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Ridgetech Inc.

Ridgetech Inc.RDGT财报

Nasdaq

What changed in Ridgetech Inc.'s 20-F — 2022 vs 2023

Top changes in Ridgetech Inc.'s 2023 20-F

251 paragraphs added · 331 removed · 207 edited across 6 sections

Item 2. Properties

Properties — owned and leased real estate

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Item 2. Offer Statistics and Expected Timetable 1 Item 3. Key Information 1 A. Selected Financial Data 1 B. Capitalization and Indebtedness 1 C. Reasons for the Offer and Use of Proceeds 1 D. Risk Factors 1 Item 4. Information on the Company 36 A. History and Development of the Company 36 B. Business Overview 38 C.
Item 2. Offer Statistics and Expected Timetable 1 Item 3. Key Information 1 A. [Reserved] 1 B. Capitalization and Indebtedness 1 C. Reasons for the Offer and Use of Proceeds 1 D. Risk Factors 1 Item 4. Information on the Company 32 A. History and Development of the Company 32 B. Business Overview 34 C. Organizational Structure 39 D.
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Organizational Structure 43 D. Property, Plants and Equipment 46

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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China’s regulators may impose penalties for non-compliance ranging from fines or suspension of operations, and this could lead to us delisting from the U.S. stock market. Also, the Personal Information Protection Law released by the National People’s Congress became effective on November 1, 2021.
China’s regulators may impose penalties for non-compliance ranging from fines or suspension of operations, and this could lead to us delisting from the U.S. stock market. 16 Also, the Personal Information Protection Law released by the National People’s Congress became effective on November 1, 2021.
We depend substantially on the continuing efforts of the Key Personnel, and our business and prospects may be severely disrupted if we lose their services. Our future success is dependent on the continued services of Mr. Lei Liu and Mr. Li Qi (the “Key Personnel”) but we do not maintain key-man insurance.
We depend substantially on the continuing efforts of the Key Personnel, and our business and prospects may be severely disrupted if we lose their services. Our future success is dependent on the continued services of Mr. Lei Liu and Ms. Li Qi (the “Key Personnel”) but we do not maintain key-man insurance.
On August 1, 2021, the China Securities Regulatory Commission stated in a statement that it had taken note of the new disclosure requirements announced by the SEC regarding the listings of Chinese companies and the recent regulatory development in China, and that both countries should strengthen communications on regulating China-related issuers.
On August 1, 2021, the China Securities Regulatory Commission (the “CSRC”) stated in a statement that it had taken note of the new disclosure requirements announced by the SEC regarding the listings of Chinese companies and the recent regulatory development in China, and that both countries should strengthen communications on regulating China-related issuers.
Adverse regulatory developments in China may subject us to additional regulatory review, and additional disclosure requirements and regulatory scrutiny to be adopted by the SEC in response to risks related to recent regulatory developments in China may impose additional compliance requirements for companies like us with China-based operations, all of which could increase our compliance costs, subject us to additional disclosure requirements.
Adverse regulatory developments in China may subject us to additional regulatory review, and additional disclosure requirements and regulatory scrutiny to be adopted by the SEC in response to risks related to recent regulatory developments in China may impose additional compliance requirements for companies like us with significant China-based operations, all of which could increase our compliance costs, subject us to additional disclosure requirements.
To date, we have not entered into any hedging transactions. While we may enter into hedging transactions in the future, the availability and effectiveness of these transactions may be limited, and we may not be able to successfully hedge our exposure at all. 33 The economy of China had experienced unprecedented growth.
To date, we have not entered into any hedging transactions. While we may enter into hedging transactions in the future, the availability and effectiveness of these transactions may be limited, and we may not be able to successfully hedge our exposure at all. The economy of China had experienced unprecedented growth.
We are a holding company and rely principally on dividends paid by our consolidated PRC operating entities for cash requirements, including the funds required to service any debt we may incur, which are passed on to us through Jiuxin Management.
We are a holding company and rely principally on dividends paid by the consolidated PRC operating entities for cash requirements, including the funds required to service any debt we may incur, which are passed on to us through Jiuxin Management.
As a result, even the perception of noncompliance, whether or not valid, may damage our reputation. 9 Risks Related to Our Corporate Structure If the PRC government deems that the VIE Agreements do not comply with PRC regulatory restrictions on foreign investment in the relevant industries or other laws or regulations of the PRC, or if these regulations or the interpretation of existing regulations change in the future, we could be subject to severe penalties or be forced to relinquish our interests in those operations, which may therefore materially reduce the value of our ordinary shares or cause them to become worthless.
As a result, even the perception of noncompliance, whether or not valid, may damage our reputation. 10 Risks Related to Our Corporate Structure If the PRC government deems that the VIE Agreements do not comply with PRC regulatory restrictions on foreign investment in the relevant industries or other laws or regulations of the PRC, or if these regulations or the interpretation of existing regulations change in the future, we could be subject to severe penalties or be forced to relinquish our interests in those operations, which may therefore materially reduce the value of our ordinary shares or cause them to become worthless.
Furthermore, if the interpretation or implementation of existing laws and regulations changes or if new regulations come into effect requiring us to obtain any additional licenses, permits or certifications that were previously not required to operate our existing businesses, we cannot provide assurance that we can successfully obtain such licenses, permits or certifications. 5 Risks Relating to Our Pharmacy Operations The continued penetration of counterfeit products into the pharmaceutical market in China may damage our reputation and have a material adverse effect on our business, financial condition, results of operations and prospects.
Furthermore, if the interpretation or implementation of existing laws and regulations changes or if new regulations come into effect requiring us to obtain any additional licenses, permits or certifications that were previously not required to operate our existing businesses, we cannot provide assurance that we can successfully obtain such licenses, permits or certifications. 6 Risks Relating to Our Pharmacy Operations The continued penetration of counterfeit products into the pharmaceutical market in China may damage our reputation and have a material adverse effect on our business, financial condition, results of operations and prospects.
Even if you are successful in bringing an action, the laws of China may render you unable to enforce a judgment against the assets of HJ Group and its management, all of which are located in China. 13 Risks Related to Doing Business in China Substantial uncertainties and restrictions with respect to the political and economic policies of the PRC government and PRC laws and regulations could have a significant impact upon the business that we may be able to conduct in the PRC and accordingly on the results of our operations and financial condition.
Even if you are successful in bringing an action, the laws of China may render you unable to enforce a judgment against the assets of HJ Group and its management, all of which are located in China. 14 Risks Related to Doing Business in China Substantial uncertainties and restrictions with respect to the political and economic policies of the PRC government and PRC laws and regulations could have a significant impact upon the business that we may be able to conduct in the PRC and accordingly on the results of our operations and financial condition.
Failure to take timely and appropriate measures to cope with any of these or similar regulatory compliance challenges could materially and adversely affect our current corporate structure and business operations and the market price of our ordinary shares. 12 We rely principally on dividends paid by our consolidated operating entities to fund any cash and financing requirements we may have, and any limitation on the ability of our consolidated PRC entities to pay dividends to us could have a material adverse effect on our ability to conduct our business.
Failure to take timely and appropriate measures to cope with any of these or similar regulatory compliance challenges could materially and adversely affect our current corporate structure and business operations and the market price of our ordinary shares. 13 We rely principally on dividends paid by our consolidated operating entities to fund any cash and financing requirements we may have, and any limitation on the ability of our consolidated PRC entities to pay dividends to us could have a material adverse effect on our ability to conduct our business.
Carrying excess inventory could increase our inventory holding costs, and failure to have inventory in stock when a customer orders or purchases it could cause us to lose that order or that customer, either of which could have a material adverse effect on our business, financial condition and results of operations. 29 We may need additional capital, and the sale of equity securities could result in dilution to our shareholders, while debts may require us to make covenants restricting how we operate.
Carrying excess inventory could increase our inventory holding costs, and failure to have inventory in stock when a customer orders or purchases it could cause us to lose that order or that customer, either of which could have a material adverse effect on our business, financial condition and results of operations. 27 We may need additional capital, and the sale of equity securities could result in dilution to our shareholders, while debts may require us to make covenants restricting how we operate.
If these circumstances were to arise, we could find it difficult or impossible, due to the unpredictability of legal proceedings in China, to recover all or a portion of the amount on deposit with our vendors or landlords. 4 If we are unable to optimize management of our procurement and distribution activities, we may be unable to meet customer demand while increasing the burden on managing our supply chain.
If these circumstances were to arise, we could find it difficult or impossible, due to the unpredictability of legal proceedings in China, to recover all or a portion of the amount on deposit with our vendors or landlords. 5 If we are unable to optimize management of our procurement and distribution activities, we may be unable to meet customer demand while increasing the burden on managing our supply chain.
Our auditor, the independent registered public accounting firm that issues the audit report for the year ended March 31, 2022 included elsewhere in this annual report, as an auditor of companies that are traded publicly in the United States and a firm registered with the PCAOB, is subject to laws in the United States pursuant to which the PCAOB conducts regular inspections to assess its compliance with the applicable professional standards.
Our auditor, the independent registered public accounting firm that issues the audit report for the year ended March 31, 2023 included elsewhere in this annual report, as an auditor of companies that are traded publicly in the United States and a firm registered with the PCAOB, is subject to laws in the United States pursuant to which the PCAOB conducts regular inspections to assess its compliance with the applicable professional standards.
In addition, natural disasters such as fires, earthquakes, snowstorms, floods or droughts, or natural conditions such as crop disease, pests or soil erosion, may also negatively impact our cultivation and harvest. 7 In addition, the actual climatic conditions of Zhejiang Province and of Lin’an in particular may not conform to historical patterns and may be affected by variations in weather patterns, including any potential impact of climate change.
In addition, natural disasters such as fires, earthquakes, snowstorms, floods or droughts, or natural conditions such as crop disease, pests or soil erosion, may also negatively impact our cultivation and harvest. 8 In addition, the actual climatic conditions of Zhejiang Province and of Lin’an in particular may not conform to historical patterns and may be affected by variations in weather patterns, including any potential impact of climate change.
Also, dividends cannot be distributed before any previous year’s loss has been offset. As a result, our consolidated PRC entities are restricted in their ability to transfer a portion of their net income to us whether in the form of dividends, loans or advances. As of March 31, 2022, our restricted reserves totaled $1,309,109 (RMB 9,513,278).
Also, dividends cannot be distributed before any previous year’s loss has been offset. As a result, our consolidated PRC entities are restricted in their ability to transfer a portion of their net income to us whether in the form of dividends, loans or advances. As of March 31, 2023, our restricted reserves totaled $1,309,109 (RMB 9,513,278).
In the event that, in the future, either there is any regulatory change or step taken by PRC regulators that does not permit YCM CPA Inc. to provide audit documentations located in China or Hong Kong to the PCAOB for inspection or investigation, or the PCAOB expands the scope of the determinations so that our PRC operating entities will be subject to the HFCA Act, as the same may be amended, you may be deprived of the benefits of such inspection which could result in limitation or restriction to our access to the U.S. capital markets and trading of our securities, including “over-the-counter” trading, may be prohibited, under the HFCA Act.
In the event that, in the future, either there is any regulatory change or step taken by PRC regulators that does not permit YCM CPA Inc. to provide audit documentations located in China or Hong Kong to the PCAOB for inspection or investigation, or the PCAOB expands the scope of the determinations so that our PRC operating entities will be subject to the HFCAA, as the same may be amended, you may be deprived of the benefits of such inspection which could result in limitation or restriction to our access to the U.S. capital markets and trading of our securities, including “over-the-counter” trading, may be prohibited, under the HFCAA.
Further, new laws and regulations or changes in laws and regulations in both the United States and China could affect our ability to list our shares on Nasdaq, which could materially impair the market for and market price of our ordinary shares. 25 Risks Related to an Investment in Our Securities To date, we have not paid any cash dividends and we do not estimate to distribute any cash dividends in the foreseeable future.
Further, new laws and regulations or changes in laws and regulations in both the United States and China could affect our ability to list our shares on Nasdaq, which could materially impair the market for and market price of our ordinary shares. 23 Risks Related to an Investment in Our Securities To date, we have not paid any cash dividends and we do not estimate to distribute any cash dividends in the foreseeable future.
If the foreign exchange control system prevents us from obtaining sufficient foreign currency to satisfy our currency demands, we may not be able to pay dividends in foreign currencies to our shareholders. 32 From 1995 until July 2005, the People’s Bank of China intervened in the foreign exchange market to maintain an exchange rate of approximately Renminbi 8.3 per U.S. dollar.
If the foreign exchange control system prevents us from obtaining sufficient foreign currency to satisfy our currency demands, we may not be able to pay dividends in foreign currencies to our shareholders. 30 From 1995 until July 2005, the People’s Bank of China intervened in the foreign exchange market to maintain an exchange rate of approximately Renminbi 8.3 per U.S. dollar.
The imposition of any of these penalties would severely disrupt our ability to conduct business and have a material adverse effect on our financial condition, results of operations and prospects. 11 In addition, new PRC laws, rules and regulations may be introduced to impose additional requirements that may be applicable to our corporate structure and contractual arrangements.
The imposition of any of these penalties would severely disrupt our ability to conduct business and have a material adverse effect on our financial condition, results of operations and prospects. 12 In addition, new PRC laws, rules and regulations may be introduced to impose additional requirements that may be applicable to our corporate structure and contractual arrangements.
If we are required to pay income tax for any dividends we receive from our PRC subsidiaries under the EIT Law and its implementation regulations, it may have a material and adverse effect on our net income and materially reduce the amount of dividends, if any, and we may pay to our shareholders. 22 We face risks related to disease epidemics and other outbreaks.
If we are required to pay income tax for any dividends we receive from our PRC subsidiaries under the EIT Law and its implementation regulations, it may have a material and adverse effect on our net income and materially reduce the amount of dividends, if any, and we may pay to our shareholders. 20 We face risks related to disease epidemics and other outbreaks.
Some of our larger competitors may enjoy competitive advantages, such as: ● greater financial and other resources; ● larger variety of products; ● more extensive and advanced supply chain management systems; 3 ● greater pricing flexibility; ● larger economies of scale and purchasing power; ● more extensive advertising and marketing efforts; ● greater knowledge of local market conditions; ● stronger brand recognition; and ● larger sales and distribution networks.
Some of our larger competitors may enjoy competitive advantages, such as: ● greater financial and other resources; ● larger variety of products; ● more extensive and advanced supply chain management systems; 4 ● greater pricing flexibility; ● larger economies of scale and purchasing power; ● more extensive advertising and marketing efforts; ● greater knowledge of local market conditions; ● stronger brand recognition; and ● larger sales and distribution networks.
If we are unable to protect our trade names, trade secrets and other propriety information from infringement, our business, financial condition and results of operations may be materially and adversely affected. 30 We may be exposed to intellectual property infringement and other claims by third parties which, if successful, could disrupt our business and have a material adverse effect on our financial condition and results of operations.
If we are unable to protect our trade names, trade secrets and other propriety information from infringement, our business, financial condition and results of operations may be materially and adversely affected. 28 We may be exposed to intellectual property infringement and other claims by third parties which, if successful, could disrupt our business and have a material adverse effect on our financial condition and results of operations.
As a holding company with no material operations of our own, we conduct a substantial majority of our operations through our VIEs in the PRC, Jiuzhou Pharmacy (including its subsidiaries and controlled entities), Jiuzhou Clinic and Jiuzhou Service, in which we have no equity ownership interest and must rely on contractual arrangements to control and operate the businesses of our VIEs.
As a holding company with no material operations of our own, we conduct a substantial majority of our operations through the VIEs in the PRC, Jiuzhou Pharmacy (including its subsidiaries and controlled entities), Jiuzhou Clinic and Jiuzhou Service, in which we have no equity ownership interest and must rely on contractual arrangements to operate and manage the businesses.
In the event that the contractual arrangements terminate, we will lose our control over them and their business operations and, as a result, over our primary sources of revenue. This may have a severe and detrimental effect on our continuing business viability under our current corporate structure, which in turn may affect the value of your investment.
In the event that the contractual arrangements terminate, we will lose our management over them and their business operations and, as a result, over our primary sources of revenue. This may have a severe and detrimental effect on our continuing business viability under our current corporate structure, which in turn may affect the value of your investment.
Any of these factors could have a material adverse effect on our business, financial condition and results of operations. 28 We may not be able to timely identify or otherwise effectively respond to changing customer preferences, and we may fail to optimize our product offering and inventory position.
Any of these factors could have a material adverse effect on our business, financial condition and results of operations. 26 We may not be able to timely identify or otherwise effectively respond to changing customer preferences, and we may fail to optimize our product offering and inventory position.
However, we cannot provide assurance that those procedures will be strictly followed by all of our employees in all of our stores. 6 Risks Relating to Our Medical Services If we do not attract and retain qualified physicians and other medical personnel, our ability to provide medical services would be adversely affected.
However, we cannot provide assurance that those procedures will be strictly followed by all of our employees in all of our stores. 7 Risks Relating to Our Medical Services If we do not attract and retain qualified physicians and other medical personnel, our ability to provide medical services would be adversely affected.
Limited trading volume will subject our ordinary shares to greater price volatility and may make it difficult for you to sell your shares at a price that is attractive to you. 26 The market price for our stock may be volatile, and such volatility may subject us to securities litigation.
Limited trading volume will subject our ordinary shares to greater price volatility and may make it difficult for you to sell your shares at a price that is attractive to you. 24 The market price for our stock may be volatile, and such volatility may subject us to securities litigation.
Li Qi, our Corporate Secretary and a member of our Board of Directors, is the general manager of each of Jiuzhou Pharmacy, Jiuzhou Clinic and Jiuzhou Service, and a general partner of Jiuzhou Clinic. Conflicts of interests between their respective duties to our company and HJ Group may arise.
Li Qi, a member of our Board of Directors, is the general manager of each of Jiuzhou Pharmacy, Jiuzhou Clinic and Jiuzhou Service, and a general partner of Jiuzhou Clinic. Conflicts of interests between their respective duties to our company and HJ Group may arise.
As a result of these contractual arrangements, we have control over and are the primary beneficiary of the consolidated VIEs and hence consolidate its financial results as our consolidated VIEs under U.S. GAAP. Chinese regulations limit foreign ownership of any pharmacy operator with thirty (30) or more stores, and limit foreign ownership of medical clinics to Sino-foreign joint venture.
As a result of these contractual arrangements, we have management over and are the primary beneficiary of the consolidated VIEs and hence consolidate its financial results as the consolidated VIEs under U.S. GAAP. Chinese regulations limit foreign ownership of any pharmacy operator with thirty (30) or more stores, and limit foreign ownership of medical clinics to Sino-foreign joint venture.
In addition, if the imposition of any of these penalties or requirement to restructure our corporate structure causes us to lose the rights to direct the activities of our consolidated VIEs or our right to receive their economic benefits, we would no longer be able to consolidate the financial results of such VIEs in our consolidated financial statements, which may cause the value of our securities to materially decline.
In addition, if the imposition of any of these penalties or requirement to restructure our corporate structure causes us to lose the ability to direct the activities of the consolidated VIEs or to receive their economic benefits, we would no longer be able to consolidate the financial results of such VIEs in our consolidated financial statements, which may cause the value of our securities to materially decline.
Our current corporate structure and business operations and the market price of our ordinary shares may be affected by the newly enacted Foreign Investment Law which does not explicitly classify whether VIEs that are controlled through contractual arrangements would be deemed as foreign-invested enterprises if they are ultimately “controlled” by foreign investors.
Our current corporate structure and business operations and the market price of our ordinary shares may be affected by the newly enacted Foreign Investment Law which does not explicitly classify whether VIEs that are managed and operated through contractual arrangements would be deemed as foreign-invested enterprises if they are ultimately “controlled” by foreign investors.
In addition, we may be subject to industry-wide regulations that may be adopted by the relevant PRC authorities, which may have the effect of restricting the scope of our operations in China, or causing the suspension or termination of our business operations in China entirely, all of which will materially and adversely affect our business, financial condition and results of operations.
In addition, we may be subject to industry-wide regulations that may be adopted by the relevant PRC authorities, which may have the effect of limiting our service offerings, restricting the scope of our operations in China, or causing the suspension or termination of our business operations in China entirely, all of which will materially and adversely affect our business, financial condition and results of operations.
Since we rely on contractual arrangements to control HJ Group and for substantially all of our revenue, the termination of such agreements will severely and detrimentally affect our continuing business viability under our current corporate structure.
Since we rely on contractual arrangements to manage and operate HJ Group and for substantially all of our revenue, the termination of such agreements will severely and detrimentally affect our continuing business viability under our current corporate structure.
Since we do not own any equity interests in Jiuzhou Pharmacy (or its subsidiary Jiuxin Medicine), but instead control it through contractual arrangements, we do not believe that the regulations limiting foreign ownership apply to us even if Jiuzhou Pharmacy or Jiuxin Medicine expands beyond thirty (30) stores.
Since we do not own any equity interests in Jiuzhou Pharmacy (or its subsidiary Jiuxin Medicine), but instead manage and operate it through contractual arrangements, we do not believe that the regulations limiting foreign ownership apply to us even if Jiuzhou Pharmacy or Jiuxin Medicine expands beyond thirty (30) stores.
Summary of Risk Factors Risks Relating to Our Business in General ● We face significant competition, and if we do not compete successfully against existing and new competitors, our revenue and profitability could be materially and adversely affected. ● We have significant cash deposits with our suppliers and landlords, which we may not be able to recover in the event of bankruptcy by our suppliers or landlords or other events beyond our control. ● If we are unable to optimize management of our procurement and distribution activities, we may be unable to meet customer demand while increasing the burden on managing our supply chain. ● We depend substantially on the continuing efforts of the Key Personnel, and our business and prospects may be severely disrupted if we lose their services. ● Our retail and wholesale operations require a number of permits and licenses in order to carry on their business. 1 Risks Relating to Our Pharmacy Operations ● The continued penetration of counterfeit products into the pharmaceutical market in China may damage our reputation and have a material adverse effect on our business, financial condition, results of operations and prospects. ● As a distributor of pharmaceutical and other healthcare products, we are exposed to inherent risks relating to product liability and personal injury claims. ● We may be subject to fines and penalties if we fail to comply with the applicable PRC laws and regulations governing sales of medicines under China’s National Medical Insurance Program.
Summary of Risk Factors Risks Relating to Our Business in General ● We face significant competition, and if we do not compete successfully against existing and new competitors, our revenue and profitability could be materially and adversely affected. ● Our ability to grow our business may be constrained by our inability to find suitable new store locations at acceptable prices or by the expiration of our current leases. ● We have significant cash deposits with our suppliers and landlords, which we may not be able to recover in the event of bankruptcy by our suppliers or landlords or other events beyond our control. ● If we are unable to optimize management of our procurement and distribution activities, we may be unable to meet customer demand while increasing the burden on managing our supply chain. ● We depend substantially on the continuing efforts of the Key Personnel, and our business and prospects may be severely disrupted if we lose their services. ● Our retail and wholesale operations require a number of permits and licenses in order to carry on their business. 1 Risks Relating to Our Pharmacy Operations ● The continued penetration of counterfeit products into the pharmaceutical market in China may damage our reputation and have a material adverse effect on our business, financial condition, results of operations and prospects. ● As a distributor of pharmaceutical and other healthcare products, we are exposed to inherent risks relating to product liability and personal injury claims. ● We may be subject to fines and penalties if we fail to comply with the applicable PRC laws and regulations governing sales of medicines under China’s National Medical Insurance Program.
If our control over our consolidated VIEs through contractual arrangements are deemed as foreign investment in the future, and any business of our consolidated VIEs is “restricted” or “prohibited” from foreign investment under the “Negative List” effective at the time, we may be deemed to be in violation of the Foreign Investment Law, the contractual arrangements that allow us to have control over our consolidated VIE may be deemed as invalid and illegal, and we may be required to unwind such contractual arrangements and/or restructure our business operations, any of which may have a material adverse effect on our business operation and the market price of our ordinary shares.
If the management and operations to the consolidated VIEs through contractual arrangements are deemed as foreign investment in the future, and any business of the consolidated VIEs is “restricted” or “prohibited” from foreign investment under the “Negative List” effective at the time, we may be deemed to be in violation of the Foreign Investment Law, the contractual arrangements that allow us to manage and operate the consolidated VIEs may be deemed as invalid and illegal, and we may be required to unwind such contractual arrangements and/or restructure our business operations, any of which may have a material adverse effect on our business operation and the market price of our ordinary shares.
We currently only have contractual control over the HJ Group entities, and do not own them due to the restrictions on foreign ownership of such companies.
We currently only have contractual management power over the HJ Group entities, and do not own them due to the restrictions on foreign ownership of such companies.
Since we do not have any actual equity interest in Jiuzhou Clinic or Jiuzhou Service, but control these entities through contractual arrangements, we do not believe that such PRC regulations are applicable to us or our structure.
Since we do not have any actual equity interest in Jiuzhou Clinic or Jiuzhou Service, but manage and operate these entities through contractual arrangements, we do not believe that such PRC regulations are applicable to us or our structure.
Therefore, it still leaves leeway for future laws, administrative regulations or provisions of the State Council to provide for contractual arrangements being viewed as a form of foreign investment. Therefore, there can be no assurance that our control over our consolidated VIE through contractual arrangements will not be deemed as foreign investment in the future.
Therefore, it still leaves leeway for future laws, administrative regulations or provisions of the State Council to provide for contractual arrangements being viewed as a form of foreign investment. Therefore, there can be no assurance that our management and operation over the consolidated VIEs through contractual arrangements will not be deemed as foreign investment in the future.
Many vendors in China are unwilling to ship merchandise on credit and instead require cash deposits, and landlords may require security deposits consisting of the equivalent of twelve (12) months of rent. As of March 31, 2022, we had approximately $0.6 million deposited with suppliers and approximately $2.6 million deposited with landlords for our pharmacies.
Many vendors in China are unwilling to ship merchandise on credit and instead require cash deposits, and landlords may require security deposits consisting of the equivalent of twelve (12) months of rent. As of March 31, 2023, we had approximately $0.14 million deposited with suppliers and approximately $1.57 million deposited with landlords for our pharmacies.
The proposed rule was adopted by the PCAOB on September 22, 2021 and approved by the SEC on November 5, 2021. 24 On June 22, 2021, the U.S. Senate passed AHFCAA which, if passed by the U.S.
The proposed rule was adopted by the PCAOB on September 22, 2021 and approved by the SEC on November 5, 2021. On June 22, 2021, the U.S. Senate passed a bill which, if passed by the U.S.
Our online business is operated by our PRC subsidiary, Jiuzhou Pharmacy, which is required to obtain and maintain certain assets relevant to its business, such as computers and other electrical equipment, as well as applicable licenses or approvals from different regulatory authorities.
Our online business is operated by one of the VIEs, Jiuzhou Pharmacy, which is required to obtain and maintain certain assets relevant to its business, such as computers and other electrical equipment, as well as applicable licenses or approvals from different regulatory authorities.
As an illustration of such volatility, the closing price of our ordinary shares during the fifty two (52) weeks preceding the date of this report ranged from a low of $1.68 to a high of $10.32.
As an illustration of such volatility, the closing price of our ordinary shares during the fifty two (52) weeks preceding the date of this report ranged from a low of $1.58 to a high of $7.46.
These contractual arrangements are not as effective in providing control over the VIEs as direct ownership. For example, the VIEs may be unwilling or unable to perform its contractual obligations under our commercial agreements.
These contractual arrangements are not as effective in management and operations as direct ownership. For example, the VIEs may be unwilling or unable to perform its contractual obligations under our commercial agreements.
The operation results of our online business fluctuates and we cannot assure our efforts for alternative vendors will result in the stable increase in revenues from online pharmacy in the coming years Our online pharmacy sales increased by approximately $7,733,445, or 34.4% for the year ended March 31, 2022, as compared to the year ended March 31, 2021.
The operation results of our online business fluctuates and we cannot assure our efforts for alternative vendors will result in the stable increase in revenues from online pharmacy in the coming years Our online pharmacy sales increased by approximately $2,165,725, or 7.2% for the year ended March 31, 2023, as compared to the year ended March 31, 2022.
Jiuzhou Pharmacy, Jiuzhou Clinic and Jiuzhou Service are subject to restrictions on making payments to us. We rely substantially on our contractual arrangements with Jiuzhou Pharmacy, Jiuzhou Clinic and Jiuzhou Service for our revenue. The Chinese government also imposes controls on the conversion of RMB into foreign currencies and the remittance of currencies out of China.
HJ Group is subject to restrictions on making payments to us. We rely substantially on our contractual arrangements with HJ Group for our revenue. The Chinese government also imposes controls on the conversion of RMB into foreign currencies and the remittance of currencies out of China.
In addition, the VIEs may seek to renew its agreements on terms that are disadvantageous to us. Although we have entered into a series of agreements that provide us with substantial ability to control the VIEs, we may not succeed in enforcing our rights under them insofar as our contractual rights and legal remedies under PRC law are inadequate.
Although we have entered into a series of agreements that provide us with substantial ability to operates and manage the VIEs, we may not succeed in enforcing our rights under them insofar as our contractual rights and legal remedies under PRC law are inadequate.
In fact, Jiuzhou Pharmacy has expended to one hundred and eleven (111) stores as of March 31, 2022. 10 Similarly, PRC regulations restrict foreign ownership of medical practices in China to Sino-foreign joint ventures.
In fact, Jiuzhou Pharmacy has expended to one hundred and fourteen (114) stores as of March 31, 2023. 11 Similarly, PRC regulations restrict foreign ownership of medical practices in China to Sino-foreign joint ventures.
According to the official announcement, the action was initiated based on the National Security Law, the Cyber Security Law and the Measures on Cybersecurity Review, which are aimed at “preventing national data security risks, maintaining national security and safeguarding public interests.” On July 10, 2021, the Cyberspace Administration of China published a revised draft of the Measures on Cybersecurity Review, expanding the cybersecurity review to data processing operators in possession of personal information of over 1 million users if the operators intend to list their securities in a foreign country. 18 It is unclear at the present time how widespread the cybersecurity review requirement and the enforcement action will be and what effect they will have on our business.
According to the official announcement, the action was initiated based on the National Security Law, the Cyber Security Law and the Measures on Cybersecurity Review, which are aimed at “preventing national data security risks, maintaining national security and safeguarding public interests.” On July 10, 2021, the Cyberspace Administration of China published a revised draft of the Measures on Cybersecurity Review, expanding the cybersecurity review to data processing operators in possession of personal information of over 1 million users if the operators intend to list their securities in a foreign country.
The Foreign Investment Law does not explicitly classify whether variable interest entities that are controlled through contractual arrangements would be deemed as foreign-invested enterprises if they are ultimately “controlled” by foreign investors.
The Foreign Investment Law does not explicitly classify whether variable interest entities that are managed and operated through contractual arrangements by foreign investors would be deemed as foreign-invested enterprises.
Furthermore, there can be no assurance that a healthcare organization that having greater resources in the provision or management of healthcare services will not decide to engage in operations similar to those being conducted by us in Hangzhou.
Furthermore, there can be no assurance that a healthcare organization that having greater resources in the provision or management of healthcare services will not decide to engage in operations similar to those being conducted by us in Hangzhou. 29 We may need to obtain additional governmental approvals to open new drugstores.
Risks Relating to Our Medical Services ● The provision of medical services is heavily regulated in the PRC and failure to comply with those regulations could result in penalties, loss of licensure, additional compliance costs or other adverse consequences. ● As a provider of medical services, we are exposed to inherent risks relating to malpractice claims.
Risks Relating to Our Medical Services ● If we do not attract and retain qualified physicians and other medical personnel, our ability to provide medical services would be adversely affected. ● The provision of medical services is heavily regulated in the PRC and failure to comply with those regulations could result in penalties, loss of licensure, additional compliance costs or other adverse consequences. ● As a provider of medical services, we are exposed to inherent risks relating to malpractice claims.
Moreover, if the PRC government determines that the contractual arrangements constituting part of our VIE structure do not comply with PRC regulations, or if these regulations change or are interpreted differently in the future, our securities may decline in value or become worthless if we are unable to assert our contractual control rights over the assets of our PRC subsidiaries that conduct all or substantially all of our operations.
Moreover, if the PRC government determines that the contractual arrangements constituting part of the VIE structure do not comply with PRC regulations, or if these regulations change or are interpreted differently in the future, our securities may decline in value or become worthless.
In addition, a tightened labor markets in our geographic region may result in fewer qualified applicants for job openings in our facilities. Further, higher wages, related labor costs and other increasing cost trends may negatively impact our results. The market price for our stock may be volatile, and such volatility may subject us to securities litigation.
In addition, a tightened labor markets in our geographic region may result in fewer qualified applicants for job openings in our facilities. Further, higher wages, related labor costs and other increasing cost trends may negatively impact our results. 31
As a result, our public shareholders may face substantially more difficulty in protecting their interests through actions against our management or directors than would shareholders of a corporation with assets and management located in the United States.
As a result, our public shareholders may face substantially more difficulty in protecting their interests through actions against our management or directors than would shareholders of a corporation with assets and management located in the United States. 19 The advent of recent healthcare reform directives from China’s central government may increase both competition and our cost of doing business.
These short seller publications are not regulated by any governmental, self-regulatory organization or other official authority in the U.S., are not subject to the certification requirements imposed by the SEC in Regulation Analyst Certification and, accordingly, the opinions they express may be based on distortion of the actual facts or, in some cases, fabrication of the facts.
Issuers with business operations based in the PRC, that have limited trading volumes and that are susceptible to higher volatility levels than U.S. domestic large-cap stocks can be particularly vulnerable to such short attacks. 25 These short seller publications are not regulated by any governmental, self-regulatory organization or other official authority in the U.S., are not subject to the certification requirements imposed by the SEC in Regulation Analyst Certification and, accordingly, the opinions they express may be based on distortion of the actual facts or, in some cases, fabrication of the facts.
Risks Related to Our Herb Farming ● Our herb farming business is subject to the volatility of prices for raw TCM herbs. ● Unforeseen and severe weather can reduce cultivation activities and lead to a decrease in anticipated harvest.
Risks Related to Our Herb Farming ● Our herb farming business is subject to the volatility of prices for raw TCM herbs. ● Unforeseen and severe weather can reduce cultivation activities and lead to a decrease in anticipated harvest. ● We have limited control over the availability and the quality of the local farmers with whom we cooperate because we do not employ them directly.
As a result, in certain circumstances it may be difficult to determine what actions or omissions may be deemed to be a violation of applicable laws and regulations. 14 The interpretation and application of existing Chinese laws, regulations and policies and possible new laws, regulations or policies have created substantial uncertainties regarding the legality of existing and future foreign investments in, and the businesses and activities of, pharmaceutical businesses in China, including our business.
The interpretation and application of existing Chinese laws, regulations and policies and possible new laws, regulations or policies have created substantial uncertainties regarding the legality of existing and future foreign investments in, and the businesses and activities of, pharmaceutical businesses in China, including our business.
For example, on August 6, 2020, the President’s Working Group on Financial Markets, or the PWG, issued the Report on Protecting United States Investors from Significant Risks from Chinese Companies to the then President of the United States.
The SEC may propose additional rules or guidance that could impact us if our auditor is not subject to the PCAOB inspection. For example, on August 6, 2020, the President’s Working Group on Financial Markets, or the PWG, issued the Report on Protecting United States Investors from Significant Risks from Chinese Companies to the then President of the United States.
On December 26, 2019, the PRC State Council approved the Implementation Rules of the Foreign Investment Law, which came into effect on January 1, 2020. Since they are relatively new, uncertainties exist in relation to their interpretation.
On December 26, 2019, the PRC State Council approved the Implementation Rules of the Foreign Investment Law, which came into effect on January 1, 2020. The interpretations to these laws are still uncertain.
However, since the Negative List has been adjusted and updated almost on an annual basis in the recent years, we cannot assure you that the aforementioned business segments will continuously be beyond the “prohibited” category.
However, since the Negative List has been adjusted and updated from time to time with little advance notice, we cannot assure you that the aforementioned business segments will continuously be beyond the “prohibited” category.
The sales from these customers contributed significantly to our official website sales. Additionally, we maintained a membership care program targeted at chronic disease customers. We have closely interacted with our members via WeChat by providing healthcare knowledge and reminding our customers to refill medicine.
The increase was primarily caused by an increase in sales via e-commerce platforms such as Tmall. We maintained a membership care program targeted at chronic disease customers. We have closely interacted with our members via WeChat by providing healthcare knowledge and reminding our customers to refill medicine.
As auditors of companies that are traded publicly in the United States and a firm registered with the Public Company Accounting Oversight Board, or the PCAOB, our auditor is required by the laws of the United States to undergo regular inspections by the PCAOB.
As auditors of companies that are traded publicly in the United States and a firm registered with the Public Company Accounting Oversight Board, or the PCAOB, our auditor is required by the laws of the United States to undergo regular inspections by the PCAOB. 21 On March 24, 2021, the SEC adopted interim final rules relating to the implementation of certain disclosure and documentation requirements of the HFCAA, which became effective on May 5, 2021.
If we fail to change auditors to meet the Nasdaq requirement and we are required by the Holding Foreign Companies Accountable Act to delist from the Nasdaq Capital Market because our present auditor is located in China and the PCAOB is unable to conduct inspections on such auditor, and our shares are unable to be listed on another securities exchange by the time of such potential delisting, then such a delisting would substantially impair your ability to sell or purchase our shares when you wish to do so, and the risk and uncertainty associated with a potential delisting would have a negative impact on the price of our shares.
If our ordinary shares is unable to be listed on another securities exchange by then, such a delisting would substantially impair your ability to sell or purchase the ordinary shares when you wish to do so, and the risk and uncertainty associated with a potential delisting would have a negative impact on the price of our ordinary shares.
On July 30, 2021, in response to the recent regulatory developments in China and actions adopted by the PRC government, the Chairman of the SEC issued a statement asking the SEC staff to seek additional disclosures from offshore issuers associated with China-based operating companies before their registration statements will be declared effective.
We may have to adjust, modify, or completely change our business operations in response to adverse regulatory changes or policy developments, and we cannot assure you that any remedial action adopted by us can be completed in a timely, cost-efficient, or liability-free manner or at all. 17 On July 30, 2021, in response to the recent regulatory developments in China and actions adopted by the PRC government, the Chairman of the SEC issued a statement asking the SEC staff to seek additional disclosures from offshore issuers associated with China-based operating companies before their registration statements will be declared effective.
On March 24, 2021, the SEC adopted interim final rules relating to the implementation of certain disclosure and documentation requirements of the HFCAA, which became effective on May 5, 2021. We will be required to comply with these rules if the SEC identifies our auditors as having a “non-inspection” year under a process to be subsequently established by the SEC.
We will be required to comply with these rules if the SEC identifies our auditors as having a “non-inspection” year under a process to be subsequently established by the SEC. On May 13, 2021, the PCAOB proposed a new rule for implementing the HFCAA.
By implementing a personalized customer care program, we were able to promote our sales. 8 Our IT system may not perform as anticipated and is vulnerable to damage and interruption, which may lead to leakage of personal data of the employees of our end-users and our seconded employees Our online sales is dependent on our IT system.
These manufacturers reward us with lower supply prices and more ads supports. 9 Our IT system may not perform as anticipated and is vulnerable to damage and interruption, which may lead to leakage of personal data of the employees of our end-users and our seconded employees Our online sales is dependent on our IT system.
Our auditor is headquartered in Irvine, California and has not been inspected by the PCAOB, but according to our auditor, it will be inspected by the PCAOB on a regular basis.
Our auditor is headquartered in Irvine, California and has been inspected by the PCAOB in March 2023.
Moreover, if the PRC government determines that the contractual arrangements constituting part of our VIE structure do not comply with PRC regulations, or if these regulations change or are interpreted differently in the future, our securities may decline in value or become worthless if we are unable to assert our contractual control rights over the assets of our PRC subsidiaries that conduct all or substantially all of our operations. 17 Compliance with China’s new Data Security Law, Measures on Cybersecurity Review, Personal Information Protection Law (second draft for consultation), regulations and guidelines relating to the multi-level protection scheme and any other future laws and regulations may entail significant expenses and could materially affect our business.
In turn, this could compromise enforceability of related contractual arrangements, or have other harmful effects on us. 15 Compliance with China’s new Data Security Law, Measures on Cybersecurity Review, Personal Information Protection Law (second draft for consultation), regulations and guidelines relating to the multi-level protection scheme and any other future laws and regulations may entail significant expenses and could materially affect our business.
Risks Related to Doing Business in China ● We rely on contractual arrangements with our VIE for our operations, which may not be as effective in providing control over these entities as direct ownership. ● You may experience difficulties in effecting service of legal process, enforcing foreign judgments or bringing original actions in China against us or our management based on United States or other foreign laws. 2 ● We may need to obtain additional governmental approvals to open new drugstores. ● The advent of recent healthcare reform directives from China’s central government may increase both competition and our cost of doing business. ● Jiuzhou Pharmacy, Jiuzhou Clinic and Jiuzhou Service are subject to restrictions on making payments to us. ● Dividends we receive from our subsidiaries located in the PRC may be subject to PRC withholding tax. ● We face risks related to disease epidemics and other outbreaks. ● Our auditor is not permitted to be subject to inspection by Public Company Accounting Oversight Board.
In addition, uncertainties with respect to the PRC legal system could adversely affect us. ● It may be difficult for U.S. regulators, such as the Department of Justice, the SEC, and other authorities, to conduct investigation or collect evidence within China. ● You may experience difficulties in effecting service of legal process, enforcing foreign judgments or bringing original actions in China against us or our management based on United States or other foreign laws. 3 ● The advent of recent healthcare reform directives from China’s central government may increase both competition and our cost of doing business. ● Our management will have broad discretion over the use of the proceeds we receive from our financing activities and might not apply the proceeds in ways that increase the value of your investment. ● HJ Group is subject to restrictions on making payments to us. ● Dividends we receive from our subsidiaries located in the PRC may be subject to PRC withholding tax. ● We face risks related to disease epidemics and other outbreaks. ● Failure to comply with the U.S.
On December 2, 2020, the U.S. House of Representatives approved the Holding Foreign Companies Accountable Act. On December 18, 2020, the Holding Foreign Companies Accountable Act was signed into law.
The Holding Foreign Companies Accountable Act, or the HFCAA, was enacted on December 18, 2020.
House of Representatives and signed into law, would reduce the number of consecutive non-inspection years required for triggering the prohibitions under the HFCAA from three years to two, under this proposal, if the auditor is not subject to PCAOB inspections for two consecutive years, it will trigger the prohibition on trading, thus posing more risks on potential delisting as well as the price of Company’s ordinary shares especially on foreign companies.
House of Representatives and signed into law, would reduce the number of consecutive non-inspection years required for triggering the prohibitions under the HFCAA from three years to two, thus reducing the time period before the securities of such foreign companies may be prohibited from trading or delisted.
These short attacks have, in the past, resulted in the selling of shares in the market, on occasion on a large scale and broad base. Issuers with business operations based in the PRC, that have limited trading volumes and that are susceptible to higher volatility levels than U.S. domestic large-cap stocks can be particularly vulnerable to such short attacks.
These short attacks have, in the past, resulted in the selling of shares in the market, on occasion on a large scale and broad base.
Any uncertainties or negative publicity regarding such approval requirements could have a material adverse effect on our ability to complete this offering or any follow-on offering of our securities or the market for and market price of our ordinary shares. 20 It may be difficult for U.S. regulators, such as the Department of Justice, the SEC, and other authorities, to conduct investigation or collect evidence within China.
In addition, any litigation in China may be protracted and result in substantial costs and diversion of resources and management attention. 18 It may be difficult for U.S. regulators, such as the Department of Justice, the SEC, and other authorities, to conduct investigation or collect evidence within China.
The SEC is assessing how to implement other requirements of the HFCAA, including the listing and trading prohibition requirements described above. The SEC may propose additional rules or guidance that could impact us if our auditor is not subject to the PCAOB inspection.
On December 29, 2022, the Accelerating Holding Foreign Companies Accountable Act was signed into law, which officially reduce the number of years that the auditor is not subject to inspection to two consecutive years. The SEC is assessing how to implement other requirements of the HFCAA, including the listing and trading prohibition requirements described above.
In addition, the VIEs may seek to renew its agreements on terms that are disadvantageous to us. Although we have entered into a series of agreements that provide us with substantial ability to control the VIEs, we may not succeed in enforcing our rights under them insofar as our contractual rights and legal remedies under PRC law are inadequate.
In addition, the VIEs may seek to renew its agreements on terms that are disadvantageous to us.
Pursuant to the Holding Foreign Companies Accountable Act, or the HFCAA, the Public Company Accounting Oversight Board (the “PCAOB”) issued a Determination Report on December 16, 2021 which found that the PCAOB is unable to inspect or investigate completely registered public accounting firms headquartered in parts of the PRC including: (i) Mainland China, and (ii) Hong Kong.
On August 26, 2022, the PCAOB signed a Statement of Protocol with the CSRC and the Ministry of Finance of the PRC (the “Statement of Protocol”), which is intended to enable the PCAOB to inspect and investigate completely registered public accounting firms in mainland China and Hong Kong.
Removed
Risks Related to Our Online Sales ● The operation results of our online business fluctuates and we cannot assure our efforts for alternative vendors will result in the stable increase in revenues from online pharmacy in the coming years Risks Related to Our Corporate Structure ● Chinese regulations limit foreign ownership of any pharmacy operator with thirty (30) or more stores, and limit foreign ownership of medical clinics to Sino-foreign joint venture.
Added
Risks Related to Our Online Sales ● We rely on computer software and hardware systems in managing our online sales, the capacity of which may restrict our growth and the failure of which could adversely affect our business, financial condition and results of operations. ● If our online business fails to obtain and maintain the requisite assets, licenses, qualified personnel and approvals required under the complex regulatory environment for Internet-based businesses in China, the business prospects for such business may be materially and adversely affected. ● The operation results of our online business fluctuates and we cannot assure our efforts for alternative vendors will result in the stable increase in revenues from online pharmacy in the coming years. ● Our IT system may not perform as anticipated and is vulnerable to damage and interruption, which may lead to leakage of personal data of the employees of our end-users and our seconded employees. ● Failure to comply with privacy, data protection and cyber security laws and regulations could have a materially adverse effect on our reputation, results of operations or financial condition, or have other adverse consequences. 2 Risks Related to Our Corporate Structure ● If the PRC government deems that the VIE Agreements do not comply with PRC regulatory restrictions on foreign investment in the relevant industries or other laws or regulations of the PRC, or if these regulations or the interpretation of existing regulations change in the future, we could be subject to severe penalties or be forced to relinquish our interests in those operations, which may therefore materially reduce the value of our ordinary shares or cause them to become worthless. ● Since we rely on contractual arrangements to manage and operate HJ Group and for substantially all of our revenue, the termination of such agreements will severely and detrimentally affect our continuing business viability under our current corporate structure. ● Our current corporate structure and business operations and the market price of our ordinary shares may be affected by the newly enacted Foreign Investment Law which does not explicitly classify whether VIEs that are managed and operated through contractual arrangements would be deemed as foreign-invested enterprises if they are ultimately “controlled” by foreign investors. ● We rely principally on dividends paid by our consolidated operating entities to fund any cash and financing requirements we may have, and any limitation on the ability of our consolidated PRC entities to pay dividends to us could have a material adverse effect on our ability to conduct our business. ● Certain management members of HJ Group have potential conflicts of interest with us, which may adversely affect our business and your ability for recourse.
Removed
The entities that operate our pharmacies and clinics are controlled by us through contractual arrangements.

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Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

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We currently operate in four business segments in China: (1) retail drugstores, (2) online pharmacy, (3) wholesale business selling products similar to those we carry in our pharmacies, and (4) farming and selling herbs used for traditional Chinese medicine (“TCM”). All of the above business are performed in China with no other international sales.
We currently operate in four business segments in China: (1) retail drugstores, (2) online pharmacy, (3) wholesale business selling products similar to those we carry in our pharmacies, and (4) farming and selling herbs used for traditional Chinese medicine (“TCM”). All of the above business are performed in China with no international sales.
In addition, our Daguan, Wenhua, Xiasha and Yueming stores have adjoining medical clinics that provide urgent care (for conditions such as sprains, minor lacerations, and dizziness), TCM treatments (including acupuncture, therapeutic massage, moxibustion, and cupping), and minor outpatient surgical treatments (such as suturing). 38 To ensure quality and personal attention for patients, we employ only licensed doctors and certified nurses and technicians.
In addition, our Daguan, Wenhua, Xiasha and Yueming stores have adjoining medical clinics that provide urgent care (for conditions such as sprains, minor lacerations, and dizziness), TCM treatments (including acupuncture, therapeutic massage, moxibustion, and cupping), and minor outpatient surgical treatments (such as suturing). 34 To ensure quality and personal attention for patients, we employ only licensed doctors and certified nurses and technicians.
Our main telephone number is +86-571-88219579. Our website is www.jiuzhou360.com. We routinely post important information on our website. The information contained on our website is not a part of this annual report. Our transfer agent is American Stock Transfer & Trust Company, LLC, whose address is 6201, 15th Avenue, Brooklyn, New York 11219, and whose telephone number is (718) 921-8206.
Our main telephone number is +86-571-88219579. Our website is www.jiuzhou360.com. We routinely post important information on our website. The information contained on our website is not a part of this annual report. Our transfer agent is American Stock Transfer & Trust Company, LLC, whose address is 6201, 15th Avenue, Brooklyn, 11219, and whose telephone number is (718) 921-8206.
We operate our pharmacies (including the medical clinics) through the following companies in China that we control through contractual arrangements (refer to “ Contractual Arrangements with HJ Group and the Key Personnel” below in this report regarding the details of contractual arrangements : ● Hangzhou Jiuzhou Grand Pharmacy Chain Co., Ltd.
We operate our pharmacies (including the medical clinics) through the following companies in China that we manage through contractual arrangements (refer to “ Contractual Arrangements with HJ Group and the Key Personnel” below in this report regarding the details of contractual arrangements : ● Hangzhou Jiuzhou Grand Pharmacy Chain Co., Ltd.
Online Sales Customers Our online customers consist primarily of consumers between the ages of 20 and 40. While our website is accessible throughout China, approximately thirty percent (30%) of our online sales during the fiscal year ended March 31, 2022, were from Zhejiang and neighboring Jiangsu and Shanghai.
Online Sales Customers Our online customers consist primarily of consumers between the ages of 20 and 40. While our website is accessible throughout China, approximately thirty percent (30%) of our online sales during the fiscal year ended March 31, 2023, were from Zhejiang and neighboring Jiangsu and Shanghai.
Relevant PRC Regulations Information relating to the relevant PRC Regulations is incorporated by reference from our 2021 Annual Report under the caption “Relevant PRC Regulations.” Please also refer to the above Risk Factor sections “Risks Related to Our Corporate Structure” and “Risks Related to Doing Business in China”.
Relevant PRC Regulations Information relating to the relevant PRC Regulations is incorporated by reference from our 2022 Annual Report under the caption “Relevant PRC Regulations.” Please also refer to the above Risk Factor sections “Risks Related to Our Corporate Structure” and “Risks Related to Doing Business in China”.
(“Jiuzhou Pharmacy”), which we control contractually, operates our “Jiuzhou Grand Pharmacy” stores; ● Hangzhou Jiuzhou Clinic of Integrated Traditional and Western Medicine (General Partnership) (“Jiuzhou Clinic”), which we control contractually, operates one (1) of our three (3) medical clinics; and ● Hangzhou Jiuzhou Medical & Public Health Service Co., Ltd.
(“Jiuzhou Pharmacy”), which we manage contractually, operates our “Jiuzhou Grand Pharmacy” stores; ● Hangzhou Jiuzhou Clinic of Integrated Traditional and Western Medicine (General Partnership) (“Jiuzhou Clinic”), which we manage contractually, operates one (1) of our three (3) medical clinics; and ● Hangzhou Jiuzhou Medical & Public Health Service Co., Ltd.
Additionally, our current leased properties are as follows: Description Location Size (square meters) Lease expiration date Principal executive office Hai Wai Hai Tongxin Mansion Floor 5&6 Gong Shu District, Hangzhou City Zhejiang Province, China 4,000 December 27, 2022 Pharmacies (1) Various locations in Hangzhou, Zhejiang Province, China Range from 79 to 1,713 July 2022 to October 2033 Farmland for herb cultivation (2) Qianhong Township, Hangzhou, Zhejiang Province, China 196,677 February 1, 2040 Land (2) Lin’An District, Hangzhou, Zhejiang Province, China 18,616 February 1, 2040 (1) As of the date of this report, we maintain operating leases in connection with our 111 pharmacies.
Additionally, our current leased properties are as follows: Description Location Size (square meters) Lease expiration date Principal executive office Hai Wai Hai Tongxin Mansion Floor 5&6 Gong Shu District, Hangzhou City Zhejiang Province, China 4,000 June 27, 2023 Pharmacies (1) Various locations in Hangzhou, Zhejiang Province, China Range from 79 to 1,713 July 2022 to October 2033 Farmland for herb cultivation (2) Qianhong Township, Hangzhou, Zhejiang Province, China 196,677 February 1, 2040 Land (2) Lin’An District, Hangzhou, Zhejiang Province, China 18,616 February 1, 2040 (1) As of the date of this report, we maintain operating leases in connection with our 114 pharmacies.
(“Jiuzhou Service”), which we control contractually, operates our other medical clinics. We also offer OTC drugs and nutritional supplements for sale through a website ( www.dada360.com ) operated by Jiuzhou Pharmacy.
(“Jiuzhou Service”), which we manage contractually, operates our other medical clinics. We also offer OTC drugs and nutritional supplements for sale through a website ( www.dada360.com ) operated by Jiuzhou Pharmacy.
Marketing and Promotion Information relating to our marketing and promotion activities is incorporated by reference from our 2021 Annual Report under the caption “Marketing and Promotion.” The updates relating to our marketing and promotion during the fiscal year of 2021 is as follows: For the fiscal year ended March 31, 2022, approximately 65.0% of our customers used their rewards cards to make purchases.
Marketing and Promotion Information relating to our marketing and promotion activities is incorporated by reference from our 2022 Annual Report under the caption “Marketing and Promotion.” The updates relating to our marketing and promotion during the fiscal year of 2023 is as follows: For the fiscal year ended March 31, 2023, approximately 37.0% of our customers used their rewards cards to make purchases.
By using Taobao’s platform in addition to our own website as mentioned above, we can be exposed to a wider range of customers. Online sales accounted for approximately 18.4% of our total revenue, for the fiscal year ended March 31, 2022. Online sales accounted for approximately 16.8% of our total revenue, for the fiscal year ended March 31, 2021.
By using Taobao’s platform in addition to our own website as mentioned above, we can be exposed to a wider range of customers. Online sales accounted for approximately 21.8% of our total revenue, for the fiscal year ended March 31, 2023. Online sales accounted for approximately 18.4% of our total revenue, for the fiscal year ended March 31, 2022.
All of our one hundred and eleven (111) of our drugstores are located in Hangzhou city. To enhance our customers’ experience, we have licensed physicians available at several of our “Jiuzhou Grand Pharmacy” locations for consultation, examination and treatment of common ailments at scheduled hours.
All of our one hundred and fourteen (114) of our drugstores are located in Hangzhou city. To enhance our customers’ experience, we have licensed physicians available at several of our “Jiuzhou Grand Pharmacy” locations for consultation, examination and treatment of common ailments at scheduled hours.
ORGANIZATIONAL STRUCTURE The following diagram illustrates our current corporate structure as of June 29, 2022: The table below summarizes the status of the registered capital of our PRC subsidiaries and controlled companies as of the date of this report: Entity Name Entity Type Registered Capital Registered Capital Paid Due Date for Unpaid Registered Capital Jiutong Medical Subsidiary USD 2,600,000 USD 2,600,000 N/A Jiuzhou Clinic VIE N/A N/A N/A Jiuzhou Pharmacy VIE USD 733,500 USD 733,500 N/A Jiuzhou Service VIE USD 73,350 USD 73,350 N/A Jiuxin Management Subsidiary USD 24,500,000 USD 23,500,000 N/A Jiuxin Medicine VIE USD 1,564,000 USD 1,564,000 N/A Qianhong Agriculture Subsidiary USD 1,497,000 USD 1,497,000 N/A Shouantang Technology Subsidiary USD 11,000,000 USD 11,000,000 N/A Shouantang Bio Subsidiary USD 162,900 USD 162,900 N/A Jiuyi Technology Subsidiary USD 5,000,000 USD 2,500,000 September 25, 2026 Linjia Medical VIE USD 2,979,460 USD 1,489,730 N/A 43 The following is the tabular form condensed consolidating schedule depicting the financial position, cash flows and results of operations for the parent, the consolidated variable interest entity, and any consolidation adjustments separately - as of and for the years ending March 31, 2022, 2021 and 2020.
ORGANIZATIONAL STRUCTURE The following diagram illustrates our current corporate structure as of June 15, 2023: The table below summarizes the status of the registered capital of our PRC subsidiaries and controlled companies as of the date of this report: Entity Name Entity Type Registered Capital Registered Capital Paid Due Date for Unpaid Registered Capital Jiutong Medical Subsidiary USD 2,600,000 USD 2,600,000 N/A Jiuzhou Clinic VIE N/A N/A N/A Jiuzhou Pharmacy VIE USD 733,500 USD 733,500 N/A Jiuzhou Service VIE USD 73,350 USD 73,350 N/A Jiuxin Management Subsidiary USD 24,500,000 USD 23,500,000 N/A Jiuxin Medicine VIE USD 1,564,000 USD 1,564,000 N/A Qianhong Agriculture Subsidiary USD 1,497,000 USD 1,497,000 N/A Shouantang Technology Subsidiary USD 11,000,000 USD 11,000,000 N/A Shouantang Bio Subsidiary USD 162,900 USD 162,900 N/A Jiuyi Technology Subsidiary USD 5,000,000 USD 2,500,000 September 25, 2026 Linjia Medical VIE USD 2,979,460 USD 1,489,730 N/A Hongtong Service VIE USD 14,615 USD 0 N/A Jiuzhen Health VIE USD 14,615 USD 14,615 N/A Shouantang Clinic VIE USD 14,615 USD 14,615 N/A 39 The following is the tabular form condensed consolidating schedule depicting the financial position, cash flows and results of operations for the parent, the consolidated variable interest entity, and any consolidation adjustments separately - as of and for the years ending March 31, 2023, 2022 and 2021.
After the acquisition, we liquidated them and then opened four new stores with the four licenses of local government medical insurance reimbursement program. On the other side, we have been concentrating on new stores within Hangzhou metropolitan area and opened eleven stores in the fiscal year 2022.
After the acquisition, we liquidated them and then opened four new stores with the four licenses of local government medical insurance reimbursement program. On the other side, we have been concentrating on new stores within Hangzhou metropolitan area and opened three stores in the fiscal year 2023.
During the fiscal year ended March 31, 2022, our herb farming business generated approximately 0% of our retail revenue.
During the fiscal year ended March 31, 2023, our herb farming business generated approximately 0% of our retail revenue.
For the fiscal year ended March, 31, 2022, we had not harvested or sold any herbs.
For the fiscal year ended March, 31, 2023, we had not harvested or sold any herbs.
(“Jiuxin Medicine”) in August 2011 (see “ Our Corporate History and Structure - HJ Group ” below), we were primarily a retail pharmacy operator. As of March 31, 2022, we currently have one hundred and eleven (111) store locations under the store brand “Jiuzhou Grand Pharmacy” in Hangzhou city. We acquired four single drugstores in fiscal 2021.
(“Jiuxin Medicine”) in August 2011 (see “ Our Corporate History and Structure - HJ Group ” below), we were primarily a retail pharmacy operator. As of March 31, 2023, we have one hundred and fourteen (114) store locations under the store brand “Jiuzhou Grand Pharmacy” in Hangzhou city. We acquired four single drugstores in fiscal 2021.
We offer primarily third-party products at our pharmacies, including: ● Approximately 1,170 prescription drugs (248 of which require a physician’s prescription and the remainder requiring customer personal information registration only), sales of which accounted for approximately 33.8% of our retail revenue for the fiscal year ended March 31, 2022; ● Approximately 1,468 OTC drugs, sales of which accounted for approximately 42.3% of our retail revenue for the fiscal year ended March 31, 2022; ● Approximately 301 nutritional supplements, including a variety of healthcare supplements, vitamin, mineral and dietary products, sales of which accounted for approximately 11.5% of our retail revenue for the fiscal year ended March 31, 2022; ● TCM, including drinkable herbal remedies and pre-packaged herbal mixtures for making soup, sales of which accounted for approximately 6.4% of our retail revenue for the fiscal year ended March 31, 2022; ● Sundry products (i.e., personal care products such as skin care, hair care and beauty products, convenience products such as soft drinks, packaged snacks, and other consumable, cleaning agents, stationeries, and seasonal and promotional items tailored to local consumer demand for convenience and quality), sales of which accounted for approximately 1.8% of our retail revenue for the fiscal year ended March 31, 2022; and ● Medical devices (i.e., family planning and birth control products, early pregnancy test products, portable electronic diagnostic apparatus, rehabilitation equipment, and surgical tools such as hemostats, needle forceps and surgical scissors), sales of which accounted for approximately 4.2% of our retail revenue for the fiscal year ended March 31,2022.
We offer primarily third-party products at our pharmacies, including: ● Approximately 1,500 prescription drugs (322 of which require a physician’s prescription and the remainder requiring customer personal information registration only), sales of which accounted for approximately 32.6% of our retail revenue for the fiscal year ended March 31, 2023; ● Approximately 1,731 OTC drugs, sales of which accounted for approximately 38.8% of our retail revenue for the fiscal year ended March 31, 2023; ● Approximately 910 nutritional supplements, including a variety of healthcare supplements, vitamin, mineral and dietary products, sales of which accounted for approximately 10.5% of our retail revenue for the fiscal year ended March 31, 2023; ● TCM, including drinkable herbal remedies and pre-packaged herbal mixtures for making soup, sales of which accounted for approximately 11.7% of our retail revenue for the fiscal year ended March 31, 2023; ● Sundry products (i.e., personal care products such as skin care, hair care and beauty products, convenience products such as soft drinks, packaged snacks, and other consumable, cleaning agents, stationeries, and seasonal and promotional items tailored to local consumer demand for convenience and quality), sales of which accounted for approximately 1.3% of our retail revenue for the fiscal year ended March 31, 2023; and ● Medical devices (i.e., family planning and birth control products, early pregnancy test products, portable electronic diagnostic apparatus, rehabilitation equipment, and surgical tools such as hemostats, needle forceps and surgical scissors), sales of which accounted for approximately 5.1% of our retail revenue for the fiscal year ended March 31, 2023.
Logistics Information relating to our logistics is incorporated by reference from our 2021 Annual Report under the caption “Logistics.” Suppliers We currently source retail products from approximately 110 suppliers, including trading companies and direct manufacturers. We source wholesale products from approximately 400 suppliers, including many of those that provide our retail products.
Logistics Information relating to our logistics is incorporated by reference from our 2022 Annual Report under the caption “Logistics.” Suppliers We currently source retail products from approximately 23 suppliers, including trading companies and direct manufacturers. We source wholesale products from approximately 406 suppliers, including many of those that provide our retail products.
The SEC maintains an internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC at www.sec.gov. 37 B. BUSINESS OVERVIEW. Pharmacies As of March 31, 2022, we currently have one hundred and eleven (111) pharmacies throughout Hangzhou, the provincial capital of Zhejiang and neighborhood cities.
The SEC maintains an internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC at www.sec.gov. 33 B. BUSINESS OVERVIEW. Pharmacies As of March 31, 2023, we currently have one hundred and fourteen (114) pharmacies throughout Hangzhou, the provincial capital of Zhejiang and neighborhood cities.
For the fiscal year March 31, 2022, wholesale revenue accounted for approximately 30.4% of our total revenue. 36 We also have a herb farming business cultivating and wholesaling herbs used for TCM. This business is conducted through Hangzhou Qianhong Agriculture Development Co., Ltd. (“Qianhong Agriculture”), a wholly-owned subsidiary.
For the fiscal year March 31, 2023, wholesale revenue accounted for approximately 22.2% of our total revenue. 32 We also have a herb farming business cultivating and wholesaling herbs used for TCM. This business is conducted through Hangzhou Qianhong Agriculture Development Co., Ltd. (“Qianhong Agriculture”), a wholly-owned subsidiary.
Since we have not harvested any ginkgo trees, herb farming revenue accounted for no revenue for the fiscal years ended March 31, 2022 and 2021. 40 Our Customers Retail Customers For the fiscal year ended March 31, 2022, our pharmacies collectively served an average of 14,992 customers per day.
Since we have not harvested any ginkgo trees, herb farming revenue accounted for no revenue for the fiscal years ended March 31, 2023 and 2022. Our Customers Retail Customers For the fiscal year ended March 31, 2023, our pharmacies collectively served an average of 19,048 customers per day.
During the fiscal year ended March 31, 2022, approximately 17% of our pharmacy revenue came from cash sales, 46% from Hangzhou’s medical insurance cards (where most of our pharmacies are located), and 37% from debit and credit cards, Zhejiang’s medical insurance cards, Alipay and other charge cards. We maintain strict cash control procedures at our pharmacies.
During the fiscal year ended March 31, 2023, approximately 4% of our pharmacy revenue came from cash sales, 41% from Hangzhou’s and Zhejiang’s medical insurance cards (where most of our pharmacies are located), and 55% from debit and credit cards, Alipay and other charge cards. 36 We maintain strict cash control procedures at our pharmacies.
Wholesale Since acquiring Jiuxin Medicine in August 2011, we have been distributing third-party products primarily to drug distributors throughout China, including: ● Approximately 1,698 prescription drugs, the sales of which accounted for approximately 82.3% of our wholesale revenue for the fiscal year ended March 31, 2022 as compared to approximately 1,352 prescription drugs, the sales of which accounted for approximately 79.5% of our wholesale revenue for the fiscal year ended March 31, 2021; ● Approximately 1,870 OTC drugs, the sales of which accounted for approximately 15.8% of our wholesale revenue for the fiscal year ended March 31, 2022 as compared to approximately 1,572 OTC drugs, the sales of which accounted for approximately 18.1% of our wholesale revenue for the fiscal year ended March 31, 2021; ● Approximately 346 nutritional supplements, the sales of which accounted for approximately 0.8% of our wholesale revenue for the fiscal year ended March 31, 2021 as compared to approximately 270 nutritional supplements, the sales of which accounted for approximately 0.4% of our wholesale revenue for the fiscal year ended March 31, 2021; 39 ● TCM products, the sales of which accounted for approximately 0.5% of our wholesale revenue for the fiscal year ended March 31, 2022; ● Sundry products, the sales of which accounted for approximately 0.2% of our wholesale revenue for the fiscal year ended March 31, 2022; and ● Medical devices, the sales of which accounted for approximately 0.3% of our wholesale revenue for the fiscal year ended March 31, 2022.
Wholesale Since acquiring Jiuxin Medicine in August 2011, we have been distributing third-party products primarily to drug distributors throughout China, including: ● Approximately 1,615 prescription drugs, the sales of which accounted for approximately 65.4% of our wholesale revenue for the fiscal year ended March 31, 2023 as compared to approximately 1,698 prescription drugs, the sales of which accounted for approximately 82.3% of our wholesale revenue for the fiscal year ended March 31, 2022; ● Approximately 1,886 OTC drugs, the sales of which accounted for approximately 31.1% of our wholesale revenue for the fiscal year ended March 31, 2023 as compared to approximately 1,870 OTC drugs, the sales of which accounted for approximately 15.8% of our wholesale revenue for the fiscal year ended March 31, 2022; ● Approximately 813 nutritional supplements, the sales of which accounted for approximately 0.9% of our wholesale revenue for the fiscal year ended March 31, 2023 as compared to approximately 346 nutritional supplements, the sales of which accounted for approximately 0.8% of our wholesale revenue for the fiscal year ended March 31, 2022; 35 ● TCM products, the sales of which accounted for approximately 1.4% of our wholesale revenue for the fiscal year ended March 31, 2023; ● Sundry products, the sales of which accounted for approximately 0.2% of our wholesale revenue for the fiscal year ended March 31, 2023; and ● Medical devices, the sales of which accounted for approximately 1.0% of our wholesale revenue for the fiscal year ended March 31, 2023.
As of the date of this report, one hundred and five (105) of our one hundred and eleven (111) “Jiuzhou Grand Pharmacy” stores are licensed to accept medical insurance cards. Those of our stores that accept medical insurance cards are designated as such by clear signage on their storefront windows.
As of the date of this report, one hundred and ten (110) of our one hundred and fourteen (114) “Jiuzhou Grand Pharmacy” stores are licensed to accept medical insurance cards. Those of our stores that accept medical insurance cards are designated as such by clear signage on their storefront windows.
Dividend Distribution As of March 31, 2022 the accumulated balance of our statutory reserve funds reserves amounted to $1.31 million, and the accumulated losses of our consolidated PRC entities amounted to $27.56 million. 42 Environmental Matters Information relating to the environmental matters is incorporated by reference from our 2021 Annual Repor t under the caption “Environmental Matters.” C.
Dividend Distribution As of March 31, 2023 the accumulated balance of our statutory reserve funds reserves amounted to $1.31 million, and the accumulated losses of our consolidated PRC entities amounted to $37.57 million. 38 Environmental Matters Information relating to the environmental matters is incorporated by reference from our 2022 Annual Report under the caption “Environmental Matters.” C.
Patient treatment at our four (4) Jiuzhou Clinics and Jiuzhou Service, follow nationally established clinical practice guidelines from China’s Ministry of Health. We currently have fifty-three (53) physicians and thirty-eight (38) clinic staff.
Patient treatment at our five (5) Jiuzhou Clinics and Jiuzhou Service, follow nationally established clinical practice guidelines from China’s Ministry of Health. We currently have fifty-eight (58) physicians and thirty (30) clinic staff.
The number of employees for each area of operations, and such employees as a percentage of our total workforce, are as follows: As of March 31, 2022 Employees Percentage Non-pharmacist store staff 365 37.3 % Pharmacists 342 34.9 % Management - non-pharmacists 94 9.6 % Physicians 53 5.4 % Non-physician clinic staff 38 3.9 % Wholesale - non-warehouse 37 3.8 % Online pharmacy - technicians 2 0.2 % Online pharmacy - non-technicians 48 4.9 % Total 979 100.00 % We closely monitor the quality of the service provided by our employees at all levels, including in-store pharmacists and store staff who directly interact with our customers.
The number of employees for each area of operations, and such employees as a percentage of our total workforce, are as follows: As of March 31, 2023 Employees Percentage Non-pharmacist store staff 431 45.9 % Pharmacists 306 32.7 % Management - non-pharmacists 27 2.9 % Physicians 58 6.2 % Non-physician clinic staff 30 3.2 % Wholesale - non-warehouse 34 3.6 % Online pharmacy - technicians 2 0.2 % Online pharmacy - non-technicians 50 5.3 % Total 938 100.00 % We closely monitor the quality of the service provided by our employees at all levels, including in-store pharmacists and store staff who directly interact with our customers.
Online sales accounted for approximately 11.6% of our total revenue, for the fiscal year ended March 31, 2020.
Online sales accounted for approximately 16.8% of our total revenue, for the fiscal year ended March 31, 2021.
Pharmacy sales accounted for approximately 96.6% of our retail revenue, and 51.2% of our total revenue, for the fiscal year ended March 31, 2022.
Pharmacy sales accounted for approximately 96.5% of our retail revenue, and 54.1% of our total revenue, for the fiscal year ended March 31, 2023.
For the fiscal year ended March 31, 2022, retail revenue, including pharmacies, medical clinics accounted for approximately 51.2% of our total revenue, while online pharmacy revenue accounted for 18.4% of our total revenue.
For the fiscal year ended March 31, 2023, retail revenue, including pharmacies, medical clinics accounted for approximately 56.0% of our total revenue, while online pharmacy revenue accounted for 21.8% of our total revenue.
Consolidating Statements of Income Information Year Ended March 31, 2022 PARENT SUBSIDIARIES VIE Eliminations Consolidated Revenue $ - $ 181,179 $ 244,933,524 $ (80,722,148 ) $ 164,392,555 Cost of revenue - 182,732 208,169,174 (80,478,391 ) 127,873,515 Gross profit - (1,553 ) 36,764,350 (243,757 ) 36,519,040 Operating Expenses 43,042 1,479,243 37,583,788 106,857 39,212,930 Loss from operations (43,042 ) (1,480,796 ) (819,438) (350,614) (2,693,890 ) Other income, net (258 ) (21,931 ) 617,439 - 595,250 Provision for income tax - 247 1,099,479 - 1,099,726 Net loss $ (43,300 ) (1,502,974 ) (1,301,478 ) (350,614 ) (3,198,366 ) Year Ended March 31, 2021 PARENT SUBSIDIARIES VIE Eliminations Consolidated Revenue $ - $ 1,693,950 $ 206,173,492 $ (74,732,809 ) $ 133,134,633 Cost of revenue - 1,250,742 177,441,192 (74,801,110 ) 103,890,824 Gross profit - 443,208 28,732,300 68,301 29,243,809 Operating Expenses 3,941,600 2,724,339 31,569,482 (154,372 ) 38,081,049 Loss from operations (3,941,600 ) (2,281,131 ) (2,837,182 ) 222,673 (8,837,240 ) Other income, net 64,090 (646,415 ) 467,923 607,702 493,300 Provision for income tax - - 31,638 - 31,638 Net loss $ (3,877,510 ) $ (2,927,546 ) (2,400,897 ) $ 830,375 $ (8,375,578 ) Year Ended March 31, 2020 PARENT SUBSIDIARIES VIE Elimination Consolidated Revenue $ $ 2,059,685 $ 175,378,838 $ (60,110,834 ) $ 117,327,689 Cost of revenue - 1,504,696 150,319,467 (60,022,904 ) 91,801,259 Gross profit - 554,989 25,059,371 (87,930 ) 25,526,430 Operating Expenses 34,560 1,351,229 31,734,804 (590,421 ) 32,530,172 Loss from operations (34,560 ) (796,240 ) (6,675,433 ) 502,491 (7,003,742 ) Other income, net 401,158 (164,693 ) 916,278 (590,420 ) 562,323 Provision for income tax - 1 16,257 - 16,258 Net loss $ 366,598 $ (960,934 ) $ (5,775,412 ) $ (87,929 ) $ (6,457,677 ) Consolidating Balance Sheets Information Year Ended March 31, 2022 PARENT SUBSIDIARIES VIE Elimination Consolidated Total assets $ 46,700 $ 55,796,336 $ 90,528,406 $ (39,987,233 ) $ 106,384,209 Total liabilities (48,578,210 ) 17,576,098 107,864,555 6,782,980 83,645,423 Current assets 46,700 12,676,793 71,423,189 (8,694,788 ) 75,451,894 Current liabilities (48,578,210 ) 17,576,098 107,864,555 (2,414,047 ) 74,448,396 Working capital 48,624,910 (4,899,305 ) (36,441,366 ) (6,280,741 ) 1,003,498 Accumulated deficit (17,136,455 ) (5,669,391 ) (24,496,890 ) (831,757 ) (48,134,493 ) Total equity 48,624,910 38,220,238 (17,336,149 ) (46,770,213 ) 22,738,786 Year Ended March 31, 2021 PARENT SUBSIDIARIES VIE Elimination Consolidated Total assets $ - $ 57,976,479 $ 82,863,681 $ (34,529,529 ) $ 106,310,631 Total liabilities (48,668,211 ) 19,712,130 98,304,131 12,560,236 81,908,286 Current assets - 14,880,358 61,824,239 (4,470,354 ) 72,234,243 Current liabilities (48,668,211 ) 19,712,130 96,411,862 (2,557,847 ) 64,897,934 Working capital 48,668,211 (4,831,772 ) (34,587,623 ) (1,912,507 ) 7,336,309 Accumulated deficit (17,093,153 ) (4,525,944 ) (21,987,871 ) (1,335,406 ) (44,942,374 ) Total equity 48,668,211 38,264,349 (15,440,450 ) (47,089,765 ) 24,402,345 44 Year Ended March 31, 2020 PARENT SUBSIDIARIES VIE Elimination Consolidated Total assets $ - $ 46,018,763 $ 72,390,246 $ (18,892,776 ) $ 99,516,233 Total liabilities (39,239,520 ) 17,605,106 84,235,162 18,137,356 80,738,104 Current assets - 11,704,443 52,758,690 (3,475,921 ) 60,987,212 Current liabilities (39,303,610 ) 19,892,848 77,831,462 (982,726 ) 57,437,974 Working capital 39,303,610 (8,188,405 ) (25,072,772 ) (2,493,195 ) 3,549,238 Accumulated deficit (13,215,642 ) (2,600,637 ) (17,900,981 ) (2,683,577 ) (36,400,837 ) Total equity 39,239,520 28,413,657 (11,844,916 ) (37,030,132 ) 18,778,129 Consolidating Cash Flows Information Year Ended March 31, 2022 PARENT SUBSIDIARIES VIE Elimination Consolidated Net cash (used in)/provided by operating activities $ (43,300 ) $ 3,283,202 $ (10,638,849 ) $ 2,012,974 $ (5,385,973 ) Net cash used in investing activities - (63,291 ) (242,847 ) - (306,138 ) Net cash (used in)/provided by financing activities 90,000 (6,256,428 ) 12,810,723 (1,807,397 ) 4,836,898 Effect of exchange rate on cash and cash equivalents - 1,499,349 228,373 (205,577 ) 1,522,146 Net increase in cash and cash equivalents 46,700 (1,537,168 ) 2,157,401 - 666,933 Year Ended March 31, 2021 PARENT SUBSIDIARIES VIE Elimination Consolidated Net cash (used in)/provided by operating activities $ (9,364,000 ) $ 2,197,717 $ 6,164,131 $ 939,860 $ (62,292 ) Net cash used in investing activities - (297,265 ) (2,355,805 ) 654,745 (1,998,325 ) Net cash (used in)/provided by financing activities 9,364,600 (346,960 ) (3,241,948 ) (2,695,839 ) 3,079,853 Effect of exchange rate on cash and cash equivalents - 1,597,554 (27,986 ) 1,101,234 2,670,802 Net increase in cash and cash equivalents - 3,151,646 538,392 - 3,690,038 Year Ended March 31, 2020 PARENT SUBSIDIARIES VIE Elimination Consolidated Net cash (used in)/provided by operating activities $ (9,273,077 ) $ 6,492,750 $ (3,689,278 ) $ (438,340 ) $ (6,907,945 ) Net cash used in investing activities - (304,645 ) (3,058,771 ) (1,473,197 ) (4,836,613 ) Net cash (used in)/provided by financing activities 9,273,077 (285,123 ) 8,448,290 1,577,462 19,013,706 Effect of exchange rate on cash and cash equivalents - (80,719 ) (1,285,100 ) 334,075 (1,031,744 ) Net increase in cash and cash equivalents - 5,822,263 415,141 - 6,237,404 45 D.
Consolidating Statements of Income Information Year Ended March 31, 2023 PARENT SUBSIDIARIES VIE Eliminations Consolidated Revenue $ - $ - $ 235,936,050 $ (87,124,074 ) $ 148,811,976 Cost of revenue - (1,739 ) 201,729,210 (87,195,959 ) 114,531,512 Gross profit - 1,739 34,206,840 71,885 34,280,464 Operating Expenses 10,534,233 4,200,530 40,798,397 (327,313 ) 55,205,847 Loss from operations (10,534,233 ) (4,198,791 ) (6,591,557 ) 399,198 (20,925,383 ) Other income, net (647 ) (2,261,118 ) 2,442,912 - 181,147 Provision for income tax - - 394,541 - 394,541 Net loss $ (10,534,880 ) (6,459,909 ) (4,543,186 ) 399,198 (21,138,777 ) Year Ended March 31, 2022 PARENT SUBSIDIARIES VIE Eliminations Consolidated Revenue $ - $ 181,179 $ 244,933,524 $ (80,722,148 ) $ 164,392,555 Cost of revenue - 182,732 208,169,174 (80,478,391 ) 127,873,515 Gross profit - (1,553 ) 36,764,350 (243,757 ) 36,519,040 Operating Expenses 43,042 1,479,243 37,583,788 106,857 39,212,930 Loss from operations (43,042 ) (1,480,796 ) (819,438 ) (350,614 ) (2,693,890 ) Other income, net (258 ) (21,931 ) 617,439 - 595,250 Provision for income tax - 247 1,099,479 - 1,099,726 Net loss $ (43,300 ) (1,502,974 ) (1,301,478 ) (350,614 ) (3,198,366 ) Year Ended March 31, 2021 PARENT SUBSIDIARIES VIE Eliminations Consolidated Revenue $ - $ 1,693,950 $ 206,173,492 $ (74,732,809 ) $ 133,134,633 Cost of revenue - 1,250,742 177,441,192 (74,801,110 ) 103,890,824 Gross profit - 443,208 28,732,300 68,301 29,243,809 Operating Expenses 3,941,600 2,724,339 31,569,482 (154,372 ) 38,081,049 Loss from operations (3,941,600 ) (2,281,131 ) (2,837,182 ) 222,673 (8,837,240 ) Other income, net 64,090 (646,415 ) 467,923 607,702 493,300 Provision for income tax - - 31,638 - 31,638 Net loss $ (3,877,510 ) $ (2,927,546 ) (2,400,897 ) $ 830,375 $ (8,375,578 ) Consolidating Balance Sheets Information Year Ended March 31, 2023 PARENT SUBSIDIARIES VIE Elimination Consolidated Total assets $ 11,820 $ 49,799,950 $ 77,392,401 $ (36,233,569 ) $ 90,970,602 Total liabilities (55,763,210 ) 24,027,715 94,103,563 11,935,382 74,303,450 Current assets 11,820 4,296,911 63,064,155 (2,890,096 ) 64,482,790 Current liabilities (55,763,210 ) 24,027,715 94,103,563 4,167,166 66,535,234 Working capital 55,775,030 (19,730,804 ) (31,039,408 ) (7,057,262 ) (2,052,444 ) Accumulated deficit (27,671,335 ) (16,095,498 ) (22,993,830 ) (2,512,355 ) (69,273,018 ) Total equity 55,775,030 25,772,235 (16,711,162 ) (48,168,951 ) 16,667,152 Year Ended March 31, 2022 PARENT SUBSIDIARIES VIE Elimination Consolidated Total assets $ 46,700 $ 55,796,336 $ 90,528,406 $ (39,987,233 ) $ 106,384,209 Total liabilities (48,578,210 ) 17,576,098 107,864,555 6,782,980 83,645,423 Current assets 46,700 12,676,793 71,423,189 (8,694,788 ) 75,451,894 Current liabilities (48,578,210 ) 17,576,098 107,864,555 (2,414,047 ) 74,448,396 Working capital 48,624,910 (4,899,305 ) (36,441,366 ) (6,280,741 ) 1,003,498 Accumulated deficit (17,136,455 ) (5,669,391 ) (24,496,890 ) (831,757 ) (48,134,493 ) Total equity 48,624,910 38,220,238 (17,336,149 ) (46,770,213 ) 22,738,786 40 Year Ended March 31, 2021 PARENT SUBSIDIARIES VIE Elimination Consolidated Total assets $ - $ 57,976,479 $ 82,863,681 $ (34,529,529 ) $ 106,310,631 Total liabilities (48,668,211 ) 19,712,130 98,304,131 12,560,236 81,908,286 Current assets - 14,880,358 61,824,239 (4,470,354 ) 72,234,243 Current liabilities (48,668,211 ) 19,712,130 96,411,862 (2,557,847 ) 64,897,934 Working capital 48,668,211 (4,831,772 ) (34,587,623 ) (1,912,507 ) 7,336,309 Accumulated deficit (17,093,153 ) (4,525,944 ) (21,987,871 ) (1,335,406 ) (44,942,374 ) Total equity 48,668,211 38,264,349 (15,440,450 ) (47,089,765 ) 24,402,345 Consolidating Cash Flows Information Year Ended March 31, 2023 PARENT SUBSIDIARIES VIE Elimination Consolidated Net cash (used in)/provided by operating activities $ (7,359,880 ) $ (1,882,172 ) $ 3,892,614 $ 2,065,925 $ (3,283,513 ) Net cash used in investing activities - - (311,719 ) (4,378 ) (316,097 ) Net cash (used in)/provided by financing activities 7,325,000 (1,320,030 ) (3,223,285 ) (415,529 ) 2,366,156 Effect of exchange rate on cash and cash equivalents - (948,967 ) 59,506 (1,646,017 ) (2,535,478 ) Net increase in cash and cash equivalents (34,880 ) (4,151,169 ) 417,117 - (3,768,932 ) Year Ended March 31, 2022 PARENT SUBSIDIARIES VIE Elimination Consolidated Net cash (used in)/provided by operating activities $ (43,300 ) $ 3,283,202 $ (10,638,849 ) $ 2,012,974 $ (5,385,973 ) Net cash used in investing activities - (63,291 ) (242,847 ) - (306,138 ) Net cash (used in)/provided by financing activities 90,000 (6,256,428 ) 12,810,723 (1,807,397 ) 4,836,898 Effect of exchange rate on cash and cash equivalents - 1,499,349 228,373 (205,577 ) 1,522,146 Net increase in cash and cash equivalents 46,700 (1,537,168 ) 2,157,401 - 666,933 Year Ended March 31, 2021 PARENT SUBSIDIARIES VIE Elimination Consolidated Net cash (used in)/provided by operating activities $ (9,364,000 ) $ 2,197,717 $ 6,164,131 $ 939,860 $ (62,292 ) Net cash used in investing activities - (297,265 ) (2,355,805 ) 654,745 (1,998,325 ) Net cash (used in)/provided by financing activities 9,364,600 (346,960 ) (3,241,948 ) (2,695,839 ) 3,079,853 Effect of exchange rate on cash and cash equivalents - 1,597,554 (27,986 ) 1,101,234 2,670,802 Net increase in cash and cash equivalents - 3,151,646 538,392 - 3,690,038 41 D.
For the fiscal year ended March 31, 2021, one supplier, HuaDong Pharmaceutical Co., Ltd. accounted for more than twenty-one point eight percent (21.8%) of our total purchases. The suppliers are neither related to nor affiliated with us. We believe that competitive sources are readily available for substantially all of the products we require for our retail and wholesale businesses.
For the fiscal year ended March 31, 2023, one supplier, HuaDong Pharmaceutical Co., Ltd. accounted for more than fifteen point eight percent (15.8%) of our total purchases. The suppliers are neither related to nor affiliated with us.
Contractual Arrangements with HJ Group and the Key Personnel Information relating to the contractual arrangements with HJ Group and the key personnel is incorporated by reference from our 2021 Annual Report under the caption “Contractual Arrangements with HJ Group and the Key Personnel.” Corporate Information Our principal executive office is located at 6 th Floor, Hai Wai Hai Tongxin Mansion, Gong Shu District, Hangzhou City, Zhejiang Province, and China.
Throughout this report, we will sometimes refer to Jiuzhou Pharmacy, Jiuzhou Clinic and Jiuzhou Service, as well as the subsidiaries of Jiuzhou Pharmacy, collectively as “HJ Group.” Corporate History Information relating to our corporate history is incorporated by reference from our annual report on Form 20-F for the fiscal year March 31, 2022 filed with the SEC on July 28, 2022 (“2022 Annual Report”) under the caption “Corporate History.” Contractual Arrangements with HJ Group and the Key Personnel Information relating to the contractual arrangements with HJ Group and the Key Personnel is incorporated by reference from our 2022 Annual Report under the caption “Contractual Arrangements with HJ Group and the Key Personnel.” Corporate Information Our principal executive office is located at 6 th Floor, Hai Wai Hai Tongxin Mansion, Gong Shu District, Hangzhou City, Zhejiang Province, and China.
As such, we believe that we can change suppliers without any material interruption to our business. To date, we have not experienced any significant difficulty in sourcing our suppliers.
We believe that competitive sources are readily available for substantially all of the products we require for our retail and wholesale businesses. As such, we believe that we can change suppliers without any material interruption to our business.
Quality Control Information relating to our quality control is incorporated by reference from our 2021 Annual Report under the caption “Quality Control.” 41 Competition Information relating to the competition we face is incorporated by reference from our 2021 Annual Report under the caption “Competition.” Intellectual Property Information relating to the our intellectual property is incorporated by reference from our 2021 Annual Report under the caption “Intellectual Property.” The updates relating to our intellectual property during the fiscal years of 2021 and 2022 are as follows: We own and operate the following websites: www.dada360.com (for online sales), http://www.chinajzyy.com/ (our corporate website used in China), and www.jiuzhou360.com (our English-language corporate website).
To date, we have not experienced any significant difficulty in sourcing our suppliers. 37 Quality Control Information relating to our quality control is incorporated by reference from our 2022 Annual Report under the caption “Quality Control.” Competition Information relating to the competition we face is incorporated by reference from our 2022 Annual Report under the caption “Competition.” Intellectual Property Information relating to the our intellectual property is incorporated by reference from our 2022 Annual Report under the caption “Intellectual Property.” Employees As of March 31, 2023, we had 938 employees combined in our retail and wholesale operations, consisting of 885 full-time and 53 part-time employees.
Removed
Throughout this report, we will sometimes refer to Jiuzhou Pharmacy, Jiuzhou Clinic and Jiuzhou Service, Lin’An Jiuzhou, as well as the subsidiaries of Jiuzhou Pharmacy, collectively as “HJ Group.” Corporate History Information relating to our corporate history is incorporated by reference from our annual report on Form 10-K for the fiscal year March 31, 2021 filed with the SEC on July 10, 2021 ( 2021 Annual Report ) under the caption “Our Corporate History and Structure.” The update relating to our corporate history during the fiscal year of 2022 is as follows: On May 14, 2021, the Company and our predecessor, a Nevada corporation entered into a definitive agreement and plan of merger (the “Merger Agreement”) related to a proposed merger transaction.
Removed
The Merger Agreement provides that, upon the terms and subject to the conditions set forth therein, our predecessor will merge with and into us (the “Redomicile Merger”), with us surviving and changing our name from China Jo-Jo Drugstores Holdings, Inc. to China Jo-Jo Drugstores, Inc.
Removed
Following the Redomicile Merger, CJJD Cayman, together with its subsidiaries, will own and continue to conduct the predecessor’s business in substantially the same manner as was currently being conducted by the predecessors of the Company and its subsidiaries. The Redomicile Merger was completed on July 30, 2021.
Removed
Corporate Structure Information relating to our corporate history is incorporated by reference from our 2021 Annual Report under the caption “Our Corporate History and Structure.” The most recent updates relating to our structure are as follows: On October 2020, we have closed all clinics under Linjia Medical Investment and Management Co. Ltd. and ceased its operation.
Removed
On November 19, 2020, Zhejiang AyiGe Medical Health Management Co., Ltd. was dissolved. On January 2021, Lin’An Jiuzhou Pharmacy Co., Ltd was sold to two individuals for total proceeds of $121,963 (RMB800,000).
Removed
We also own two inactive domain names. We do not own any patents, nor do we have any pending patent applications, and we are not a beneficiary of any licenses, franchises, concessions or royalty agreements. Employees As of March 31, 2022, we had 979 employees combined in our retail and wholesale operations, consisting of 911 full-time and 68 part-time employees.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

59 edited+14 added−20 removed57 unchanged
We do not have any variable interest in any unconsolidated entity that provides financing, liquidity, market risk or credit support to us or engages in leasing, hedging or research and development services with us. Exchange Rates Our subsidiaries and affiliated companies in the PRC maintain their books and records in RMB, the lawful currency of the PRC.
We do not have any variable interest in any unconsolidated entity that provides financing, liquidity, market risk or credit support to us or engages in leasing, hedging or research and development services with us. Exchange Rates Our subsidiaries, the VIEs and affiliated companies in the PRC maintain their books and records in RMB, the lawful currency of the PRC.
Income Taxes Our income tax expense for the year ended March 31, 2022 increased by $1,068,088 as compared to the year ended March 31, 2021 due to a decrease in the effective rate resulting from an increase in profits in several business lines.
Our income tax expense for the year ended March 31, 2022 increased by $1,068,088 as compared to the year ended March 31, 2021 due to a decrease in the effective rate resulting from an increase in profits in several business lines.
Overview We currently operate in four business segments in China: (1) retail drugstores, (2) online pharmacy, (3) wholesale of products similar to those that we carry in our pharmacies, and (4) farming and selling herbs used for traditional Chinese medicine (“TCM”). 46 Our drugstores offer customers a wide variety of pharmaceutical products, including prescription and over-the-counter (“OTC”) drugs, nutritional supplements, TCM, personal and family care products, medical devices, and convenience products, including consumable, seasonal, and promotional items.
Overview We currently operate in four business segments in China: (1) retail drugstores, (2) online pharmacy, (3) wholesale of products similar to those that we carry in our pharmacies, and (4) farming and selling herbs used for traditional Chinese medicine (“TCM”). 42 Our drugstores offer customers a wide variety of pharmaceutical products, including prescription and over-the-counter (“OTC”) drugs, nutritional supplements, TCM, personal and family care products, medical devices, and convenience products, including consumable, seasonal, and promotional items.
Management believes that the application of these policies on a consistent basis enables us to provide useful and reliable financial information about our operating results and financial condition. E. OFF-BALANCE SHEET ARRANGEMENT. Please refer to the disclosure under Off-balance Sheet Arrangements on page 55 of this report. F. TABULAR DISCLOSURE OF CONTRACTUAL OBLIGATIONS.
Management believes that the application of these policies on a consistent basis enables us to provide useful and reliable financial information about our operating results and financial condition. E. OFF-BALANCE SHEET ARRANGEMENT. Please refer to the disclosure under Off-balance Sheet Arrangements on page 51 of this report. F. TABULAR DISCLOSURE OF CONTRACTUAL OBLIGATIONS.
The adoption of the new revenue standard was not material and is not expected to be material to our net income on an ongoing basis. 47 Impairment of definite-lived intangible assets The Company evaluates the recoverability of definite-lived intangible assets whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable.
The adoption of the new revenue standard was not material and is not expected to be material to our net income on an ongoing basis. 43 Impairment of definite-lived intangible assets The Company evaluates the recoverability of definite-lived intangible assets whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable.
ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS A . OPERATING RESULTS. The following discussion and analysis of our results of operations and financial condition for the fiscal years ended March 31, 2022, 2021 and 2020 should be read in conjunction with our financial statements and the notes to those financial statements that are included elsewhere in this report.
ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS A . OPERATING RESULTS. The following discussion and analysis of our results of operations and financial condition for the fiscal years ended March 31, 2023, 2022 and 2021 should be read in conjunction with our financial statements and the notes to those financial statements that are included elsewhere in this report.
Our suppliers demand significantly more purchase from us based on our contracts, so that they can give us purchase discounts.. As a result, we lowed our sales prices to local vendors. By lowing the sales prices, we were able to increase our sales significantly. However, hospitals are still the dominant drug retailers in China.
Our suppliers demanded significantly more purchase from us based on our contracts, so that they can give us purchase discounts.. As a result, we lowed our sales prices to local vendors. By lowing the sales prices, we were able to increase our sales significantly. However, hospitals are still the dominant drug retailers in China.
Industry and Market Outlook Other than as disclosed elsewhere in this annual report, we are not aware of any trends, uncertainties, demands, commitments or events for the year ended March 31, 2022 that are reasonably likely to have a material and adverse effect on our net revenues, income, profitability, liquidity or capital resources, or that would cause the disclosed financial information to be not necessarily indicative of future results of operations or financial conditions. 56 CRITICAL ACCOUNTING ESTIMATES The discussion and analysis of our financial condition and results of operations are based upon our audited consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States.
Industry and Market Outlook Other than as disclosed elsewhere in this annual report, we are not aware of any trends, uncertainties, demands, commitments or events for the year ended March 31, 2023 that are reasonably likely to have a material and adverse effect on our net revenues, income, profitability, liquidity or capital resources, or that would cause the disclosed financial information to be not necessarily indicative of future results of operations or financial conditions. 52 CRITICAL ACCOUNTING ESTIMATES The discussion and analysis of our financial condition and results of operations are based upon our audited consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States.
In fiscal 2021, we accelerated collection of certain aged accounts from customers which we no longer or rarely sold products to. By doing so, we are able to take better use of our cash. As a result, the overall reserve on wholesale accounts receivables decreased.
In fiscal 2023, we accelerated collection of certain aged accounts from customers which we no longer or rarely sold products to. By doing so, we are able to take better use of our cash. As a result, the overall reserve on wholesale accounts receivables decreased.
In fiscal 2022, in order to use our cash more efficiently, we accelerated the collection of deposits from quite a few suppliers, especially aged accounts. We chose to only leave deposits with critical suppliers who supply large quantities of merchandise. As a result, the outstanding advances to suppliers decreased dramatically.
In fiscal 2023, in order to use our cash more efficiently, we accelerated the collection of deposits from quite a few suppliers, especially aged accounts. We chose to only leave deposits with critical suppliers who supply large quantities of merchandise. As a result, the outstanding advances to suppliers decreased dramatically.
We also farm certain herbs used in TCM but have not made sales in the year ended March 31, 2022. Amidst COVID-19 outbreak, we experienced a decline in the number of customer visits. To avoid face-to-face contact, customers tend to shop online.
We also farm certain herbs used in TCM but have not made sales in the year ended March 31, 2023. Amidst COVID-19 outbreak, we experienced a decline in the number of customer visits. To avoid face-to-face contact, customers tend to shop online.
By linking our online pharmacy platform with Yingda and educating these employees, they are able to buy health products on our online stores. The sales from these customers contributed significantly to our official website sales. 49 Prescription drugs used to be prohibited from sales online due to safety concern.
By linking our online pharmacy platform with Yingda and educating these employees, they are able to buy health products on our online stores. The sales from these customers contributed significantly to our official website sales. 46 Prescription drugs used to be prohibited from sales online due to safety concern.
Jiuzhou Pharmacy only purchases certain non-medical products such as sundry. As a result, our retail chain made few advances to suppliers as of March 31, 2022. At the end of 2022 we had outstanding advances to suppliers with which we have ceased doing business.
Jiuzhou Pharmacy only purchases certain non-medical products such as sundry. As a result, our retail chain made few advances to suppliers as of March 31, 2023. At the end of 2023 we had outstanding advances to suppliers with which we have ceased doing business.
These advances have been fully reserved. 54 Advances to suppliers for our drug wholesale business consist of prepayments to our vendors such as pharmaceutical manufacturers and other distributors. We typically receive products from vendors within three to nine months after making prepayments.
These advances have been fully reserved. 50 Advances to suppliers for our drug wholesale business consist of prepayments to our vendors such as pharmaceutical manufacturers and other distributors. We typically receive products from vendors within three to nine months after making prepayments.
At the same time, gross margin increased from 22.0% to 22.2% due to higher retail drugstores profit margins. Retail gross margins increased primarily because we introduced certain popular products with high profit margin and lowered the sale percentile of DTC (Direct-to-Patient) products.
At the same time, gross margin increased from 22.0% to 22.2% due to higher retail drugstores profit margins. Retail gross margins increased primarily because we introduced certain popular products with high profit margin and lowered the sale percentile of DTC (Direct-to-Customer) products.
On the other side, we have been concentrating on new stores within Hangzhou metropolitan area.As of March 31, 2022, we had 111 pharmacies in Hangzhou city under the store brand of “Jiuzhou Grand Pharmacy”. Since May 2010, we have also been selling certain OTC drugs, medical devices, nutritional supplements and other sundry products online.
On the other side, we have been concentrating on new stores within Hangzhou metropolitan area. As of March 31, 2023, we had 114 pharmacies in Hangzhou city under the store brand of “Jiuzhou Grand Pharmacy”. Since May 2010, we have also been selling certain OTC drugs, medical devices, nutritional supplements and other sundry products online.
In the year ended March 31, 2022, we wrote off an approximately $341,102 collectible from provincial and Hangzhou City government insurance, as such amounts have been determined by the health insurance bureaus to be unqualified for reimbursement. Accounts receivables from our online pharmacy business mainly consist of receivables from insurance company and a service company handling with insurance companies.
In the year ended March 31, 2023, we wrote off an approximately $50,275 collectible from provincial and Hangzhou City government insurance, as such amounts have been determined by the health insurance bureaus to be unqualified for reimbursement. Accounts receivables from our online pharmacy business mainly consist of receivables from insurance company and a service company handling with insurance companies.
The exchange rates used to translate amounts in RMB into USD for the purposes of preparing the audited consolidated financial statements or otherwise disclosed in this report were as follows: March 31, 2022 March 31, 2021 March 31, 2020 Balance sheet items, except for the registered and paid-up capital, as of end of period/year USD1: RMB 6.3393 USD1: RMB 6.5594 USD1: RMB 7.0915 Amounts included in the statement of Operations and statement of cash flows for the period/ year ended USD1: RMB 6.4180 USD1: RMB 6.7722 USD1: RMB 6.9656 55 Inflation We believe that inflation has not had a material effect on our operations to date.
The exchange rates used to translate amounts in RMB into USD for the purposes of preparing the audited consolidated financial statements or otherwise disclosed in this report were as follows: March 31, 2023 March 31, 2022 March 31, 2021 Balance sheet items, except for the registered and paid-up capital, as of end of period/year USD1: RMB 6.8676 USD1: RMB 6.3393 USD1: RMB 6.5594 Amounts included in the statement of Operations and statement of cash flows for the period/ year ended USD1: RMB 6.8516 USD1: RMB 6.4180 USD1: RMB 6.7722 51 Inflation We believe that inflation has not had a material effect on our operations to date.
Please refer to the table under Contractual Obligations on page 55 of this report.
Please refer to the table under Contractual Obligations on page 51 of this report.
The change is primarily attributable to an increase in cash provided by investment in a joint venture of $1,470,119 and an increase of $170,445 in additions to leasehold improvements. For the year ended March 31, 2021, net cash used in investing activities amounted to $(1,998,325), as compared to $(4,836,613) provided by investing activities a year ago.
For the year ended March 31, 2022, net cash used in investing activities amounted to $(306,138), as compared to $(1,998,325) provided by investing activities a year ago. The change is primarily attributable to an increase in cash provided by investment in a joint venture of $1,470,119 and an increase of $170,445 in additions to leasehold improvements.
The number of the new daily cases has become limited. People now work and live as normal. As a result, we believe the negative impacts on our operations are temporary. However, the impact of COVID-19 on our operations depends on its future developments, which are highly uncertain and cannot be predicted.
People now work and live as normal. As a result, we believe the negative impacts on our operations are temporary. However, the impact of COVID-19 on our operations depends on its future developments, which are highly uncertain and cannot be predicted.
In order to keep pace with customers’ change in their ways of shopping, we strengthened our O2O service team, which takes orders online, i.e. via mobile phone app, and delivers products to local community from our stores. The spread of the disease has been effectively controlled in China in the past few months.
In order to keep pace with customers’ change in their ways of shopping, we strengthened our O2O service team, which takes orders online, i.e. via mobile phone app, and delivers products to local community from our stores. The spread of the disease has been effectively controlled in China and the number of the new daily cases has become limited.
Contractual Obligations and Off-Balance Sheet Arrangements Contractual Obligations The following table summarizes our contractual obligations: Payments due by period Contractual obligations Total Less than 1 year 1-3 years 3-5 years More than 5 years Short-term loan payable $ - - - - - Notes payable 34,189,022 34,189,022 - - - Long-term loan payable 1,957,956 1,957,956 - - - Total $ 36,146,978 36,146,978 - - - Off-balance Sheet Arrangements We do not have any outstanding financial guarantees or commitments to guarantee the payment obligations of any third parties.
Contractual Obligations and Off-Balance Sheet Arrangements Contractual Obligations The following table summarizes our contractual obligations: Payments due by period Contractual obligations Total Less than 1 year 1-3 years 3-5 years More than 5 years Short-term loan payable $ - - - - - Notes payable 29,255,776 29,255,776 - - - Long-term loan payable - - - - - Total $ 29,255,776 29,255,776 - - - Off-balance Sheet Arrangements We do not have any outstanding financial guarantees or commitments to guarantee the payment obligations of any third parties.
As a result, our profit margin for online sales decreased. Wholesale gross margin increased primarily due to various products with different profit margin we carried and sold to certain pharmaceutical vendors. Although we have attempted to market our products to major local hospitals and other pharmacies, we have not been able to make significant progress.
We do not expect significant increase in gross margin our online sales. Wholesale gross margin decreased primarily due to various products with different profit margin we carried and sold to certain pharmaceutical vendors. Although we have attempted to market our products to major local hospitals and other pharmacies, we have not been able to make significant progress.
Excluding the effect from the salary and rent, the sales and marketing expenses increased by approximately $0.8 million, which primarily reflects the increase in fee charged by distribution channels Such as Tmall and JD as a percentage of online pharmacy sales.
The sales and marketing expenses increased by approximately $0.68 million, which primarily reflects the increase in fee charged by distribution channels Such as Tmall and JD as a percentage of online pharmacy sales.
Net Loss As a result of the foregoing, net loss was $3,198,366, $8,375,578 and $6,457,677 in the years ended March 31, 2022, 2021 and 2020. 53 Accounts receivable Accounts receivable, which are unsecured, are stated at the amount we expect to collect.
Net Loss As a result of the foregoing, net loss was $21,138,777, $3,198,366 and $8,375,578 in the years ended March 31, 2023, 2022 and 2021. 49 Accounts receivable Accounts receivable, which are unsecured, are stated at the amount we expect to collect.
Gross Profit The average gross margins for each of our four business segments for the years ended March 31, 2022, 2021 and 2020 are as follows: Year ended March 31, 2022 2021 2020 Average gross margin for retail drugstores 32.0 % 30.2 % 28.1 % Average gross margin for online sales 11.9 % 10.4 % 10.6 % Average gross margin for wholesale business 12.0 % 11.3 % 11.0 % Average gross margin for farming business N/A N/A N/A 51 Comparison of years ended March 31, 2022 and 2021 Gross profit increased by $7,275,231 or 24.9% period over period primarily as a result of an increase in gross profit provided by both wholesale business and retail drugstores, which increased significantly in the year ended March 31, 2022.
Gross Profit The average gross margins for each of our four business segments for the years ended March 31, 2023, 2022 and 2021 are as follows: Year ended March 31, 2023 2022 2021 Average gross margin for retail drugstores 32.2 % 32.0 % 30.2 % Average gross margin for online sales 12.0 % 11.9 % 10.4 % Average gross margin for wholesale business 10.9 % 12.0 % 11.3 % Average gross margin for farming business N/A N/A N/A Comparison of years ended March 31, 2023 and 2022 Gross profit decreased by $2,238,576 or 6.1% period over period primarily as a result of a decrease in gross profit provided by wholesale business, which decreased significantly in the year ended March 31, 2023.
LIQUIDITY AND CAPITAL RESOURCES Our cash flows for the periods indicated are as follows: For the year ended March 31, 2022 2021 2020 Net cash used in operating activities $ (5,385,973 ) $ (62,292 ) $ (6,907,945 ) Net cash used in investing activities $ (306,138 ) $ (1,998,325 ) $ (4,836,613 ) Net cash provided by financing activities $ 4,836,898 $ 3,079,853 $ 19,013,706 Net cash used in operating activities For the year ended March 31, 2022 cash used in operating activities amounted to $(5,385,793), as compared to $(62,292) a year ago.
LIQUIDITY AND CAPITAL RESOURCES Our cash flows for the periods indicated are as follows: For the year ended March 31, 2023 2022 2021 Net cash used in operating activities $ (3,283,513 ) $ (5,385,973 ) $ (62,292 ) Net cash used in investing activities $ (316,097 ) $ (306,138 ) $ (1,998,325 ) Net cash provided by financing activities $ 2,366,156 $ 4,836,898 $ 3,079,853 Net cash used in operating activities For the year ended March 31, 2023 cash used in operating activities amounted to $(3,283,513), as compared to $(5,385,793) a year ago.
Loss from Operations As a result of the above, loss from operations was $2,693,890, $8,837,240 and $7,003,742 for the years ended March 31, 2022, 2021 and 2020, respectively. Our operating margin for the year ended March 31, 2022, 2021 and 2020 was (1.6) %, (6.6) % and (6.0) %, respectively.
Loss from Operations As a result of the above, loss from operations was $20,925,383, $2,693,890 and $8,837,240 for the years ended March 31, 2023, 2022 and 2021, respectively. Our operating margin for the year ended March 31, 2023, 2022 and 2021 was (14.1) %, (1.6) % and (6.6) %, respectively.
Subsequent to March 31, 2022 and through June 30, 2022, we collected approximately $8.2 million in receivables relating to our drugstore business, approximately $1.1 million in receivables relating to our online pharmacy business, approximately $2.5 million relating to our wholesale business, and $0 relating to our herb farming business.
Subsequent to March 31, 2023 and through May 31, 2023, we collected approximately $6.1 million in receivables relating to our drugstore business, approximately $2.9 million in receivables relating to our online pharmacy business, approximately $5.4 million relating to our wholesale business, and $0 relating to our herb farming business.
For the year ended March 31, 2021 cash used in operating activities amounted to $(62,292), as compared to $(6,907,945) a year ago.
For the year ended March 31, 2022 cash used in operating activities amounted to $(5,385,793), as compared to $(62,292) a year ago.
However, after removing the impact of exchange rate fluctuation, the actual retail drugstores sales decreased 1.5%. Same-store sales decreased by approximately $949,110, or 1.3%, while new stores contributed approximately $548,403 in revenue in the year ended March 31, 2021.
Same-store sales decreased by approximately $1,569,549, or 1.9%, while new stores contributed approximately $692,824 in revenue in the year ended March 31, 2023.However, after removing the impact of exchange rate fluctuation, the actual retail drugstores sales increased 5.6%.
In the year ended March 31, 2022 and 2021, we evaluated the use rights of the forest land, which is currently used to cultivate Ginkgo trees.
In the year ended March 31, 2023 and 2022, we evaluated the use rights of the forest land, which is currently used to cultivate Ginkgo trees. The forest rights certificate from the local village extends the life of the lease to January 31, 2060.
Our income tax expense for the year ended March 31, 2021 increased by $15,380 as compared to the year ended March 31, 2020 due to an increase in the effective rate resulting from an increase in profits in several business lines.
Income Taxes Our income tax expense for the year ended March 31, 2023 decreased by $705,185 as compared to the year ended March 31, 2022 due to an increase in the effective rate resulting from a decrease in profits in several business lines.
The change is primarily due to repayment of notes payable and proceeds from equity and debt financing. For the year ended March 31, 2021, net cash provided by financing activities amounted to $3,079,853, as compared to $19,013,706 a year ago. The change is primarily due to repayment of notes payable and proceeds from third parties loan.
For the year ended March 31, 2022, net cash provided by financing activities amounted to $4,836,898, as compared to $3,079,853 a year ago. The change is primarily due to repayment of notes payable and proceeds from equity and debt financing. As of March 31, 2023, we had cash of approximately $31,570,644.
Our total current assets as of March 31, 2022, were $75,451,894 and total current liabilities were $74,448,396, which resulted in a working capital of $1,003,498. C. RESEARCH AND DEVELOPMENT, PATENTS AND LICENSES, ETC. The Company has no research and development policy for the past three years. D. TREND INFORMATION.
Our total current assets as of March 31, 2023, were $64,482,790 and total current liabilities were $66,535,234, which resulted in a working capital deficit of $2,052,444. C. RESEARCH AND DEVELOPMENT, PATENTS AND LICENSES, ETC. The Company has no research and development policy for the past three years. D. TREND INFORMATION.
Overall, such expenses as a percentage of our revenue were 18.8% and 20.2% respectively, in the years ended March 31, 2022 and 2021. Sales and marketing expenses for the year ended March 31, 2021 increased by $3,161,311 or 13.3% as compared to the year ended March 31, 2020, primarily due to increase in salary and rent.
Overall, such expenses as a percentage of our revenue were 18.8% and 20.2% respectively, in the years ended March 31, 2022 and 2021. 48 General and Administrative Expenses General and administrative expenses for the year ended March 31, 2023 increased by $7,481,508 or 91.4% as compared to the year ended March 31, 2022, primarily due to the increase in bad debt expense.
Results of Operations Comparison of years ended March 31, 2022, 2021 and 2020 The following table summarizes our results of operations for the years ended March 31, 2022, 2021 and 2020: Years ended December 31, 2022 2021 2020 Amount Percentage of total revenue Amount Percentage of total revenue Amount Percentage of total revenue Revenue $ 164,392,555 100.0 % $ 133,134,633 100.0 % $ 117,327,689 100.0 % Cost of goods sold $ 127,873,515 77.8 % 103,890,824 78.0 % 91,801,259 78.2 % Gross profit $ 36,519,040 22.2 % $ 29,243,809 22.0 % $ 25,526,430 21.8 % Selling expenses $ 30,876,959 18.8 % $ 26,954,914 20.2 % $ 23,793,603 20.3 % General and administrative expenses $ 8,187,176 5.0 % $ 10,897,629 8.2 % $ 8,108,377 6.9 % Impairment of long-lived assets $ 148,795 0.1 % $ 228,506 0.2 % $ 628,192 0.5 % Loss from operations $ (2,693,890 ) (1.6 )% $ (8,837,240 ) (6.6 )% $ (7,003,742 ) (6.0 )% Other Expense, net $ 595,250 0.4 % $ 429,210 0.3 % $ 562,323 0.5 % Change in fair value of derivative liability $ - 0.0 % $ 64,090 0.0 % $ 401,158 0.3 % Income tax expense $ 1,099,726 0.7 % $ 31,638 0.0 % $ 16,258 0.0 % Net loss $ (3,198,366 ) (1.9 )% $ (8,375,578 ) (6.3 )% $ (6,457,677 ) (5.5 )% 48 Revenue by Segment Comparison of years ended March 31, 2022 and 2021 The following table breaks down the revenue for our four business segments for the years ended March 31, 2022 and 2021: For the years ended March 31, 2022 2021 Amount % of total revenue Amount % of total revenue Variance by amount % of change Revenue from retail drugstores $ 84,228,492 51.2 % $ 76,098,975 57.2 % $ 8,129,517 10.7 % Revenue from online sales 30,219,364 18.4 % 22,485,919 16.8 % 7,733,445 34.4 % Revenue from wholesale business 49,944,699 30.4 % 34,549,739 26.0 % 15,394,960 44.6 % Revenue from farming business - - % - - % - - % Total revenue $ 164,392,555 100.0 % $ 133,134,633 100.0 % $ 31,251,312 23.5 % Retail drugstores sales, which accounted for approximately 51.2% of total revenue for the year ended March 31, 2022, increased by $8,129,517 or 10.7% compared to the year ended March 31, 2021, to $84,228,492.
Results of Operations Comparison of years ended March 31, 2023, 2022 and 2021 The following table summarizes our results of operations for the years ended March 31, 2023, 2022 and 2021: Years ended December 31, 2023 2022 2021 Amount Percentage of total revenue Amount Percentage of total revenue Amount Percentage of total revenue Revenue $ 148,811,976 100.0 % $ 164,392,555 100.0 % $ 133,134,633 100.0 % Cost of goods sold $ 114,531,512 77.0 % 127,873,515 77.8 % 103,890,824 78.0 % Gross profit $ 34,280,464 23.0 % $ 36,519,040 22.2 % $ 29,243,809 22.0 % Selling expenses $ 29,177,163 19.6 % $ 30,876,959 18.8 % $ 26,954,914 20.2 % General and administrative expenses $ 15,668,684 10.5 % $ 8,187,176 5.0 % $ 6,956,029 5.2 % Stock based compensation $ 10,360,000 7.0 % $ - 0 % $ 3,941,600 3.0 % Impairment of long-lived assets $ - 0 % $ 148,795 0.1 % $ 228,506 0.2 % Loss from operations $ (20,925,383 ) (14.1 )% $ (2,693,890 ) (1.6 )% $ (8,837,240 ) (6.6 )% Other Expense, net $ 181,147 0.1 % $ 595,250 0.4 % $ 429,210 0.3 % Change in fair value of derivative liability $ - 0.0 % $ - 0.0 % $ 64,090 0.0 % Income tax expense $ 394,541 0.3 % $ 1,099,726 0.7 % $ 31,638 0.0 % Net loss $ (21,138,777 ) (14.2 )% $ (3,198,366 ) (1.9 )% $ (8,375,578 ) (6.3 )% 44 Revenue by Segment Comparison of years ended March 31, 2023 and 2022 The following table breaks down the revenue for our four business segments for the years ended March 31, 2023 and 2022: For the years ended March 31, 2023 2022 Amount % of total revenue Amount % of total revenue Variance by amount % of change Revenue from retail drugstores $ 83,351,768 56.0 % $ 84,228,492 51.2 % $ (876,724 ) (1.0 )% Revenue from online sales 32,385,089 21.8 % 30,219,364 18.4 % 2,165,725 7.2 % Revenue from wholesale business 33,075,119 22.2 % 49,944,699 30.4 % (16,869,580 ) (33.8 )% Revenue from farming business - - % - - % - - % Total revenue $ 148,811,976 100.0 % $ 164,392,555 100.0 % $ (15,580,579 ) (9.5 )% Retail drugstores sales, which accounted for approximately 56.0% of total revenue for the year ended March 31, 2023, decreased by $876,724 or 1.0% compared to the year ended March 31, 2022, to $83,351,768.
Excluding the above effects, general and administrative expenses decreased by approximately $0.06 million. Impairment of Long-lived Assets We recorded an impairment of long-lived assets of $148,795, $228,506 and $628,192 for the year ended March 31, 2022, 2021 and 2020. In the year ended March 31, 2022, we evaluated the forest land use rights and recorded an impairment of $148,795.
Impairment of Long-lived Assets We recorded an impairment of long-lived assets of $0, $148,795 and $228,506 for the year ended March 31, 2023, 2021 and 2020. In the year ended March 31, 2023, we evaluated the forest land use rights and did not record an impairment.
General and administrative expenses for the year ended March 31, 2021 increased by $2,789,252 or 34.4% as compared to the year ended March 31, 2020, primarily due to the increase in stock-based compensation, offset by the decrease in bad debt expense. Such expenses as a percentage of revenue increased to 8.2% from 6.9% for the same period a year ago.
General and administrative expenses for the year ended March 31, 2022 increased by $1,231,147 or 17.7% as compared to the year ended March 31, 2021, primarily due to the increase in bad debt expense. Such expenses as a percentage of revenue decreased to 5.0% from 5.2% for the same period a year ago.
Until we are able to obtain status as a provincial or national exclusive sale agent for certain popular drugs or have sales access to large local hospitals, we may have to maintain low profit margins in order to drive sales on our wholesale business. 52 Selling and Marketing Expenses Sales and marketing expenses for the year ended March 31, 2022 increased by $3,922,045 or 14.6% as compared to the year ended March 31, 2021, primarily due to increase in rent and the sales and marketing expenses.
Until we are able to obtain status as a provincial or national exclusive sale agent for certain popular drugs or have sales access to large local hospitals, we may have to maintain low profit margins in order to drive sales on our wholesale business. 47 Comparison of years ended March 31, 2022 and 2021 Gross profit increased by $7,275,231 or 24.9% period over period primarily as a result of an increase in gross profit provided by both wholesale business and retail drugstores, which increased significantly in the year ended March 31, 2022.
Net cash used in investing activities For the year ended March 31, 2022, net cash used in investing activities amounted to $(306,138), as compared to $(1,998,325) provided by investing activities a year ago.
Net cash used in investing activities For the year ended March 31, 2023, net cash used in investing activities amounted to $(316,097), as compared to $(306,138) provided by investing activities a year ago. The change is primarily attributable to purchases of long term assets.
Comparison of years ended March 31, 2021 and 2020 The following table breaks down the revenue for our four business segments for the years ended March 31, 2021 and 2020: For the years ended March 31, 2021 2020 Amount % of total revenue Amount % of total revenue Variance by amount % of change Revenue from retail drugstores $ 76,098,975 57.2 % $ 74,081,237 63.1 % $ 2,017,738 2.7 % Revenue from online sales 22,485,919 16.8 % 13,541,215 11.6 % 8,944,704 66.1 % Revenue from wholesale business 34,549,739 26.0 % 29,705,237 25.3 % 4,844,502 16.3 % Revenue from farming business - - % - - % - - % Total revenue $ 133,134,633 100.0 % $ 117,327,689 100.0 % $ 15,806,944 13.5 % Retail drugstores sales, which accounted for approximately 57.2% of total revenue for the year ended March 31, 2021, increased by $2,017,738 or 2.7% compared to the year ended March 31, 2020, to $76,098,975.
Comparison of years ended March 31, 2022 and 2021 The following table breaks down the revenue for our four business segments for the years ended March 31, 2022 and 2021: For the years ended March 31, 2022 2021 Amount % of total revenue Amount % of total revenue Variance by amount % of change Revenue from retail drugstores $ 84,228,492 51.2 % $ 76,098,975 57.2 % $ 8,129,517 10.7 % Revenue from online sales 30,219,364 18.4 % 22,485,919 16.8 % 7,733,445 34.4 % Revenue from wholesale business 49,944,699 30.4 % 34,549,739 26.0 % 15,394,960 44.6 % Revenue from farming business - - % - - % - - % Total revenue $ 164,392,555 100.0 % $ 133,134,633 100.0 % $ 31,251,312 23.5 % Retail drugstores sales, which accounted for approximately 51.2% of total revenue for the year ended March 31, 2022, increased by $8,129,517 or 10.7% compared to the year ended March 31, 2021, to $84,228,492.
A ginkgo tree may have a growth period of up to twenty years before it is mature enough for harvest. Usually, the longer it grows the more valuable it becomes. We plan to continue cultivating the trees in order to maximize their market value in the future.
Usually, the longer it grows the more valuable it becomes. We plan to continue cultivating the trees in order to maximize their market value in the future.
In December 2020, we issued a total of 3,790,000 shares of common stock and recorded stock-based compensation of approximately $3.9 million. In the year ended March 31, 2021, we recorded the reduction in the allowance for bad debts of $1.0 million as compared to increase in bad debt expense in of $0.1 million in FY2020.
In the year ended March 31, 2021, we recorded the reduction in the allowance for bad debts of $0.17 million as compared to the increase in the allowance for bad debts of $1.0 million in FY2022. Share-based Compensation We recorded stock based compensation of $10,360,000, $0 and $3,941,600 for the years ended March 31, 2023, 2022 and 2021.
The forest rights certificate from the local village extends the life of the lease to January 31, 2060.Based on the evaluation of the forest land use rights, the Company recorded an impairment of $148,795 and $228,506.
Based on the evaluation of the forest land use rights, the Company recorded an impairment of $0 and $148,795.
In the year ended March 31, 2021, we evaluated the forest land use rights and recorded an impairment of $228,506. In the year ended March 31, 2020, we evaluated the licenses of insurance applicable drugstores acquired in the past based on their discounted positive cash value and recorded an impairment of $628,192.
In the year ended March 31, 2022, we evaluated the forest land use rights and recorded an impairment of $148,795. In the year ended March 31, 2021, we evaluated the forest land use rights and recorded an impairment of $228,506.
The rent expense increased by approximately $3.48 million as a result of local real estate boom. The sales and marketing expenses increased by approximately $0.68 million, which primarily reflects the increase in fee charged by distribution channels Such as Tmall and JD as a percentage of online pharmacy sales.
The sales and marketing expenses increased by approximately $1.91 million, which primarily reflects the increase in fee charged by distribution channels such as Tmall and JD as a percentage of online pharmacy sales. Overall, such expenses as a percentage of our revenue were 19.6% and 18.8% respectively, in the years ended March 31, 2023 and 2022.
The aging of our advances to suppliers is as follows for the periods described below: From date of cash prepayment to suppliers Retail drugstores Online Pharmacy Drug wholesale Herb farming Total amount 1- 3 months $ 120,666 $ - $ 273,758 $ - $ 394,424 4- 6 months 132,719 - 14,451 - 147,170 7- 12 months - - 68,932 - 68,932 Over one year (7,916 ) - (31,033 ) - (38,949 ) Total advances to suppliers $ 245,469 $ - $ 326,180 $ - $ 571,577 Since the acquisition of Jiuxin Medicine, we have gradually transferred almost all logistics services of our retail drugstores to Jiuxin Medicine.
The aging of our advances to suppliers is as follows for the periods described below: From date of cash prepayment to suppliers Retail drugstores Online Pharmacy Drug wholesale Herb farming Total amount 1- 3 months $ 35,054 $ - $ 71,529 $ - $ 106,583 4- 6 months - - 12,467 - 12,467 7- 12 months - - 41,760 - 41,760 Over one year 88,139 - 113,098 - 201,237 Allowance for advances to supplier (88,489 ) - (131,141 ) - (219,630 ) Total advances to suppliers $ 34,704 $ - $ 107,713 $ - $ 142,417 Since the acquisition of Jiuxin Medicine, we have gradually transferred almost all logistics services of our retail drugstores to Jiuxin Medicine.
General and Administrative Expenses General and administrative expenses for the year ended March 31, 2022 decreased by $2,710,453 or 24.9% as compared to the year ended March 31, 2021, primarily due to the decrease in stock-based compensation, offset by the increase in bad debt expense.
Selling and Marketing Expenses Sales and marketing expenses for the year ended March 31, 2023 decreased by $1,699,796 or 5.5% as compared to the year ended March 31, 2022, primarily due to decrease in rent, offset by increase in the sales and marketing expenses.
The change is primarily attributable to an increase in cash provided by investment in a joint venture of $1,096,964 and an increase of $773,343 in purchases of intangible assets. Net cash provided by financing activities For the year ended March 31, 2022, net cash provided by financing activities amounted to $4,836,898, as compared to $3,079,853 a year ago.
Net cash provided by financing activities For the year ended March 31, 2023, net cash provided by financing activities amounted to $2,366,156, as compared to $4,836,898 a year ago. The change is primarily due to repayment of notes payable and proceeds from equity and debt financing.
Such expenses as a percentage of revenue increased to 5.0% from 8.2% for the same period a year ago. In December 2020, we issued a total of 3,790,000 shares of common stock and recorded stock-based compensation of approximately $3.941,600.
In April and December 2022, we issued a total of 3,000,000 shares of ordinary shares and recorded stock-based compensation of approximately $10.36 million. In December 2020, we issued a total of 3,790,000 shares of ordinary shares and recorded stock-based compensation of approximately $3,941,600.
Local hospitals usually have strong ties with their existing suppliers and we have not been able to make significant progress in becoming a major supplier to local hospitals. In the year ended March 31, 2022, 2021 and 2020, we have not harvested and generated revenue from our farming business. We planted ginkgo trees during the year ended March 31, 2013.
Local hospitals usually have strong ties with their existing suppliers and we have not been able to make significant progress in becoming a major supplier to local hospitals. As a relatively small wholesale distributor in pharmaceutical products, our sales are subject to significant variance. Wholesale business usually carries low gross profit margin.
In the year ended March 31, 2021, we recorded the reduction in the allowance for bad debts of $0.17 million as compared to the increase in the allowance for bad debts of $1.0 million in FY2022. Excluding the above effects, general and administrative expenses decreased by approximately $0.06 million.
Such expenses as a percentage of revenue increased to 10.5% from 5.0% for the same period a year ago. In the year ended March 31, 2023, we recorded an increase in the allowance for bad debts of $7.58 million as compared to the increase in the allowance for bad debts of $1.32 million in FY2022.
Our accounts receivable aging was as follows for the periods described below: From date of invoice to customer Retail drugstores Online Pharmacy Drug wholesale Herb farming Total amount 1- 3 months $ 14,056,378 $ 1,463,890 $ 2,146,573 $ - $ 17,666,841 4- 6 months 2,624 6,731 1,534,368 - 1,543,723 7- 12 months 4,579 - - - 4,579 Over one year - - - - - Allowance for doubtful accounts (2,019,909 ) (14,975 ) (443,764 ) - (2,478,648 ) Total accounts receivable $ 12,043,672 $ 1,455,646 $ 3,237,177 $ - $ 16,736,495 Accounts receivable from our retail business mainly consist of reimbursements from local government health insurance bureaus and commercial health insurance programs.
Our accounts receivable aging was as follows for the periods described below: From date of invoice to customer Retail drugstores Online Pharmacy Drug wholesale Herb farming Total amount 1- 3 months $ 3,904,367 $ 2,575,793 $ 5,180,062 $ - $ 11,660,222 4- 6 months 239,942 15,584 963,194 - 1,218,720 7- 12 months 832,699 811,361 424 - 1,644,484 Over one year 1,903,362 - 6,124 - 1,909,486 Allowance for doubtful accounts (1,856,178 ) (351,082 ) (106,046 ) - (2,313,306 ) Total accounts receivable $ 5,024,192 $ 3,051,656 $ 6,043,758 $ - $ 14,119,606 Accounts receivable from our retail business mainly consist of reimbursements from local government health insurance bureaus and commercial health insurance programs.
At the same time, gross margin increased from 21.8% to 22.0% due to higher retail drugstores profit margins. The average gross margins for each of our four business segments are as follows: Retail gross margins increased primarily because we introduced certain popular products with high profit margin and renegotiated prices with our suppliers continuously.
At the same time, gross margin increased from 22.2% to 23.0% due to higher retail drugstores profit margins. Retail gross margins increased slightly primarily reflecting our stable and balanced operation.
The change is primarily attributable to a decrease in cash provided by inventories and biological assets of $4,594,952, a decrease in cash provided by accounts receivable of $1,740,172, a decrease in cash provided by bad debt direct write-off and provision of $1,153,216 offset by an increase of $6,697,870 in accounts payable, an increase in cash provided by Stock compensation of $3,907,040 and an increase in cash provided by other current assets of $2,283,281.
The change is primarily attributable to a decrease in cash provided by inventories and biological assets of $2,045,648, a decrease in cash provided by customer deposits of $1,714,057, a decrease in cash provided by net loss of $17,940,411 offset by an increase of $10,360,000 in stock compensation, an increase in cash provided by accounts payable of $5,323,538.
As a result, the sale of prescription drugs was $8,243,099 in the year ended March 31, 2021 as compared to $1,447,469 in the year ended March 31, 2020. Additionally, we maintained a membership care program targeted at chronic disease customers. We have closely interacted with our members via WeChat by providing healthcare knowledge and reminding our customers to refill medicine.
We have closely interacted with our members via WeChat by providing healthcare knowledge and reminding our customers to refill medicine. By implementing a personalized customer care program, we were able to promote our sales. Additionally, we increasingly cooperate with certain manufacturers to promote their products such as Dendrobium Candidum.
Comparison of years ended March 31, 2021 and 2020 Gross profit increased by $3,717,379 or 14.6% period over period primarily as a result of an increase in gross profit provided by both wholesale business and retail drugstores, which increased significantly in the year ended March 31, 2021.
Sales and marketing expenses for the year ended March 31, 2022 increased by $3,922,045 or 14.6% as compared to the year ended March 31, 2021, primarily due to increase in rent and the sales and marketing expenses. The rent expense increased by approximately $3.48 million as a result of local real estate boom.
Removed
The actual decrease in our retail drugstore sales is primarily due to the negative effect on the overall economy from COVID-19 and our strategic decision to cease selling certain low-profit margin products that are eligible for reimbursement by NHSA since September 1, 2020 In the first half of Calendar 2020, to boost our sales, we promoted sale of DTP (Direct-to-Patient) drugs.
Added
The actual increase in our retail drugstore sales is primarily due to continuous efforts in promoting non-NHSA covered products, close cooperation with major suppliers, and contribution from the new store sales.
Removed
DTP drugs are usually new medicines not sold at hospitals with low profit margin. As part of the PRC’s recent medical reform package, local governments require local hospitals to reduce the revenue percentage from drug sales. In order to achieve such goal, public hospitals first chose to case to sell low-profit-margin DTP products.
Added
As a result, we were able to depend less on the medical reimbursement program and increase our cash sales. In addition, to fight against our competitors, we have been closely working with our suppliers to conduct a series of market promotions in local communities.
Removed
As the biggest local drugstore network in Hangzhou City, Jiuzhou Pharmacy has a few stores located adjacent to local hospitals. Additionally, we have actively contacted local vendors of certain DTP products that we were previously not selling and were able to sell these DTP products in our stores.
Added
As a major player in local retail pharmaceutical market, our stores are densely located in major communities in Hangzhou City. As a prime local sales network, we were able to attract large pharmaceutical manufacturers to support us in performing a series of sale campaigns, in which large manufacturers provide ads, prices cutback and specialist support.
Removed
By setting special counters sell DTP products at our stores, sales in our drugstores have increased especially in the first half of Calendar 2020. However, sales of a few DTP drugs are reimbursed by local NHSA.
Added
As a result, our sales were able to increase slightly although NHSA tightened its budget. Our new stores have also contributed additional sales. Our store count is 111 at March 31, 2022 and 114 at March 31, 2023.
Removed
If we continue to sell large quantity of products reimbursed by the NHSA, the agency may refuse to pay us due to its limited budget. As a result, we chose to actively control sales of certain low-profit margin products covered by NHSA.
Added
Our online pharmacy sales increased by approximately $2,165,725, or 7.2% for the year ended March 31, 2023, as compared to the year ended March 31, 2022. The increase was primarily caused by an increase in sales via e-commerce platforms such as Tmall. We maintained a membership care program targeted at chronic disease customers.
Removed
In order to further balance its budget, the local NHSA announced to eliminate a variety of medicines, including nutritional supplements, from its list of reimbursed drugs beginning from September 1, 2020. Certain eliminated items are quite popular at the market. As these products are not reimbursed by their insurance program, customers usually choose to order less on these products.
Added
These manufacturers reward us with lower supply prices and more advertising supports. As a result, we are able to better promote our sales. 45 Prescription drugs used to be prohibited from sales online due to safety concern. However, because the nation has lifted the ban order, online prescription drug sales become popular.
Removed
As a result, our overall sales were affected. However, as we quickly searched for substitute products favored by our customers, we expect to recover our sales in the future. 50 Although local economy has quickly recovered from COVID-19, the economy growth has slowed down in general. Local people have become more conservative in consumption.
Added
As a result, the sale of prescription drugs was $10,606,244 in the year ended March 31, 2023 as compared to $10,331,652 in the year ended March 31, 2022. Wholesale revenue decreased by $16,869,580 or 33.8%. Hospitals are still the dominant drug distributors in China.
Removed
Once the spread of COVID-19 is effectively controlled, we expect the local consumption will surge again in the future. Our store count is 118 at March, 2020 and 109 at March 31, 2021. Our online pharmacy sales increased by approximately $8,944,704, or 66.1% for the year ended March 31, 2021, as compared to the year ended March 31, 2020.
Added
However, we incurred labor, logistic and tax cost for our wholesale business. As a result, to keep reasonable profitability, we abandoned certain wholesales at low gross profit margin in the year ended March 31, 2023. As a result, the wholesale revenue declined.
Removed
The increase was primarily caused by an increase in sales of prescription drugs via e-commerce platforms such as Tmall. In the past, prescription drugs cannot be sold online due to safety concern. However, because the nation has lifted the ban order, online prescription drug sales become popular.
Added
In the year ended March 31, 2023 and 2022, we have not harvested and generated revenue from our farming business. We planted ginkgo trees during the year ended March 31, 2013. A ginkgo tree may have a growth period of up to twenty years before it is mature enough for harvest.
Removed
By implementing a personalized customer care program, we were able to promote our sales. The sales via our official website were primarily made by certain pharmacy benefit management providers and insurance companies. For example, we have signed a service contract with Yingda Taihe Life Insurance Co. Ltd. (“Yingda”), a national insurance company.
Added
Due to stricter budget control on medical reimbursement program from local National Healthcare Security Administration (“NHSA”) and competitive market condition, we spent significant efforts in selecting and replacing our merchandises at stores. To minimize the effect from local NHSA’s budget control, we expand the categories of our merchandises .
Removed
Certain companies bought private health insurances from Yingda for their employees. By linking our online pharmacy platform with Yingda and educating these employees, they are able to buy health products on our online stores. The sales from these customers contributed significantly to our official website sales.

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Item 6. [Reserved]

Selected Financial Data — reserved (removed by SEC in 2021)

31 edited+1 added−3 removed55 unchanged
The responsibilities of our Audit Committee include: ● meeting with our management periodically to consider the adequacy of our internal control over financial reporting and the objectivity of our financial reporting; ● appointing the independent registered public accounting firm, determining the compensation of the independent registered public accounting firm, and pre-approving the engagement of the independent registered public accounting firm for audit and non-audit services; ● overseeing the independent registered public accounting firm, including reviewing its independence and quality control procedures, as well as the experience and qualifications of the audit personnel that are providing audit services to us; 63 ● meeting with the independent registered public accounting firm and reviewing the scope and significant findings of the audits performed by them, and meeting with management and internal financial personnel regarding these matters; and ● reviewing our financing plans, the adequacy and sufficiency of our financial and accounting controls, practices and procedures, the activities and recommendations of the auditors and our reporting policies and practices, and reporting recommendations to our full Board of Directors for approval.
The responsibilities of our Audit Committee include: ● meeting with our management periodically to consider the adequacy of our internal control over financial reporting and the objectivity of our financial reporting; ● appointing the independent registered public accounting firm, determining the compensation of the independent registered public accounting firm, and pre-approving the engagement of the independent registered public accounting firm for audit and non-audit services; ● overseeing the independent registered public accounting firm, including reviewing its independence and quality control procedures, as well as the experience and qualifications of the audit personnel that are providing audit services to us; 59 ● meeting with the independent registered public accounting firm and reviewing the scope and significant findings of the audits performed by them, and meeting with management and internal financial personnel regarding these matters; and ● reviewing our financing plans, the adequacy and sufficiency of our financial and accounting controls, practices and procedures, the activities and recommendations of the auditors and our reporting policies and practices, and reporting recommendations to our full Board of Directors for approval.
COMPENSATION. Compensation of Directors and Executive Officers The following table sets forth information concerning all cash and non-cash compensation awarded to, earned by or paid to our principal executive officer and principal financial officer during the last two (2) fiscal years. No other executive officer received compensation in excess of $100,000 during the fiscal year ended March 31, 2022.
COMPENSATION. Compensation of Directors and Executive Officers The following table sets forth information concerning all cash and non-cash compensation awarded to, earned by or paid to our principal executive officer and principal financial officer during the last two (2) fiscal years. No other executive officer received compensation in excess of $100,000 during the fiscal year ended March 31, 2023.
(2) Compensation is reflected in the Summary Compensation Table on page 59 above. We do not currently have an established policy to provide compensation to members of our Board of Directors for their services in that capacity, although we have entered into certain agreements with some of our directors as described below.
(2) Compensation is reflected in the Summary Compensation Table on page 55 above. We do not currently have an established policy to provide compensation to members of our Board of Directors for their services in that capacity, although we have entered into certain agreements with some of our directors as described below.
Wang served as a CFO assistant of Kandi Technologies Group, Inc. (Nasdaq:KNDI), a company engaged in the research, development, manufacturing, and sales of vehicle products. She was mainly responsible for consolidation of financial reports and internal control audits. From 2012 to 2015, Ms.
Prior to that, Ms. Wang served as a CFO assistant of Kandi Technologies Group, Inc. (Nasdaq: KNDI), a company engaged in the research, development, manufacturing, and sales of vehicle products. She was mainly responsible for consolidation of financial reports and internal control audits. From 2012 to 2015, Ms.
Zhao is a licensed certified public accountant. He graduated with a bachelor’s degree in accounting from Central University of Finance and Economic in Beijing in July 1999, and obtained a master’s degree in professional accounting from the University of Washington in December 2002. 57 Li Qi is one of the three founders of HJ Group. Ms.
Zhao is a licensed certified public accountant. He graduated with a bachelor’s degree in accounting from Central University of Finance and Economic in Beijing in July 1999, and obtained a master’s degree in professional accounting from the University of Washington in December 2002. 53 Li Qi is one of the three founders of HJ Group. Ms.
On September 21, 2010, our Board of Directors approved a stock incentive plan for officers, directors, employees, and consultants entitled “China Jo-Jo Drugstores, Inc. 2010 Equity Incentive Plan” (the “Plan”). The maximum number of shares that may be issued under the Plan is 168,750 shares of our common stock.
On September 21, 2010, our Board of Directors approved a stock incentive plan for officers, directors, employees, and consultants entitled “China Jo-Jo Drugstores, Inc. 2010 Equity Incentive Plan” (the “Plan”). The maximum number of shares that may be issued under the Plan is 168,750 shares of our ordinary shares.
Qi has served as our secretary since October 23, 2009 to September 4, 2018, and is currently the general manager of both Jiuzhou Pharmacy and Jiuzhou Service. From January 2000 to June 2003, Ms. Qi worked in Zhejiang Yikang Drugstore as a general manager. From October 1991 to January 2000, Ms.
Qi had served as our secretary since October 23, 2009 to September 4, 2018, and is currently the general manager of both Jiuzhou Pharmacy and Jiuzhou Service. From January 2000 to June 2003, Ms. Qi worked in Zhejiang Yikang Drugstore as a general manager. From October 1991 to January 2000, Ms.
Additionally, she is entitled to be included as an insured under our directors and officers insurance policy. 62 C. BOARD PRACTICES. The Board of Directors and Committees We seek directors with established strong professional reputations and experience in areas relevant to the strategy and operation of our businesses.
Additionally, she is entitled to be included as an insured under our directors and officers insurance policy. 58 C. BOARD PRACTICES. The Board of Directors and Committees We seek directors with established strong professional reputations and experience in areas relevant to the strategy and operation of our businesses.
The Company is currently in compliance with the diversity requirements of Nasdaq Rule 5605(f) and 5606, with three female Asian directors and three male Asian directors. 58 Board Diversity Matrix (As of March 31, 2022) Country of Principal Executive Offices China Foreign Private Issuer Yes Disclosure Prohibited under Home Country Law No Total Number of Directors 6 Part I: Gender Identity Female Male Non-Binary Did Not Disclose Gender Directors 3 3 0 0 Part II: Demographic Background Underrepresented Individual in Home Country Jurisdiction 0 0 0 0 LGBTQ+ 0 0 0 0 Did Not Disclose Demographic Background 0 0 0 0 B.
The Company is currently in compliance with the diversity requirements of Nasdaq Rule 5605(f) and 5606, with three female Asian directors and three male Asian directors. 54 Board Diversity Matrix (As of March 31, 2023) Country of Principal Executive Offices China Foreign Private Issuer Yes Disclosure Prohibited under Home Country Law No Total Number of Directors 6 Part I: Gender Identity Female Male Non- Binary Did Not Disclose Gender Directors 3 3 0 0 Part II: Demographic Background Underrepresented Individual in Home Country Jurisdiction 0 0 0 0 LGBTQ+ 0 0 0 0 Did Not Disclose Demographic Background 0 0 0 0 B.
We believe that all of our directors meet the foregoing qualifications. Based on the information submitted by Ms. Caroline Wang, Mr. Jiangliang He, and Dr. Genghua Gu, our Board of Directors has determined that each of them is independent under Rule 5605(a) (2) of The Nasdaq Listing Rules. Our Board of Directors has three (3) committees.
We believe that all of our directors meet the foregoing qualifications. Based on the information submitted by Ms. Caroline Wang, Mr. Jiangliang He, Ms. Ping fan Wu, and Dr. Genghua Gu, our Board of Directors has determined that each of them is independent under Rule 5605(a)(2) of The Nasdaq Listing Rules. Our Board of Directors has three (3) committees.
Amendment No. 1 was approved by the stockholders at the annual shareholders meeting on March 23, 2015. On January 27, 2016, our Board of Directors adopted and approved Amendment No. 2 to the Plan to increase the number of shares of the Company’s common stock available for issuance thereunder from 360,417 share limit to 597,917 shares.
Amendment No. 1 was approved by the stockholders at the annual shareholders meeting on March 23, 2015. On January 27, 2016, our Board of Directors adopted and approved Amendment No. 2 to the Plan to increase the number of shares of the Company’s ordinary shares available for issuance thereunder from 360,417 share limit to 597,917 shares.
The Plan was approved by our shareholders at our annual meeting held on November 2, 2010. On February 24, 2015, our Board of Directors adopted and approved Amendment No. 1 to the Plan to increase the number of shares of the Company’s common stock available for issuance thereunder from 168,750 share limit to 360,417 shares.
The Plan was approved by our shareholders at our annual meeting held on November 2, 2010. On February 24, 2015, our Board of Directors adopted and approved Amendment No. 1 to the Plan to increase the number of shares of the Company’s ordinary shares available for issuance thereunder from 168,750 share limit to 360,417 shares.
On February 14, 2017, our Board of Directors adopted and approved Amendment No. 3 to the Plan to increase the number of shares of the Company’s common stock available for issuance thereunder from 597,917 share limit to 808,039 shares. Amendment No. 3 was approved by the stockholders at the annual shareholders meeting on March 29, 2017.
On February 14, 2017, our Board of Directors adopted and approved Amendment No. 3 to the Plan to increase the number of shares of the Company’s ordinary shares available for issuance thereunder from 597,917 share limit to 808,039 shares. Amendment No. 3 was approved by the stockholders at the annual shareholders meeting on March 29, 2017.
Security Ownership of Certain Beneficial Owners and Management The following table sets forth certain information regarding our ordinary shares beneficially owned on June 29, 2022 or the latest applicable date prior to that date, for (i) each stockholder known to be the beneficial owner of five percent (5%) or more of our outstanding ordinary shares, (ii) each executive officer and director, and (iii) all executive officers and directors as a group.
Security Ownership of Certain Beneficial Owners and Management The following table sets forth certain information regarding our ordinary shares beneficially owned on June 15, 2023 or the latest applicable date prior to that date, for (i) each stockholder known to be the beneficial owner of five percent (5%) or more of our outstanding ordinary shares, (ii) each executive officer and director, and (iii) all executive officers and directors as a group.
As a result, 6,030,000 shares of ordinary shares held by Super Marvel reported herein as beneficially owned by each of Mr. Liu and Ms. Qi, which they in turn own indirectly through their respective ownership of Super Marvel. (5) Ms. Wang’s address is: 3601B The Center, Changle Road, Xuhui District, and Shanghai, China. (6) Dr.
As a result, 502,500 shares of ordinary shares held by Super Marvel reported herein as beneficially owned by each of Mr. Liu and Ms. Qi, which they in turn own indirectly through their respective ownership of Super Marvel. (5) Ms. Wang’s address is: 3601B The Center, Changle Road, Xuhui District, and Shanghai, China. (6) Dr.
During the fiscal year ended March 31, 2022, our Board of Directors and its committees held the following number of meetings and took the following number of actions by unanimous written consent: Meetings Unanimouswritten consents Board of Directors 3 3 Audit Committee 1 0 Compensation Committee 1 0 Nominating Committee 1 0 Audit Committee Our Audit Committee operates under a written charter, a copy of which is available on our website at http://www.jiuzhou360.com under the tabs “Investor”–“Corporate Governance”–“Documents”, and is composed of our three (3) independent directors.
During the fiscal year ended March 31, 2023, our Board of Directors and its committees held the following number of meetings and took the following number of actions by unanimous written consent: Meetings Unanimous written consents Board of Directors 2 5 Audit Committee 1 1 Compensation Committee 1 3 Nominating Committee 1 1 Audit Committee Our Audit Committee operates under a written charter, a copy of which is available on our website at http://www.jiuzhou360.com under the tabs “Investor”–“Corporate Governance”–“Documents”, and is composed of our three (3) independent directors.
The Plan, as amended and restated, has authorized, with the stockholders’ approval previously obtained, to reserve a total of 1,016,372 shares of our common stock for issuance under the Plan.
The Plan, as amended and restated, has authorized, with the stockholders’ approval previously obtained, to reserve a total of 1,016,372 shares of our ordinary shares for issuance under the Plan.
On March 26, 2018, the shareholders of the Company approved the Amendment No. 4 to the Plan which increased the total shares of common stock available for issuance thereunder to 1,016,372.
On March 26, 2018, the shareholders of the Company approved the Amendment No. 4 to the Plan which increased the total shares of ordinary shares available for issuance thereunder to 1,016,372.
Amendment No. 2 was approved by the stockholders at the annual shareholders meeting on March 23, 2016. Under the Plan, the Company may issue common stock and/or options to purchase common stock to our officers, directors, employees and consultants.
Amendment No. 2 was approved by the stockholders at the annual shareholders meeting on March 23, 2016. Under the Plan, the Company may issue ordinary shares and/or options to purchase ordinary shares to our officers, directors, employees and consultants.
Summary Compensation Table Name and Principal Position Fiscal Year ended March 31, Salary ($) Bonus ($) Stock Awards ($)(1) Option Awards ($) Non-Equity Incentive Plan Compensation ($) Nonqualified Deferred Compensation Earnings ($) All Other Compensation ($) Total ($) Lei Liu, 2022 90,000 -0- - -0- -0- -0- -0- 90,000 CEO (2) 2021 90,000 -0- - -0- -0- -0- -0- 90,000 Ming Zhao, 2022 88,000 -0- - -0- -0- -0- -0- 88,000 CFO 2021 88,000 -0- - -0- -0- -0- -0- 88,000 (1) Reflects the full fair value of stock issued during the applicable fiscal year for financial statement reporting purposes.
Summary Compensation Table Name and Principal Position Fiscal Year ended March 31, Salary ($) Bonus ($) Stock Awards ($)(1) Option Awards ($) Non-Equity Incentive Plan Compensation ($) Nonqualified Deferred Compensation Earnings ($) All Other Compensation ($) Total ($) Lei Liu, 2023 90,000 -0- 1,691,800 -0- -0- -0- -0- 1,781,800 CEO (2) 2022 90,000 -0- - -0- -0- -0- -0- 90,000 Ming Zhao, 2023 88,000 -0- 101,000 -0- -0- -0- -0- 189,000 CFO 2022 88,000 -0- - -0- -0- -0- -0- 88,000 (1) Reflects the full fair value of stock issued during the applicable fiscal year for financial statement reporting purposes.
She served as its retail COO, responsible for retail channel branding/sales of the distribution products in China and online/offline business strategy planning and operation management for its Direct-to-Patient (“DTP”) pharmacy. The DTP pharmacy is mainly a hospital-side pharmacy and the products are primarily high-value drugs.
She served as its retail COO, responsible for retail channel branding/sales of the distribution products in China and online/offline business strategy planning and operation management for its Direct-to-Customer (“DTC”) pharmacy. The DTC pharmacy is mainly a hospital-side pharmacy and the products are primarily high-value drugs.
Zhao may terminate his employment agreement immediately upon written notice if we breach our agreement with him. 59 Outstanding Equity Awards at Fiscal Year Ended March 31, 2022 Option Awards Stock Awards Name Number of securities underlying unexercised options exercisable Equity incentive plan awards: number of securities underlying unexercised options unexercisable Equity incentive plan awards: number of securities underlying unexercised unearned options Option exercise price ($) Option expiration date Number of shares or units of stock that have not vested Market value of shares or units of stock that have not vested ($) Equity incentive plan awards: number of unearned shares, units or other rights that have not vested Equity incentive plan awards: market or payout value of unearned shares, units or other rights that have not vested ($) Lei Liu - - 15,000 30.00 Nov.18, 2022 - - - $ - Ming Zhao - - 2,500 30.00 Nov.18, 2022 - - - $ - Li Qi - - 10,417 30.00 Nov.18, 2022 - - - $ - Equity Compensation Plan Information Plan Category Number of securities to be issued upon exercise of outstanding options, warrants and rights Weighted- average exercise price of outstanding options, warrants and rights Number of securities remaining available for future issuance under equity compensation plans Equity compensation plans approved by security holders 80,583 30.00 376,667 Equity compensation plans not approved by security holders - - - TOTAL 80,583 30.00 376,667 60 Discussion of Summary Compensation and Grants of Plan-based Awards Tables A summary of certain material terms of our existing compensation plans and arrangements is set forth below.
Zhao may terminate his employment agreement immediately upon written notice if we breach our agreement with him. 55 Outstanding Equity Awards at Fiscal Year Ended March 31, 2023 Option Awards Stock Awards Name Number of securities underlying unexercised options exercisable Equity incentive plan awards: number of securities underlying unexercised options unexercisable Equity incentive plan awards: number of securities underlying unexercised unearned options Option exercise price ($) Option expiration date Number of shares or units of stock that have not vested Market value of shares or units of stock that have not vested ($) Equity incentive plan awards: number of unearned shares, units or other rights that have not vested Equity incentive plan awards: market or payout value of unearned shares, units or other rights that have not vested ($) Lei Liu - - - - - - - - $ - Ming Zhao - - - - - - - - $ - Li Qi - - - - - - - - $ - Equity Compensation Plan Information Plan Category Number of securities to be issued upon exercise of outstanding options, warrants and rights Weighted- average exercise price of outstanding options, warrants and rights Number of securities remaining available for future issuance under equity compensation plans Equity compensation plans approved by security holders - - 376,667 Equity compensation plans not approved by security holders - - - TOTAL - - 376,667 56 Discussion of Summary Compensation and Grants of Plan-based Awards Tables A summary of certain material terms of our existing compensation plans and arrangements is set forth below.
The following table identifies our current executive officers and directors as of the date of this report, their respective offices and positions, and their respective dates of election or appointment: Name Age(1) Position Date of Appointment Lei Liu 57 Chief Executive Officer and Chairman of the Board of Directors September 17, 2009 Ming Zhao 46 Chief Financial Officer August 1, 2011 Li Qi 50 Director October 23, 2009 Caroline Wang (2) (3) (4) 35 Director March 29, 2017 Jiangliang He (2) (3) (4) 59 Director September 4, 2018 Genghua Gu (2) (3) (4) 71 Director March 28, 2014 Pingfan Wu (4) 57 Director October 26, 2018 (1) As of the date of this report.
The following table identifies our current executive officers and directors as of the date of this report, their respective offices and positions, and their respective dates of election or appointment: Name Age(1) Position Date of Appointment Lei Liu 58 Chief Executive Officer and Chairman of the Board of Directors September 17, 2009 Ming Zhao 47 Chief Financial Officer August 1, 2011 Li Qi 51 Director October 23, 2009 Caroline Wang (2) (3) (4) 36 Director March 29, 2017 Jiangliang He (2) (3) (4) 60 Director September 4, 2018 Genghua Gu (2) (3) (4) 72 Director March 28, 2014 Pingfan Wu (4) 58 Director October 26, 2018 (1) As of the date of this report.
(2) Salary as reported is based on interbank exchange rate of RMB 6.5594 to $1.00 on March 31, 2021 and RMB 6.4180 to $1.00 on March 31, 2022.
(2) Salary as reported is based on interbank exchange rate of RMB 6.4180 to $1.00 on March 31, 2022 and RMB 6.8516 to $1.00 on March 31, 2023.
(3) Unless otherwise noted, the number and percentage of outstanding shares of ordinary shares is based upon 4,329,316 shares outstanding as of June 29, 2022. (4) The address of Super Marvel Limited (“Super Marvel”) is P.O. Box 957, Offshore Incorporations Centre, Road Town, Tortola, British Virgin Islands. The owners of Super Marvel are Lei Liu (56.7%), Li Qi (43.3%).
(3) Unless otherwise noted, the number and percentage of outstanding shares of ordinary shares is based upon 23,697,210 shares outstanding as of June 15, 2023. (4) The address of Super Marvel Limited (“Super Marvel”) is P.O. Box 957, Offshore Incorporations Centre, Road Town, Tortola, British Virgin Islands. The owners of Super Marvel are Lei Liu (56.7%), Li Qi (43.3%).
Caroline Wang has been a member of our Board since March 29, 2017. Ms. Wang has been a project manager with JC Group, a comprehensive industrial financial group which serves the “city management”, performing internal audit and projects management for a variety of financial products since October 2015. Prior to that, Ms.
Qi is highly qualified to serve on our Board of Directors. Caroline Wang has been a member of our Board since March 29, 2017. Ms. Wang has been a project manager with JC Group, a comprehensive industrial financial group which serves the “city management”, performing internal audit and projects management for a variety of financial products since October 2015.
Ordinary Shares Beneficially Owned Executive officers and directors: (1) Number of Shares beneficially owned (2) Percentage of class beneficially owned (3) Lei Liu, Chief Executive Officer and Chairman of the Board of Directors (4) 1,075,457 24.8 % Ming Zhao, Chief Financial Officer 66,583 1.5 % Li Qi, Director (4) 794,083 18.3 % Caroline Wang, Director (5) - * % Genghua Gu, Director (6) 2,500 * % Jiangliang, He, Director - * % Pingfan Wu, Director - * % All directors and executive officers as a group (8 persons) 1,436,124 33.2 % 5% Shareholders: (1) CareRetail Holdings Limited (7) 403,333 9.3 % Super Marvel Limited (4) 502,500 11.6 % * Less than 1%.
Ordinary Shares Beneficially Owned Executive officers and directors: (1) Number of Shares beneficially owned (2) Percentage of class beneficially owned (3) Lei Liu, Chief Executive Officer and Chairman of the Board of Directors (4) 1,075,457 4.5 % Ming Zhao, Chief Financial Officer 66,583 0.3 % Li Qi, Director (4) 794,083 3.4 % Caroline Wang, Director (5) - * % Genghua Gu, Director (6) 2,500 * % Jiangliang, He, Director - * % Pingfan Wu, Director - * % All directors and executive officers as a group (8 persons) 1,436,123 6.1 % 5% Shareholders: (1) N/A * Less than 0.1%.
Qi worked in the Branch Hospital of Hangzhou No. 1 People’s Hospital as a nurse. Ms. Qi is a licensed TCM pharmacist in the PRC and is a 1991 graduate of Hangzhou Nurse School. As the founder and secretary overseeing our day-to-day corporate operations, Ms. Qi is highly qualified to serve on our Board of Directors.
Qi worked in the Branch Hospital of Hangzhou No. 1 People’s Hospital as a nurse. Ms. Qi is a licensed TCM pharmacist in the PRC and is a 1991 graduate of Hangzhou Nurse School. As a founder and general manager of our two subsidiaries overseeing our day-to-day corporate operations, Ms.
As of March 31, 2022, there were 212,546 shares of our common stock available for future issuance under the Plan. 61 Director Compensation The following table provides compensation information for our directors during the fiscal year ended March 31, 2022: Director Compensation Table Name Fiscal Year ended March 31, Fees Earned or Paid in Cash ($) Stock Awards ($)(1) Option Awards ($) Non-Equity Incentive Plan Compensation ($) Nonqualified Deferred Compensation Earnings ($) All Other Compensation ($) Total ($) Lei Liu (2) 2022 90,000 -- -0- -0- -0- -0- 90,000 Li Qi (2) 2022 68,000 -0- -0- -0- -0- -0- 68,000 Caroline Wang 2021 12,465 -0- -0- -0- -0- -0- 12,465 Genghua Gu 2022 6,000 -0- -0- -0- -0- -0- 6,000 Jiangliang He 2022 5,609 -0- -0- -0- -0- -0- 5,609 Pingfan Wu 2022 9,349 -0- -0- -0- -0- -0- 9,349 (1) Reflects dollar amount expensed by the Company during the applicable fiscal year for financial statement reporting purposes.
As of March 31, 2023, there were 58,379 shares of our ordinary shares available for future issuance under the Plan. 57 Director Compensation The following table provides compensation information for our directors during the fiscal year ended March 31, 2023: Director Compensation Table Name Fiscal Year ended March 31, Fees Earned or Paid in Cash ($) Stock Awards ($)(1) Option Awards ($) Non-Equity Incentive Plan Compensation ($) Nonqualified Deferred Compensation Earnings ($) All Other Compensation ($) Total ($) Lei Liu (2) 2023 90,000 1,691,800 -0- -0- -0- -0- 1,781,800 Li Qi (2) 2023 68,000 1,329,200 -0- -0- -0- -0- 1,397,200 Caroline Wang 2023 11,676 -0- -0- -0- -0- -0- 11,676 Genghua Gu 2023 5,254 -0- -0- -0- -0- -0- 5,254 Jiangliang He 2023 5,254 -0- -0- -0- -0- -0- 5,254 Pingfan Wu 2023 8,757 -0- -0- -0- -0- -0- 8,757 (1) Reflects dollar amount expensed by the Company during the applicable fiscal year for financial statement reporting purposes.
As of March 31, 2022, we had 979 employees combined in our retail and wholesale operations, consisting of 911 full-time and 68 part-time employees.
As of March 31, 2023, we had 938 employees combined in our retail and wholesale operations, consisting of 885 full-time and 53 part-time employees.
The number of employees for each area of operations, and such employees as a percentage of our total workforce, are as follows: As of March 31, 2022 Employees Percentage Non-pharmacist store staff 365 37.3 % Pharmacists 342 34.9 % Management - non-pharmacists 94 9.6 % Physicians 53 5.4 % Non-physician clinic staff 38 3.9 % Wholesale - non-warehouse 37 3.8 % Online pharmacy - technicians 2 0.2 % Online pharmacy - non-technicians 48 4.9 % Total 979 100.00 % 64 E.
The number of employees for each area of operations, and such employees as a percentage of our total workforce, are as follows: As of March 31, 2023 Employees Percentage Non-pharmacist store staff 431 45.9 % Pharmacists 306 32.7 % Management - non-pharmacists 27 2.9 % Physicians 58 6.2 % Non-physician clinic staff 30 3.2 % Wholesale - non-warehouse 34 3.6 % Online pharmacy - technicians 2 0.2 % Online pharmacy - non-technicians 50 5.3 % Total 938 100.00 % 60 E.
Removed
Gu’s address is: No.1, Xueshi Road, Hangzhou, China. (7) The address of CareRetail Holdings Limited is Walkers Corporate Limited, Cayman Corporate Centre, 27 Hospital Road, George Town, and Grand Cayman KY1-9008.
Added
Gu’s address is: No.1, Xueshi Road, Hangzhou, China. F. Disclosure of a registrant’s action to recover erroneously awarded compensation. Not applicable. 61
Removed
Hillhouse Capital Management, Ltd., an exempted Cayman Islands company (“Hillhouse Capital”) is hereby deemed to be the sole beneficial owner of, and to control the voting power of, the shares of our ordinary shares held by CareRetail. The directors of Hillhouse Capital are Jun Shen and Colm O’Connell. Mr. Shen and Mr. O’Connell are employees of Hillhouse Capital and Mr.
Removed
Lei Zhang is the President and Chief Investment Officer of Hillhouse Capital. 65

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

3 edited+0 added−1 removed5 unchanged
However, see ” Risk Factors - Risks Related to Our Corporate Structure - Our contractual arrangements with HJ Group and the Key Personnel may not be as effective in providing control over these entities as direct ownership,” and “Management members of HJ Group have potential conflicts of interest with us, which may adversely affect our business and your ability for recourse.” Other Related Party Transactions March 31, 2022 March 31, 2021 Due to a director and CEO (1) : 1,561,244 445,305 (1) Due to foreign exchange restrictions, the Company’s director and CEO, Mr.
However, see ” Risk Factors - Risks Related to Our Corporate Structure - Our contractual arrangements with HJ Group and the Key Personnel may not be as effective in providing control over these entities as direct ownership,” and “Management members of HJ Group have potential conflicts of interest with us, which may adversely affect our business and your ability for recourse.” Other Related Party Transactions March 31, 2023 March 31, 2022 Due to a director and CEO (1) : 683,560 1,561,244 (1) Due to foreign exchange restrictions, the Company’s director and CEO, Mr.
On April 28, 2018, 10% of Jiuxin Medicine was sold to Hangzhou Kangzhou Biotech Co. Ltd. for a total proceeds of approximately $75,643 (RMB507, 760). On January 29, 2021, The Company acquired back the 10% of Jiuxin Medicine for a total price of $77,410 (RMB507, 760). Mr. Lei Liu owns 51% of Hangzhou Kangzhou Biotech Co. Ltd. C.
On January 29, 2021, The Company acquired back 10% of Jiuxin Medicine for a total price of $77,410 (RMB507,760). Mr. Lei Liu owns 51% of Hangzhou Kangzhou Biotech Co. Ltd. C. INTERESTS OF EXPERTS AND COUNSEL. Not applicable. 62
Lei Liu personally lent U.S. dollars to the Company to facilitate its payments of expenses in the United States. The Company leases a retail space from Mr. Lei Liu. The lease will expire in September 2022. The rent for the year ended March 31, 2022 has not been paid to Mr. Liu as of March 31, 2022.
Lei Liu personally lent U.S. dollars to the Company to facilitate its payments of expenses in the United States. The Company leases a retail space from Mr. Lei Liu. The lease will expire in September 2025. On April 28, 2018, 10% of Jiuxin Medicine was sold to Hangzhou Kangzhou Biotech Co. Ltd. for a total proceeds of approximately $75,643 (RMB507,760).
Removed
INTERESTS OF EXPERTS AND COUNSEL. Not applicable. 66

Other RDGT 10-K year-over-year comparisons