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Ridgetech Inc.

Ridgetech Inc.RDGT财报

Nasdaq

What changed in Ridgetech Inc.'s 20-F — 2023 vs 2024

Top changes in Ridgetech Inc.'s 2024 20-F

296 paragraphs added · 249 removed · 195 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. [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.
Item 2. Offer Statistics and Expected Timetable 1 Item 3. Key Information 1 A. [Reserved] 7 B. Capitalization and Indebtedness 7 C. Reasons for the Offer and Use of Proceeds 7 D. Risk Factors 8 Item 4. Information on the Company 36 A. History and Development of the Company 36 B. Business Overview 38 C. Organizational Structure 43 D.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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To the extent that our independent registered public accounting firm’s audit documentation related to their audit reports for our company become located in China, the PCAOB may not be able inspect such audit documentation and, as such, you may be deprived of the benefits of such inspection and our ordinary shares could be delisted from the stock exchange pursuant to the Holding Foreign Companies Accountable Act.
To the extent that our independent registered public accounting firm’s audit documentation related to their audit reports for our company become located in China, the PCAOB may not be able inspect such audit documentation and, as such, you may be deprived of the benefits of such inspection and our ordinary shares could be delisted from the stock exchange pursuant to the Holding Foreign Companies Accountable Act.
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.
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. ● 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. 10 ● 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.
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.
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. ● 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. ● 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 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. 8 Risks Relating to Our Pharmacy Operations ● Our ability to grow our pharmacy business may be constrained by our inability to find suitable new store locations at acceptable prices or by the expiration of our current leases. ● 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.
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.
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. 17 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, 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.
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. The advent of recent healthcare reform directives from China’s central government may increase both competition and our cost of doing business.
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.
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. We may need to obtain additional governmental approvals to open new drugstores.
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.
Any of these factors could have a material adverse effect on our business, financial condition and results of operations. 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.
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.
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. 1 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.
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.
In addition, any litigation in China may be protracted and result in substantial costs and diversion of resources and management attention. 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.
Potential war or terrorist attacks may also cause uncertainty and cause our business to suffer in ways that we cannot currently predict. Failure to comply with the U.S. Foreign Corrupt Practices Act could subject us to penalties and other adverse consequences.
Potential war or terrorist attacks may also cause uncertainty and cause our business to suffer in ways that we cannot currently predict. 25 Failure to comply with the U.S. Foreign Corrupt Practices Act could subject us to penalties and other adverse consequences.
Our ability to grow our business may be constrained if suitable new store locations cannot be identified with lease terms or purchase prices that are acceptable to us. We compete with other retailers and businesses for suitable locations for our stores.
Our ability to grow our pharmacy business may be constrained if suitable new store locations cannot be identified with lease terms or purchase prices that are acceptable to us. We compete with other retailers and businesses for suitable locations for our stores.
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.
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. 20 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. 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.
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. 19 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. 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.
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. 31 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.
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.
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. 26 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.
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.
In turn, this could compromise enforceability of related contractual arrangements, or have other harmful effects on us. 21 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.
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.
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. 12 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, 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.
Our auditor, the independent registered public accounting firm that issues the audit report for the year ended March 31, 2024 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.
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).
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, 2024, our restricted reserves totaled $1,309,109 (RMB 9,513,278).
While the Statement of Protocol may lead to resolution of the previously identified issues, there can be no assurance that this will be the case. 22 On December 15, 2022, the PCAOB issued a new Determination Report which: (1) vacated the December 16, 2021 Determination Report; and (2) concluded that the PCAOB has been able to conduct inspections and investigations completely in the PRC in 2022.
While the Statement of Protocol may lead to resolution of the previously identified issues, there can be no assurance that this will be the case. 27 On December 15, 2022, the PCAOB issued a new Determination Report which: (1) vacated the December 16, 2021 Determination Report; and (2) concluded that the PCAOB has been able to conduct inspections and investigations completely in the PRC in 2022.
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.
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. 28 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.
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.
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. 18 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.
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.
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; 11 ● 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. 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.
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. 32 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.
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.
Since we do not own any equity interests in Jiuzhou Pharmacy, 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.
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.
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. 29 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
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. 35
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.
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.
ITEM 3. KEY INFORMATION. A. [Reserved.] B. CAPITALIZATION AND INDEBTEDNESS. Not applicable. C. REASONS FOR THE OFFER AND USE OF PROCEEDS. Not applicable. D. RISK FACTORS. You should carefully consider the risks described below together with all of the other information included in this report before making an investment decision with regard to our securities.
A. [Reserved.] B. CAPITALIZATION AND INDEBTEDNESS. Not applicable. C. REASONS FOR THE OFFER AND USE OF PROCEEDS. Not applicable. 7 D. RISK FACTORS. You should carefully consider the risks described below together with all of the other information included in this report before making an investment decision with regard to our securities.
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.
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, 2024, we had approximately $0.91 million deposited with suppliers and approximately $1.63 million deposited with landlords for our pharmacies.
On July 26, 2021, the Company was first notified by the Nasdaq Stock Market LLC (“Nasdaq”), notifying us our failure to maintain a minimum bid price of $1.00 per share for 30 consecutive trading days under Nasdaq Listing Rules 5550(a)(2) and 5810(c)(3)(A).
On June 15, 2023, the Company was first notified by the Nasdaq Stock Market LLC (“Nasdaq”), notifying us our failure to maintain a minimum bid price of $1.00 per share for 30 consecutive trading days under Nasdaq Listing Rules 5550(a)(2) and 5810(c)(3)(A).
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.
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.
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.
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.
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.
In fact, Jiuzhou Pharmacy has expended to one hundred and twenty-seven (127) stores as of March 31, 2024. Similarly, PRC regulations restrict foreign ownership of medical practices in China to Sino-foreign joint ventures.
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.
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 $2.65 to a high of $95.40.
The Company was given its first 180-day extension, or until January 24, 2022 to regain compliance by maintaining a minimum closing bid price of at least $1.00 for a minimum of 10 consecutive trading days. On January 25, 2022, the Company was notified by the Nasdaq regarding a second 180-day extension from or until July 25, 2022 to regain compliance.
The Company was given its first 180-day extension, or until December 12, 2023 to regain compliance by maintaining a minimum closing bid price of at least $1.00 for a minimum of 10 consecutive trading days. On December 13, 2023, the Company was notified by the Nasdaq regarding a second 180-day extension from or until June 10, 2024 to regain compliance.
On April 25, 2022, the Company received a compliance letter from Nasdaq notifying that as of April 22, 2022, the Company evidenced a closing bid price of its ordinary shares at or greater than the $1.00 per share minimum requirement for the last 11 consecutive business days, from April 7, 2022 through April 22, 2022.
On March 15, 2024, the Company received a compliance letter from Nasdaq notifying that as of March 14, 2024, the Company evidenced a closing bid price of its ordinary shares at or greater than the $1.00 per share minimum requirement for the last 10 consecutive business days, from March 1, 2024 through March 14, 2024.
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.
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 decreased by approximately $527,206, or 1.6% for the year ended March 31, 2024, as compared to the year ended March 31, 2023.
You should be aware that in light of the relative freedom to operate that such persons enjoy – oftentimes blogging from outside the U.S. with little or no assets or identity requirements – should we be targeted for such an attack and the rumors not dismissed by market participants, our stock will likely suffer from a temporary, or possibly long term, decline in market price.
You should be aware that in light of the relative freedom to operate that such persons enjoy – oftentimes blogging from outside the U.S. with little or no assets or identity requirements – should we be targeted for such an attack and the rumors not dismissed by market participants, our stock will likely suffer from a temporary, or possibly long term, decline in market price. 30 Other General Risk Factors Changes in economic conditions and consumer confidence in China may influence the drugstore industry, consumer preferences and spending patterns.
Errors in the packaging or dispensing of pharmaceuticals could lead to serious injury or death. Furthermore, the applicable PRC laws, rules and regulations require our in-store pharmacists to offer counseling to our customers, without additional charge, about medication, dosage, delivery systems, common side effects, and other information the in-store pharmacists deem significant.
Furthermore, the applicable PRC laws, rules and regulations require our in-store pharmacists to offer counseling to our customers, without additional charge, about medication, dosage, delivery systems, common side effects, and other information the in-store pharmacists deem significant.
Therefore, any significant fluctuation in the value of RMB may materially and adversely affect our cash flows, revenues, earnings, financial position, and the value of, and any dividends payable on, our stock in U.S. dollars.
We rely entirely on fees paid to us by our affiliated entities in China. Therefore, any significant fluctuation in the value of RMB may materially and adversely affect our cash flows, revenues, earnings, financial position, and the value of, and any dividends payable on, our stock in U.S. dollars.
The LC Law formalized workers’ rights concerning overtime hours, pensions, layoffs, employment contracts and the role of trade unions. Considered one of the strictest labor laws in the world, among other things, the LC Law provides for specific standards and procedures for the termination of an employment contract and places the burden of proof on the employer.
Considered one of the strictest labor laws in the world, among other things, the LC Law provides for specific standards and procedures for the termination of an employment contract and places the burden of proof on the employer.
Any system failure which causes interruptions to the input, retrieval and transmission of data, or increases in service time could disrupt our normal operations.
We are dependent upon our electronic commerce system to carry out our online sales. Any system failure which causes interruptions to the input, retrieval and transmission of data, or increases in service time could disrupt our normal operations.
Therefore, we cannot assure you that we will be able to complete the filings for our future offering and fully comply with the relevant new rules on a timely basis, if at all. In addition, we cannot guarantee that we will not be subject to tightened regulatory review and we could be exposed to government interference in China.
Therefore, we cannot assure you that we will be able to complete the filings for our future offering and fully comply with the relevant new rules on a timely basis, if at all.
As a result, our revenue and profitability may be negatively affected by changes in national, regional or local economic conditions and consumer confidence in China.
Our business and revenue growth primarily depend on the size of the pharmaceutical market in China. As a result, our revenue and profitability may be negatively affected by changes in national, regional or local economic conditions and consumer confidence in China.
If additional governmental approvals are deemed to be necessary and we are unable to obtain such approvals on a timely basis or at all, our business, financial condition, results of operations and prospects, as well as the trading price of our ordinary shares, will be materially and adversely affected.
If additional governmental approvals are deemed to be necessary and we are unable to obtain such approvals on a timely basis or at all, our business, financial condition, results of operations and prospects, as well as the trading price of our ordinary shares, will be materially and adversely affected. 33 The PRC’s labor law restricts our ability to reduce our workforce in the PRC in the event of an economic downturn and may increase our production costs.
Fluctuations in the value of RMB may have a material adverse effect on your investment. The value of RMB against the U.S. dollar and other currencies may fluctuate and is affected by, among other things, changes in political and economic conditions. Our revenues, costs, and financial assets are mostly denominated in RMB, while our reporting currency is the U.S. dollar.
The value of RMB against the U.S. dollar and other currencies may fluctuate and is affected by, among other things, changes in political and economic conditions. Our revenues, costs, and financial assets are mostly denominated in RMB, while our reporting currency is the U.S. dollar. Accordingly, this may result in gains or losses from currency translation on our financial statements.
The economy, infrastructure and livelihood of the people of the PRC or such other jurisdictions may be materially and adversely affected by acts of God, acts of war and terrorism, natural disasters, riots, epidemics and other disasters which are beyond our control. Our business, financial condition and results of operations may be adversely affected if these events occur.
We face risks related to disease epidemics and other outbreaks. The economy, infrastructure and livelihood of the people of the PRC or such other jurisdictions may be materially and adversely affected by acts of God, acts of war and terrorism, natural disasters, riots, epidemics and other disasters which are beyond our control.
Furthermore, changing local demographics at existing store locations could materially and adversely affect revenue and profitability levels at those stores, and overall our business, financial condition, results of operation, and prospects.
Furthermore, changing local demographics at existing store locations could materially and adversely affect revenue and profitability levels at those stores, and overall our business, financial condition, results of operation, and prospects. In fact, our growth of the pharmacy business through new store opening has slowed down significantly in recent years.
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.
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 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.
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. ● As a provider of medical services, we are exposed to inherent risks relating to malpractice claims. 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. ● 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 controlled 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.
Distributors of pharmaceutical and other healthcare products are exposed to risks inherent in the packaging and distribution of such products. Such risks include unintentional distribution of counterfeit, mislabeled or contaminated drugs, and, with respect to our pharmacies, improper filling of prescriptions, labeling of prescriptions and adequacy of warnings.
Such risks include unintentional distribution of counterfeit, mislabeled or contaminated drugs, and, with respect to our pharmacies, improper filling of prescriptions, labeling of prescriptions and adequacy of warnings. Errors in the packaging or dispensing of pharmaceuticals could lead to serious injury or death.
Since 1979, PRC legislation and regulations have significantly enhanced the protections afforded to various forms of foreign investments in China. However, China has not developed a fully integrated legal system and recently enacted laws and regulations may not sufficiently cover all aspects of economic activities in China.
However, China has not developed a fully integrated legal system and recently enacted laws and regulations may not sufficiently cover all aspects of economic activities in China.
Additionally, we expect the NEDL to result in a rise in the number of government-subsidized community healthcare service centers, which in turn may erode the convenience and price advantage that our drugstores traditionally enjoy against hospitals.
Additionally, we expect the NEDL to result in a rise in the number of government-subsidized community healthcare service centers, which in turn may erode the convenience and price advantage that our drugstores traditionally enjoy against hospitals. 24 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.
Effective April 7, 2022, the Company effected a 1-for-12 reverse stock split.
Effective March 1, 2024, the Company effected a 1-for-20 reverse stock split.
For example, epidemics threaten people’s lives and may adversely affect their livelihood as well as their living and consumption patterns.
Our business, financial condition and results of operations may be adversely affected if these events occur. For example, epidemics threaten people’s lives and may adversely affect their livelihood as well as their living and consumption patterns.
The continued proliferation of counterfeit products in China could have a material adverse effect on our business financial condition, and results of operation. As a distributor of pharmaceutical and other healthcare products, we are exposed to inherent risks relating to product liability and personal injury claims.
The continued proliferation of counterfeit products in China could have a material adverse effect on our business financial condition, and results of operation.
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. We are dependent upon our electronic commerce system to carry out our online sales.
With wholesale business growing at a faster pace than other businesses, our overall gross margin may decline at least in the short run 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.
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.
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. 13 Risks Relating to Our Pharmacy Operations Our ability to grow our pharmacy business may be constrained by our inability to find suitable new store locations at acceptable prices or by the expiration of our current leases.
Moreover, the legal uncertainty created by the Data Security Law and the recent Chinese government actions could materially adversely affect our ability, on favorable terms, to raise capital, including engaging in follow-on offerings of our securities in the U.S. market.
Moreover, the legal uncertainty created by the Data Security Law and the recent Chinese government actions could materially adversely affect our ability, on favorable terms, to raise capital, including engaging in follow-on offerings of our securities in the U.S. market. 22 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.
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.
As we do not have dominating power such as lowest prices or exclusive products, we may not be able to improve our sales significantly in the near future. 15 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.
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.
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. 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.
The PRC’s labor law restricts our ability to reduce our workforce in the PRC in the event of an economic downturn and may increase our production costs. In June 2007, the National People’s Congress of the PRC enacted new labor law legislation called the Labor Contract Law, which became effective on January 1, 2008 (the “LC Law”).
In June 2007, the National People’s Congress of the PRC enacted new labor law legislation called the Labor Contract Law, which became effective on January 1, 2008 (the “LC Law”). The LC Law formalized workers’ rights concerning overtime hours, pensions, layoffs, employment contracts and the role of trade unions.
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.
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. 34 On July 21, 2005, the PRC government changed its decade-old policy of pegging the value of the Renminbi to the U.S. dollar, and the Renminbi appreciated more than 20% against the U.S. dollar over the following three years.
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.
As a result, even the perception of noncompliance, whether or not valid, may damage our reputation. 16 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.
However, we cannot provide assurance that those procedures will be strictly followed by all of our employees in all of our stores. Risks Related to Our Wholesale Business We may not able to effectively grow our wholesale business organically and growing through acquisitions may prove challenging.
As a result, any imposition of malpractice liability could materially harm our business, financial condition and results of operations. Risks Related to Our Herb Farming Our herb farming business is subject to the volatility of prices for raw TCM herbs. We currently planted gingko trees in our leased farm land.
As a result, any imposition of malpractice liability could materially harm our business, financial condition and results of operations.
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.
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.
If we are unable to successfully maintain good relationships with them, our ability to provide medical services may 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.
If we are unable to successfully maintain good relationships with them, our ability to provide medical services may be adversely affected. As a provider of medical services, we are exposed to inherent risks relating to malpractice claims.
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.
Also, the Personal Information Protection Law released by the National People’s Congress became effective on November 1, 2021.
Removed
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.
Added
ITEM 3. KEY INFORMATION. China Jo-Jo Drugstores, Inc. (“CJJD”, the “Company”, “we”, “our”, or “us”) is not a Chinese operating company but a holding company incorporated in the Cayman Islands. The Cayman Islands holding company has no material operations of its own. The operations are conducted through our operating entities established in the PRC, including the VIEs.
Removed
Our failure to successfully compete could materially and adversely affect our business, financial condition, results of operation, and prospects. 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.
Added
We do not have any equity ownership in the business of the VIEs. Instead, we receive the economic benefits of the VIEs, are the primary beneficiary for accounting purposes, and consolidate VIEs’ financial statements through the VIE Agreements to the extent we have satisfied the conditions for consolidation of the VIEs under U.S. GAAP..
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Healthcare providers in China, as in most other populous countries, are required to comply with many laws and regulations at the national and local government levels.
Added
The VIE structure is used to provide contractual exposure to foreign investment in Chinese-based companies where Chinese law prohibits direct foreign investment in the operating companies, and that investors may never directly hold equity interests in the Chinese operating entities. We are subject to certain legal and operational risks associated with the VIEs’ operations in China.
Removed
These laws and regulations relate to: licensing; the conduct of operations; the ownership of facilities; the addition of facilities and services; advertising; confidentiality, maintenance and security issues associated with medical records; billing for services; and prices for services. If we fail to comply with applicable laws and regulations, we could suffer penalties, including the loss of our licenses to operate.
Added
PRC laws and regulations governing our current business operations are sometimes vague and uncertain, and therefore, these risks may result in a material change in the VIEs’ operations, significant depreciation of the value of our ordinary shares, or a complete hindrance of our ability to offer or continue to offer our securities to investors.
Removed
In addition, further healthcare legislative reform is likely, and could materially and adversely affect our business and results of operations in the event that we do not comply or if the cost of compliance is prohibitive.
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Rules and regulations in China can change quickly with little advance notice.

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Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

37 edited+0 added−2 removed33 unchanged
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.
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.
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.
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, 2024, were from Zhejiang and neighboring Jiangsu and Shanghai.
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”.
Relevant PRC Regulations Information relating to the relevant PRC Regulations is incorporated by reference from our 2023 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 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.
(“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 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.
(“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.
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.
ORGANIZATIONAL STRUCTURE The following diagram illustrates our current corporate structure as of July 30, 2024: 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 30,000,000 USD 27,500,000 N/A Jiuxin Medicine Subsidiary 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 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, 2024, 2023 and 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.
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 fourteen stores in the fiscal year 2024.
During the fiscal year ended March 31, 2023, our herb farming business generated approximately 0% of our retail revenue.
During the fiscal year ended March 31, 2024, our herb farming business generated approximately 0% of our retail revenue.
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.
Marketing and Promotion Information relating to our marketing and promotion activities is incorporated by reference from our 2023 Annual Report under the caption “Marketing and Promotion.” The updates relating to our marketing and promotion during the fiscal year of 2024 is as follows: For the fiscal year ended March 31, 2024, approximately 39% of our customers used their rewards cards to make purchases.
For the fiscal year ended March, 31, 2023, we had not harvested or sold any herbs.
For the fiscal year ended March, 31, 2024, we had not harvested or sold any herbs.
ITEM 4. INFORMATION ON THE COMPANY. A . HISTORY AND DEVELOPMENT OF THE COMPANY. Overview We are a retailer and distributor of pharmaceutical and other healthcare products typically found in retail pharmacies in the People’s Republic of China (“PRC” or “China”). Prior to acquiring Zhejiang Jiuxin Medicine Co., Ltd.
ITEM 4. INFORMATION ON THE COMPANY. A . HISTORY AND DEVELOPMENT OF THE COMPANY. Overview We are a retailer and wholesale distributor of pharmaceutical and other healthcare products in the People’s Republic of China (“PRC” or “China”). Prior to acquiring Zhejiang Jiuxin Medicine Co., Ltd.
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.
All of our one hundred and twenty-seven (127) 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.
(“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.
(“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, 2024, we have one hundred and twenty-seven (127) store locations under the store brand “Jiuzhou Grand Pharmacy” in Hangzhou city. We acquired four single drugstores in fiscal 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.
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 20.6% of our total revenue, for the fiscal year ended March 31, 2024. Online sales accounted for approximately 21.8% of our total revenue, for the fiscal year ended March 31, 2023.
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.
Logistics Information relating to our logistics is incorporated by reference from our 2023 Annual Report under the caption “Logistics.” Suppliers We currently source retail products from approximately 26 suppliers, including trading companies and direct manufacturers. We source wholesale products from approximately 401 suppliers, including many of those that provide our retail products.
As we sold all our equity interests in Quannuo Technology in November 2015, we have transferred our online pharmacy operation function to Jiuzhou Pharmacy. We have established payment methods with banks and online intermediaries such as Alipay, and are cooperating with business-to-consumer online vendors such as Taobao.
As we sold all our equity interests in Quannuo Technology in November 2015, we have transferred our online pharmacy operation function to Jiuzhou Pharmacy. We have established payment methods with banks and online intermediaries such as Alipay or Wechat Pay, and are cooperating with business-to-consumer online vendors such as Taobao, JD.com or Pinduoduo.
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.
Since we have not harvested any ginkgo trees, herb farming revenue accounted for no revenue for the fiscal years ended March 31, 2024 and 2023. Our Customers Retail Customers For the fiscal year ended March 31, 2024, our pharmacies collectively served an average of 23,253 customers per day.
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.
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. As such, we believe that we can change suppliers without any material interruption to our business.
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.
Dividend Distribution As of March 31, 2024, 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 $40.85 million. Environmental Matters Information relating to the environmental matters is incorporated by reference from our 2023 Annual Report under the caption “Environmental Matters.” 42 C.
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.
For the fiscal year ended March 31, 2024, one supplier, HuaDong Pharmaceutical Co., Ltd. accounted for thirteen point five percent (13.5%) of our total purchases. The suppliers are neither related to nor affiliated with us. For the fiscal year ended March 31, 2023, one supplier, HuaDong Pharmaceutical Co., Ltd. accounted for fifteen point eight percent (15.8%) of our total purchases.
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.
We offer primarily third-party products at our pharmacies, including: ● Approximately 1,460 prescription drugs (345 of which require a physician’s prescription and the remainder requiring customer personal information registration only), sales of which accounted for approximately 33.4% of our retail revenue for the fiscal year ended March 31, 2024; ● Approximately 1,722 OTC drugs, sales of which accounted for approximately 41.7% of our retail revenue for the fiscal year ended March 31, 2024; ● Approximately 916 nutritional supplements, including a variety of healthcare supplements, vitamin, mineral and dietary products, sales of which accounted for approximately 13.1% of our retail revenue for the fiscal year ended March 31, 2024; ● TCM, including drinkable herbal remedies and pre-packaged herbal mixtures for making soup, sales of which accounted for approximately 4.5% of our retail revenue for the fiscal year ended March 31, 2024; ● 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 1.5% of our retail revenue for the fiscal year ended March 31, 2024; 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 5.9% of our retail revenue for the fiscal year ended March 31, 2024.
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.
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, 2024, we currently have one hundred and twenty-seven (127) pharmacies throughout Hangzhou, the provincial capital of Zhejiang and neighborhood cities.
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.
To date, we have not experienced any significant difficulty in sourcing our suppliers. 41 Quality Control Information relating to our quality control is incorporated by reference from our 2023 Annual Report under the caption “Quality Control.” Competition Information relating to the competition we face is incorporated by reference from our 2023 Annual Report under the caption “Competition.” Intellectual Property Information relating to the our intellectual property is incorporated by reference from our 2023 Annual Report under the caption “Intellectual Property.” Employees As of March 31, 2024, we had 1,003 employees combined in our retail and wholesale operations, consisting of 939 full-time and 64 part-time employees.
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.
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 seventy-seven (77) physicians and thirty-eight (38) clinic staff.
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.
Additionally, our current leased properties are as follows: Description Location Size (square meters) Lease expiration date Principal executive office Renxin Yaju Building 5 Floor 4 Gong Shu District,Hangzhou City, Zhejiang Province, China 184 January 31, 2034 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 127 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.
During the fiscal year ended March 31, 2024, approximately 3% of our pharmacy revenue came from cash sales, 39% from Hangzhou’s and Zhejiang’s medical insurance cards (where most of our pharmacies are located), and 58% from debit and credit cards, Alipay and other charge cards. 40 We maintain strict cash control procedures at our pharmacies.
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.
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, 2023 filed with the SEC on June 15, 2023 (the “ 2023 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 2023 Annual Report under the caption “Contractual Arrangements with HJ Group and the Key Personnel.” Corporate Information Our principal executive office is located at 4th Floor, Building 5, Renxin Yaju, Gong Shu District, Hangzhou City, Zhejiang Province, and China.
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.
As of the date of this report, one hundred and twenty-five (125) of our one hundred and twenty-seven (127) “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.
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.
Wholesale Since acquiring Jiuxin Medicine in August 2011, we have been distributing third-party products primarily to drug distributors throughout China, including: ● Approximately 1,542 prescription drugs, the sales of which accounted for approximately 65.5% of our wholesale revenue for the fiscal year ended March 31, 2024 as compared to 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; ● Approximately 1,793 OTC drugs, the sales of which accounted for approximately 24.1% of our wholesale revenue for the fiscal year ended March 31, 2024 as compared to 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; ● Approximately 841 nutritional supplements, the sales of which accounted for approximately 1.6% of our wholesale revenue for the fiscal year ended March 31, 2024 as compared to 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; 39 ● TCM products, the sales of which accounted for approximately 0.8% of our wholesale revenue for the fiscal year ended March 31, 2024; ● Sundry products, the sales of which accounted for approximately 1.5% of our wholesale revenue for the fiscal year ended March 31, 2024; and ● Medical devices, the sales of which accounted for approximately 6.5% of our wholesale revenue for the fiscal year ended March 31, 2024.
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.
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, 2024 Employees Percentage Non-pharmacist store staff 464 46.2 % Pharmacists 327 32.6 % Management - non-pharmacists 30 3.0 % Physicians 77 7.7 % Non-physician clinic staff 38 3.8 % Wholesale - non-warehouse 20 2.0 % Online pharmacy - technicians 2 0.2 % Online pharmacy - non-technicians 45 4.5 % Total 1,003 100.00 % 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.
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.
For the fiscal year ended March 31, 2024, retail revenue, including pharmacies, medical clinics accounted for approximately 49.0% of our total revenue, while online pharmacy revenue accounted for 20.6% of our total revenue.
Online sales accounted for approximately 16.8% of our total revenue, for the fiscal year ended March 31, 2021.
Online sales accounted for approximately 18.4% of our total revenue, for the fiscal year ended March 31, 2022.
Since August 2011, we have operated a wholesale business through Jiuxin Medicine, distributing third-party pharmaceutical products (similar to those carried by our pharmacies) primarily to trading companies throughout China. Jiuxin Medicine is wholly owned by Jiuzhou Pharmacy.
Since August 2011, we have operated a wholesale business through Jiuxin Medicine, distributing third-party pharmaceutical products (similar to those carried by our pharmacies) primarily to trading companies throughout China. Jiuxin Medicine is wholly owned by Jiuzhou Pharmacy. For the fiscal year March 31, 2024, wholesale revenue accounted for approximately 30.4% of our total revenue.
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.
Consolidating Statements of Income Information Year Ended March 31, 2024 PARENT SUBSIDIARIES VIE Eliminations Consolidated Revenue $ - $ 123,994,053 $ 107,536,353 $ (76,989,329 ) $ 154,541,077 Cost of revenue - 118,779,423 81,642,435 (76,989,329 ) 123,432,529 Gross profit - 5,214,630 25,893,918 - 31,108,548 Operating Expenses 5,676 4,769,364 31,057,131 (1,189,060 ) 34,643,111 Loss from operations (5,676 ) 445,266 (5,163,213 ) 1,189,060 (3,534,563 ) Other income, net (808 ) (1,194,566 ) 558,557 - (636,817 ) Provision for income tax - (41,363 ) 104,225 - 62,862 Net loss $ (6,484 ) (707,937 ) (4,708,881 ) 1,189,060 (4,234,242 ) 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 ) 44 Consolidating Balance Sheets Information Year Ended March 31, 2024 PARENT SUBSIDIARIES VIE Eliminations Consolidated Total assets $ 55,336 $ 78,718,328 $ 64,561,889 $ (48,278,463 ) $ 95,057,090 Total liabilities (58,302,810 ) 45,398,527 82,268,892 11,399,344 80,763,953 Current assets 55,336 20,931,574 51,313,687 (2,618,235 ) 69,682,362 Current liabilities (58,302,810 ) 45,398,527 82,268,892 4,995,486 74,360,095 Working capital 58,358,146 (24,466,953 ) (30,955,205 ) (7,613,721 ) (4,677,733 ) Accumulated deficit (27,677,819 ) (22,005,227 ) (20,755,517 ) (3,068,683 ) (73,507,246 ) Total equity 58,358,146 33,319,801 (17,707,005 ) (59,677,805 ) 14,293,137 Year Ended March 31, 2023 PARENT SUBSIDIARIES VIE Eliminations 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 Eliminations 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 45 Consolidating Cash Flows Information Year Ended March 31, 2024 PARENT SUBSIDIARIES VIE Eliminations Consolidated Net cash (used in)/provided by operating activities $ (2,596,084 ) $ 2,966,213 $ (5,644,328 ) $ 2,118,760 $ (3,155,439 ) Net cash used in investing activities - (8,156 ) (2,031,694 ) - (2,039,850 ) Net cash (used in)/provided by financing activities 2,639,600 (5,113,399 ) 8,974,553 1,503,537 8,004,291 Effect of exchange rate on cash and cash equivalents - (57,264 ) 2,174,086 (3,622,297 ) (1,505,475 ) Net increase in cash and cash equivalents 43,516 (2,212,606 ) 3,472,617 - 1,303,527 Year Ended March 31, 2023 PARENT SUBSIDIARIES VIE Eliminations 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 Eliminations 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 - 1,499,349 228,374 (205,577 ) 1,522,146 Net increase in cash and cash equivalents 46,700 (1,537,168 ) 2,157,401 - 666,933 46 D.
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.
Pharmacy sales accounted for approximately 95.4% of our retail revenue, and 46.7% of our total revenue, for the fiscal year ended March 31, 2024.
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.
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 Equiniti Trust Company, , LLC, whose address is 48 Wall Street, Floor 23 New York, NY 10005, and whose telephone number is (800) 468-9716.
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.
In addition, Jiuxin Medicine supplies 96.8% of the inventory of Jiuzhou Pharmacy worth $77,054,670 in the fiscal year March 31, 2024. 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.
Removed
Until we can establish a new customer base and secure the status to serve as provincial or national exclusive sale agent for certain popular drugs, we do not expect our wholesale business to increase significantly in the immediate future.
Removed
For the fiscal year ended March 31, 2022, one supplier, Zhejiang Yingte Electronic Commerce Co., LTD. accounted for more than twenty-one point four percent (21.4%) of our total purchases. The suppliers are neither related to nor affiliated with us.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

52 edited+18 added−20 removed58 unchanged
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.
In the years 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.
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.
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.
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.
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.
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.
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”). 47 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.
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.
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.
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.
These manufacturers reward us with lower supply prices and more advertising supports. As a result, we are able to better promote our sales. 51 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.
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.
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. 48 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, 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.
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, 2024, 2023 and 2022 should be read in conjunction with our financial statements and the notes to those financial statements that are included elsewhere in this report.
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.
In fiscal 2024, 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.
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.
These advances have been fully reserved. 55 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.
Additionally, we have licensed doctors of both western medicine and TCM on site for consultation, examination and treatment of common ailments at scheduled hours. During the year ended March 31, 2021, the Company sold its Lin’An Jiuzhou Pharmacy Co., Ltd (“Lin’An Jiuzhou”), which runs ten stores in Linan City, to local investors for a total proceeds of $.
Additionally, we have licensed doctors of both western medicine and TCM on site for consultation, examination and treatment of common ailments at scheduled hours. During the year ended March 31, 2021, the Company sold its Lin’An Jiuzhou Pharmacy Co., Ltd (“Lin’An Jiuzhou”), which runs ten stores in Linan City, to local investors for total proceeds of $125,514.
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.
On the other side, we have been concentrating on new stores within Hangzhou metropolitan area. As of March 31, 2024, we had 127 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, 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.
In the year ended March 31, 2024, we wrote off an approximately $56,170 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 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.
In the years ended March 31, 2024 and 2023, 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.
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.
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, 2024 March 31, 2023 March 31, 2022 Balance sheet items, except for the registered and paid-up capital, as of end of period/year USD1: RMB 7.2203 USD1: RMB 6.8676 USD1: RMB 6.3393 Amounts included in the statement of Operations and statement of cash flows for the period/ year ended USD1: RMB 7.1671 USD1: RMB 6.8516 USD1: RMB 6.4180 56 Inflation We believe that inflation has not had a material effect on our operations to date.
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.
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.
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.
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.
Subsequent to March 31, 2024 and through June 30, 2024, 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.
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.
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. As of March 31, 2024, we had cash of approximately $32,874,171.
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.
Gross Profit The average gross margins for each of our four business segments for the years ended March 31, 2024, 2023 and 2022 are as follows: Year ended March 31, 2024 2023 2022 Average gross margin for retail drugstores 29.9 % 32.2 % 32.0 % Average gross margin for online sales 11.3 % 12.0 % 11.9 % Average gross margin for wholesale business 10.4 % 10.9 % 12.0 % Average gross margin for farming business N/A N/A N/A Comparison of years ended March 31, 2024 and 2023 Gross profit decreased by $3,171,916 or 9.3% period over period primarily as a result of a decrease in gross profit provided by retail drugstores, which decreased significantly in the year ended March 31, 2024.
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.
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 $ 276,997 276,997 - - - Notes payable 31,676,335 31,676,335 - - - Long-term loan payable - - - - - Total $ 31,953,332 31,953,332 - - - Off-balance Sheet Arrangements We do not have any outstanding financial guarantees or commitments to guarantee the payment obligations of any third parties.
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.
Loss from Operations As a result of the above, loss from operations was $3,534,563, $20,925,383 and $2,693,890 for the years ended March 31, 2024, 2023 and 2022, respectively. Our operating margin for the year ended March 31, 2024, 2023 and 2022 was (2.3) %, (14.1) % and (1.6) %, respectively.
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.
We also farm certain herbs used in TCM but have not made sales in the year ended March 31, 2024. During the COVID-19 outbreak, we experienced a decline in the number of customer visits at our stores. To avoid face-to-face contact, customers tended to shop online.
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.
Net Loss As a result of the foregoing, net loss was $4,234,242, $21,138,777 and $3,198,366 in the years ended March 31, 2024, 2023 and 2022. 54 Accounts receivable Accounts receivable, which are unsecured, are stated at the amount we expect to collect.
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.
LIQUIDITY AND CAPITAL RESOURCES Our cash flows for the periods indicated are as follows: For the year ended March 31, 2024 2023 2022 Net cash used in operating activities $ (3,155,439 ) $ (3,283,513 ) $ (5,385,973 ) Net cash used in investing activities $ (2,039,850 ) $ (316,097 ) $ (306,138 ) Net cash provided by financing activities $ 8,004,291 $ 2,366,156 $ 4,836,898 Net cash used in operating activities For the year ended March 31, 2024 cash used in operating activities amounted to $(3,155,439), as compared to $(3,283,513) a year ago.
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.
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. Share-based Compensation We recorded stock-based compensation of $0, $10,360,000 and $0 for the years ended March 31, 2024, 2023 and 2022.
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.
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.
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.
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. 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, 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.
In the year ended March 31, 2024, we evaluated the forest land use rights and did not record an impairment. In the year ended March 31, 2023, we evaluated the forest land use rights and did not record an impairment. In the year ended March 31, 2022, we evaluated the forest land use rights and recorded an impairment of $148,795.
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.
Such expenses as a percentage of revenue decreased to 4.7% from 10.5% for the same period a year ago. In the year ended March 31, 2024, we recorded a reduction of $0.22 million in the allowance account for bad debts as compared to the increase of $7.58 million in the allowance account for bad debts in FY2023.
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.
Income Taxes Our income tax expense for the year ended March 31, 2024 decreased by $331,679 as compared to the year ended March 31, 2023 due to a decrease in the effective rate resulting from an increase in profits in several business lines.
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.
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, 2024 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. 57 E.
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.
As a result, our retail chain made few advances to suppliers as of March 31, 2024. At the end of 2024 we had outstanding advances to suppliers with which we have ceased doing business.
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.
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. 53 General and Administrative Expenses General and administrative expenses for the year ended March 31, 2024 decreased by $8,411,160 or 53.7% as compared to the year ended March 31, 2023, primarily due to the decrease in bad debt expense.
However, after removing the impact of exchange rate fluctuation, the actual retail drugstores sales increased 5.2%. Same-store sales increased by approximately $7,317,963, or 10.0%, while new stores contributed approximately $711,155 in revenue in the year ended March 31, 2022.
Same-store sales decreased by approximately $9,071,271 or 10.9%, while new stores contributed approximately $1,397,972 in revenue in the year ended March 31, 2024. However, after removing the impact of exchange rate fluctuation, the actual retail drugstores sales decreased 5.0%.
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.
Results of Operations Comparison of years ended March 31, 2024, 2023 and 2022 The following table summarizes our results of operations for the years ended March 31, 2024, 2023 and 2022: Years ended December 31, 2024 2023 2022 Amount Percentage of total revenue Amount Percentage of total revenue Amount Percentage of total revenue Revenue $ 154,541,077 100.0 % $ 148,811,976 100.0 % $ 164,392,555 100.0 % Cost of goods sold $ 123,432,529 79.9 % 114,531,512 77.0 % 127,873,515 77.8 % Gross profit $ 31,108,548 20.1 % $ 34,280,464 23.0 % $ 36,519,040 22.2 % Selling expenses $ 27,385,587 17.7 % $ 29,177,163 19.6 % $ 30,876,959 18.8 % General and administrative expenses $ 7,257,524 4.7 % $ 15,668,684 10.5 % $ 8,187,176 5.0 % Stock based compensation $ - 0 % $ 10,360,000 7.0 % $ - 0 % Impairment of long-lived assets $ - 0 % $ - 0 % $ 148,795 0.1 % Loss from operations $ (3,534,563 ) (2.3 )% $ (20,925,383 ) (14.1 )% $ (2,693,890 ) (1.6 )% Other Expense, net $ (636,817 ) (0.4 )% $ 181,147 0.1 % $ 595,250 0.4 % Change in fair value of derivative liability $ - 0.0 % $ - 0.0 % $ - 0.0 % Income tax expense $ 62,862 0.0 % $ 394,541 0.3 % $ 1,099,726 0.7 % Net loss $ (4,234,242 ) (2.7 )% $ (21,138,777 ) (14.2 )% $ (3,198,366 ) (1.9 )% 49 Revenue by Segment Comparison of years ended March 31, 2024 and 2023 The following table breaks down the revenue for our four business segments for the years ended March 31, 2024 and 2023: For the years ended March 31, 2024 2023 Amount % of total revenue Amount % of total revenue Variance by amount % of change Revenue from retail drugstores $ 75,678,470 49.0 % $ 83,351,768 56.0 % $ (7,673,298 ) (9.2 )% Revenue from online sales 31,857,883 20.6 % 32,385,089 21.8 % (527,206 ) (1.6 )% Revenue from wholesale business 47,004,724 30.4 % 33,075,119 22.2 % 13,929,605 42.1 % Revenue from farming business - - % - - % - - % Total revenue $ 154,541,077 100.0 % $ 148,811,976 100.0 % $ 5,729,101 3.8 % Retail drugstores sales, which accounted for approximately 49.0% of total revenue for the year ended March 31, 2024, decreased by $7,673,298, or 9.2% compared to the year ended March 31, 2023, to $75,678,470.
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.
Our total current assets as of March 31, 2024, were $69,682,362 and total current liabilities were $74,360,095, which resulted in a working capital deficit of $4,677,733. C. RESEARCH AND DEVELOPMENT, PATENTS AND LICENSES, ETC. The Company has no research and development policy for the past three years. D. TREND INFORMATION.
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 sales and marketing expenses decreased by approximately $0.87 million, which primarily attributable to the decrease in fee charged by distribution channels resulting from the decrease in retail drugstores and online pharmacy sales. Overall, such expenses as a percentage of our revenue were 17.7% and 19.6% respectively, in the years ended March 31, 2024 and 2023.
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.
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.
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.
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.
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.
Net cash used in investing activities For the year ended March 31, 2024, net cash used in investing activities amounted to $(2,039,850), as compared to $(316,097) provided by investing activities a year ago. The change is primarily attributable to investment in a joint venture and purchases of long-term assets.
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.
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. Impairment of Long-lived Assets We recorded an impairment of long-lived assets of $0, $0 and $148,795 for the year ended March 31, 2024, 2023 and 2022.
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.
Net cash provided by financing activities For the year ended March 31, 2024, net cash provided by financing activities amounted to $8,004,291, as compared to $2,366,156 a year ago. The change is primarily due to notes payable and proceeds from short-term bank loan.
Based on the evaluation of the forest land use rights, the Company recorded an impairment of $0 and $148,795.
Based on the evaluation of the forest land use rights, the Company did not record an impairment for the years ended March 31, 2024 and 2023.
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.
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 $ 6,663,872 $ 2,682,630 $ 5,225,356 $ - $ 14,571,858 4- 6 months 2,806 909,673 932,319 - 1,844,798 7- 12 months 43,068 8,589 - - 51,657 Over one year 225,750 36,528 17,178 - 279,456 Allowance for doubtful accounts (704,482 ) (112,273 ) (106,911 ) - (923,666 ) Total accounts receivable $ 6,231,014 $ 3,525,147 $ 6,067,942 $ - $ 15,824,103 Accounts receivable from our retail business mainly consist of reimbursements from local government health insurance bureaus and commercial health insurance programs.
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 increase was primarily caused by sales to commercial insurance customers via our official website and an increase in sales of prescription drugs via e-commerce platforms such as Tmall.
Our store count is 114 at March 31, 2023 and 127 at March 31, 2024. Our online pharmacy sales decreased by approximately $527,206 or 1.6% for the year ended March 31, 2024, as compared to the year ended March 31, 2023. The decrease was primarily caused by a decrease in sales via e-commerce platforms such as JD and Pinduoduo.
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 and 2021, we have not harvested and generated revenue from our farming business. We planted ginkgo trees during the year ended March 31, 2013.
Therefore, we are actively looking for potential acquisition targets with trading platform to strengthen our wholesale business. In the years ended March 31, 2024 and 2023, we have not harvested and generated revenue from our farming business. We planted ginkgo trees during the year ended March 31, 2013.
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.
Selling and Marketing Expenses Sales and marketing expenses for the year ended March 31, 2024 decreased by $1,791,576 or 6.1% as compared to the year ended March 31, 2023, primarily due to a decrease in expense related to Normal Nucleic Acid Testing (“NNAT”) requested by local government and a decrease in 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.
Eventually, we may be able to increase our wholesale profit margin. 52 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.
The change is primarily attributable to a decrease in cash provided by accounts payable of $9,938,165, a decrease in cash provided by stock compensation of $3,941,600, a decrease in cash provided by other receivables of $2,396,659 offset by an increase of $5,138,115 in inventories and biological assets, an increase in cash provided by net loss of $5,177,212.
The change is primarily attributable to an increase in net income of $16,904,535, an increase in accounts receivable of $727,315, an increase in cash provided by accounts payable of $4,236,698 and an increase in cash provided by other payables and accrued liabilities of $2,210,422, offset by a decrease in bad debt direct write-off and provision of $6,789,437, a decrease in inventories and biological assets of $1,177,071 and a decrease in stock compensation of $10,360,000.
In order to promote our profit margin, we selected products with higher profits margin and marketed these products to our customers. 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.
Wholesale gross margin slightly decreased primarily due to certain products with low profit margin we carried and sold to certain pharmaceutical vendors. In the year ended March 31, 2024,we have been actively looking for new buyers in certain emerging new platforms such as .
Advances to suppliers Advances to suppliers are mainly prepayments to secure certain products or services at favorable pricing.
Advances to suppliers Advances to suppliers are mainly prepayments to secure certain products or services at favorable pricing. Since the acquisition of Jiuxin Medicine, we have gradually transferred almost all logistics services of our retail drugstores to Jiuxin Medicine. Jiuzhou Pharmacy only purchases certain non-medical products such as sundry.
Removed
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.
Added
In December 2022, the local government has eased its control and the demand on medical products surged therefrom. Currently, COVID-19 has no significant impact on our operation.
Removed
Major factors include the duration of the outbreak, new information concerning the severity of the coronavirus, and actions to contain coronavirus or minimize its harm, among others.
Added
The decrease in our retail drugstore sales is primarily due to local consumption cutback, extremely competitive market and the temporary surge of sale in the second half of fiscal 2023, which is nonrecurring and is due to Chinese government’s sanction lift on COVID-19. Because of the economy slowdown, local people tend to be more frugal and spend less.
Removed
The actual increase in our retail drugstore sales is primarily due to continuous adjustments of merchandises, suitable to the market and improved store employee incentive plan, and contribution from the new store sales.
Added
Except for prescription medicines, the sale of other products such as nutritional supplements and upscale merchandises used as gifts decreased. Unless the economy recovers quickly, the retail sales may continue to slow down. The retail drugstore market has become saturated in China.
Removed
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 .
Added
In Hangzhou City, over 4,000 drugstores, including chain stores and single stores, make the city one of the most competitive drugstore markets in China. The local population per store becomes as low as 2,000. As such, the sales per store were negatively affected.
Removed
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. As a result, our sales were able to increase slightly although NHSA tightened its budget.
Added
In order to keep competitive, we have to adjust our product category or lower our prices continually, therefore, our store sales decreased. In the second half of 2023, the government lifted the sanction on Covid 19. People were no longer quarantined and were able to travel, so we quickly experienced a Covid 19 outbreak.
Removed
In addition, we hired a new human resource head, who has fruitful experience in other major drugstore chain in China. He has implemented a new store employee compensation plan, which better links employees’ compensation with sales and profits margin. Our new stores have also contributed additional sales.
Added
Because people had not prepared enough preventive and therapeutic medicines, they flooded into local drugstores for medicines. Our retail sales surged in that time period. However, the increase was temporary and we were able to achieve the same level of sales in fiscal 2024. Our new stores have also contributed additional sales.
Removed
Our store count is 109 at March 31, 2021 and 111 at March 31, 2022. In January 2021, we sold Lin’An Jiuzhou Pharmacy which had ten stores. In the nine months ended December 31, 2020, the sale from Lin’An Jiuzhou Pharmacy was approximately $1,721,606.
Added
Because the online prices are transparent, to be competitive in online sales, we have to keep low prices. More competitors came into the online retail sales market.
Removed
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. Certain companies bought private health insurances from Yingda for their employees.
Added
As we do not have dominating power such as lowest prices or exclusive products, we may not be able to improve our sales significantly in the near future. 50 Wholesale revenue increased by $13,929,605 or 42.1%.
Removed
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.
Added
In the year ended March 31, 2024, Online platforms such as Pharmacist Help, Yiyao Help and Yao Help have become popular ways to transact medical products by bulk. The platforms attract a plenty of buyers and sellers, so both parties have extended opportunities to expose themselves.
Removed
However, because the nation has lifted the ban order, online prescription drug sales become popular. As a result, the sale of prescription drugs was $10,331,652 in the year ended March 31, 2022 as compared to $8,243,099 in the year ended March 31, 2021. Wholesale revenue increased by $15,394,960 or 44.6%.
Added
We have spent significant efforts in exploring these buyers with certain products at reasonable prices as a result, we are able to attract more buyers and promote our sales. We believe that selling on the modern wholesale platform may be a new growth point.
Removed
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.
Added
At the same time, gross margin decreased from 23.0% to 20.1% due to lower retail drugstores profit margins. Retail gross margins decreased. In order to control its budget, the local municipal health insurance agency adjusted down certain prices of drugs reimbursed by it from time to time.
Removed
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.
Added
We actively negotiated with suppliers to lower the purchase price as well, so we can keep reasonable profit margin. However, certain pharmaceutical giant companies are not willing to lower their prices. On the other side, as overall drugstore market becomes more competitive, we had to lower our prices to keep our market shares.
Removed
In order to promote our sales and profits, we specifically selected a series of popular products, which we believe are suitable to local community. Additionally, DTC products are usually prescription drugs prescribed by the hospital doctors.
Added
Unless the economy quickly recovers, we do not expect to keep a high retail profit margin. Gross margin of online pharmacy sales decreased only slightly primarily due to the competitive market.
Removed
In order to attract more customers to our stores, we introduced certain DTC products into our stores, However, due to their low profit margin, we have controlled its sales in the fiscal year 2022. As a result, we were able to keep up with our sales profit margin. .
Added
Although we have spent significant efforts in promoting our profit margin, due to the competitive market, we have to keep competitive prices as online customers are very sensitive to prices, which are easily comparable among different website vendors. We do not expect significant increase in gross margin our online sales.

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Item 6. [Reserved]

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

33 edited+5 added−4 removed50 unchanged
Additionally, she is entitled to be included as an insured under our directors and officers insurance policy. Agreement with Pingfan Wu As of October 26, 2018, we entered into an agreement with Ms. Wu in the form of a director offer letter pursuant to which we agreed to compensate her $9,349 (RMB60,000) annually for her services.
Additionally, she is entitled to be included as an insured under our directors and officers insurance policy. Agreement with Pingfan Wu On October 26, 2018, we entered into an agreement with Ms. Wu in the form of a director offer letter pursuant to which we agreed to compensate her $9,349 (RMB60,000) annually for her services.
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.
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; 64 ● 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 term of his employment was extended verbally for another two (2) years with an amended annual compensation of $88,000 starting from October 2012. The term of this employment was extended verbally for another one (1) years automatically (unless providing prior notice otherwise) with an annual compensation of $88,000 starting from October 2015. During his employment, Mr.
The term of his employment was extended verbally for another two (2) years with an amended annual compensation of $88,000 starting from October 2012. The term of this employment was extended verbally for another one (1) year automatically (unless providing prior notice otherwise) with an annual compensation of $88,000 starting from October 2015. During his employment, Mr.
Summary Compensation Table Name and Principal Position Fiscal Year ended March 31, Salary ($) Bonus ($) Stock Awards ($)(1) Option Awards ($) Non-Equity Incentive Plan Compensation ($) Nonqualified Deferred Compensation Earnings ($) All Other Compensation ($) Total ($) Lei Liu, 2023 90,000 -0- 1,691,800 -0- -0- -0- -0- 1,781,800 CEO (2) 2022 90,000 -0- - -0- -0- -0- -0- 90,000 Ming Zhao, 2023 88,000 -0- 101,000 -0- -0- -0- -0- 189,000 CFO 2022 88,000 -0- - -0- -0- -0- -0- 88,000 (1) Reflects the full fair value of stock issued during the applicable fiscal year for financial statement reporting purposes.
Summary Compensation Table Name and Principal Position Fiscal Year ended March 31, Salary ($) Bonus ($) Stock Awards ($)(1) Option Awards ($) Non-Equity Incentive Plan Compensation ($) Nonqualified Deferred Compensation Earnings ($) All Other Compensation ($) Total ($) Lei Liu, 2024 90,000 -0- - -0- -0- -0- -0- 90,000 CEO (2) 2023 90,000 -0- 1,691,800 -0- -0- -0- -0- 1,781,800 Ming Zhao, 2024 88,000 -0- - -0- -0- -0- -0- 88,000 CFO 2023 88,000 -0- 101,000 -0- -0- -0- -0- 189,000 (1) Reflects the full fair value of stock issued during the applicable fiscal year for financial statement reporting purposes.
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.
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. 53 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. 58 Li Qi is one of the three founders of HJ Group. Ms.
Additionally, he is entitled to be included as an insured under our directors and officers insurance policy. Agreement with Caroline Wang As of March 29, 2017, we entered into an agreement with Ms. Wang in the form of a director offer letter pursuant to which we agreed to compensate her $11,813 (RMB80,000) annually for her services.
Additionally, he is entitled to be included as an insured under our directors and officers insurance policy. Agreement with Caroline Wang On March 29, 2017, we entered into an agreement with Ms. Wang in the form of a director offer letter pursuant to which we agreed to compensate her $11,162 (RMB80,000) annually for her services.
Additionally, she is entitled to be included as an insured under our directors and officers insurance policy. Agreement with Jiangliang He As of September 4, 2018, we entered into an agreement with Mr. He in the form of a director offer letter pursuant to which we agreed to compensate her $5,609 (RMB36,000) annually for her services.
Additionally, she is entitled to be included as an insured under our directors and officers insurance policy. Agreement with Jiangliang He On September 4, 2018, we entered into an agreement with Mr. He in the form of a director offer letter pursuant to which we agreed to compensate her $5,023 (RMB36,000) annually for her services.
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.
We believe that all of our directors meet the foregoing qualifications. Based on the information submitted by Ms. Caroline Wang, Mr. Jiangliang He, Ms. Pingfan 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.
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.
During the fiscal year ended March 31, 2024, 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 3 Audit Committee 1 1 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.
Zhao is serving as our Chief Financial Officer for a term of two years commencing August 1, 2011, for annual compensation of $100,000, payable in monthly installments, as well as a one-time grant of 3,333 shares of our ordinary shares (the “Shares”) under our 2010 Equity Incentive Plan.
Zhao dated as of August 1, 2011, under which Mr. Zhao is serving as our Chief Financial Officer for a term of two years commencing August 1, 2011, for annual compensation of $100,000, payable in monthly installments, as well as a one-time grant of 3,333 shares of our ordinary shares (the “Shares”) under our 2010 Equity Incentive Plan.
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.
As a result, 25,125 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.
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.
Security Ownership of Certain Beneficial Owners and Management The following table sets forth certain information regarding our ordinary shares beneficially owned on July 30, 2024 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.
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.
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. Qi is qualified to serve on our Board of Directors.
Employment Agreements, Termination of Employment and Change-in-Control Arrangements Except as described below, we currently have no employment agreements with any of our executive officers, nor any compensatory plans or arrangements resulting from the resignation, retirement or any other termination of any of our executive officers, from a change-in-control, or from a change in any executive officer’s responsibilities following a change-in-control.
Employment Agreements, Termination of Employment and Change-in-Control Arrangements Except as described below, we currently have no employment agreements with any of our executive officers, nor any compensatory plans or arrangements resulting from the resignation, retirement or any other termination of any of our executive officers, from a change-in-control, or from a change in any executive officer’s responsibilities following a change-in-control. 60 Agreement with Ming Zhao We entered into an employment agreement with Mr.
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.
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.
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, 2024, there were 0 ordinary share available for future issuance under the Plan. 62 Director Compensation The following table provides compensation information for our directors during the fiscal year ended March 31, 2024: 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) 2024 90,000 -0- -0- -0- -0- -0- 90,000 Li Qi (2) 2024 68,000 -0- -0- -0- -0- -0- 68,000 Caroline Wang 2024 11,162 -0- -0- -0- -0- -0- 11,162 Genghua Gu 2024 5,000 -0- -0- -0- -0- -0- 5,000 Jiangliang He 2024 5,023 -0- -0- -0- -0- -0- 5,023 Pingfan Wu 2024 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.
(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.
(2) Salary as reported is based on interbank exchange rate of RMB 6.8516 to $1.00 on March 31, 2023 and RMB 7.1671 to $1.00 on March 31, 2024.
Zhao may terminate his employment agreement immediately upon written notice if we breach our agreement with him. 55 Outstanding Equity Awards at Fiscal Year Ended March 31, 2023 Option Awards Stock Awards Name Number of securities underlying unexercised options exercisable Equity incentive plan awards: number of securities underlying unexercised options unexercisable Equity incentive plan awards: number of securities underlying unexercised unearned options Option exercise price ($) 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.
Outstanding Equity Awards at Fiscal Year Ended March 31, 2024 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 - - - Equity compensation plans not approved by security holders - - - TOTAL - - - 61 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 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.
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 59 Chief Executive Officer and Chairman of the Board of Directors September 17, 2009 Ming Zhao 48 Chief Financial Officer August 1, 2011 Li Qi 52 Director October 23, 2009 Caroline Wang (2) (3) (4) 37 Director March 29, 2017 Jiangliang He (2) (3) (4) 61 Director September 4, 2018 Genghua Gu (2) (3) (4) 73 Director March 28, 2014 (1) As of the date of this report.
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
Gu’s address is: No.1, Xueshi Road, Hangzhou, China. F. Disclosure of a registrant’s action to recover erroneously awarded compensation. None. 66
(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%).
(3) Unless otherwise noted, the number and percentage of outstanding shares of ordinary shares is based upon 6,654,077 shares outstanding as of July 30, 2024. (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%) and Li Qi (43.3%).
As the founder and CEO responsible for our vision and direction, Mr. Liu is invaluable to us and our Board of Directors. Ming Zhao has served as our Chief Financial Officer since August 2011. From September 2010 to July 2011, Mr.
As the founder and CEO responsible for our strategies and directions, Mr. Liu has been valuable to us and our Board of Directors. Ming Zhao has served as our Chief Financial Officer since August 2011. From September 2010 to July 2011, Mr.
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.
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.
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%.
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) 511,568 7.7 % Ming Zhao, Chief Financial Officer 3,331 0.1 % Li Qi, Director (4) 25,125 0.4 % Caroline Wang, Director (5) - * % Genghua Gu, Director (6) 42 * % Jiangliang, He, Director - * % All directors and executive officers as a group (6 persons) 7.8 % 5% Shareholders: (1) N/A * Less than 0.1%.
Family Relationships There are no family relationships among our officers and directors and those of our subsidiaries and affiliated companies. Board Diversity The Nominating Committee does not have a formal policy with respect to diversity. However, the Board of Directors and the Nominating Committee believe that it is essential that the members of the Board of Directors represent diverse viewpoints.
Family Relationships There are no family relationships among our officers and directors and those of our subsidiaries and affiliated companies. 59 Board Diversity The Nominating Committee does not have a formal policy with respect to diversity.
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.
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, 2024 Employees Percentage Non-pharmacist store staff 464 46.2 % Pharmacists 327 32.6 % Management - non-pharmacists 30 3.0 % Physicians 77 7.7 % Non-physician clinic staff 38 3.8 % Wholesale - non-warehouse 20 2.0 % Online pharmacy - technicians 2 0.2 % Online pharmacy - non-technicians 45 4.5 % Total 1,003 100.00 % 65 E.
(1) Unless otherwise noted, the address for each of the named beneficial owners is: 6 th Floor, Hai Wai Hai Tongxin Mansion, Gong Shu District, Hangzhou City, Zhejiang Province, China, 310008.
(1) Unless otherwise noted, the address for each of the named beneficial owners is: Renxin Yaju Building 5 Floor 4 Gong Shu District, Hangzhou City, Zhejiang Province, China, 310008.
In considering candidates for the Board of Directors, the Board of Directors and the Nominating Committee consider the entirety of each candidate’s credentials in the context of the factors mentioned above.
However, the Board of Directors and the Nominating Committee believe that it is essential that the members of the Board of Directors represent diverse viewpoints. In considering candidates for the Board of Directors, the Board of Directors and the Nominating Committee consider the entirety of each candidate’s credentials in the context of the factors mentioned above.
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.
As of March 31, 2024, we had 1,003 employees combined in our retail and wholesale operations, consisting of 939 full-time and 64 part-time employees.
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.
Board Diversity Matrix (as of the date of this annual report) Country of Principal Executive Offices China Foreign Private Issuer Yes Disclosure Prohibited under Home Country Law No Total Number of Directors 5 Part I: Gender Identity Female Male Non- Binary Did Not Disclose Gender Directors 2 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.
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 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.
(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.
Wu did not result from any disagreement with the Company on any matter relating to the Company’s business operations, financial reporting or controls, policies or practices 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.
Removed
Pingfan Wu graduated from Jiangxi Medical College with a major in clinical medicine. After graduation, she worked in a hospital for eight years as a physician and an attending physician. After that, she joined Sino-American Shike/GlaxoSmithKline for 18 years until 2014. From sales representative to GSK China Sales/Strategy Director, Ms.
Added
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.
Removed
Wu was responsible for the sale of multiple prescription drugs/OTC products in Chinese hospitals, retail markets, government cooperation projects and mergers and acquisitions. Since 2014 Ms. Wu has been working at Cardinal Health China Pharmaceutical Co., Ltd., which is among the top three largest U.S./foreign drug distribution companies in China (“Cardinal China”).
Added
No other executive officer received compensation in excess of $100,000 during the fiscal year ended March 31, 2024 and 2023.
Removed
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.
Added
Zhao may terminate his employment agreement immediately upon written notice if we breach our agreement with him.
Removed
Agreement with Ming Zhao We entered into an employment agreement with Mr. Zhao dated as of August 1, 2011, under which Mr.
Added
(2) Compensation is reflected in the Summary Compensation Table on page 60 above. (3) On May 31, 2024, Ms. Pingfan Wu had resigned from her position as a member of the board of directors (the “Board”) due to personal reasons. The resignation of Ms.
Added
Additionally, she is entitled to be included as an insured under our directors and officers insurance policy. On May 31, 2024, Ms. Pingfan Wu had resigned from her position as a member of the board of directors (the “Board”) due to personal reasons. 63 C. BOARD PRACTICES.

Item 7. Management's Discussion & Analysis

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

2 edited+1 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, 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.
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 Due from related parties: March 31, 2024 March 31, 2023 Hangzhou Kahamadi Biotechnology Co., Ltd 32,825 - Others (the directors of subsidiaries) (1) 280,521 - Total $ 313,346 $ - Due to related parties: March 31, 2024 March 31, 2023 Due to a director and CEO (2) : 1,580,057 683,560 Other (3) : 253,452 - Total $ 1,833,509 $ 683,560 (1) Advances to directors of our subsidiaries.
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).
(2) Due to foreign exchange restrictions, the Company’s director and CEO, Mr. 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.
Removed
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
Added
The amounts owed under the lease for the twelve months ended March 31, 2024 were paid to Mr. Liu as of March 31, 2024. (3) Linjia Medical borrowed from its non-controlling shareholder. C. INTERESTS OF EXPERTS AND COUNSEL. Not applicable. 67

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