|
|
|
$
|
6,671,873
|
|
Financial assets available for sale
|
|
|
|
|
|
|
465,165
|
|
Restricted
cash
|
|
|
6,949,808
|
|
|
|
13,747,990
|
|
Notes
receivable
|
|
|
169,850
|
|
|
|
15,506
|
|
Trade accounts
receivable, net
|
|
|
10,070,611
|
|
|
|
8,054,597
|
|
Inventories
|
|
|
13,767,234
|
|
|
|
10,802,691
|
|
Other receivables,
net
|
|
|
1,738,864
|
|
|
|
1,376,468
|
|
Advances to suppliers,
net
|
|
|
3,644,598
|
|
|
|
4,230,665
|
|
Other current
assets
|
|
|
1,733,945
|
|
|
|
1,518,048
|
|
Total current
assets
|
|
|
46,427,001
|
|
|
|
46,883,003
|
|
|
|
|
|
|
|
|
|
|
PROPERTY AND EQUIPMENT,
net
|
|
|
4,986,110
|
|
|
|
5,543,076
|
|
|
|
|
|
|
|
|
|
|
OTHER ASSETS
|
|
|
|
|
|
|
|
|
Long-term
investment
|
|
|
179,904
|
|
|
|
108,539
|
|
Farmland
assets
|
|
|
1,546,112
|
|
|
|
1,562,205
|
|
Long term
deposits
|
|
|
2,370,850
|
|
|
|
2,452,056
|
|
Other noncurrent
assets
|
|
|
2,859,998
|
|
|
|
2,595,129
|
|
Intangible assets,
net
|
|
|
2,818,340
|
|
|
|
2,928,779
|
|
Total other
assets
|
|
|
9,775,204
|
|
|
|
9,646,708
|
|
|
|
|
|
|
|
|
|
|
Total
assets
|
|
$
|
61,188,315
|
|
|
$
|
62,072,787
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
|
|
|
|
|
CURRENT
LIABILITIES
|
|
|
|
|
|
|
|
|
Short-term loan
payable
|
|
$
|
29,984
|
|
|
$
|
31,011
|
|
Accounts payable,
trade
|
|
|
21,208,208
|
|
|
|
16,667,396
|
|
Notes
payable
|
|
|
11,674,166
|
|
|
|
17,595,634
|
|
Other
payable
|
|
|
1,756,456
|
|
|
|
1,917,821
|
|
Other payable -
related parties
|
|
|
2,271,790
|
|
|
|
2,199,775
|
|
Customer
deposits
|
|
|
2,678,671
|
|
|
|
2,610,151
|
|
Taxes
payable
|
|
|
164,904
|
|
|
|
483,770
|
|
Accrued
liabilities
|
|
|
592,881
|
|
|
|
615,056
|
|
Total current
liabilities
|
|
|
40,377,060
|
|
|
|
42,120,614
|
|
|
|
|
|
|
|
|
|
|
Warrant
liability
|
|
|
578,156
|
|
|
|
636,301
|
|
Total
liabilities
|
|
|
40,955,216
|
|
|
|
42,756,915
|
|
|
|
|
|
|
|
|
|
|
STOCKHOLDERS'
EQUITY
|
|
|
|
|
|
|
|
|
Common stock; $0.001
par value; 250,000,000 shares authorized; 19,425,678
and 17,735,504 shares issued and outstanding as
of September 30, 2016 and
March 31, 2016
|
|
|
19,426
|
|
|
|
17,736
|
|
Additional paid-in
capital
|
|
|
23,416,150
|
|
|
|
22,088,267
|
|
Statutory
reserves
|
|
|
1,309,109
|
|
|
|
1,309,109
|
|
Accumulated
deficit
|
|
|
(7,396,547)
|
|
|
|
(6,957,053)
|
|
Accumulated other
comprehensive income
|
|
|
2,884,961
|
|
|
|
2,857,813
|
|
Total stockholders'
equity
|
|
|
20,233,099
|
|
|
|
19,315,872
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and
stockholders' equity
|
|
$
|
61,188,316
|
|
|
$
|
62,072,787
|
|
CHINA JO-JO
DRUGSTORES, INC. AND SUBSIDIARIES
|
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE
LOSS
|
(UNAUDITED)
|
|
|
|
For the three months
ended
September 30,
|
|
|
For the six months
ended
September 30,
|
|
|
|
2016
|
|
|
2015
|
|
|
2016
|
|
|
2015
|
|
REVENUES,
NET
|
|
$
|
20,160,835
|
|
|
$
|
22,577,626
|
|
|
$
|
41,096,750
|
|
|
$
|
43,888,918
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
COST OF GOODS
SOLD
|
|
|
15,807,828
|
|
|
|
18,600,619
|
|
|
|
32,261,939
|
|
|
|
35,536,228
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GROSS PROFIT
|
|
|
4,353,007
|
|
|
|
3,977,007
|
|
|
|
8,834,811
|
|
|
|
8,352,690
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SELLING
EXPENSES
|
|
|
3,023,322
|
|
|
|
3,418,755
|
|
|
|
5,706,043
|
|
|
|
6,515,124
|
|
GENERAL AND
ADMINISTRATIVE EXPENSES
|
|
|
1,382,650
|
|
|
|
839,842
|
|
|
|
3,301,132
|
|
|
|
1,760,072
|
|
TOTAL OPERATING
EXPENSES
|
|
|
4,405,972
|
|
|
|
4,258,597
|
|
|
|
9,007,175
|
|
|
|
8,275,196
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(LOSS) INCOME FROM
OPERATIONS
|
|
|
(52,965)
|
|
|
|
(281,590)
|
|
|
|
(172,364)
|
|
|
|
77,494
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INTEREST
INCOME
|
|
|
61,035
|
|
|
|
115,740
|
|
|
|
285,457
|
|
|
|
190,737
|
|
INTEREST
EXPENSE
|
|
|
(430)
|
|
|
|
5,925
|
|
|
|
(869)
|
|
|
|
(154,006)
|
|
OTHER INCOME,
NET
|
|
|
17,425
|
|
|
|
145,597
|
|
|
|
104,624
|
|
|
|
107,082
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CHANGE IN FAIR VALUE OF
DERIVATIVE LIABILITIES
|
|
|
90,289
|
|
|
|
200,903
|
|
|
|
58,093
|
|
|
|
158,066
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INCOME BEFORE INCOME
TAXES
|
|
|
115,354
|
|
|
|
113,113
|
|
|
|
274,941
|
|
|
|
305,911
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PROVISION FOR INCOME
TAXES (BENEFIT)
|
|
|
17,484
|
|
|
|
(38,062)
|
|
|
|
49,518
|
|
|
|
44,125
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET INCOME
|
|
|
97,870
|
|
|
|
151,175
|
|
|
|
229,023
|
|
|
|
261,786
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OTHER COMPREHENSIVE
(LOSS) INCOME
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency
translation adjustments
|
|
|
(87,721)
|
|
|
|
(860,853)
|
|
|
|
27,148
|
|
|
|
(774,553)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
COMPREHENSIVE (LOSS)
INCOME
|
|
$
|
(10,149)
|
|
|
$
|
(709,678)
|
|
|
$
|
256.171
|
|
|
$
|
(512,767)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
WEIGHTED AVERAGE NUMBER
OF SHARES:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
19,375,773
|
|
|
|
16,537,461
|
|
|
|
18,239,065
|
|
|
|
16,096,406
|
|
Diluted
|
|
|
19,375,773
|
|
|
|
16,588,559
|
|
|
|
18,239,065
|
|
|
|
16,147,505
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EARNINGS PER
SHARES:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.01
|
|
|
$
|
0.01
|
|
|
$
|
0.01
|
|
|
$
|
0.02
|
|
Diluted
|
|
$
|
0.01
|
|
|
$
|
0.01
|
|
|
$
|
0.01
|
|
|
$
|
0.02
|
|
CHINA JO-JO
DRUGSTORES, INC. AND SUBSIDIARIES
|
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
(UNAUDITED)
|
|
|
Six months ended
September 30,
|
|
|
|
2016
|
|
|
2015
|
|
CASH FLOWS FROM
OPERATING ACTIVITIES:
|
|
|
|
|
|
|
Net income
|
|
$
|
229,023
|
|
|
|
261,786
|
|
Adjustments to
reconcile net (loss) income to net cash provided by (used in)
operating activities:
|
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
|
|
466,570
|
|
|
|
763,839
|
|
Stock-based
compensation
|
|
|
1,329,574
|
|
|
|
208,450
|
|
Bad debt
provision
|
|
|
(177,274)
|
|
|
|
(1,540,695)
|
|
Change in fair value
of purchase option derivative liability
|
|
|
(58,145)
|
|
|
|
(158,066)
|
|
Change in operating
assets:
|
|
|
|
|
|
|
|
|
Accounts receivable,
trade
|
|
|
(2,190,470)
|
|
|
|
716,075
|
|
Notes
receivable
|
|
|
(156,527)
|
|
|
|
98,698
|
|
Inventories
|
|
|
(3,358,110)
|
|
|
|
(1,371,177)
|
|
Other
receivables
|
|
|
(176,334)
|
|
|
|
(556,942)
|
|
Advances to
suppliers
|
|
|
275,098
|
|
|
|
748,185
|
|
Other current
assets
|
|
|
(269,040)
|
|
|
|
615,329
|
|
Other noncurrent
assets
|
|
|
(354,594)
|
|
|
|
-
|
|
Change in operating
liabilities:
|
|
|
|
|
|
|
|
|
Accounts payable,
trade
|
|
|
5,147,686
|
|
|
|
2,924,110
|
|
Other payables and
accrued liabilities
|
|
|
(102,920)
|
|
|
|
1,133,850
|
|
Customer
deposits
|
|
|
156,632
|
|
|
|
(2,460,559)
|
|
Taxes
payable
|
|
|
(306,109)
|
|
|
|
116,924
|
|
Net cash provided by
operating activities
|
|
|
455,060
|
|
|
|
1,499,807
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM
INVESTING ACTIVITIES:
|
|
|
|
|
|
|
|
|
Purchase of
equipment
|
|
|
(49,298)
|
|
|
|
(106,200)
|
|
Decrease in Financial
assets available for sale
|
|
|
454,608
|
|
|
|
1,293,600
|
|
Investment in a joint
venture
|
|
|
(75,768)
|
|
|
|
(113,190)
|
|
Additions to
leasehold improvements
|
|
|
(26,262)
|
|
|
|
-
|
|
Net cash provided by
(used in) investing activities
|
|
|
303,280
|
|
|
|
1,074,210
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM
FINANCING ACTIVITIES:
|
|
|
|
|
|
|
|
|
Proceeds from
short-term bank loan
|
|
|
|
|
|
|
23,580
|
|
Repayment of
short-term bank loan
|
|
|
|
|
|
|
(31,665)
|
|
Change in restricted
cash
|
|
|
6,411,257
|
|
|
|
(4,279,182)
|
|
Repayments of notes
payable
|
|
|
(17,196,298)
|
|
|
|
(15,589,077)
|
|
Proceeds from notes
payable
|
|
|
11,800,003
|
|
|
|
17,407,506
|
|
Proceeds from other
payables-related parties
|
|
|
95,088
|
|
|
|
69,977
|
|
Proceeds from equity
financing
|
|
|
|
|
|
|
2,699,500
|
|
Net cash provided
by financing activities
|
|
|
1,110,050
|
|
|
|
300,639
|
|
|
|
|
|
|
|
|
|
|
EFFECT OF EXCHANGE RATE
ON CASH
|
|
|
(188,172)
|
|
|
|
(188,652)
|
|
INCREASE IN
CASH
|
|
|
1,680,218
|
|
|
|
2,686,004
|
|
CASH, beginning of
period
|
|
|
6,671,873
|
|
|
|
4,023,581
|
|
CASH, end of
period
|
|
$
|
8,352,091
|
|
|
$
|
6,709,585
|
|
|
|
|
|
|
|
|
|
|
SUPPLEMENTAL DISCLOSURE
OF CASH FLOW INFORMATION:
|
|
|
|
|
|
|
|
|
Cash paid for
interest
|
|
$
|
869
|
|
|
$
|
158,415
|
|
Cash paid for income
taxes
|
|
$
|
42,437
|
|
|
$
|
35,943
|
|
Non-cash financing
activities:
|
|
|
|
|
|
|
|
|
Issuance of stock
purchase options to an investor
|
|
|
|
|
|
|
1,231,067
|
|
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
September
30
|
Six Months
Ended
September
30
|
|
2016
|
2015
|
2016
|
2015
|
Net income
|
$97,870
|
$151,175
|
$229,023
|
$261,786
|
Non-GAAP
adjustments:
|
|
|
|
|
Share based
compensation expense
|
738,923
|
84,417
|
1,329,574
|
208,450
|
Change in fair value
of derivative liabilities
|
(90,341)
|
(200,903)
|
(58,145)
|
(158,066)
|
Adjusted net
income
|
746,452
|
34,689
|
1,500,452
|
312,170
|
Adjusted net income
per share - diluted
|
0.04
|
0.00
|
0.08
|
0.02
|
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-second-quarter-results-300362059.html
SOURCE China Jo-Jo Drugstores,
Inc.