China Jo-Jo Drugstores 8-K China Jo-Jo Drugstores Inc. Reports Financial Results for Third Quarter 2012

Exhibit 99.1

China Jo-Jo Drugstores Inc. Reports Financial Results for Third Quarter 2012

HANGZHOU, China--(BUSINESS WIRE)--February 14, 2012--China Jo-Jo Drugstores, Inc. (NASDAQ:CJJD), a retail pharmacy chain in Zhejiang and Shanghai, today reported record revenue for the third quarter of fiscal year 2012 ended December 31, 2011. The Company will hold its earnings call on Thursday, Feb. 16 at 8:00 a.m. Eastern Time.

Third Quarter Highlights:

• Revenue increased 42.1% to a record high of $25.64 million
• Gross profit increased 28.1% to $6.83 million
• Net income attributable to controlling interest decreased 29.7% to $1.57 million
• Two new stores opened during the quarter, bring the store number to 60 by the end of the quarter, compared with 49 a year ago.

Third Quarter Results

Revenue increased 42.1% to $25.64 million for the three months ended December 31, 2011, from $18.04 million for the three months ended December 31, 2010, primarily as a result of wholesale revenue from Zhejiang Jiuxin Medicine Co., Ltd. (“Jiuxin Medicine”) which was acquired in August 2011, and sales from new stores opened since December 31, 2010, offset by same-store sales decrease.

Same-store sales decreased by $1.87 million, or 10.5%, period over period, mainly as a result of shifting certain non-retail sales from Hangzhou Jiuzhou Grand Pharmacy Chain Co., Ltd., which operates most of the Company’s pharmacies, to Jiuxin Medicine.

Gross profit increased by 28.1% to $6.83 million from $5.33 million. Gross margin decreased from 29.5% to 26.6 % as a result of lower gross profit margin from Jiuxin Medicine’s wholesale activities.

Selling expenses increased 86.9% to $2.50 million. The increase is primarily a result of operating 60 store locations as compared to 49 stores that we operated a year ago. Selling expenses as a percentage of our revenue increased from 7.4% to 9.7%.

General and administrative expenses increased 77.2% to $2.18 million. General and administrative expenses as a percentage of our revenue increased from 6.8% to 8.5%. The increase is mainly attributable to the establishment of new subsidiaries in the last calendar year and expenses of being a public company.

Income from operations decreased 22.1% to $2.15 million. Operating margin decreased to 8.4% from 15.3% a year ago.

Net income attributable to controlling interest decreased 29.7% to $1.57 million.

Dr. Lei Liu, Chairman and CEO, stated, “We are pleased to report another record quarter in revenue with our excellent operational and financial performance in the fiscal third quarter, achieving double-digit sales growth. Because of our integrated business model, we were able to adjust our distribution channel and strike a good balance between product volume and selling prices.”

“Facing an economic slowdown and inflationary pressures in China, we have been closely monitoring market development and new growth opportunities. We are also controlling rental increases and other expenses,” stated Dr. Lei Liu, Chairman and CEO. “Our recent strategic initiatives include VIP clubs that cater to high-income customers with increasing healthcare needs. We are also developing more customized services in our stores.”

Dr. Liu continued, “I believe our online drugstore will bring new revenue sources and our expertise in traditional Chinese medicine will distinguish ourselves from our competitors. Going forward, we will continue to grow our business based on an integrated model. We also look to open more stores in both Zhejiang and Shanghai.”

New Store Openings

The Company operated a total of 60 stores as of December 31, 2011, including two new stores added during the quarter, as compared to 49 stores as of December 31, 2010. We anticipate that our overall revenue will continue to increase as we open additional stores and our maturing stores are able to accept government insurance.

Nine Month Results

Revenue increased 41.6% to $69.30 million for the nine months ended December 31, 2011, from $48.93 million for the nine months ended December 31, 2010, primarily as a result of same-store sales growth, sales from new stores opened since December 31, 2010, and wholesale revenue from Jiuxin Medicine.

Same-store sales increased by $4.50 million, or 9.2 %, period over period, mainly from sales of pharmaceutical products covered by government-sponsored medical insurance programs. Revenue also increased from operating additional new store locations.

Gross profit increased 39.0% to $19.95 million from $14.35 million. Our gross margin decreased from 29.3% to 28.8% as a result of the lower profit margin from Jiuxin Medicine’s wholesale activities.

Selling expenses increased 97.3% to $6.59 million from $3.34 million. The increase is primarily a result of operating 60 store locations as compared to 49 stores that we operated a year earlier. Selling expenses as a percentage of revenue increased from 6.8% to 9.5%.

General and administrative expenses increased 65.7% to $4.57 million from $2.76 million a year ago. General and administrative expenses as a percentage of our revenue increased from 5.6% to 6.6%. The increase is mainly attributable to the establishment of new subsidiaries in the last calendar year and expenses of being a public company.

Income from operations increased 6.6% to $8.79 million from $8.25 million a year ago. Operating margin fell to 12.7% from 16.9%.

Net income attributable to controlling interest increased 7.2% to $6.45 million from $6.02 million a year ago.

Balance Sheet Highlights

As of December 31, 2011, the Company had $4.34 million of cash, $38.73 million in current assets and $16.34 million in current liabilities.

Conference Call Information

The Company will host a conference call to discuss third quarter results on Thursday, Feb. 16, 2012, at 8:00 a.m. Eastern Time. To participate in the conference call, please dial 1-877-941-1428 from North America. International participants can access the call by dialing 1-480-629-9665. A live audio webcast of this conference call will be available under the Investors Relations section of the Company's website at http://www.chinajojodrugstores.com. A replay of the call will be available from February 16, 2012 approximately 11 a.m. Eastern Time to February 23, 2012 at 11:59 p.m. Eastern Time by dialing 1-877-870-5176 or 1-858-384-5517 (international) with pin #4515605. The replay will also be available on the company website.

About China Jo-Jo Drugstores, Inc.

China Jo-Jo Drugstores, Inc. primarily operates a retail pharmacy chain in Zhejiang and Shanghai, offering both western and traditional Chinese medicine, including prescription and over-the-counter drugs, sundries, nutritional supplements and medical devices. China Jo-Jo Drugstores also provides on-site physician consulting. As of December 31, 2011, the Company operated 60 stores.

Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995: Certain of the statements made in the press release constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements can be identified by the use of forward-looking terminology such as “believe,” “expect,” “may,” “will,” “should,” “project,” “plan,” “seek,” “intend,” or “anticipate” or the negative thereof or comparable terminology. Such statements typically involve risks and uncertainties and may include financial projections or information regarding the progress of new product development. Actual results could differ materially from the expectations reflected in such forward-looking statements as a result of a variety of factors, including the risks associated with the effect of changing economic conditions in The People’s Republic of China, variations in cash flow, reliance on collaborative retail partners and on new product development, variations in new product development, risks associated with rapid technological change, and the potential of introduced or undetected flaws and defects in products, and other risk factors detailed in reports filed with the Securities and Exchange Commission from time to time.

CHINA JO-JO DRUGSTORES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
					DECEMBER 31,			MARCH 31,
					2011			2011
ASSETS
CURRENT ASSETS
	Cash			$	4,339,666		$	6,489,905
	Restricted cash				1,451,564			921,876
	Trade accounts receivable, net				7,374,177			1,484,850
	Inventories				7,361,719			4,617,420
	Other receivables				1,214,408			1,049,564
	Advances to suppliers, net				14,086,803			16,528,772
	Other current assets				2,906,589			8,364,267
		Total current assets			38,734,926			39,456,654
PROPERTY AND EQUIPMENT, net					15,303,962			5,471,432
OTHER ASSETS
	Long term deposit				2,635,206			2,540,758
	Prepaid - noncurrent				6,752,564			6,075,478
	Intangible assets, net				2,881,237			390,302
		Total other assets			12,269,007			9,006,538
			Total assets	$	66,307,895		$	53,934,624
LIABILITIES AND EQUITY
CURRENT LIABILITIES
	Accounts payable, trade			$	5,518,920		$	3,530,204
	Notes payable				4,836,702			2,704,680
	Other payables				1,651,888			627,734
	Other payables - related parties				880,058			880,058
	Customer deposits				1,883,966			2,038,608
	Taxes payable				1,259,043			1,624,558
	Accrued liabilities				305,154			311,639
		Total current liabilities			16,335,731			11,717,481
Purchase option derivative liability					36,834			153,226
		Total liabilities			16,372,565			11,870,707
COMMITMENTS AND CONTINGENCIES
EQUITY
	China Jo-Jo Drugstores, Inc. stockholders' equity
	Preferred stock; $0.001 par value; 10,000,000 shares authorized;
		nil issued and outstanding as of December 31, 2011
		and March 31, 2011			-			-
	Common stock; $0.001 par value; 250,000,000 shares authorized;
		13,559,088 and 13,530,477 shares issued and outstanding as of
		December 31, 2011 and March 31, 2011, respectively			13,559			13,530
	Additional Paid-in capital				16,409,543			16,333,956
	Statutory reserves				1,309,109			1,309,109
	Retained earnings				29,737,898			23,287,474
	Accumulated other comprehensive income				2,466,228			1,119,848
		Total China Jo-Jo Drugstores, Inc. stockholders' equity			49,936,337			42,063,917
	Noncontrolling interests				(1,007	)		-
		Total equity			49,935,330			42,063,917
			Total liabilities and equity	$	66,307,895		$	53,934,624

CHINA JO-JO DRUGSTORES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND OTHER COMPREHENSIVE INCOME
(UNAUDITED)
			Three months ended December 31,					Nine months ended December 31,
			2011			2010		2011		2010
REVENUES, NET		$	25,643,949		$	18,042,309	$	69,296,755	$	48,927,907
COST OF GOODS SOLD			18,817,080			12,713,181		49,342,667		34,576,771
GROSS PROFIT			6,826,869			5,329,128		19,954,088		14,351,136
SELLING EXPENSES			2,498,892			1,337,055		6,588,686		3,339,928
GENERAL & ADMINISTRATIVE EXPENSES			2,175,615			1,227,520		4,570,919		2,758,654
OPERATING EXPENSES			4,674,507			2,564,575		11,159,605		6,098,582
INCOME FROM OPERATIONS			2,152,362			2,764,553		8,794,483		8,252,554
OTHER INCOME (EXPENSE), NET			16,343			112,736		222,929		60,985
CHANGE IN FAIR VALUE OF PURCHASE OPTION DERIVATIVE LIABILITY			19,404			119,595		116,392		91,546
INCOME BEFORE INCOME TAXES			2,188,109			2,996,884		9,133,804		8,405,085
PROVISION FOR INCOME TAXES			610,910			759,431		2,684,463		2,387,719
NET INCOME			1,577,199			2,237,453		6,449,341		6,017,366
ADD: NET (PROFIT) LOSS ATTRIBUTABLE TO NONCONTROLLING INTEREST			(3,217	)		-		1,083		-
NET INCOME ATTRIBUTABLE TO CONTROLLING INTEREST			1,573,982			2,237,453		6,450,424		6,017,366
OTHER COMPREHENSIVE INCOME
	Foreign currency translation adjustments - controlling interest		262,892			514,170		1,346,380		1,168,202
	Foreign currency translation adjustments - noncontrolling interest		31			-		31		-
COMPREHENSIVE INCOME		$	1,836,905		$	2,751,623	$	7,796,835	$	7,185,568
WEIGHTED AVERAGE NUMBER OF SHARES
	Basic		13,557,379			13,500,002		13,546,570		13,220,002
	Diluted		13,557,379			13,500,002		13,546,570		13,220,002
EARNINGS PER SHARES
	Basic - attributable to controlling interest	$	0.12		$	0.17	$	0.48	$	0.46
	Diluted - attributable to controlling interest	$	0.12		$	0.17	$	0.48	$	0.46

CHINA JO-JO DRUGSTORES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
						Nine months ended
						December 31,
						2011			2010
CASH FLOWS FROM OPERATING ACTIVITIES:
	Net income				$	6,449,341		$	6,017,366
	Adjustments to reconcile net income to net cash
		provided by (used in) operating activities:
			Depreciation and amortization			2,065,451			627,387
			Stock compensation			75,616			80,445
			Bad debt expense			543,435			130,170
			Change in fair value of purchase option derivative liability			(116,392	)		(91,546	)
	Changes in operating assets:
			Accounts receivable, trade			(5,082,547	)		(2,292,087	)
			Inventories			1,497,076			(1,257,608	)
			Other receivables			(636,952	)		(351,317	)
			Advances to suppliers			3,000,229			(10,724,139	)
			Other current assets			5,635,292			(501,851	)
			Long term deposit			(17,790	)		-
			Prepaid - noncurrent			153,828			(337,058	)
	Changes in operating liabilities:
			Accounts payable, trade			5,554,243			1,935,978
			Other payables and accrued liabilities			(862,802	)		(282,608	)
			Customer deposit			(213,660	)		-
			Taxes payable			(366,393	)		(38,313	)
				Net cash provided by (used in) operating activities		17,677,975			(7,085,181	)
CASH FLOWS FROM INVESTING ACTIVITIES:
	Payments and advance on property and equipment purchase					(11,727,452	)		(2,096,497	)
	Net payments for business acquisitions					(3,297,561	)		(593,440	)
				Net cash used in investing activities		(15,025,013	)		(2,689,937	)
CASH FLOWS FROM FINANCING ACTIVITIES:
	Change in restricted cash					(496,520	)		(417,930	)
	Payments on notes payable					(4,452,229	)		1,149,847
	Proceeds from equity financing					-			15,708,608
	Payments on short-term loans					-			(890,160	)
	Payments on other payables-related parties					-			(54,942	)
				Net cash (used in) provided by financing activities		(4,948,749	)		15,495,423
EFFECT OF EXCHANGE RATE ON CASH						145,548			332,488
(DECREASE) INCREASE IN CASH						(2,150,239	)		6,052,793
CASH, beginning of period						6,489,905			801,593
CASH, end of period					$	4,339,666		$	6,854,386
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
	Cash paid for interest				$	-		$	23,587
	Cash paid for income taxes				$	3,254,843		$	2,474,812
	Non-cash financing activities
		Notes payable transferred to accounts payable vendors			$	6,480,692		$	3,649,312

CONTACT:
China Jo-Jo Drugstores, Inc.
Ming Zhao, Chief Financial Officer
561-372-5555
frank.zhao@jojodrugstores.com