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</div><!-- Field: Rule-Page --><div style="margin-top: 0pt; margin-bottom: 0pt; width: 100%"><div style="font-size: 1pt; border-top: Black 2pt solid; border-bottom: Black 1pt solid">&#160;</div></div><!-- Field: /Rule-Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><b>UNITED STATES</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><b>SECURITIES AND EXCHANGE COMMISSION</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><b>WASHINGTON, D.C. 20549</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><b>FORM <ix:nonNumeric contextRef="c0" name="dei:DocumentType">20-F</ix:nonNumeric></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><ix:nonNumeric contextRef="c0" format="ixt:fixed-false" name="dei:DocumentRegistrationStatement">&#9744;</ix:nonNumeric> REGISTRATION STATEMENT PURSUANT TO SECTION
12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center">OR</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><ix:nonNumeric contextRef="c0" format="ixt:fixed-true" name="dei:DocumentAnnualReport">&#9746;</ix:nonNumeric> ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center">For the Fiscal year ended <ix:nonNumeric contextRef="c0" format="ixt:date-monthname-day-year-en" name="dei:DocumentPeriodEndDate"><ix:nonNumeric contextRef="c0" format="ixt:date-monthname-day-en" name="dei:CurrentFiscalYearEndDate">March&#160;31</ix:nonNumeric>, <ix:nonNumeric contextRef="c0" name="dei:DocumentFiscalYearFocus">2023</ix:nonNumeric></ix:nonNumeric></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center">OR</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><ix:nonNumeric contextRef="c0" format="ixt:fixed-false" name="dei:DocumentTransitionReport">&#9744;</ix:nonNumeric> TRANSITION REPORT PURSUANT TO SECTION 13
OR 15(d) OF THE SECURITIES EXCHANGE ACT OF&#160;1934</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center">For the transition period from __________ to __________</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><ix:nonNumeric contextRef="c0" format="ixt:fixed-false" name="dei:DocumentShellCompanyReport">&#9744;</ix:nonNumeric> SHELL COMPANY REPORT PURSUANT TO SECTION
13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center">Date of event requiring this shell company report
<span style="text-decoration:underline">________</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center">Commission file number: <ix:nonNumeric contextRef="c0" name="dei:EntityFileNumber"><span style="text-decoration:underline">001-40724</span></ix:nonNumeric></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><b><span style="-sec-ix-hidden: hidden-fact-0">China Jo-Jo Drugstores, Inc.</span></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center">(Exact name of Registrant as specified in its charter)</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center">Not applicable</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center">(Translation of Registrant&#8217;s name into English)</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse"> <tr style="vertical-align: bottom"> <td style="width: 49%; border-bottom: black 1.5pt solid; font-size: 10pt; text-align: center"><ix:nonNumeric contextRef="c0" format="ixt-sec:edgarprovcountryen" name="dei:EntityIncorporationStateCountryCode"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Cayman Islands</span></ix:nonNumeric></td> <td style="width: 2%; font-size: 10pt; text-align: center">&#160;</td> <td style="width: 49%; border-bottom: black 1.5pt solid"> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><ix:nonNumeric contextRef="c0" name="dei:EntityAddressAddressLine1">Hai Wai Hai Tongxin</ix:nonNumeric> <ix:nonNumeric contextRef="c0" name="dei:EntityAddressAddressLine2">Mansion Floor 6</ix:nonNumeric> <ix:nonNumeric contextRef="c0" name="dei:EntityAddressAddressLine3">Gong Shu District</ix:nonNumeric></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><ix:nonNumeric contextRef="c0" name="dei:EntityAddressCityOrTown">Hangzhou City</ix:nonNumeric>, Zhejiang Province</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">People&#8217;s Republic of <ix:nonNumeric contextRef="c0" format="ixt-sec:countrynameen" name="dei:EntityAddressCountry">China</ix:nonNumeric>, <ix:nonNumeric contextRef="c0" name="dei:EntityAddressPostalZipCode">310008</ix:nonNumeric></p></td></tr> <tr style="vertical-align: top"> <td style="font-size: 10pt; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(Jurisdiction of incorporation or organization)</span></td> <td style="font-size: 10pt; text-align: center">&#160;</td> <td style="font-size: 10pt; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(Address of principal executive offices)</span></td></tr> </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><ix:nonNumeric contextRef="c1" name="dei:ContactPersonnelName">Lei Liu</ix:nonNumeric></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><ix:nonNumeric contextRef="c1" name="dei:EntityAddressAddressLine1">Hai Wai Hai Tongxin</ix:nonNumeric> <ix:nonNumeric contextRef="c1" name="dei:EntityAddressAddressLine2">Mansion Floor 6</ix:nonNumeric> <ix:nonNumeric contextRef="c1" name="dei:EntityAddressAddressLine3">Gong Shu District</ix:nonNumeric></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><ix:nonNumeric contextRef="c1" name="dei:EntityAddressCityOrTown">Hangzhou City</ix:nonNumeric>, Zhejiang Province</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center">People&#8217;s Republic of <ix:nonNumeric contextRef="c1" format="ixt-sec:countrynameen" name="dei:EntityAddressCountry">China</ix:nonNumeric>, <ix:nonNumeric contextRef="c1" name="dei:EntityAddressPostalZipCode">310008</ix:nonNumeric></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center">Tel: <ix:nonNumeric contextRef="c1" name="dei:CityAreaCode">+86</ix:nonNumeric>-<ix:nonNumeric contextRef="c1" name="dei:LocalPhoneNumber">571-88219579</ix:nonNumeric></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center">(Name, telephone, Email and/or facsimile number
and address of company contact person)</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">Securities registered or to be registered pursuant
to Section 12(b) of the Act:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse"> <tr style="vertical-align: bottom"> <td style="width: 32%; border-bottom: black 1.5pt solid; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Title of each class</span></td> <td style="width: 2%; text-align: center">&#160;</td> <td style="width: 32%; border-bottom: black 1.5pt solid; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Trading Symbol(s)</span></td> <td style="width: 2%; text-align: center">&#160;</td> <td style="white-space: nowrap; width: 32%; border-bottom: black 1.5pt solid; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Name of each exchange on which registered</span></td></tr> <tr style="vertical-align: top; background-color: #CCEEFF"> <td style="text-align: center"><ix:nonNumeric contextRef="c0" name="dei:Security12bTitle"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Ordinary shares, par value $0.012 per share</span></ix:nonNumeric></td> <td style="text-align: center">&#160;</td> <td style="text-align: center"><ix:nonNumeric contextRef="c0" name="dei:TradingSymbol"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">CJJD</span></ix:nonNumeric></td> <td style="text-align: center">&#160;</td> <td style="text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><ix:nonNumeric contextRef="c0" format="ixt-sec:exchnameen" name="dei:SecurityExchangeName">Nasdaq</ix:nonNumeric> Capital Market</span></td></tr> </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center">Securities registered or to be registered pursuant
to Section 12(g) of the Act:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center">none</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center">(Title of Class)</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center">Securities for which there is a reporting obligation
pursuant to Section 15(d) of the Act:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center">none</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center">(Title of Class)</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></p><div>

</div><!-- Field: Page; Sequence: 1 --><div>
    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><p style="margin: 0pt">&#160;</p></div><div>
    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Indicate the number of outstanding
shares of each of the issuer&#8217;s classes of capital or ordinary shares as of the close of the period covered by the annual report.
<ix:nonFraction contextRef="c2" decimals="INF" format="ixt:num-dot-decimal" name="dei:EntityCommonStockSharesOutstanding" scale="0" unitRef="shares">23,697,210</ix:nonFraction> Ordinary Shares and 0 Preferred Shares outstanding as of March&#160;31, 2023.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Indicate by check mark if
the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. &#9744; Yes &#9746; <ix:nonNumeric contextRef="c0" name="dei:EntityWellKnownSeasonedIssuer">No</ix:nonNumeric></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">If this report is an annual
or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934. &#9744; Yes &#9746; <ix:nonNumeric contextRef="c0" name="dei:EntityVoluntaryFilers">No</ix:nonNumeric></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Indicate by check mark whether
the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. &#9746; <ix:nonNumeric contextRef="c0" name="dei:EntityCurrentReportingStatus">Yes</ix:nonNumeric> &#9744; No</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Indicate by check mark whether
the registrant has submitted electronically every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation
S-T (&#167;232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit
and post such files). &#9746; <ix:nonNumeric contextRef="c0" name="dei:EntityInteractiveDataCurrent">Yes</ix:nonNumeric> &#9744; No</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Indicate by check mark whether
the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or an &#8220;emerging growth company.&#8221;
See definition of &#8220;accelerated filer and large accelerated filer&#8221; in Rule 12b-2 of the Exchange Act.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse"> <tr style="vertical-align: top"> <td style="width: 9%">&#160;</td> <td style="white-space: nowrap; width: 29%"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Large accelerated filer</span></td> <td style="white-space: nowrap; width: 13%"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9744;</span></td> <td style="white-space: nowrap; width: 13%"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Accelerated filer</span></td> <td style="white-space: nowrap; width: 9%"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9744;</span></td> <td style="white-space: nowrap; width: 18%"><ix:nonNumeric contextRef="c0" format="ixt-sec:entityfilercategoryen" name="dei:EntityFilerCategory"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Non-accelerated filer</span></ix:nonNumeric></td> <td style="white-space: nowrap; width: 9%"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9746;</span></td></tr> <tr style="vertical-align: top"> <td>&#160;</td> <td style="white-space: nowrap"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Emerging growth company</span></td> <td style="white-space: nowrap"><ix:nonNumeric contextRef="c0" format="ixt:fixed-false" name="dei:EntityEmergingGrowthCompany"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9744;</span></ix:nonNumeric></td> <td colspan="2" style="white-space: nowrap">&#160;</td> <td colspan="2" style="white-space: nowrap">&#160;</td></tr> </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">If an emerging growth company
that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the
extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of
the Exchange Act. &#9744;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Indicate by check mark whether
the registrant has filed a report on and attestation to its management&#8217;s assessment of the effectiveness of its internal control
over financial reporting under&#160;Section 404(b) of the Sarbanes-Oxley Act&#160;(15 U.S.C. 7262(b)) by the registered public accounting
firm that prepared or issued its audit report. <ix:nonNumeric contextRef="c0" format="ixt:fixed-false" name="dei:IcfrAuditorAttestationFlag">&#9744;</ix:nonNumeric></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">If securities are registered pursuant to Section 12(b) of the Act, indicate by check
mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued
financial statements. <ix:nonNumeric contextRef="c0" format="ixt:fixed-false" name="dei:DocumentFinStmtErrorCorrectionFlag">&#9744;</ix:nonNumeric></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Indicate by check mark whether
any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the
registrant&#8217;s executive officers during the relevant recovery period pursuant to &#167;240.10D-1(b). &#9744;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Indicate by check mark which
basis of accounting the registrant has used to prepare the financial statements included in this filing.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse"> <tr style="vertical-align: top"> <td style="width: 9%">&#160;</td> <td style="width: 18%; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><ix:nonNumeric contextRef="c0" name="dei:DocumentAccountingStandard">U.S. GAAP</ix:nonNumeric> &#9746;</span></td> <td style="width: 1%; text-align: justify">&#160;</td> <td style="width: 53%"> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">International Financial Reporting Standards as issued</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">by the International Accounting Standards Board &#9744;</p></td> <td style="width: 1%; text-align: justify">&#160;</td> <td style="width: 18%; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Other &#9744;</span></td></tr> </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">If &#8220;Other&#8221; has
been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to
follow. Item 17 &#9744; Item 18 &#9744;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">If this is an annual report,
indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). &#9744; Yes <ix:nonNumeric contextRef="c0" format="ixt:fixed-false" name="dei:EntityShellCompany">&#9746;</ix:nonNumeric> No</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></p><div>

</div><!-- Field: Rule-Page --><div style="margin-top: 0pt; margin-bottom: 0pt; width: 100%"><div style="font-size: 1pt; border-top: Black 1pt solid; border-bottom: Black 2pt solid">&#160;</div></div><!-- Field: /Rule-Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></p><div>

</div><!-- Field: Page; Sequence: 2 --><div>
    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><p style="margin: 0pt">&#160;</p></div><div>
    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>In this annual report:</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 0.5in; text-align: justify">&#160;</td>
    <td style="width: 0.25in; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i>References to the &#8220;Company&#8221;, &#8220;we&#8221;, &#8220;our&#8221; and &#8220;us&#8221; are to China Jo-Jo Drugstores, Inc., a Cayman Islands company, and its predecessor China Jo-Jo Drugstores, Inc., a Nevada corporation, and its consolidated subsidiaries, subsidiaries controlled by contract and therefore deemed as variable interest entities under U.S. GAAP;</i></span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 0.5in; text-align: justify">&#160;</td>
    <td style="width: 0.25in; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i>References to &#8220;China&#8221; or the &#8220;PRC&#8221; refers to the People&#8217;s Republic of China, excluding, for the purposes of this annual report only, Hong Kong, Macau and Taiwan;&#160;&#160;</i></span></td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i>References to &#8220;RMB&#8221; and &#8220;Renminbi&#8221; refer to the legal currency of China;</i></span></td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#8220;US$,&#8221; &#8220;U.S. dollars,&#8221; &#8220;$,&#8221; and &#8220;dollars&#8221; refer to the legal currency of the United States;&#160;</span></td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i>References to &#8220;variable interest entit[y][ies]&#8221; or &#8220;VIE[s]&#8221; refer to Jiuzhou Pharmacy, Jiuzhou Clinic and Jiuzhou Service, as well as the subsidiaries of Jiuzhou Pharmacy, collectively as &#8220;HJ Group&#8221;</i>.</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Special Note Regarding Forward-looking Statements</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">This report contains forward-looking
statements. All forward-looking statements are inherently uncertain as they are based on current expectations and assumptions concerning
future events or future performance of the registrant. Readers are cautioned not to place undue reliance on these forward-looking statements,
which are only predictions and speak only as of the date hereof. Forward-looking statements usually contain the words &#8220;estimate,&#8221;
&#8220;anticipate,&#8221; &#8220;believe,&#8221; &#8220;expect,&#8221; or similar expressions, and are subject to numerous known and unknown
risks and uncertainties. In evaluating such statements, prospective investors should carefully review various risks and uncertainties
identified in this report, including the matters set forth under the captions &#8220;Risk Factors&#8221; and in the registrant&#8217;s
other SEC filings. These risks and uncertainties could cause the registrant&#8217;s actual results to differ materially from those indicated
in the forward-looking statements. The registrant undertakes no obligation to update or publicly announce revisions to any forward-looking
statements to reflect future events or developments.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Although forward-looking statements
in this report reflect the good faith judgment of our management, such statements can only be based on facts and factors currently known
by us. Consequently, forward-looking statements are inherently subject to risks and uncertainties, and actual results and outcomes may
differ materially from the results and outcomes discussed in or anticipated by the forward-looking statements. Factors that could cause
or contribute to such differences in results and outcomes include, without limitation, those specifically addressed under the heading
&#8220;<i>Risks Relating to Our Business</i>&#8221; below, as well as those discussed elsewhere in this report. Readers are urged not to
place undue reliance on these forward-looking statements, which speak only as of the date of this report. We file reports with the Securities
and Exchange Commission (the &#8220;SEC&#8221;). You can read and copy any materials we file with the SEC at our internet address at www.jiuzhou360.com.
In addition, the SEC maintains an Internet site (www.sec.gov) that contains reports, proxy and information statements, and other information
regarding issuers that file electronically with the SEC, including the registrant.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We undertake no obligation
to revise or update any forward-looking statements in order to reflect any event or circumstance that may arise after the date of this
report. Readers are urged to carefully review and consider the various disclosures made throughout the entirety of this report, which
attempt to advise interested parties of the risks and factors that may affect our business, financial condition, results of operations
and prospects.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

</div><!-- Field: Page; Sequence: 3 --><div>
    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><p style="margin: 0pt">&#160;</p></div><div>
    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><b>TABLE OF CONTENTS</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="background-color: rgb(204,238,255)">
    <td style="vertical-align: top; width: 10%"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><a href="#a_001">Part I</a></span></td>
    <td style="vertical-align: top; width: 3%">&#160;</td>
    <td style="vertical-align: top; width: 78%; text-align: justify">&#160;</td>
    <td style="vertical-align: bottom; width: 9%; text-align: center">&#160;</td></tr>
  <tr>
    <td style="padding-left: 0.125in; vertical-align: top"><a href="#a_002"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Item 1.</span></a></td>
    <td style="vertical-align: top">&#160;</td>
    <td style="vertical-align: top; text-align: justify"><a href="#a_002"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Identity of Directors, Senior Management and Advisers</span></a></td>
    <td style="vertical-align: bottom; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">1</span></td></tr>
  <tr style="background-color: rgb(204,238,255)">
    <td style="padding-left: 0.125in; vertical-align: top"><a href="#a_003"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Item 2.</span></a></td>
    <td style="vertical-align: top">&#160;</td>
    <td style="vertical-align: top; text-align: justify"><a href="#a_003"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Offer Statistics and Expected Timetable</span></a></td>
    <td style="vertical-align: bottom; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">1</span></td></tr>
  <tr>
    <td style="padding-left: 0.125in; vertical-align: top"><a href="#a_004"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Item 3.</span></a></td>
    <td style="vertical-align: top">&#160;</td>
    <td style="vertical-align: top; text-align: justify"><a href="#a_004"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Key Information</span></a></td>
    <td style="vertical-align: bottom; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">1</span></td></tr>
  <tr style="background-color: rgb(204,238,255)">
    <td style="vertical-align: top">&#160;</td>
    <td style="vertical-align: top"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><a href="#a_005">A.</a></span></td>
    <td style="vertical-align: top; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><a href="#a_005">[Reserved]</a></span></td>
    <td style="vertical-align: bottom; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">1</span></td></tr>
  <tr>
    <td style="vertical-align: top">&#160;</td>
    <td style="vertical-align: top"><a href="#a_006"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">B.</span></a></td>
    <td style="vertical-align: top; text-align: justify"><a href="#a_006"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Capitalization and Indebtedness</span></a></td>
    <td style="vertical-align: bottom; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">1</span></td></tr>
  <tr style="background-color: rgb(204,238,255)">
    <td style="vertical-align: top">&#160;</td>
    <td style="vertical-align: top"><a href="#a_007"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">C.</span></a></td>
    <td style="vertical-align: top; text-align: justify"><a href="#a_007"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Reasons for the Offer and Use of Proceeds</span></a></td>
    <td style="vertical-align: bottom; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">1</span></td></tr>
  <tr>
    <td style="vertical-align: top">&#160;</td>
    <td style="vertical-align: top"><a href="#a_008"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">D.</span></a></td>
    <td style="vertical-align: top; text-align: justify"><a href="#a_008"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Risk Factors</span></a></td>
    <td style="vertical-align: bottom; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">1</span></td></tr>
  <tr style="background-color: rgb(204,238,255)">
    <td style="padding-left: 0.125in; vertical-align: top"><a href="#a_009"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Item 4.</span></a></td>
    <td style="vertical-align: top">&#160;</td>
    <td style="vertical-align: top; text-align: justify"><a href="#a_009"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Information on the Company</span></a></td>
    <td style="vertical-align: bottom; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">32</span></td></tr>
  <tr>
    <td style="vertical-align: top">&#160;</td>
    <td style="vertical-align: top"><a href="#a_010"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">A.</span></a></td>
    <td style="vertical-align: top; text-align: justify"><a href="#a_010"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">History and Development of the Company</span></a></td>
    <td style="vertical-align: bottom; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">32</span></td></tr>
  <tr style="background-color: rgb(204,238,255)">
    <td style="vertical-align: top">&#160;</td>
    <td style="vertical-align: top"><a href="#a_011"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">B.</span></a></td>
    <td style="vertical-align: top; text-align: justify"><a href="#a_011"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Business Overview</span></a></td>
    <td style="vertical-align: bottom; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">34</span></td></tr>
  <tr>
    <td style="vertical-align: top">&#160;</td>
    <td style="vertical-align: top"><a href="#a_012"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">C.</span></a></td>
    <td style="vertical-align: top; text-align: justify"><a href="#a_012"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Organizational Structure</span></a></td>
    <td style="vertical-align: bottom; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">39</span></td></tr>
  <tr style="background-color: rgb(204,238,255)">
    <td style="vertical-align: top">&#160;</td>
    <td style="vertical-align: top"><a href="#a_013"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">D.</span></a></td>
    <td style="vertical-align: top; text-align: justify"><a href="#a_013"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Property, Plants and Equipment</span></a></td>
    <td style="vertical-align: bottom; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">42</span></td></tr>
  <tr>
    <td style="padding-left: 0.125in; vertical-align: top"><a href="#a_014"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Item 4A.</span></a></td>
    <td style="vertical-align: top">&#160;</td>
    <td style="vertical-align: top; text-align: justify"><a href="#a_014"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Unresolved Staff Comments</span></a></td>
    <td style="vertical-align: bottom; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">42</span></td></tr>
  <tr style="background-color: rgb(204,238,255)">
    <td style="padding-left: 0.125in; vertical-align: top"><a href="#a_015"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Item 5.</span></a></td>
    <td style="vertical-align: top">&#160;</td>
    <td style="vertical-align: top; text-align: justify"><a href="#a_015"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Operating and Financial Review and Prospects</span></a></td>
    <td style="vertical-align: bottom; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">42</span></td></tr>
  <tr>
    <td style="vertical-align: top">&#160;</td>
    <td style="vertical-align: top"><a href="#a_016"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">A.</span></a></td>
    <td style="vertical-align: top; text-align: justify"><a href="#a_016"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Operating Results</span></a></td>
    <td style="vertical-align: bottom; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">42</span></td></tr>
  <tr style="background-color: rgb(204,238,255)">
    <td style="vertical-align: top">&#160;</td>
    <td style="vertical-align: top"><a href="#a_017"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">B.</span></a></td>
    <td style="vertical-align: top; text-align: justify"><a href="#a_017"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Liquidity and Capital Resources</span></a></td>
    <td style="vertical-align: bottom; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">52</span></td></tr>
  <tr>
    <td style="vertical-align: top">&#160;</td>
    <td style="vertical-align: top"><a href="#a_018"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">C.</span></a></td>
    <td style="vertical-align: top; text-align: justify"><a href="#a_018"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Research and Development, Patents and Licenses, etc.</span></a></td>
    <td style="vertical-align: bottom; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">52</span></td></tr>
  <tr style="background-color: rgb(204,238,255)">
    <td style="vertical-align: top">&#160;</td>
    <td style="vertical-align: top"><a href="#a_019"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">D.</span></a></td>
    <td style="vertical-align: top; text-align: justify"><a href="#a_019"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Trend Information</span></a></td>
    <td style="vertical-align: bottom; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">52</span></td></tr>
  <tr>
    <td style="vertical-align: top">&#160;</td>
    <td style="vertical-align: top"><a href="#a_020"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">E.</span></a></td>
    <td style="vertical-align: top; text-align: justify"><a href="#a_020"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Off-balance Sheet Arrangements</span></a></td>
    <td style="vertical-align: bottom; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">53</span></td></tr>
  <tr style="background-color: rgb(204,238,255)">
    <td style="vertical-align: top">&#160;</td>
    <td style="vertical-align: top"><a href="#a_021"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">F.</span></a></td>
    <td style="vertical-align: top; text-align: justify"><a href="#a_021"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Tabular Disclosure of Contractual Obligations</span></a></td>
    <td style="vertical-align: bottom; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">53</span></td></tr>
  <tr>
    <td style="padding-left: 0.125in; vertical-align: top"><a href="#a_022"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Item 6.</span></a></td>
    <td style="vertical-align: top">&#160;</td>
    <td style="vertical-align: top; text-align: justify"><a href="#a_022"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Directors, Senior Management and Employees</span></a></td>
    <td style="vertical-align: bottom; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">53</span></td></tr>
  <tr style="background-color: rgb(204,238,255)">
    <td style="vertical-align: top">&#160;</td>
    <td style="vertical-align: top"><a href="#a_023"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">A.</span></a></td>
    <td style="vertical-align: top; text-align: justify"><a href="#a_023"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Directors and Senior Management</span></a></td>
    <td style="vertical-align: bottom; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">53</span></td></tr>
  <tr>
    <td style="vertical-align: top">&#160;</td>
    <td style="vertical-align: top"><a href="#a_024"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">B.</span></a></td>
    <td style="vertical-align: top; text-align: justify"><a href="#a_024"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Compensation</span></a></td>
    <td style="vertical-align: bottom; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">55</span></td></tr>
  <tr style="background-color: rgb(204,238,255)">
    <td style="vertical-align: top">&#160;</td>
    <td style="vertical-align: top"><a href="#a_025"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">C.</span></a></td>
    <td style="vertical-align: top; text-align: justify"><a href="#a_025"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Board Practices</span></a></td>
    <td style="vertical-align: bottom; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">59</span></td></tr>
  <tr>
    <td style="vertical-align: top">&#160;</td>
    <td style="vertical-align: top"><a href="#a_026"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">D.</span></a></td>
    <td style="vertical-align: top; text-align: justify"><a href="#a_026"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Employees</span></a></td>
    <td style="vertical-align: bottom; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">60</span></td></tr>
  <tr style="background-color: rgb(204,238,255)">
    <td style="vertical-align: top">&#160;</td>
    <td style="vertical-align: top"><a href="#a_027"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">E.</span></a></td>
    <td style="vertical-align: top; text-align: justify"><a href="#a_027"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Share Ownership</span></a></td>
    <td style="vertical-align: bottom; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">61</span></td></tr>
  <tr>
    <td style="vertical-align: top">&#160;</td>
    <td style="vertical-align: top"><a href="#a_075">F.</a></td>
    <td style="vertical-align: top; text-align: justify"><a href="#a_075">Disclosure of a registrant&#8217;s action to recover erroneously awarded
compensation</a></td>
    <td style="vertical-align: bottom; text-align: center">61</td></tr>
  <tr style="background-color: rgb(204,238,255)">
    <td style="padding-left: 0.125in; vertical-align: top"><a href="#a_028"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Item 7.</span></a></td>
    <td style="vertical-align: top">&#160;</td>
    <td style="vertical-align: top; text-align: justify"><a href="#a_028"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Major Shareholders and Related Party Transactions</span></a></td>
    <td style="vertical-align: bottom; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">62</span></td></tr>
  <tr>
    <td style="vertical-align: top">&#160;</td>
    <td style="vertical-align: top"><a href="#a_029"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">A.</span></a></td>
    <td style="vertical-align: top; text-align: justify"><a href="#a_029"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Major Shareholders</span></a></td>
    <td style="vertical-align: bottom; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">62</span></td></tr>
  <tr style="background-color: rgb(204,238,255)">
    <td style="vertical-align: top">&#160;</td>
    <td style="vertical-align: top"><a href="#a_030"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">B.</span></a></td>
    <td style="vertical-align: top; text-align: justify"><a href="#a_030"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Related Party Transactions</span></a></td>
    <td style="vertical-align: bottom; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">62</span></td></tr>
  <tr>
    <td style="vertical-align: top">&#160;</td>
    <td style="vertical-align: top"><a href="#a_031"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">C.</span></a></td>
    <td style="vertical-align: top; text-align: justify"><a href="#a_031"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Interests of Experts and Counsel</span></a></td>
    <td style="vertical-align: bottom; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">62</span></td></tr>
  <tr style="background-color: rgb(204,238,255)">
    <td style="padding-left: 0.125in; vertical-align: top"><a href="#a_032"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Item 8.</span></a></td>
    <td style="vertical-align: top">&#160;</td>
    <td style="vertical-align: top; text-align: justify"><a href="#a_032"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Financial Information</span></a></td>
    <td style="vertical-align: bottom; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">63</span></td></tr>
  <tr>
    <td style="vertical-align: top">&#160;</td>
    <td style="vertical-align: top"><a href="#a_033"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">A.</span></a></td>
    <td style="vertical-align: top; text-align: justify"><a href="#a_033"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Consolidated Statements and Other Financial Information</span></a></td>
    <td style="vertical-align: bottom; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">63</span></td></tr>
  <tr style="background-color: rgb(204,238,255)">
    <td style="vertical-align: top">&#160;</td>
    <td style="vertical-align: top"><a href="#a_034"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">B.</span></a></td>
    <td style="vertical-align: top; text-align: justify"><a href="#a_034"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Significant Changes</span></a></td>
    <td style="vertical-align: bottom; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">63</span></td></tr>
  <tr>
    <td style="padding-left: 0.125in; vertical-align: top"><a href="#a_035"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Item 9.</span></a></td>
    <td style="vertical-align: top">&#160;</td>
    <td style="vertical-align: top; text-align: justify"><a href="#a_035"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The Offer and Listing</span></a></td>
    <td style="vertical-align: bottom; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">63</span></td></tr>
  <tr style="background-color: rgb(204,238,255)">
    <td style="vertical-align: top">&#160;</td>
    <td style="vertical-align: top"><a href="#a_036"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">A.</span></a></td>
    <td style="vertical-align: top; text-align: justify"><a href="#a_036"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Offer and Listing Details</span></a></td>
    <td style="vertical-align: bottom; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">63</span></td></tr>
  <tr>
    <td style="vertical-align: top">&#160;</td>
    <td style="vertical-align: top"><a href="#a_037"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">B.</span></a></td>
    <td style="vertical-align: top; text-align: justify"><a href="#a_037"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Plan of Distribution</span></a></td>
    <td style="vertical-align: bottom; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">63</span></td></tr>
  <tr style="background-color: rgb(204,238,255)">
    <td style="vertical-align: top">&#160;</td>
    <td style="vertical-align: top"><a href="#a_038"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">C.</span></a></td>
    <td style="vertical-align: top; text-align: justify"><a href="#a_038"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Markets</span></a></td>
    <td style="vertical-align: bottom; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">63</span></td></tr>
  <tr>
    <td style="vertical-align: top">&#160;</td>
    <td style="vertical-align: top"><a href="#a_039"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">D.</span></a></td>
    <td style="vertical-align: top; text-align: justify"><a href="#a_039"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Selling shareholders</span></a></td>
    <td style="vertical-align: bottom; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">63</span></td></tr>
  <tr style="background-color: rgb(204,238,255)">
    <td style="vertical-align: top">&#160;</td>
    <td style="vertical-align: top"><a href="#a_040"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">E.</span></a></td>
    <td style="vertical-align: top; text-align: justify"><a href="#a_040"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Dilution</span></a></td>
    <td style="vertical-align: bottom; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">63</span></td></tr>
  <tr>
    <td style="vertical-align: top">&#160;</td>
    <td style="vertical-align: top"><a href="#a_041"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">F.</span></a></td>
    <td style="vertical-align: top; text-align: justify"><a href="#a_041"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Expenses of the issue</span></a></td>
    <td style="vertical-align: bottom; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">63</span></td></tr>
  <tr style="background-color: rgb(204,238,255)">
    <td style="padding-left: 0.125in; vertical-align: top"><a href="#a_042"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Item 10.</span></a></td>
    <td style="vertical-align: top">&#160;</td>
    <td style="vertical-align: top; text-align: justify"><a href="#a_042"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Additional Information</span></a></td>
    <td style="vertical-align: bottom; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">64</span></td></tr>
  <tr>
    <td style="vertical-align: top">&#160;</td>
    <td style="vertical-align: top"><a href="#a_043"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">A.</span></a></td>
    <td style="vertical-align: top; text-align: justify"><a href="#a_043"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Share Capital</span></a></td>
    <td style="vertical-align: bottom; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">64</span></td></tr>
  <tr style="background-color: rgb(204,238,255)">
    <td style="vertical-align: top">&#160;</td>
    <td style="vertical-align: top"><a href="#a_044"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">B.</span></a></td>
    <td style="vertical-align: top; text-align: justify"><a href="#a_044"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Memorandum and Articles of Association</span></a></td>
    <td style="vertical-align: bottom; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">64</span></td></tr>
  <tr>
    <td style="vertical-align: top">&#160;</td>
    <td style="vertical-align: top"><a href="#a_045"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">C.</span></a></td>
    <td style="vertical-align: top; text-align: justify"><a href="#a_045"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Material Contracts</span></a></td>
    <td style="vertical-align: bottom; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">69</span></td></tr>
  <tr style="background-color: rgb(204,238,255)">
    <td style="vertical-align: top">&#160;</td>
    <td style="vertical-align: top"><a href="#a_046"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">D.</span></a></td>
    <td style="vertical-align: top; text-align: justify"><a href="#a_046"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Exchange Controls</span></a></td>
    <td style="vertical-align: bottom; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">69</span></td></tr>
  <tr>
    <td style="vertical-align: top">&#160;</td>
    <td style="vertical-align: top"><a href="#a_047"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">E.</span></a></td>
    <td style="vertical-align: top; text-align: justify"><a href="#a_047"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Taxation</span></a></td>
    <td style="vertical-align: bottom; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">70</span></td></tr>
  <tr style="background-color: rgb(204,238,255)">
    <td style="vertical-align: top">&#160;</td>
    <td style="vertical-align: top"><a href="#a_048"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">F.</span></a></td>
    <td style="vertical-align: top; text-align: justify"><a href="#a_048"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Dividends and Paying Agents</span></a></td>
    <td style="vertical-align: bottom; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">71</span></td></tr>
  <tr>
    <td style="vertical-align: top">&#160;</td>
    <td style="vertical-align: top"><a href="#a_049"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">G.</span></a></td>
    <td style="vertical-align: top; text-align: justify"><a href="#a_049"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Statement by Experts</span></a></td>
    <td style="vertical-align: bottom; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">71</span></td></tr>
  <tr style="background-color: rgb(204,238,255)">
    <td style="vertical-align: top">&#160;</td>
    <td style="vertical-align: top"><a href="#a_050"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">H.</span></a></td>
    <td style="vertical-align: top; text-align: justify"><a href="#a_050"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Documents on Display</span></a></td>
    <td style="vertical-align: bottom; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">71</span></td></tr>
  <tr>
    <td style="vertical-align: top">&#160;</td>
    <td style="vertical-align: top"><a href="#a_051"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">I.</span></a></td>
    <td style="vertical-align: top; text-align: justify"><a href="#a_051"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Subsidiary Information</span></a></td>
    <td style="vertical-align: bottom; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">71</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

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    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt"><!-- Field: Sequence; Type: LowerRoman; Name: PageNo -->i<!-- Field: /Sequence --></p></div><div>
    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="background-color: rgb(204,238,255)">
    <td style="vertical-align: top; width: 10%; padding-left: 9pt"><a href="#a_052"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Item 11.</span></a></td>
    <td style="vertical-align: top; width: 3%">&#160;</td>
    <td style="vertical-align: top; width: 78%; padding-left: 9pt; text-align: justify; text-indent: -9pt"><a href="#a_052"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Quantitative and Qualitative Disclosures about Market Risk</span></a></td>
    <td style="vertical-align: bottom; width: 9%; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">71</span></td></tr>
  <tr>
    <td style="vertical-align: top; padding-left: 9pt"><a href="#a_053"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Item 12.</span></a></td>
    <td style="vertical-align: top">&#160;</td>
    <td style="vertical-align: top; padding-left: 9pt; text-align: justify; text-indent: -9pt"><a href="#a_053"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Description of Securities Other than Equity Securities</span></a></td>
    <td style="vertical-align: bottom; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">73</span></td></tr>
  <tr style="background-color: rgb(204,238,255)">
    <td style="vertical-align: top; padding-left: 9pt">&#160;</td>
    <td style="vertical-align: top"><a href="#a_054"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">A.</span></a></td>
    <td style="vertical-align: top; padding-left: 9pt; text-align: justify; text-indent: -9pt"><a href="#a_054"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Debt Securities</span></a></td>
    <td style="vertical-align: bottom; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">73</span></td></tr>
  <tr>
    <td style="vertical-align: top; padding-left: 9pt">&#160;</td>
    <td style="vertical-align: top"><a href="#a_055"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">B.</span></a></td>
    <td style="vertical-align: top; padding-left: 9pt; text-align: justify; text-indent: -9pt"><a href="#a_055"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Warrants and Rights</span></a></td>
    <td style="vertical-align: bottom; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">73</span></td></tr>
  <tr style="background-color: rgb(204,238,255)">
    <td style="vertical-align: top; padding-left: 9pt">&#160;</td>
    <td style="vertical-align: top"><a href="#a_056"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">C.</span></a></td>
    <td style="vertical-align: top; padding-left: 9pt; text-align: justify; text-indent: -9pt"><a href="#a_056"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Other Securities</span></a></td>
    <td style="vertical-align: bottom; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">73</span></td></tr>
  <tr>
    <td style="vertical-align: top; padding-left: 9pt">&#160;</td>
    <td style="vertical-align: top"><a href="#a_057"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">D.</span></a></td>
    <td style="vertical-align: top; padding-left: 9pt; text-align: justify; text-indent: -9pt"><a href="#a_057"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">American Depositary Shares</span></a></td>
    <td style="vertical-align: bottom; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">73</span></td></tr>
  <tr style="background-color: rgb(204,238,255)">
    <td style="vertical-align: top; padding-left: 9pt">&#160;</td>
    <td style="vertical-align: top">&#160;</td>
    <td style="vertical-align: top; padding-left: 9pt; text-align: justify; text-indent: -9pt">&#160;</td>
    <td style="vertical-align: bottom; text-align: center">&#160;</td></tr>
  <tr>
    <td style="vertical-align: top"><a href="#a_058"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Part II </span></a></td>
    <td style="vertical-align: top">&#160;</td>
    <td style="vertical-align: top; padding-left: 9pt; text-align: justify; text-indent: -9pt">&#160;</td>
    <td style="vertical-align: bottom; text-align: center">&#160;</td></tr>
  <tr style="background-color: rgb(204,238,255)">
    <td style="vertical-align: top; padding-left: 9pt"><a href="#a_059"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Item 13.</span></a></td>
    <td style="vertical-align: top">&#160;</td>
    <td style="vertical-align: top; padding-left: 9pt; text-align: justify; text-indent: -9pt"><a href="#a_059"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Defaults, Dividend Arrearages and Delinquencies</span></a></td>
    <td style="vertical-align: bottom; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">74</span></td></tr>
  <tr>
    <td style="vertical-align: top; padding-left: 9pt"><a href="#a_060"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Item 14.</span></a></td>
    <td style="vertical-align: top">&#160;</td>
    <td style="vertical-align: top; padding-left: 9pt; text-align: justify; text-indent: -9pt"><a href="#a_060"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Material Modifications to the Rights of Security Holders and Use of Proceeds</span></a></td>
    <td style="vertical-align: bottom; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">74</span></td></tr>
  <tr style="background-color: rgb(204,238,255)">
    <td style="vertical-align: top; padding-left: 9pt"><a href="#a_061"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Item 15.</span></a></td>
    <td style="vertical-align: top">&#160;</td>
    <td style="vertical-align: top; padding-left: 9pt; text-align: justify; text-indent: -9pt"><a href="#a_061"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Controls and Procedures</span></a></td>
    <td style="vertical-align: bottom; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">74</span></td></tr>
  <tr>
    <td style="vertical-align: top; padding-left: 9pt"><a href="#a_077">Item 16.</a></td>
    <td style="vertical-align: top">&#160;</td>
    <td style="vertical-align: top; padding-left: 9pt; text-align: justify; text-indent: -9pt"><a href="#a_077">[Reserved]</a></td>
    <td style="vertical-align: bottom; text-align: center">75</td></tr>
  <tr style="background-color: rgb(204,238,255)">
    <td style="vertical-align: top; padding-left: 9pt"><a href="#a_062"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Item 16A.</span></a></td>
    <td style="vertical-align: top">&#160;</td>
    <td style="vertical-align: top; padding-left: 9pt; text-align: justify; text-indent: -9pt"><a href="#a_062"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Audit Committee Financial Expert</span></a></td>
    <td style="vertical-align: bottom; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">75</span></td></tr>
  <tr>
    <td style="vertical-align: top; padding-left: 9pt"><a href="#a_063"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Item 16B.</span></a></td>
    <td style="vertical-align: top">&#160;</td>
    <td style="vertical-align: top; padding-left: 9pt; text-align: justify; text-indent: -9pt"><a href="#a_063"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Code of Ethics</span></a></td>
    <td style="vertical-align: bottom; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">75</span></td></tr>
  <tr style="background-color: rgb(204,238,255)">
    <td style="vertical-align: top; padding-left: 9pt"><a href="#a_064"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Item 16C.</span></a></td>
    <td style="vertical-align: top">&#160;</td>
    <td style="vertical-align: top; padding-left: 9pt; text-align: justify; text-indent: -9pt"><a href="#a_064"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Principal Accountant Fees and Services</span></a></td>
    <td style="vertical-align: bottom; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">76</span></td></tr>
  <tr>
    <td style="vertical-align: top; padding-left: 9pt"><a href="#a_065"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Item 16D.</span></a></td>
    <td style="vertical-align: top">&#160;</td>
    <td style="vertical-align: top; padding-left: 9pt; text-align: justify; text-indent: -9pt"><a href="#a_065"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Exemptions from the Listing Standards for Audit Committees</span></a></td>
    <td style="vertical-align: bottom; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">76</span></td></tr>
  <tr style="background-color: rgb(204,238,255)">
    <td style="vertical-align: top; padding-left: 9pt"><a href="#a_066"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Item 16E.</span></a></td>
    <td style="vertical-align: top">&#160;</td>
    <td style="vertical-align: top; padding-left: 9pt; text-align: justify; text-indent: -9pt"><a href="#a_066"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Purchases of Equity Securities by the Issuer and Affiliated Purchasers</span></a></td>
    <td style="vertical-align: bottom; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">77</span></td></tr>
  <tr>
    <td style="vertical-align: top; padding-left: 9pt"><a href="#a_067"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Item 16F.</span></a></td>
    <td style="vertical-align: top">&#160;</td>
    <td style="vertical-align: top; padding-left: 9pt; text-align: justify; text-indent: -9pt"><a href="#a_067"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Change in Registrant&#8217;s Certifying Accountant</span></a></td>
    <td style="vertical-align: bottom; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">77</span></td></tr>
  <tr style="background-color: rgb(204,238,255)">
    <td style="vertical-align: top; padding-left: 9pt"><a href="#a_068"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Item 16G.</span></a></td>
    <td style="vertical-align: top">&#160;</td>
    <td style="vertical-align: top; padding-left: 9pt; text-align: justify; text-indent: -9pt"><a href="#a_068"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Corporate Governance</span></a></td>
    <td style="vertical-align: bottom; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">77</span></td></tr>
  <tr>
    <td style="vertical-align: top; padding-left: 9pt"><a href="#a_069"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Item 16H.</span></a></td>
    <td style="vertical-align: top">&#160;</td>
    <td style="vertical-align: top; padding-left: 9pt; text-align: justify; text-indent: -9pt"><a href="#a_069"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Mine Safety Disclosure</span></a></td>
    <td style="vertical-align: bottom; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">77</span></td></tr>
  <tr style="background-color: rgb(204,238,255)">
    <td style="vertical-align: top; padding-left: 9pt"><a href="#a_070">Item 16I</a></td>
    <td style="vertical-align: top">&#160;</td>
    <td style="font-style: normal; text-transform: none; vertical-align: top; padding-left: 9pt; text-align: justify; text-indent: -9pt; font-weight: normal"><a href="#a_070">Disclosure Regarding Foreign Jurisdictions That Prevent Inspections</a></td>
    <td style="vertical-align: bottom; text-align: center">77</td></tr>
  <tr>
    <td style="vertical-align: top; padding-left: 9pt"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><a href="#a_076">Item 16J</a></p>
</td>
    <td style="vertical-align: top">&#160;</td>
    <td style="font-style: normal; text-transform: none; vertical-align: top; padding-left: 9pt; text-align: justify; text-indent: -9pt; font-weight: normal"><a href="#a_076">Insider trading policies</a></td>
    <td style="vertical-align: bottom; text-align: center">78</td></tr>
  <tr style="background-color: rgb(204,238,255)">
    <td style="vertical-align: top; padding-left: 9pt">&#160;</td>
    <td style="vertical-align: top">&#160;</td>
    <td style="vertical-align: top; padding-left: 9pt; text-align: justify; text-indent: -9pt">&#160;</td>
    <td style="vertical-align: bottom; text-align: center">&#160;</td></tr>
  <tr>
    <td style="vertical-align: top"><a href="#a_071"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Part III</span></a></td>
    <td style="vertical-align: top">&#160;</td>
    <td style="vertical-align: top; padding-left: 9pt; text-align: justify; text-indent: -9pt">&#160;</td>
    <td style="vertical-align: bottom; text-align: center">&#160;</td></tr>
  <tr style="background-color: rgb(204,238,255)">
    <td style="vertical-align: top; padding-left: 9pt"><a href="#a_072"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Item 17.</span></a></td>
    <td style="vertical-align: top">&#160;</td>
    <td style="vertical-align: top; padding-left: 9pt; text-align: justify; text-indent: -9pt"><a href="#a_072"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Financial Statements</span></a></td>
    <td style="vertical-align: bottom; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">79</span></td></tr>
  <tr>
    <td style="vertical-align: top; padding-left: 9pt"><a href="#a_073"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Item 18.</span></a></td>
    <td style="vertical-align: top">&#160;</td>
    <td style="vertical-align: top; padding-left: 9pt; text-align: justify; text-indent: -9pt"><a href="#a_073"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Financial Statements</span></a></td>
    <td style="vertical-align: bottom; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">79</span></td></tr>
  <tr style="background-color: rgb(204,238,255)">
    <td style="vertical-align: top; padding-left: 9pt"><a href="#a_074"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Item 19.</span></a></td>
    <td style="vertical-align: top">&#160;</td>
    <td style="vertical-align: top; padding-left: 9pt; text-align: justify; text-indent: -9pt"><a href="#a_074"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Exhibits</span></a></td>
    <td style="vertical-align: bottom; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">79</span></td></tr>
  <tr>
    <td style="vertical-align: top; padding-left: 9pt">&#160;</td>
    <td style="vertical-align: top">&#160;</td>
    <td style="vertical-align: top; padding-left: 9pt; text-align: justify; text-indent: -9pt">&#160;</td>
    <td style="vertical-align: bottom; text-align: center">&#160;</td></tr>
  <tr style="background-color: rgb(204,238,255)">
    <td colspan="3" style="vertical-align: top; text-align: justify"><a href="#b_001"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Index to Consolidated Financial Statements</span></a></td>
    <td style="vertical-align: bottom; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">F-1</span></td></tr>
  </table><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></p><div>

</div><!-- Field: Page; Sequence: 5; Value: 1 --><div>
    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt"><!-- Field: Sequence; Type: LowerRoman; Name: PageNo -->ii<!-- Field: /Sequence --></p></div><div>
    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><div><a id="a_001"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><b>PART I</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><div><a id="a_002"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT
AND ADVISERS.</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Not applicable.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><div><a id="a_003"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE.</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Not applicable.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><div><a id="a_004"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>ITEM 3. KEY INFORMATION.</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><div><a id="a_005"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><b>A. [Reserved.]</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><div><a id="a_006"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><b>B. CAPITALIZATION AND INDEBTEDNESS.</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Not applicable.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><div><a id="a_007"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><b>C. REASONS FOR THE OFFER
AND USE OF PROCEEDS.</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Not applicable.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><div><a id="a_008"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><b>D. RISK FACTORS.</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><i>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. The statements contained in or incorporated into this report that are not historic facts are forward-looking
statements that are subject to risks and uncertainties that could cause actual results to differ materially from those set forth in or
implied by forward-looking statements. If any of the following risks actually occurs, our business, financial condition or results of
operations could be harmed. In that case, the trading price of our ordinary shares could decline, and you may lose all or part of your
investment.</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>Summary of Risk Factors</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Risks Relating to Our Business in General</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 48px">&#160;</td>
    <td style="width: 24px; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">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.</span></td></tr>
  <tr style="vertical-align: top">
    <td>&#160;</td>
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td></tr>
  <tr style="vertical-align: top">
    <td>&#160;</td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
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  </table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="vertical-align: top">
    <td style="width: 48px">&#160;</td>
    <td style="width: 0.25in; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
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  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="vertical-align: top">
    <td style="width: 48px">&#160;</td>
    <td style="width: 0.25in; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
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  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="vertical-align: top">
    <td style="width: 48px">&#160;</td>
    <td style="width: 0.25in; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
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  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="vertical-align: top">
    <td style="width: 48px">&#160;</td>
    <td style="width: 0.25in; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
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  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></p><div>

</div><!-- Field: Page; Sequence: 6; Options: NewSection; Value: 1 --><div>
    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><p style="text-align: center; margin-top: 0pt; margin-bottom: 0pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->1<!-- Field: /Sequence --></p></div><div>
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    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Risks Relating to Our Pharmacy Operations</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="vertical-align: top">
    <td style="width: 48px">&#160;</td>
    <td style="width: 0.25in; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">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.</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="vertical-align: top">
    <td style="width: 48px">&#160;</td>
    <td style="width: 0.25in; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
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  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="vertical-align: top">
    <td style="width: 48px">&#160;</td>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Risks Relating to Our Medical Services</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Risks Related to Our Herb Farming</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Risks Related to Our Online Sales</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

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    <td>&#160;</td>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Risks Related to Our Corporate Structure</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Risks Related to Doing Business in China</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

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</div><p style="margin: 0">&#160;</p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></p><div>

</div><!-- Field: Page; Sequence: 8; Value: 1 --><div>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Risks Related to an Investment in Our Securities</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
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    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The market price of our ordinary shares has fluctuated and may continue to fluctuate in the future, and we may not pay dividends on our ordinary shares.</span></td></tr>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
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    <td style="width: 48px">&#160;</td>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Other General Risk Factors</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

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  <tr style="vertical-align: top">
    <td style="width: 48px">&#160;</td>
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    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Changes in economic conditions and consumer confidence in China may influence the drugstore industry, consumer preferences and spending patterns.</span></td></tr>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="vertical-align: top">
    <td style="width: 48px">&#160;</td>
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    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Techniques employed by manipulative short sellers in Chinese small-cap stocks may drive down the market price of our ordinary shares.</span></td></tr>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Risks Relating to Our Business in General</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>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.</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Both the drugstore, online
pharmacy and wholesale pharmaceutical distribution industries in China are highly competitive, and we expect competition to intensify
in the future. Our primary drugstore competitors include other drugstore chains and independent drugstores. Increasingly, we also face
competition from discount stores, convenience stores and supermarkets as we expand our offering of non-drug convenience products and services.
We compete for customers and revenue primarily on the basis of store location, merchandise selection, price, services offered, and our
brand name. Our online pharmacy competitors include other online pharmaceutical vendors. As larger traditional drugstore chain companies
entered into the online sales, we face competition ranging from prices to service. Our primary wholesale competitors include regional
and national players. In addition, we may be subject to additional competition from new entrants to both industries in China. We could
also face increased competition from foreign companies if the Chinese government removes the restrictions on the entry of foreign companies
into these industries.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Some of our larger competitors
may enjoy competitive advantages, such as:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
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    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">greater financial and other resources;</span></td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify">&#160;</td>
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    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">larger variety of products;</span></td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">more extensive and advanced supply chain management systems;</span></td></tr>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
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    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">greater pricing flexibility;</span></td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">larger economies of scale and purchasing power;</span></td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">more extensive advertising and marketing efforts;</span></td></tr>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="vertical-align: top">
    <td style="width: 0.5in; text-align: justify">&#160;</td>
    <td style="width: 0.25in; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">greater knowledge of local market conditions;</span></td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">stronger brand recognition; and</span></td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">larger sales and distribution networks.</span></td></tr>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">As a result of the aforementioned
advantages, we may be unable to offer products similar to, or more desirable than, those offered by our competitors, market our products
as effectively as our competitors, or otherwise respond successfully to competitive pressures. As competition increases in the markets
in which we operate, a significant increase in general pricing pressures could occur, which could require us to reevaluate our pricing
structures to remain competitive. Our competitors may be able to offer larger discounts on competing products, and we may not be able
to profitably match those discounts. Furthermore, our competitors may offer products that are more attractive to our customers or that
render our products uncompetitive. In addition, the timing of the introduction of competing products into the market could affect the
market acceptance and market share of our products. Our failure to successfully compete could materially and adversely affect our business,
financial condition, results of operation, and prospects.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>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.</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">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. Local land use regulations and other regulations
applicable to the kinds of stores we seek to construct may impact our ability to find suitable locations and influence the cost of constructing
our stores. The expiration of leases at existing store locations may adversely affect us if the renewal terms of those leases are unacceptable
to us and we are forced to close or relocate stores. 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.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>We have significant cash deposits with our
suppliers and landlords in order to obtain and maintain our inventory and maintain and establish store locations, which we may not be
able to recover in the event of bankruptcy by our suppliers or landlords or other events beyond our control.</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our ability to obtain products
and maintain inventory at, and to establish and maintain leases for, our pharmacies, is dependent upon our ability to post and maintain
significant cash deposits with our suppliers and landlords. 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. If we are unable or unwilling to establish such advances and deposits, our ability to generate sales and expand our business
could be adversely affected. In general, we expect the amounts required for advances and deposits to increase as we undertake our expansion
plans, complete store openings and expand our business through acquisitions or otherwise. We do not generally receive interest on the
deposits made to suppliers or landlords, and such deposits are subject to the risk of loss as a result of the creditworthiness or bankruptcy
of the party who holds our funds, as well as the risk from any illegal acts associated with the third party, such as conversion, fraud,
theft or dishonesty. 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.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></p><div>

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    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>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.</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Since May 2011, we have been
using Jiuxin Medicine&#8217;s facility as our distribution center for both our retail and wholesale businesses. Starting from March 31,
2018, we outsourced our logistic service to Astro Boy Cloud Pan (Hangzhou) Storage and Logistic Co. Ltd (&#8220;Astro Boy Logistic&#8221;).
As a result, Jiuxin Medicine&#8217;s warehouse lease has been terminated. Astro Boy Logistic provides us with a facility with approximately
14,000 square meters located approximately eighteen (18) miles from our headquarters, which served as our central distribution center.
Astro Boy Logistic&#8217;s staff and vehicles make regular deliveries to our pharmacies and wholesale customers. Our ability to meet customer
demand may be significantly limited if we do not successfully and efficiently conduct our distribution activities, or if Astro Boy Logistic&#8217;s
facility is destroyed or shut down for any reason, including as the result of natural disasters. Any disruption in the operation of our
distribution activities could result in higher costs or longer lead times associated with distributing our products. Since it is difficult
to predict accurate sales volume in our industry, we may be unable to optimize our distribution activities, which may result in excess
or insufficient inventory, warehousing, fulfillment or distribution capacity. Furthermore, failure to effectively control product damage
during the distribution process could decrease our operating margins and reduce our profitability.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">All product procurements are
handled through our corporate headquarters. Such centralization is intended to reduce the cost of goods sold as a result of volume purchase
benefits. However, we may be less successful than anticipated in achieving these volume purchase benefits. In addition, such centralization
is expected to increase the complexity of tracking inventory and could place additional burdens on the management of our supply chain.
If we cannot successfully reduce our costs through centralizing procurement, our profitability and prospects could be materially and adversely
affected.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>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.</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our future success is dependent
on the continued services of Mr. Lei Liu and Ms. Li Qi (the &#8220;Key Personnel&#8221;) but we do not maintain key-man insurance. If we
lose the services of either of the Key Personnel, we may not be able to locate suitable or qualified replacements, which could severely
disrupt our business and prospects. Each of the Key Personnel has entered into confidentiality and non-competition agreements with us.
However, if any disputes arise between us and the Key Personnel, we cannot provide assurance, in light of uncertainties associated with
the PRC legal system, that any of these agreements can be enforced in China, the jurisdiction in which the Key Personnel reside and hold
some of their assets. See &#8220;<i>Risks Related to Doing Business in China - You may experience difficulties in effecting service of
legal process, enforcing foreign judgments or bringing original actions in China based on United States or other foreign laws against
us or our management.</i>&#160;&#8221;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Our retail and wholesale operations require
a number of permits and licenses in order to carry on their business.</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We are required to obtain
certain permits and licenses from various PRC governmental authorities, including a Drug Distribution Permit and a GSP certification.
We are also required to obtain food hygiene certificates for the distribution of nutritional supplements and food products. We cannot
provide any assurance that we can maintain all required licenses, permits and certifications to carry on our business at all times, and
from time to time we may have not been in the past, or may not be in the future, in compliance with all such required licenses, permits
and certifications. Moreover, these licenses, permits and certifications are subject to periodic renewal and/or reassessment by the relevant
PRC governmental authorities and the standards of such renewal or reassessment may change from time to time. We intend to apply for renewal
of these licenses, permits and certifications when required by applicable laws and regulations. Any failure by us to obtain and maintain
all licenses, permits and certifications necessary to carry on our business at any time could have a material adverse effect on our business,
financial condition and results of operations. In addition, any inability to renew any of these licenses, permits and certifications could
severely disrupt our business, and prevent us from continuing to carry on our business. Any changes in the standards used by governmental
authorities in considering whether to renew or reassess our business licenses, permits and certifications, as well as any enactment of
new regulations that may restrict the conduct of our business, may also decrease our revenue and/or increase our costs, materially reducing
our profitability 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.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Risks Relating to Our Pharmacy Operations</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>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.</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Counterfeit products have
continued to make their way into the Chinese pharmaceutical market. Counterfeit products are generally sold at lower prices compared to
their authentic counterparts due to their low production costs, and in some cases may be very similar in appearance to their authentic
counterparts. Counterfeit pharmaceuticals may or may not have the same chemical content as their authentic counterparts, and are typically
manufactured without proper licenses or approvals as well as fraudulently mislabeled with respect to their content and/or manufacturer.
Although China&#8217;s central government has been increasingly active in combating counterfeit pharmaceutical and other products, China
does not yet have effective regulatory control or an enforcement system over counterfeit pharmaceutical products. Although we have implemented
a series of quality control procedures in our procurement process, we cannot provide assurance that we may not be inadvertently selling
counterfeit pharmaceutical products. Any unintentional sale of counterfeit products may subject us to negative publicity, fines and/or
other administrative penalties, or may even result in litigation against us. Moreover, the increased distribution of counterfeit products
and other products in recent years may reinforce the negative image of drug distributors among consumers in China. The continued proliferation
of counterfeit products in China could have a material adverse effect on our business financial condition, and results of operation.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>As a distributor of pharmaceutical and other
healthcare products, we are exposed to inherent risks relating to product liability and personal injury claims.</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">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. 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. Our in-store pharmacists sometimes also have a duty to warn customers regarding any potential negative effects of a
prescription drug if the warning could reduce or negate these effects, and we may be liable for claims arising from any advice given by
our in-store pharmacists. Product liability or personal injury claims may be asserted against us with respect to any of the products or
pharmaceuticals we sell or services we provide, and we may be required to pay for substantial monetary damages for any successful product
liability or personal injury claim against us. We may, however, in product liability claims, have the right under applicable PRC laws,
rules and regulations to recover from the relevant manufacturer any compensation we paid to our customers in connection with such claim.
However, even if we successfully defend ourselves against this type of claim, we could be required to spend significant management, financial
and other resources in the process, which could disrupt our business. Our reputation and our brand names may also suffer as a result of
any product liability or personal injury claims against us. Like many other similar companies in China, we do not carry product liability
insurance. A product recall or damage to our reputation in the event of a product liability or personal injury claim or judgment against
us could have a material adverse effect on our business, financial condition and results of operations.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>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&#8217;s National Medical Insurance
Program.</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Eligible participants in China&#8217;s
national medical insurance program, mainly consisting of urban residents in China, are entitled to buy medicines using their medical insurance
cards from an authorized pharmacy, provided that the medicines they purchase have been included in the national or provincial medical
insurance catalogs. The pharmacy, in turn, obtains reimbursement from the relevant government social security bureaus. Moreover, the applicable
PRC laws, rules and regulations prohibit pharmacies from selling goods other than pre-approved medicines when purchases are made with
medical insurance cards. We have established procedures to prohibit our drugstores from selling unauthorized goods to customers who make
purchases with medical insurance cards. However, we cannot provide assurance that those procedures will be strictly followed by all of
our employees in all of our stores.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Risks Relating to Our Medical Services</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>If we do not attract and retain qualified
physicians and other medical personnel, our ability to provide medical services would be adversely affected.</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The success of our medical
services will, in part, be dependent upon the number and quality of doctors, nurses and other medical support personnel that we employ
and our ability to maintain good relationships with them. Our medical staff may terminate their employment with us at any time. If we
are unable to successfully maintain good relationships with them, our ability to provide medical services may be adversely affected.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>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.</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">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.
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. 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. The above list of certain regulated areas
is not exhaustive, and it is not possible to anticipate the exact nature of future healthcare legislative reform in China. Depending on
the priorities set by the Chinese Ministry of Health, the political climate at any given time, the continued development of the Chinese
healthcare system and many other factors, future legislative reforms may be highly comprehensive, including stringent infection control
policies, improved rural healthcare facilities, increased regulation of the distribution of pharmaceuticals, and numerous other policy
matters. Consequently, the implications of these future reforms could result in penalties, loss of licensure, additional compliance costs
or other adverse consequences we cannot foresee at the present time.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>As a provider of medical services, we are
exposed to inherent risks relating to malpractice claims.</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">As a provider of medical services,
any misdiagnosis or improper treatment may result in negative publicity regarding us or our services, which would harm our reputation.
If we are found liable for malpractice, we may be required to pay substantial monetary damages. Furthermore, even if we successfully defend
ourselves against a malpractice claim, we could be required to spend significant management, financial and other resources in the process,
which could disrupt our business, and our reputation and brand name may also suffer. Since malpractice claims are not common in China,
we do not carry malpractice insurance. As a result, any imposition of malpractice liability could materially harm our business, financial
condition and results of operations.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Risks Related to Our Herb Farming</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Our herb farming business is subject to
the volatility of prices for raw TCM herbs.</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We currently planted gingko
trees in our leased farm land. In the future, we may continue to cultivate and sell certain herbs in bulk to third-party vendors, based
on local market prices primarily determined by TCM manufacturers and trading companies. Such market prices have increased significantly
in recent years in response to changes in the supply of and demand for raw herbs, market uncertainty and a variety of additional factors
that are beyond our control, including inflation, changes in weather, disease outbreaks, domestic government regulation, market speculation
and overall economic conditions. There can be no assurance that market prices, which historically have fluctuated widely, will continue
to increase or remain stable, and any future declines in prices may negatively impact the viability of our herb farming business.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Unforeseen and severe weather can reduce
cultivation activities and lead to a decrease in anticipated harvest.</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Seasonal climate change and
weather variations such as levels of rainfall and temperature may, among other things, affect the quality, overall supply and availability
of raw herbs. Sustained adverse weather conditions in Zhejiang Province in general and in Lin&#8217;an in particular where our herbs are
planted, such as rain, extreme cold or snow, could disrupt or curtail cultivation activities. This in turn could reduce our anticipated
harvest yields, delay the timing of our anticipated harvest and distribution, and negatively affect the quality of our harvest. In addition,
natural disasters such as fires, earthquakes, snowstorms, floods or droughts, or natural conditions such as crop disease, pests or soil
erosion, may also negatively impact our cultivation and harvest.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In addition, the actual climatic
conditions of Zhejiang Province and of Lin&#8217;an in particular may not conform to historical patterns and may be affected by variations
in weather patterns, including any potential impact of climate change. The effects of climate change may produce more unpredictable weather
events that may adversely affect our ability to cultivate and harvest successfully.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The occurrence of any of these
may materially harm our herb farming business.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>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.</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We rely on local farmers to
farm and harvest our herbs, but do not employ them directly. Instead, they are recruited and employed by the local villagers&#8217; committees
with whom we negotiate. We have limited control over the availability and the quality of this labor force. A shortage of suitable labor
may adversely affect our harvest yields.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Risks Related to Our Online Sales</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>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.</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">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. Although we believe our existing disaster recovery plan that
can handle the failure of our computer software and hardware systems, we cannot provide assurance that we can effectively carry out this
disaster recovery plan and that we will be able to restore our operation within a sufficiently short time frame to avoid disruption to
our business. Any failure in our computer software and/or hardware systems could have a material adverse effect on our business, financial
condition and results of operations. In addition, if the capacity of our computer software and hardware systems fails to meet the increasing
needs of our operations, our ability to grow may be constrained.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>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.</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Internet-based businesses
in China are highly regulated by China&#8217;s central government, and numerous regulatory authorities are empowered to issue and implement
regulations governing various aspects of these businesses. Our online business is operated by one of the VIEs, Jiuzhou Pharmacy, which
is required to obtain and maintain certain assets relevant to its business, such as computers and other electrical equipment, as well
as applicable licenses or approvals from different regulatory authorities. These assets and licenses are essential to the operation of
an e-commerce business and are generally subject to annual review by the relevant governmental authorities. Furthermore, we may be required
to obtain additional licenses. If we fail to obtain or maintain any of the required assets, licenses or approvals, our Internet business
may be subject to various penalties, such as confiscation of income, fines, and/or the discontinuation or restriction of its operations.
Any such disruption may materially and adversely affect the prospects of our online business.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>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</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our online pharmacy sales
increased by approximately $2,165,725, or 7.2% for the year ended March 31, 2023, as compared to the year ended March 31, 2022. The increase
was primarily caused by an increase in sales via e-commerce platforms such as Tmall. We maintained a membership care program targeted
at chronic disease customers. We have closely interacted with our members via WeChat by providing healthcare knowledge and reminding our
customers to refill medicine. By implementing a personalized customer care program, we were able to promote our sales. Additionally, we
increasingly cooperate with certain manufacturers to promote their products. These manufacturers reward us with lower supply prices and
more ads supports.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>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</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our online sales is dependent
on our IT system. We have in our possession a substantial amount of personal data related to the employees of our end users and our seconded
employees. We are obliged to keep all the personal data in our possession in such manner required by the laws and regulations relating
to personal data protection implemented in the PRC. If our IT system experiences any functional problems or there is any failure of our
IT system due to power outages, hacker attacks, computer viruses, security breaches and errors in usage by our internal employees causing
any breach of confidentiality by us or any failure to comply with the protection, collection, use and disclosure of personal data as prescribed
under the relevant laws and regulations, resulting in personal data related to the employees of the end-users of our payroll outsourcing
services or our seconded employees being leaked to or obtained by third parties, our reputation will be in jeopardy which could lead to
loss of our major customers. The employees of the end-users of our payroll outsourcing services or our seconded employees may also take
legal actions against us for damages and/or compensation for the loss that may have arisen or been incurred therefrom, in addition to
the penalties prescribed under the relevant laws and regulations in the PRC we are subject to.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The internal control procedures
we have implemented to safeguard the security and confidentiality of our customer database may not effectively prevent leakage of personal
data or unauthorized access to our customer database under all circumstances. If such incident happens, we may be subject to investigation,
litigation, arbitration and other forms of legal proceedings and/or dispute for breach of personal data privacy laws and regulations in
the PRC, and our management team will have to divert substantial time, effort and resources to handle the legal procedures.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>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</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The collection, storage, hosting,
transfer, processing, disclosure, use, security and retention and destruction of personal information required to provide our services
is subject to national and foreign privacy, data protection and cyber security laws. These laws, which are not uniform, generally do one
or more of the following: regulate the collection, storage, hosting, transfer (including in some cases, the transfer outside the country
of collection), processing, disclosure, use, security and retention and destruction of personal information; require notice to individuals
of privacy practices; give individuals certain access and correction rights with respect to their personal information; and regulate the
use or disclosure of personal information for secondary purposes such as marketing. Under certain circumstances, some of these laws require
us to provide notification to affected individuals, clients, data protection authorities and/or other regulators in the event of a data
breach. In many cases, these laws apply not only to third-party transactions, but also to transfers of information among the Company and
its subsidiaries.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We believe that providing
insights from data, including artificial intelligence and machine learning, will become increasingly important to the value that our solutions
and services deliver to our customers. However, the ability to provide data-driven insights may be constrained by current or future regulatory
requirements or ethical considerations that could restrict or impose burdensome and costly requirements on our ability to leverage data
in innovative ways.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Complying with privacy, data
protection and cyber security laws and requirements may result in significant costs to our business and require us to amend certain of
our business practices. Further, enforcement actions and investigations by regulatory authorities related to data security incidents and
privacy violations continue to increase. The future enactment of more restrictive laws, rules or regulations and/or future enforcement
actions or investigations could have a materially adverse impact on us through increased costs or restrictions on our businesses and noncompliance
could result in significant regulatory penalties and legal liability and damage our reputation. In addition, data security events and
concerns about privacy abuses by other companies are changing consumer and social expectations for enhanced privacy and data protection.
As a result, even the perception of noncompliance, whether or not valid, may damage our reputation.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Risks Related to Our Corporate Structure</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>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.</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We are a holding company incorporated
in the Cayman Islands. As a holding company with no material operations of our own, we conduct a substantial majority of our operations
through the VIEs in the PRC, Jiuzhou Pharmacy (including its subsidiaries and controlled entities), Jiuzhou Clinic and Jiuzhou Service,
in which we have no equity ownership interest and must rely on contractual arrangements to operate and manage the businesses. These contractual
arrangements are not as effective in management and operations as direct ownership. For example, the VIEs may be unwilling or unable to
perform its contractual obligations under our commercial agreements. Consequently, we would not be able to conduct our operations in the
manner currently planned, we cannot provide assurance that the Key Personnel will act in our best interests. Under such circumstances,
we may have to rely on legal remedies under Chinese law, which may not be effective in providing us any relief. In addition, the VIEs
may seek to renew its agreements on terms that are disadvantageous to us. Although we have entered into a series of agreements that provide
us with substantial ability to operates and manage the VIEs, we may not succeed in enforcing our rights under them insofar as our contractual
rights and legal remedies under PRC law are inadequate. In addition, if we are unable to renew these agreements on favorable terms when
these agreements expire or enter into similar agreements with other parties, our business may not be able to operate or expand, and our
operating expenses may significantly increase.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>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.</i></b></p><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Since we do not own equity
interests of HJ Group, the termination of our contractual arrangements with them would sever our ability to continue receiving payments
from them under our current holding company structure. We cannot provide assurance that there will not be any event or reason that may
cause the contractual arrangements to terminate. In the event that the contractual arrangements terminate, we will lose our management
over them and their business operations and, as a result, over our primary sources of revenue. This may have a severe and detrimental
effect on our continuing business viability under our current corporate structure, which in turn may affect the value of your investment.
Should this occur, we may seek to acquire control of HJ Group through other means, although we cannot guarantee that we will do so, nor
can we guarantee that we will be successful if we do.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Because our holding company
is an exempted company incorporated in the Cayman Islands with limited liability, it is classified as a foreign enterprise under PRC laws
and regulations, and our wholly foreign-owned enterprises in the PRC will be foreign-invested enterprises. 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.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>&#160;</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>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.
The entities that operate our pharmacies and clinics are controlled by us through contractual arrangements. The validity of such contractual
arrangements is uncertain. If the Chinese government determines that these contractual arrangements do not comply with applicable regulations,
we could be subject to severe penalties and our business could be adversely affected. In addition, changes in the relevant Chinese laws
and regulations may materially and adversely affect our business.</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Current PRC regulations limit
foreign ownership of a pharmacy operator to forty nine percent (49%) if such operator owns interests in thirty (30) or more drugstores
in China that sell a variety of branded pharmaceutical products sourced from different suppliers. 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. In fact, Jiuzhou Pharmacy has expended to one hundred and fourteen (114) stores as of March 31, 2023.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Similarly, PRC regulations
restrict foreign ownership of medical practices in China to Sino-foreign joint ventures. Since we do not have any actual equity interest
in Jiuzhou Clinic or Jiuzhou Service, but manage and operate these entities through contractual arrangements, we do not believe that such
PRC regulations are applicable to us or our structure.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">There are, however, uncertainties
regarding the interpretation and application of PRC laws, rules and regulations, including but not limited to the laws, rules and regulations
governing the validity and enforcement of our contractual arrangements. Although the structures for operating our business in China (including
our corporate structure and contractual arrangements with Jiuzhou Pharmacy, Jiuzhou Clinic, Jiuzhou Service and the Key Personnel) comply
with all applicable PRC laws, rules and regulations, and do not violate, breach, contravene or otherwise conflict with any applicable
PRC laws, rules or regulations, we cannot provide assurance that a regulatory authority will not determine that our corporate structure
and contractual arrangements violate PRC laws, rules or regulations. If any such authority determines that our contractual arrangements
are in violation of applicable PRC laws, rules or regulations, our contractual arrangements may become invalid or unenforceable, and we
may not be able to consolidate the operations of HJ Group with our results of operations. In addition, new PRC laws, rules and regulations
may be introduced from time to time to impose additional requirements that may be applicable to our contractual arrangements. For example,
pursuant to the new Civil Code in China promulgated in May 2020, the pledge of any equity interests of a PRC private entity shall become
effective once it is duly registered with the local branches of the SAIC. The SAIC issued the&#160;<i>Administrative Measures for Registrations
of Share Pledge</i>&#160;on September 1, 2008, further amended to its current version on April 29, 2016, which has failed to provide detailed
procedural guidance for the local SAIC offices to handle the registrations of pledged shares. In accordance with the Foreign Investment
Law, the State Council promulgated and approved in 2021 a list of special administrative measures for market access of foreign investments,
or the Negative List. The Negative List contains no limits or restrictions on foreign investment holdings in the pharmaceutical or retail
industries. The Equity Pledge Agreement that forms a part of the contractual arrangements creates a legally binding obligation on the
parties upon the execution date; however, the pledge established under such agreement does not become effective until due registration
with the local SAIC office. On May 18, 2010, registration of the pledged equity interests in Jiuzhou Pharmacy was completed.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The Chinese government has
broad discretion in dealing with violations of laws and regulations, including levying fines, revoking business and other licenses, and
requiring actions necessary for compliance. In particular, licenses and permits issued or granted to us by the relevant governmental bodies
may be revoked at a later time by higher regulatory bodies. We cannot predict the effect of the interpretation of existing or new Chinese
laws or regulations on our businesses. We cannot provide assurance that our current ownership and operating structure will not be found
in violation of any current or future Chinese laws or regulations. As a result, we may be subject to sanctions, including fines, and could
be required to restructure our operations or cease the provision of certain services. Any of these or similar actions could significantly
disrupt our business operations or restrict us from conducting a substantial portion of our business operations, which could materially
and adversely affect our business, financial condition and results of operations.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">If we are determined to be
in violation of any existing or future PRC laws, rules or regulations, or fail to obtain or maintain any of the required governmental
permits or approvals, the relevant PRC regulatory authorities would have broad discretion in dealing with such violations, including:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="vertical-align: top">
    <td style="width: 0.5in; text-align: justify">&#160;</td>
    <td style="width: 0.25in; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">revoking the business and operating licenses of the HJ Group entities;</span></td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">discontinuing or restricting the operations of the HJ Group entities;</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="vertical-align: top">
    <td style="width: 0.5in; text-align: justify">&#160;</td>
    <td style="width: 0.25in; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">imposing conditions or requirements with which we or the HJ Group entities may not be able to comply;</span></td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">requiring us or the HJ Group entities to restructure the relevant ownership structure or operations; and/or</span></td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">imposing fines.</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">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.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">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. Occurrence of any of these events could materially and adversely affect our business, financial condition and results of
operations and the market price of our ordinary shares. In addition, if the imposition of any of these penalties or requirement to restructure
our corporate structure causes us to lose the ability to direct the activities of the consolidated VIEs or to receive their economic benefits,
we would no longer be able to consolidate the financial results of such VIEs in our consolidated financial statements, which may cause
the value of our securities to materially decline. Moreover, if the PRC government determines that the contractual arrangements constituting
part of the VIE structure do not comply with PRC regulations, or if these regulations change or are interpreted differently in the future,
our securities may decline in value or become worthless.</p><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>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 &#8220;controlled&#8221; by foreign investors.</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The VIE structure has been
adopted by many Chinese-based companies, including us, to obtain necessary licenses and permits in the industries that are currently subject
to foreign investment restrictions in China. On March&#160;15, 2019, the National People&#8217;s Congress, China&#8217;s national legislative
body (the &#8220;NPC&#8221;) approved the Foreign Investment Law, which took effect on January&#160;1, 2020. On December 26, 2019, the
PRC State Council approved the Implementation Rules of the Foreign Investment Law, which came into effect on January 1, 2020. The interpretations
to these laws are still uncertain. The Foreign Investment Law does not explicitly classify whether variable interest entities that are
managed and operated through contractual arrangements by foreign investors would be deemed as foreign-invested&#160;enterprises. However,
it has a catch-all&#160;provision under definition of &#8220;foreign investment&#8221; that includes investments made by foreign investors
in China through other means as provided by laws, administrative regulations or the State Council. Therefore, it still leaves leeway for
future laws, administrative regulations or provisions of the State Council to provide for contractual arrangements being viewed as a form
of foreign investment. Therefore, there can be no assurance that our management and operation over the consolidated VIEs through contractual
arrangements will not be deemed as foreign investment in the future.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In accordance with the Foreign
Investment Law, the State Council promulgated and approved in 2021 a list of special administrative measures for market access of foreign
investments, or the Negative List. The Foreign Investment Law grants national treatment to foreign-invested&#160;entities, except for
those foreign-invested&#160;entities that operate in industries specified as either &#8220;restricted&#8221; or &#8220;prohibited&#8221;
from foreign investment in the Negative List. The Foreign Investment Law provides that foreign-invested&#160;entities operating in &#8220;restricted&#8221;
or &#8220;prohibited&#8221; industries will require market entry clearance and other approvals from relevant PRC government authorities.
Pursuant to the Negative List, the Company&#8217;s four business segments ((1) retail drugstores, (2) online pharmacy, (3) wholesale of
products similar to those that the Company carries in its pharmacies, and (4) farming and selling herbs used for traditional Chinese medicine)
do not fall within the &#8220;prohibited&#8221; category. However, since the Negative List has been adjusted and updated from time to
time with little advance notice, we cannot assure you that the aforementioned business segments will continuously be beyond the &#8220;prohibited&#8221;
category. If the management and operations to the consolidated VIEs through contractual arrangements are deemed as foreign investment
in the future, and any business of the consolidated VIEs is &#8220;restricted&#8221; or &#8220;prohibited&#8221; from foreign investment
under the &#8220;Negative List&#8221; effective at the time, we may be deemed to be in violation of the Foreign Investment Law, the contractual
arrangements that allow us to manage and operate the consolidated VIEs may be deemed as invalid and illegal, and we may be required to
unwind such contractual arrangements and/or restructure our business operations, any of which may have a material adverse effect on our
business operation and the market price of our ordinary shares.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Furthermore, if future laws,
administrative regulations or provisions mandate further actions to be taken by companies with respect to existing contractual arrangements,
we may face substantial uncertainties as to whether we can complete such actions in a timely manner, or at all. 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.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>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.</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We are a holding company and
rely principally on dividends paid by the consolidated PRC operating entities for cash requirements, including the funds required to service
any debt we may incur, which are passed on to us through Jiuxin Management. If any of the consolidated operating entities incurs debt
in its own name in the future, the instruments governing the debt may restrict dividends or other distributions on our equity interest
to us. In addition, the PRC tax authorities may require us to adjust our taxable income under the contractual arrangements in a manner
that would materially and adversely affect our ability to pay dividends and other distributions on our equity interest.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Furthermore, applicable PRC
laws, rules and regulations permit payment of dividends by our consolidated PRC entities only out of their retained earnings, if any,
determined in accordance with PRC accounting standards. Under PRC laws, rules and regulations, our consolidated PRC entities are required
to set aside at least ten percent (10%) of their after-tax profit each year, based on PRC accounting standards, into their statutory surplus
reserve funds until the accumulative amount of such reserves reaches fifty percent (50%) of their respective registered capital. Also,
dividends cannot be distributed before any previous year&#8217;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). Our restricted reserves are not distributable as cash dividends.
Any limitation on the ability of our consolidated operating entities to pay dividends to us could materially and adversely limit our ability
to grow, make investments or acquisitions that could be beneficial to our businesses, pay dividends, or otherwise fund and conduct our
business.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Certain management members of HJ Group have
potential conflicts of interest with us, which may adversely affect our business and your ability for recourse.</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Mr. Lei Liu, our Chief Executive
Officer and Chairman of our Board of Directors, is also the executive director of Jiuzhou Pharmacy, a general partner of Jiuzhou Clinic,
and the supervising director of Jiuzhou Service. In addition, Mr. Liu has also lent us money out of his personal funds to help facilitate
our payments of expenses in the U.S., as well as to purchase a land use right. Ms. Li Qi, a member of our Board of Directors, is the general
manager of each of Jiuzhou Pharmacy, Jiuzhou Clinic and Jiuzhou Service, and a general partner of Jiuzhou Clinic. Conflicts of interests
between their respective duties to our company and HJ Group may arise. As our directors and executive officers, they have a duty of loyalty
and care to us under U.S. and Hong Kong law when there are any potential conflicts of interests between our company and HJ Group. We cannot
provide assurance, however, that when any conflicts of interest arise, both of them will act completely in our interests or that conflicts
of interests will be resolved in our favor. For example, they may determine that it is in HJ Group&#8217;s interests to sever the contractual
arrangements with Jiuxin Management, irrespective of the effect such action may have on us. In addition, either one of them could violate
his or her legal duties by diverting business opportunities from us to others, thereby affecting the amount of payment that HJ Group is
obligated to remit to us under the Consulting Services Agreement.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In the event that you believe
that your rights have been infringed under securities laws or otherwise as a result of any one of the circumstances described above, it
may be difficult or impossible for you to bring an action against HJ Group, or our officers or directors who are members of the management,
all of whom reside within China. 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.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></p><div>

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    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Risks Related to Doing Business in China</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>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.</i></b><i>&#160;</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our business operations conducted
through our PRC operating entities may be adversely affected by the current and future political environment in the PRC. Recently, the
PRC government initiated a series of regulatory actions and statements to regulate business operations in China with little advance notice,
including cracking down on illegal activities in the securities market, enhancing supervision over China-based companies listed overseas
using variable interest entity structure, adopting new measures to extend the scope of cybersecurity reviews, and expanding the efforts
in anti-monopoly enforcement. The Chinese government exerts substantial influence and control over the manner in which we must conduct
our business activities. Our ability to operate in China may be adversely affected by changes in Chinese laws and regulations. Under the
current government leadership, the government of the PRC has been pursuing reform policies which have adversely affected China-based operating
companies whose securities are listed in the United States, with significant policies changes being made from time to time without notice.
There are substantial uncertainties regarding the interpretation and application of PRC laws and regulations, including, but not limited
to, the laws and regulations governing our business, or the enforcement and performance of our contractual arrangements. Only after 1979
did the Chinese government begin to promulgate a comprehensive system of laws that regulate economic affairs in general, deal with economic
matters such as foreign investment, corporate organization and governance, commerce, taxation and trade, as well as encourage foreign
investment in China. Although the influence of the law has been increasing, 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. Also, because these laws
and regulations are relatively new, and because of the limited volume of published cases and their lack of force as precedents, interpretation
and enforcement of these laws and regulations involve significant uncertainties. New laws and regulations that affect existing and proposed
future businesses may also be applied retroactively. In addition, there have been constant changes and amendments of laws and regulations
over the past 30 years in order to keep up with the rapidly changing society and economy in China. Because government agencies and courts
provide interpretations of laws and regulations and decide contractual disputes and issues, their inexperience in adjudicating new business
and new polices or regulations in certain less developed areas causes uncertainty and may affect our business. Consequently, we cannot
predict the future direction of Chinese legislative activities with respect to either businesses with foreign investment or the effectiveness
on enforcement of laws and regulations in China. The uncertainties, including new laws and regulations and changes of existing laws, as
well as judicial interpretation by inexperienced officials in the agencies and courts in certain areas, may cause possible problems to
foreign investors. Although the PRC government has been pursuing economic reform policies for more than two decades, the PRC government
continues to exercise significant control over economic growth in the PRC through the allocation of resources, controlling payments of
foreign currency, setting monetary policy and imposing policies that impact particular industries in different ways. We cannot assure
you that the PRC government will continue to pursue policies favoring a market oriented economy or that existing policies will not be
significantly altered, especially in the event of a change in leadership, social or political disruption, or other circumstances affecting
political, economic and social life in the PRC. The Chinese government may intervene or influence our operations at any time, or may exert
more control over offerings conducted overseas and/or foreign investment in China-based issuers, which could result in a material change
in our operations and/or the value of the securities being offered. Any adverse changes in Chinese laws and regulations and the Chinese
government&#8217;s significant oversight and discretion over the conduct of our business could significantly limit or completely hinder
our ability to offer or continue to offer securities to investors and cause the value of our securities to significantly decline or be
worthless.&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>&#160;</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>We may be adversely affected by complexity,
uncertainties and changes in Chinese regulation of drugstores and the practice of medicine.</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The Chinese government regulates
drugstores and the practice of medicine, including foreign ownership and requirements for licenses and permits. These laws and regulations
are relatively new and evolving, and their interpretation and enforcement involve significant uncertainty. As a result, in certain circumstances
it may be difficult to determine what actions or omissions may be deemed to be a violation of applicable laws and regulations.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The interpretation and application
of existing Chinese laws, regulations and policies and possible new laws, regulations or policies have created substantial uncertainties
regarding the legality of existing and future foreign investments in, and the businesses and activities of, pharmaceutical businesses
in China, including our business. We currently only have contractual management power over the HJ Group entities, and do not own them
due to the restrictions on foreign ownership of such companies. However, changes to laws in the PRC may force us to restructure our ownership
structure or our operations, which would severely disrupt our ability to conduct business and have a material adverse effect on our financial
condition, results of operations and prospects.</p><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Uncertainties relating to
the regulation of drugstores and medical practice in China also extend to evolving licensing practices, which means that permits, licenses
or operations at our company may be subject to challenge. This may disrupt our business or subject us to sanctions, requirements to increase
capital, or other conditions or enforcement. In turn, this could compromise enforceability of related contractual arrangements, or have
other harmful effects on us.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Compliance with China&#8217;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.</i></b>&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>&#160;</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">China has implemented or will
implement rules and is considering a number of additional proposals relating to data protection. China&#8217;s new Data Security Law took
effect in September 2021. The Data Security Law provides that the data processing activities must be conducted based on &#8220;data classification
and hierarchical protection system&#8221; for the purpose of data protection and prohibits entities in China from transferring data stored
in China to foreign law enforcement agencies or judicial authorities without prior approval by the Chinese government.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 30.6pt">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Additionally, China&#8217;s
Cyber Security Law requires companies to take certain organizational, technical and administrative measures and other necessary measures
to ensure the security of their networks and data stored on their networks. Specifically, the Cyber Security Law provides that China adopt
a multi-level protection scheme (MLPS), under which network operators are required to perform obligations of security protection to ensure
that the network is free from interference, disruption or unauthorized access, and prevent network data from being disclosed, stolen or
tampered. Under the MLPS, entities operating information systems must have a thorough assessment of the risks and the conditions of their
information and network systems to determine the level to which the entity&#8217;s information and network systems belong-from the lowest
Level&#160;1 to the highest Level&#160;5 pursuant to a series of national standards on the grading and implementation of the classified
protection of cyber security. The grading result will determine the set of security protection obligations that entities must comply with.
Entities classified as Level&#160;2 or above should report the grade to the relevant government authority for examination and approval.<i>&#160;</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Recently, the Cyberspace Administration
of China has taken action against several Chinese internet companies in connection with their initial public offerings on U.S. securities
exchanges, for alleged national security risks and improper collection and use of the personal information of Chinese data subjects. According
to the official announcement, the action was initiated based on the National Security Law, the Cyber Security Law and the Measures on
Cybersecurity Review, which are aimed at &#8220;preventing national data security risks, maintaining national security and safeguarding
public interests.&#8221; On July 10, 2021, the Cyberspace Administration of China published a revised draft of the Measures on Cybersecurity
Review, expanding the cybersecurity review to data processing operators in possession of personal information of over 1 million users
if the operators intend to list their securities in a foreign country.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">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&#8217;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.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Also, the Personal Information
Protection Law released by the National People&#8217;s Congress became effective on November 1, 2021. The law creates a comprehensive
set of data privacy and protection requirements that apply to the processing of personal information and expands data protection compliance
obligations to cover the processing of personal information of persons by organizations and individuals in China, and the processing of
personal information of persons in China outside of China if such processing is for purposes of providing products and services to, or
analyzing and evaluating the behavior of, persons in China. The law also provides that critical information infrastructure operators and
personal information processing entities who process personal information meeting a volume threshold to-be-set by Chinese cyberspace regulators
are also required to store in China personal information generated or collected in China, and to pass a security assessment administered
by Chinese cyberspace regulators for any export of such personal information. Lastly, the draft contains proposals for significant fines
for serious violations of up to RMB 50 million or 5% of annual revenues from the prior year and may also be ordered to suspend any related
activity by competent authorities.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Interpretation, application
and enforcement of these laws, rules and regulations evolve from time to time and their scope may continually change, through new legislation,
amendments to existing legislation and changes in enforcement. Compliance with the Cyber Security Law and the Data Security Law could
significantly increase the cost to us of providing our service offerings, require significant changes to our operations or even prevent
us from providing certain service offerings in jurisdictions in which we currently operate or in which we may operate in the future. Despite
our efforts to comply with applicable laws, regulations and other obligations relating to privacy, data protection and information security,
it is possible that our practices, offerings or platform could fail to meet all of the requirements imposed on us by the Cyber Security
Law, the Data Security Law and/or related implementing regulations. Any failure on our part to comply with such law or regulations or
any other obligations relating to privacy, data protection or information security, or any compromise of security that results in unauthorized
access, use or release of personally identifiable information or other data, or the perception or allegation that any of the foregoing
types of failure or compromise has occurred, could damage our reputation, discourage new and existing counterparties from contracting
with us or result in investigations, fines, suspension or other penalties by Chinese government authorities and private claims or litigation,
any of which could materially adversely affect our business, financial condition and results of operations. Even if our practices are
not subject to legal challenge, the perception of privacy concerns, whether or not valid, may harm our reputation and brand and adversely
affect our business, financial condition and results of operations. 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.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>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.
In addition, uncertainties with respect to the PRC legal system could adversely affect us.</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We conduct substantially all of our business through the consolidated
VIEs in China. Our operations in China are governed by PRC laws and regulations. The consolidated VIEs are generally subject to laws and
regulations applicable to foreign investments in China and, in particular, laws and regulations applicable to wholly foreign-owned enterprises.
The PRC legal system is based on statutes. Prior court decisions may be cited for reference but have limited precedential value.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The recent regulatory developments
in China, in particular with respect to restrictions on China-based companies raising capital offshore, may lead to additional regulatory
review in China over our financing and capital raising activities in the United States. In addition, we may be subject to industry-wide
regulations that may be adopted by the relevant PRC authorities, which may have the effect of limiting our service offerings, restricting
the scope of our operations in China, or causing the suspension or termination of our business operations in China entirely, all of which
will materially and adversely affect our business, financial condition and results of operations. 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.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">On July 30, 2021, in response to the recent regulatory developments
in China and actions adopted by the PRC government, the Chairman of the SEC issued a statement asking the SEC staff to seek additional
disclosures from offshore issuers associated with China-based operating companies before their registration statements will be declared
effective. On August 1, 2021, the China Securities Regulatory Commission (the &#8220;CSRC&#8221;) stated in a statement that it had taken
note of the new disclosure requirements announced by the SEC regarding the listings of Chinese companies and the recent regulatory development
in China, and that both countries should strengthen communications on regulating China-related issuers. To the best knowledge of this
Company, as of the date of this annual report, current Chinese laws and regulations do not forbid us from issuing securities overseas.
On December 24, 2021, the CSRC published the Administration of Overseas Securities Offering and Listing by Domestic Companies (the &#8220;Draft
Administrative Provisions&#8221;) and the Administration Measures for the Filing of Overseas Securities Offering and Listing by Domestic
Companies (the &#8220;Draft Filing Measures&#8221;). The Draft Administrative Provisions and the Draft Filing Measures lay out requirements
for filing and include unified regulation management, strengthening regulatory coordination, and cross-border regulatory cooperation.
On February 17, 2023, the CSRC promulgated the Trial Administrative Measures of Overseas Securities Offering and Listing by Domestic Companies
(the &#8220;Trial Measures&#8221;), which took effect on March 31, 2023. On the same date, the CSRC circulated Supporting Guidance Rules
No. 1 through No. 5, Notes on the Trial Measures, Notice on Administration Arrangements for the Filing of Overseas Listings by Domestic
Enterprises and relevant CSRC Answers to Reporter Questions, or collectively, the Guidance Rules and Notice, on CSRC&#8217;s official
website. The Trial Measures, together with the Guidance Rules and Notice reiterate the basic principles of the Draft Administrative Provisions
and Draft Filing Measures and impose substantially the same requirements for the overseas securities offering and listing by domestic
enterprises, and clarified and emphasized several aspects, which include but are not limited to: (1) criteria to determine whether an
issuer will be required to go through the filing procedures under the Trial Measures; (2) exemptions from immediate filing requirements
for issuers including those that have already been listed in foreign securities markets, including U.S. markets, prior to the effective
date of the Trial Measures, but these issuers shall still be subject to filing procedures if they conduct refinancing or are involved
in other circumstances that require filing with the CSRC; (3) a negative list of types of issuers banned from listing or offering overseas,
such as issuers whose affiliates have been recently convicted of bribery and corruption; (4) issuers&#8217; compliance with web security,
data security, and other national security laws and regulations; (5) issuers&#8217; filing and reporting obligations, such as obligation
to file with the CSRC after it submits an application for initial public offering to overseas regulators, and obligation after offering
or listing overseas to file with the CSRC after it completes subsequent offerings and to report to the CSRC material events including
change of control or voluntary or forced delisting of the issuer; and (6) the CSRC&#8217;s authority to fine both issuers and their relevant
shareholders for failure to comply with the Trial Measures, including failure to comply with filing obligations or committing fraud and
misrepresentation. Specifically, pursuant to the Trial Measures, our future securities offerings in the Nasdaq Capital Market where we
have currently offered and listed shall also be filed with the CSRC within 3 working days after the offering is completed. As the Trial
Measures are newly issued, there remain uncertainties regarding its interpretation and implementation. 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.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">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. In particular, because these laws and regulations are relatively new, and because of the limited volume
of published decisions and their nonbinding nature, the interpretation and enforcement of these laws and regulations involve uncertainties.
In addition, the PRC legal system is based in part on government policies and internal rules (some of which are not published on a timely
basis or at all) that may have a retroactive effect. As a result, we may not be aware of our violation of these policies and rules until
some time after the violation. In addition, any litigation in China may be protracted and result in substantial costs and diversion of
resources and management attention.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>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.</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Shareholder claims or regulatory
investigation that are common in the United States generally are difficult to pursue as a matter of law or practicality in China. For
example, in China, there are significant legal and other obstacles to providing information needed for regulatory investigations or litigations
initiated outside China. Although the authorities in China may establish a regulatory cooperation mechanism with the securities regulatory
authorities of another country or region to implement cross-border supervision and administration, such cooperation with regulatory authorities
in the Unities States&#8212;including the SEC and the Department of Justice&#8212;may not be efficient in the absence of mutual and practical
cooperation mechanism. Furthermore, according to Article 177 of the PRC Securities Law, which became effective in March 2020, no overseas
securities regulator is allowed to directly conduct investigation or evidence collection activities within the PRC territory. While detailed
interpretation of or implementation rules under Article 177 have yet to be promulgated, the inability for an overseas securities regulator
to directly conduct investigation or evidence collection activities within China may further increase the difficulties you face in protecting
your interests.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>&#160;</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>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.</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We are a holding company and
conduct our business through our subsidiaries and controlled companies in the PRC. In addition, all of our operating assets are located
in, and all of our other senior executive officers reside within, China. As a result, it may not be possible to effect service of process
within the United States or elsewhere outside China upon those of our senior executive officers and directors that do not reside in the
United States, including with respect to matters arising under U.S. federal securities laws or applicable state securities laws. Moreover,
our Chinese counsel has advised us that China does not have treaties with the United States or many other countries providing for the
reciprocal recognition and enforcement of judgment of courts. 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.&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>The advent of recent healthcare reform directives
from China&#8217;s central government may increase both competition and our cost of doing business.</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Under the auspices of the
Healthy China 2020 program (the &#8220;Program&#8221;), published by China&#8217;s National Development and Reform Commission in October
2008, the central government has set in motion a series of policies in fairly rapid succession aimed to improve China&#8217;s healthcare
system. Such policies include (1) discouraging hospitals from both prescribing and dispensing medication, (2) the unveiling in April 2009
of formal healthcare reform guidelines aimed at improving the availability of and subsidies for &#8220;essential&#8221; drugs, and (3)
the announcement in August 2009 of China&#8217;s National Essential Drugs List (&#8220;NEDL&#8221;), initially listing approximately three
hundred (300) medicines to be sold at government-controlled prices. While an underlying goal of these policies is to make drugs more accessible
to China&#8217;s poorer population, these policies also serve to create opportunities that in turn will intensify business competition
in the Chinese retail drugstore industry, as well as competition for skilled labor and retail spaces. 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.&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>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.</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our management will have broad
discretion to use the net proceeds from any offerings we may conduct from time to time, and the shareholders will be relying on the judgment
of our management regarding the application of these proceeds. Except as described in our offering books, the net proceeds received by
us from our offerings will be added to our general funds and will be used for general corporate purposes. Our management might not apply
the net proceeds from offerings of our securities in ways that increase the value of your investment and might not be able to yield a
significant return, if any, on any investment of such net proceeds. You may not have the opportunity to influence our decisions on how
to use such proceeds.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>HJ Group is subject to restrictions on
making payments to us.</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We rely substantially on our contractual arrangements with HJ Group
for our revenue. The Chinese government also imposes controls on the conversion of RMB into foreign currencies and the remittance of currencies
out of China. We may experience difficulties in completing the administrative procedures necessary to obtain and remit foreign currency.
Furthermore, if these companies incur debt on their own in the future, the instruments governing the debt may restrict their ability to
make payments. If we are unable to receive all of the revenues from our operations through these contractual arrangements, we may be unable
to pay dividends on our ordinary shares.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Dividends we receive from our subsidiaries
located in the PRC may be subject to PRC withholding tax.</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The Enterprise Income Tax
Law (&#8220;EIT Law&#8221;) provides that a maximum income tax rate of twenty percent (20%) is applicable to dividends payable to non-PRC
investors that are &#8220;non-resident enterprises,&#8221; to the extent such dividends are derived from sources within the PRC. However,
the State Council has reduced such rate to ten percent (10%) through the implementation regulations. We are a Cayman Islands holding company
and substantially all of our income is derived from our subsidiaries and controlled companies located in the PRC. Therefore, dividends
paid to us from China may be subject to the ten percent (10%) income tax if we are considered a &#8220;non-resident enterprise&#8221; under
the EIT Law. 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.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&#160;</p><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>We face risks related to disease epidemics
and other outbreaks.</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">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.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">For example, epidemics threaten
people&#8217;s lives and may adversely affect their livelihood as well as their living and consumption patterns. The occurrence of an
epidemic is beyond our control, and we cannot assure you that the outbreak of coronavirus (including COVID-19), severe acute respiratory
syndrome, the H5N1 strain of avian influenza, the H1N1 strain of swine flu, the Zika virus or any other epidemics or pandemics will not
happen. Any epidemic or pandemic occurring, such as the most recent outbreak of COVID-19, in the PRC, or even in areas outside of the
PRC, may severely affect and restrict the level of economic activity as the government may impose regulatory administrative measures quarantining
affected areas or other measures to control the outbreak of the disease, which in turn may adversely affect our business, financial condition
and results of operations. Acts of war and terrorism may cause damage or disruption to us or our employees, facilities, markets, suppliers
or customers, any of which may adversely impact our revenue, cost, financial condition and results of operations or the trading price
of our securities. Potential war or terrorist attacks may also cause uncertainty and cause our business to suffer in ways that we cannot
currently predict.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Failure to comply with the U.S. Foreign
Corrupt Practices Act could subject us to penalties and other adverse consequences.</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We are required to comply
with the United States Foreign Corrupt Practices Act, which generally prohibits United States companies from engaging in bribery or other
prohibited payments to foreign officials for the purpose of obtaining or retaining business. Foreign companies, including some that may
compete with us, are not subject to these prohibitions, and therefore may have a competitive advantage over us. Corruption, extortion,
bribery, pay-offs, theft and other fraudulent practices may occur in the PRC. If our competitors engage in these practices, they may receive
preferential treatment in the PRC, giving them an advantage in securing business, which would put us at a disadvantage. We cannot provide
assurance that our employees or other agents will not engage in such conduct for which we might be held responsible. If our employees
or other agents are found to have engaged in such practices, we could suffer severe penalties and other consequences that may have a material
adverse effect on our business, financial condition and results of operations.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>If relations between the United States and
China worsen, investors may be unwilling to hold or buy our stock and our stock price may decrease.</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">At various times in recent
years, the United States and China have had significant disagreements over political and economic issues. Controversies may arise in the
future between the two countries. Any political or trade controversies between the United States and China, whether or not directly related
to our business, could reduce the price of our ordinary shares.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Our auditor, YCM CPA Inc., is headquartered
in California, and is subject to inspection by the PCAOB on a regular basis. To the extent that our independent registered public accounting
firm&#8217;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.</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The Holding Foreign Companies
Accountable Act, or the HFCAA, was enacted on December 18, 2020. The HFCAA states if the SEC determines that we have filed audit reports
issued by a registered public accounting firm that has not been subject to inspection by the PCAOB for three consecutive years beginning
in 2021, the SEC shall prohibit our shares from being traded on a national securities exchange or in the over-the-counter trading market
in the United States.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our independent registered
public accounting firm issued an audit opinion on the financial statements included in our annual reports filed with the SEC. Our independent
registered public accounting firm&#8217;s audit documentation related to their audit reports included in our annual reports is located
in China, and audit procedures take place within China&#8217;s borders. 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.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">On March 24, 2021, the SEC
adopted interim final rules relating to the implementation of certain disclosure and documentation requirements of the HFCAA, which became
effective on May 5, 2021. We will be required to comply with these rules if the SEC identifies our auditors as having a &#8220;non-inspection&#8221;
year under a process to be subsequently established by the SEC.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">On May 13, 2021, the PCAOB
proposed a new rule for implementing the HFCAA. Among other things, the proposed rule provides a framework for the PCAOB to use when determining,
under the HFCAA, whether it is unable to inspect or investigate completely registered public accounting firms located in a foreign jurisdiction
because of a position taken by one or more authorities in that jurisdiction. The proposed rule would also establish the manner of the
PCAOB&#8217;s determinations; the factors the PCAOB will evaluate and the documents and information it will consider when assessing whether
a determination is warranted; the form, public availability, effective date, and duration of such determinations; and the process by which
the board of the PCAOB can modify or vacate its determinations. The proposed rule was adopted by the PCAOB on September 22, 2021 and approved
by the SEC on November 5, 2021.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">On June 22, 2021, the U.S.
Senate passed a bill which, if passed by the U.S. House of Representatives and signed into law, would reduce the number of consecutive
non-inspection years required for triggering the prohibitions under the HFCAA from three years to two, thus reducing the time period before
the securities of such foreign companies may be prohibited from trading or delisted. On December 29, 2022, the Accelerating Holding Foreign
Companies Accountable Act was signed into law, which officially reduce the number of years that the auditor is not subject to inspection
to two consecutive years.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The SEC is assessing how to
implement other requirements of the HFCAA, including the listing and trading prohibition requirements described above. The SEC may propose
additional rules or guidance that could impact us if our auditor is not subject to the PCAOB inspection. For example, on August 6, 2020,
the President&#8217;s Working Group on Financial Markets, or the PWG, issued the Report on Protecting United States Investors from Significant
Risks from Chinese Companies to the then President of the United States. This report recommended the SEC implement five recommendations
to address companies from jurisdictions that do not provide the PCAOB with sufficient access to fulfill its statutory mandate. Some of
the concepts of these recommendations were implemented with the enactment of the HFCAA. However, some of the recommendations were more
stringent than the HFCAA. For example, if a company was not subject to the PCAOB inspection, the report recommended that the transition
period before a company would be delisted would end on January 1, 2022.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">On December 2, 2021, the SEC
issued amendments to finalize the interim final rules previously adopted in March 2021, and established procedures to identify issuers
and prohibit the trading of the securities of certain registrants as required by the HFCAA.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">On August 26, 2022, the PCAOB
signed a Statement of Protocol with the CSRC and the Ministry of Finance of the PRC (the &#8220;Statement of Protocol&#8221;), which is
intended to enable the PCAOB to inspect and investigate completely registered public accounting firms in mainland China and Hong Kong.
According to a statement released by the PCAOB, the Statement of Protocol (i) provides the PCAOB with sole discretion to select the firms,
audit engagements and potential violations it inspects and investigates without consultation with, nor input from, Chinese authorities,
(ii) puts procedures in place for PCAOB inspectors and investigators to view complete audit work papers with all information included
and for the PCAOB to retain information as needed and (iii) provides the PCAOB with direct access to interview and take testimony from
all personnel associated with the audits the PCAOB inspects or investigates. While the Chairs of both the PCAOB and the SEC made statements
supporting the Statement of Protocol, both emphasized that this is only the first step in the process. As such, uncertainties remain regarding
how the Statement of Protocol will be implemented and how it will impact China-based issuers and there is no assurance that the PCAOB
will be able to execute, in a timely manner, its future inspections and investigations in a manner that satisfies the Statement of Protocol.
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.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">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. The December 15, 2022 Determination Report cautions,
however, that authorities in the PRC might take positions at any time that would prevent the PCAOB from continuing to inspect or investigate
completely. As required by the HFCAA, if in the future the PCAOB determines it no longer can inspect or investigate completely because
of a position taken by an authority in the PRC, the PCAOB will act expeditiously to consider whether it should issue a new determination.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">While the HFCAA is not currently
applicable to the Company because the Company&#8217;s current auditors are subject to PCAOB review, if this changes in the future for
any reason, the Company may be subject to the HFCAA. The implications of this regulation if the Company were to become subject to it are
uncertain. Such uncertainty could cause the market price of our ordinary shares to be materially and adversely affected, and our securities
could be delisted or prohibited from being traded on Nasdaq earlier than would be required by the HFCAA. If our ordinary shares is unable
to be listed on another securities exchange by then, such a delisting would substantially impair your ability to sell or purchase the
ordinary shares when you wish to do so, and the risk and uncertainty associated with a potential delisting would have a negative impact
on the price of our ordinary shares.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">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 is headquartered in
Irvine, California and has been inspected by the PCAOB in March 2023. In the event that, in the future, either there is any regulatory
change or step taken by PRC regulators that does not permit YCM CPA Inc. to provide audit documentations located in China or Hong Kong
to the PCAOB for inspection or investigation, or the PCAOB expands the scope of the determinations so that our PRC operating entities
will be subject to the HFCAA, as the same may be amended, you may be deprived of the benefits of such inspection which could result in
limitation or restriction to our access to the U.S. capital markets and trading of our securities, including &#8220;over-the-counter&#8221;
trading, may be prohibited, under the HFCAA. The recent developments would add uncertainties to our listing and we cannot assure you whether
Nasdaq Capital Market or regulatory authorities would apply additional and more stringent criteria to us after considering the effectiveness
of our auditor&#8217;s audit procedures and quality control procedures, adequacy of personnel and training, or sufficiency of resources,
geographic reach, or experience as it relates to our audit.&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">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.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Risks Related to an Investment in Our Securities</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>To date, we have not paid any cash dividends
and we do not estimate to distribute any cash dividends in the foreseeable future.</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We do not anticipate paying
cash dividends on our ordinary shares in the foreseeable future and we may not have sufficient funds legally available to pay dividends.
Even if the funds are legally available for distribution, we may nevertheless decide not to pay any dividends. We intend to retain all
earnings for our operations.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Nasdaq may delist our ordinary shares from
trading on the Nasdaq Capital Market for failing to maintain a minimum bid price of $1.00, which could limit investors&#8217; ability
to effect transactions in our ordinary shares and subject us to additional trading restrictions.</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">On July 26, 2021, the Company
was first notified by the Nasdaq Stock Market LLC (&#8220;Nasdaq&#8221;), 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). 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.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">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. Effective April 7, 2022,
the Company effected a 1-for-12 reverse stock split.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">On April 25, 2022, the Company
received a compliance letter from Nasdaq notifying that as of&#160;April 22, 2022, the Company evidenced a closing bid price of its ordinary
shares at or greater than the&#160;$1.00&#160;per share minimum requirement for the last 11 consecutive business days, from April 7, 2022
through April 22, 2022. Nasdaq stated that accordingly, Jo-Jo Drugstores has regained compliance with Nasdaq Marketplace Rule 5550(a)(2).</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We cannot provide assurance
that we will remain compliant with the Bid Price Rule in the future. If Nasdaq delists our ordinary shares from trading on its exchange
due to incompliance, we could face significant material adverse consequences including:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="vertical-align: top">
    <td style="width: 48px; text-align: justify">&#160;</td>
    <td style="width: 24px; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">a limited availability of market quotations for our ordinary shares;</span></td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">a limited amount of news and analyst coverage for our company; and</span></td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">a decreased ability to issue additional securities or obtain additional financing in the future.</span></td></tr>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Although publicly traded, the trading market
in our ordinary shares may be substantially less liquid than the average stock quoted on the Nasdaq Capital Market, and such low trading
volume may adversely affect the price of our ordinary shares.</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Although our securities has
been listed on the Nasdaq Capital Market since April 22, 2010, the historical trading volume of our securities has generally been low.
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.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></p><div>

</div><!-- Field: Page; Sequence: 29; Value: 1 --><div>
    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><p style="text-align: center; margin-top: 0pt; margin-bottom: 0pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->24<!-- Field: /Sequence --></p></div><div>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>The market price for our stock may be volatile,
and such volatility may subject us to securities litigation.</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The market price for our stock
may be volatile and, when compared to seasoned issuers, subject to wide fluctuations in response to various factors, many of which are
beyond our control, including the following:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="vertical-align: top">
    <td style="width: 48px; text-align: justify">&#160;</td>
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    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">actual or anticipated fluctuations in our quarterly operating results;</span></td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">changes in financial estimates by securities research analysts;</span></td></tr>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="vertical-align: top">
    <td style="width: 48px; text-align: justify">&#160;</td>
    <td style="width: 24px; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">conditions in the retail pharmacy markets;</span></td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">changes in the economic performance or market valuations of other retail pharmacy operators;</span></td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">announcements by us or our competitors of new products, acquisitions, strategic partnerships, joint ventures or capital commitments;</span></td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">addition or departure of key personnel;</span></td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">fluctuations of exchange rates between RMB and the U.S. dollar;</span></td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">intellectual property litigation; and</span></td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">general economic or political conditions in China.</span></td></tr>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">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. In addition, the securities market has from time to time experienced significant price and volume fluctuations
that are not related to the operating performance of particular companies. These market fluctuations may also materially and adversely
affect the market price of our stock.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In the past, plaintiffs have
often initiated securities class action litigation against a company following periods of volatility in the market price of its securities.
We may, in the future, be the target of similar litigation. Securities litigation could result in substantial costs and liabilities and
could divert management&#8217;s attention and resources.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Techniques employed by manipulative short
sellers in Chinese small-cap stocks may drive down the market price of our ordinary shares.</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Short selling is the practice
of selling securities that the seller does not own but rather has borrowed from a third party with the intention of buying identical securities
back at a later date to return to the lender. The short seller hopes to profit from the difference in the sale price of the borrowed securities
and the purchase price of the replacement shares. As it is therefore in the short seller&#8217;s best interests for the price of the stock
to decline, there have been incidents of short sellers publishing, or arranging to publish negative opinions in order to create negative
market momentum. While traditionally these disclosed shorts have been limited in their ability to access mainstream business media or
to otherwise create negative market rumors, the rise of the Internet and technological advancements regarding document creation, videotaping
and publication by weblog (&#8220;blogging&#8221;) have allowed many disclosed shorts to publicly attack a company&#8217;s credibility,
strategy and veracity by means of so-called research reports that mimic the type of investment analysis performed by large Wall Street
firms and independent research analysts. 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.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></p><div>

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    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">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. In light of the limited risks involved in publishing such information,
and the enormous profit that can be made from running just one successful short attack, unless the short sellers become subject to significant
penalties, it is more likely than not that disclosed shorts will continue to issue such reports.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">While we intend to strongly
defend our public filings against any such short seller attacks, oftentimes we are constrained, either by principles of freedom of speech,
applicable state law (often called Anti-SLAPP statutes), or issues of commercial confidentiality, in the manner in which we can proceed
against the relevant short seller. You should be aware that in light of the relative freedom to operate that such persons enjoy &#8211;
oftentimes blogging from outside the U.S. with little or no assets or identity requirements &#8211; 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.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Other General Risk Factors</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Changes in economic conditions and consumer
confidence in China may influence the drugstore industry, consumer preferences and spending patterns.</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">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. In particular, as we focus on our expansion
of pharmacies in metropolitan markets, where living standards and consumer purchasing power are relatively high, we are especially susceptible
to changes in economic conditions, consumer confidence and customer preferences of the urban Chinese population. External factors beyond
our control that affect consumer confidence include unemployment rates, levels of personal disposable income, national, regional or local
economic conditions, and acts of war or terrorism. Changes in economic conditions and consumer confidence could adversely affect consumer
preferences, purchasing power and spending patterns. A decrease in overall consumer spending as a result of changes in economic conditions
could adversely affect our front-end and pharmacy sales and negatively impact our profitability. In addition, acts of war or terrorism
may cause damage to our facilities, disrupt the supply of the products and services we offer in our stores, or adversely impact consumer
demand. Any of these factors could have a material adverse effect on our business, financial condition and results of operations.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></p><div>

</div><!-- Field: Page; Sequence: 31; Value: 1 --><div>
    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><p style="text-align: center; margin-top: 0pt; margin-bottom: 0pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->26<!-- Field: /Sequence --></p></div><div>
    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>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.</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The pharmaceutical industry
in China is rapidly evolving and is subject to rapidly changing customer preferences that are difficult to predict. Our success depends
on our ability to anticipate and identify customer preferences, and adapt our product selection to meet these preferences. In particular,
we must optimize our product selection and inventory positions based on sales trends. We cannot provide assurance that our product selection,
especially our selection of nutritional supplements and food products, will accurately reflect customer preferences at any given time.
If we fail to accurately anticipate either the market for our products or customers&#8217; purchasing habits or fail to respond to customers&#8217;
changing preferences promptly and effectively, we may not be able to adapt our product selection to customer preferences or make appropriate
adjustments to our inventory positions, which could significantly reduce our revenue and have a material adverse effect on our business,
financial condition and results of operations.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Our success depends on our ability to establish
effective advertising, marketing and promotional programs.</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our success depends on our
ability to establish effective advertising, marketing and promotional programs, including pricing strategies implemented in response to
competitive pressures and/or to drive demand for our products. Our advertisements are designed to promote our brand, our corporate image
and the prices of products available for sale in our stores. Our pricing strategies and value propositions must be appropriate for our
target customers. If we are not able to maintain and increase the awareness of our pharmacy&#8217;s brand and the products and services
we provide, we may not be able to attract and retain customers and our reputation may also suffer. We expect to incur substantial expenses
in our marketing and promotional efforts to both attract and retain customers. However, our marketing and promotional activities may be
less successful than we anticipate, and may not be effective at building our brand awareness and customer base. In addition, the government
may impose restrictions on how marketing and promotional activities can be conducted. We cannot provide assurance that our current and
proposed budget for marketing activities will be adequate to support our future growth. Failure to successfully execute our advertising,
marketing and promotional programs may result in material decreases in our revenue and profitability.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Failure to maintain optimal inventory levels
could increase our inventory holding costs or cause us to lose sales, either of which could have a material adverse effect on our business,
financial condition and results of operations.</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We need to maintain sufficient
inventory levels to operate both of our retail and wholesale businesses successfully as well as meet customer expectations. However, we
must also guard against the risk of accumulating excess inventory. We are exposed to inventory risks as a result of rapid changes in product
life cycles, changing consumer preferences, uncertainty of the success of product launches, seasonality, and manufacturer backorders and
other vendor-related problems. We cannot provide assurance that we can accurately predict these trends and events and avoid over-stocking
or under-stocking products. In addition, demand for products could change significantly between the time product inventory is ordered
and the time it is available for sale.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">When we begin selling a new
product, it is particularly difficult to accurately forecast product demand. The purchase of certain types of inventory may require significant
lead-time. As we carry a broad selection of products and maintain significant inventory levels for a substantial portion of our merchandise,
we may be unable to sell such inventory in sufficient quantities or during the relevant selling seasons. 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.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>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.</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We believe that the aggregate
amount of our current cash, anticipated cash flow from operations, available borrowings under our existing bank facilities, and personal
loans from our principal shareholders should be sufficient to meet our anticipated cash needs for the near future. We may, however, require
additional cash resources due to changed business conditions or other future developments. If our resources are insufficient to satisfy
our cash requirements, we may seek to sell additional equity or debt securities or obtain credit facilities. The sale of additional equity
securities could result in the dilution of our existing shareholders. We cannot guarantee that we will be able to obtain any additional
financing on terms that are acceptable to us, or at all. Even if we are able to obtain any requisite financing, the incurrence of additional
indebtedness would result in increased debt service obligations, and could result in further operating and financing covenants that would
restrict our freedom to operate our business, such as conditions that:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="vertical-align: top">
    <td style="width: 48px; text-align: justify">&#160;</td>
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    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">limit our ability to pay dividends or require us to seek consent for the payment of dividends;</span></td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
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  <tr style="vertical-align: top">
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">require us to dedicate a portion of our cash flow from operations to payments on our debt, thereby reducing the availability of our cash flow to fund capital expenditures, working capital and other general corporate purposes; and</span></td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">limit our flexibility in planning for, or reacting to, changes in our business and our industry.</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Our brand names, trade secrets and other
intellectual property are valuable assets. If we are unable to protect them from infringement, our business and prospects may be harmed.</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We consider our pharmacy brand
names to be valuable assets. We may be unable to prevent third parties from using such brand names without authorization, which may adversely
affect our business and reputation, including the perceived quality and reliability of our products and services. We have five registered
trademarks. We also own three domain names that we actively use in our business.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We rely on trade secrets to
protect our know-how and other proprietary information, including pricing, purchasing, promotional strategies, customer lists and/or suppliers
lists. As a result, our employees are required to sign employment agreements that contain confidentiality provisions as a condition of
their employment with us. However, trade secrets are difficult to protect. While we believe we use reasonable efforts to protect our trade
secrets, our employees, consultants, contractors or advisors may unintentionally or willfully disclose our information to competitors.
In addition, confidentiality agreements executed by the aforementioned individuals may not be enforceable or provide meaningful protection
for our trade secrets or other proprietary information in the event of unauthorized use or disclosure.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">If we were to enforce a claim
that a third party had illegally obtained and was using our trade secrets, such efforts could be expensive and time-consuming, and the
outcome unpredictable. Additionally, if our competitors independently develop information that is equivalent to our trade secrets or other
proprietary information, we have little recourse to enforce our rights, and our business and prospects could be harmed.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Litigation may be necessary
in the future to enforce our intellectual property rights or to determine the validity and scope of the intellectual property rights of
others. However, since the validity, enforceability and scope of protection of intellectual property rights in the PRC are uncertain and
still evolving, we may not be successful in prosecuting these cases. In addition, any litigation, proceeding or other efforts to protect
our intellectual property rights could result in substantial costs and diversion of our resources, and could seriously harm our business
and operating results. Furthermore, the degree of future protection of our proprietary rights is uncertain and may not adequately protect
our rights or permit us to gain or keep our competitive advantage. 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.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>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.</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our success depends, in large
part, on our ability to use our proprietary information and know-how without infringing third party intellectual property rights. As litigation
becomes more common in China, we face a higher risk of being the subject of claims for intellectual property infringement, invalidity
or indemnification relating to other parties&#8217; proprietary rights. Our current or potential competitors, many of whom have substantial
resources, may have or may obtain intellectual property protection that will prevent, limit or interfere with our ability to conduct our
business in China. Moreover, the defense of intellectual property suits, including trademark infringement suits and related legal and
administrative proceedings, can be both costly and time consuming and may significantly divert the efforts and resources of our management
personnel. Furthermore, an adverse determination in any such litigation or proceeding to which we may become a party could cause us to:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="vertical-align: top">
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    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">pay damage awards;</span></td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">seek licenses from third parties;</span></td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">pay ongoing royalties;</span></td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">redesign our product offerings; or</span></td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">be restricted by injunctions,</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Each of which could effectively
prevent us from pursuing some or all of our business and result in our customers or potential customers deferring or limiting their purchase
from our stores, which could have a material adverse effect on our financial condition and results of operations.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>We face competition that could adversely
affect our results of operations.</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our clinics compete with
a large number and variety of healthcare facilities in their respective markets. There are numerous government-run and private hospitals
and clinics available to the general populace. There can be no assurance that these or other clinics, hospitals or other facilities will
not commence or expand such operations, which would increase their competitive position. 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.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

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    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>We may need to obtain additional governmental
approvals to open new drugstores. Our inability to obtain such approvals will have a material adverse effect on our business and growth.</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">According to the&#160;<i>Measures
on the Administration of Foreign Investment in the Commercial Sector</i>&#160;(the &#8220;Measures&#8221;) promulgated by China&#8217;s
Ministry of Commerce (the &#8220;MOC&#8221;), which became effective on June 1, 2004, a company that is directly owned by a foreign invested
enterprise needs to obtain relevant governmental approvals before it opens new retail stores. However, there are no specific laws, rules
or regulations with respect to whether such approvals are necessary for a company that is contractually controlled by a foreign invested
enterprise. In addition, the Measures state that the MOC will promulgate a detailed implementation regulation to govern foreign invested
enterprises engaging in drug sale. However, such implementation regulation has not yet been promulgated. Therefore, we cannot provide
assurance that the MOC will not require such approvals to be obtained, or as to when any regulation of such requirements may be implemented.
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.&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>The PRC&#8217;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.</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In June 2007, the National
People&#8217;s Congress of the PRC enacted new labor law legislation called the Labor Contract Law, which became effective on January
1, 2008 (the &#8220;LC Law&#8221;). The LC Law formalized workers&#8217; 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. In
addition, the law requires the payment of a statutory severance pay upon the termination of an employment contract in most cases, including
the case of the expiration of a fixed-term employment contract. Further, the LC Law requires an employer to conclude an &#8220;employment
contract without a fixed-term&#8221; with any employee who either has worked for the same employer for ten (10) consecutive years or more
or has had two (2) consecutive fixed-term contracts with the same employer. An &#8220;employment contract without a fixed term&#8221;
can no longer be terminated on the ground of the expiration of the contract, although it can still be terminated pursuant to the standards
and procedures set forth under the new law. Because of the lack of implementing rules for the LC Law and the precedents for the enforcement
of such a law, the standards and procedures set forth under the LC Law in relation to the termination of an employment contract have raised
concerns among foreign investment enterprises in the PRC that such &#8220;employment contract without a fixed term&#8221; might in fact
become a &#8220;lifetime, permanent employment contract.&#8221; Finally, under the LC Law, downsizing of either more than twenty (20)
people or more than ten percent (10%) of the workforce may occur only under specified circumstances, such as a restructuring undertaken
pursuant to the PRC&#8217;s Enterprise Bankruptcy Law, or where a company suffers serious difficulties in production and/or business operations,
or where there has been a material change in the objective economic circumstances relied upon by the parties at the time of the conclusion
of the employment contract, thereby making the performance of such employment contract impossible. To date, there has been very little
guidance and precedent as to how such specified circumstances for downsizing will be interpreted and enforced by the relevant PRC authorities.
All of our employees working for us exclusively within the PRC are covered by the LC Law and thus, our ability to adjust the size of our
operations when necessary in periods of recession or less severe economic downturns may be curtailed. Accordingly, if we face future periods
of decline in business activity generally or adverse economic periods specific to our business, the LC Law can be expected to exacerbate
the adverse effect of the economic environment on our results of operations and financial condition.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>We cannot be certain that the Chinese regulatory
authorities will not impose more stringent restrictions on the convertibility of the Renminbi, especially with respect to foreign exchange
transactions.</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Fluctuations in the value
of the Renminbi may have a material and adverse effect on your investment. The change in value of the Renminbi against the U.S. dollar
is affected by, among other things, changes in PRC&#8217;s political and economic conditions. We receive substantially all of our revenues
in RMB. Under our current structure, our income is primarily derived from payments from the three (3) HJ Group companies. Shortages in
the availability of foreign currency may restrict the ability of our subsidiaries and our PRC affiliated entities to remit sufficient
foreign currency to pay dividends or other payments to us, or otherwise satisfy their foreign currency denominated obligations. Under
existing Chinese foreign exchange regulations, payments of current account items, including profit distributions, interest payments and
expenditures from trade-related transactions, can be made in foreign currencies without prior approval from SAFE by complying with certain
procedural requirements. However, approval from appropriate government authorities is required where RMB is to be converted into foreign
currency and remitted out of China to pay capital expenses, such as the repayment of bank loans denominated in foreign currencies. The
Chinese government may also, at its discretion, restrict access in the future to foreign currencies for current account transactions.
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.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></p><div>

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    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">From 1995 until July 2005,
the People&#8217;s Bank of China intervened in the foreign exchange market to maintain an exchange rate of approximately Renminbi 8.3
per U.S. dollar. On July 21, 2005, the PRC government changed this policy and began allowing modest appreciation of the Renminbi versus
the U.S. dollar. Under the new policy, the Renminbi was permitted to fluctuate within a narrow and managed band against a basket of certain
foreign currencies. This change in policy caused the Renminbi to appreciate approximately 21.5% against the U.S. dollar over the following
three years. As a consequence, the Renminbi has fluctuated sharply since July 2008 against other freely traded currencies, in tandem with
the U.S. dollar. It is difficult to predict how long the current situation may last and when and how it may change again. There remains
significant international pressure on the PRC government to adopt a substantial liberalization of its currency policy, which could result
in a further and more significant appreciation in the value of the Renminbi against the U.S. dollar. Significant revaluation of the Renminbi
may have a material and adverse effect on your investment. For example, to the extent that we need to convert U.S. dollars we receive
from securities offering into Renminbi for our operations, appreciation of the Renminbi against the U.S. dollar would have an adverse
effect on the Renminbi amount we would receive from the conversion. Conversely, if we decide to convert our Renminbi into U.S. dollars
for the purpose of making payments for dividends on our ordinary shares or for other business purposes, appreciation of the U.S. dollar
against the Renminbi would have a negative effect on the U.S. dollar amount available to us. In August 2015, the PRC Government devalued
its currency by approximately 3%, represented the largest yuan depreciation for 20 years. Concerns remain that China&#8217;s slowing economy,
and in particular its exports, will need a stimulus that can only come from further cuts in the exchange rate.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Fluctuations in the value of RMB may have
a material adverse effect on your investment.</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">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. 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. For example, an appreciation
of RMB against the U.S. dollar would, to the extent that we need to convert U.S. dollars into RMB for such purposes, make any new RMB
denominated investments or expenditures more costly to us. An appreciation of RMB against the U.S. dollar would result in foreign currency
translation gains for financial reporting purposes when we translate our RMB denominated financial assets into U.S. dollars, as the U.S.
dollar is our reporting currency.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In addition, appreciation
or depreciation in the value of the Renminbi relative to the U.S. dollar would affect our financial results reported in U.S. dollars without
giving effect to any underlying change in our business or results of operations. The income statements of our operations are translated
into U.S. dollars at the average exchange rates in each applicable period. To the extent the U.S. dollar strengthens against foreign currencies,
the translation of these foreign currencies denominated transactions results in reduced revenue, operating expenses and net income for
our international operations. Similarly, to the extent the U.S. dollar weakens against foreign currencies, the translation of these foreign
currency denominated transactions results in increased revenue, operating expenses and net income for our international operations. We
are also exposed to foreign exchange rate fluctuations as we convert the financial statements of our foreign subsidiaries into U.S. dollars
in consolidation. If there is a change in foreign currency exchange rates, the conversion of the foreign subsidiaries&#8217; financial
statements into U.S. dollars will lead to a translation gain or loss, which is recorded as a component of other comprehensive income.
Very limited hedging transactions are available in China to reduce our exposure to exchange rate fluctuations. To date, we have not entered
into any hedging transactions. While we may enter into hedging transactions in the future, the availability and effectiveness of these
transactions may be limited, and we may not be able to successfully hedge our exposure at all.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>The economy of China had experienced unprecedented
growth. This growth has slowed in the recent years, and if the growth of the economy continues to slow or if the economy contracts, our
financial condition may be materially and adversely affected.</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The rapid growth of the Chinese
economy had historically resulted in widespread growth opportunities for industries across China. This growth has slowed in the recent
years. As a result of the global financial crisis due to COVID-19, and Ukraine War, and the inability of enterprises to gain comparable
access to the same amounts of capital available in past years, there may be an adverse effect on the business climate and growth of private
enterprises in China. An economic slowdown could have an adverse effect on our sales and may increase our costs. Further, if economic
growth continues to slow, and if, in conjunction, inflation continues unchecked, our costs would be likely to increase, and there can
be no assurance that we would be able to increase our prices to an extent that would offset the increase in our expenses.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">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.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></p><div>

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    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><div><a id="a_009"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>ITEM 4. INFORMATION ON THE COMPANY.</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><div><a id="a_010"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><b>A<i>. </i>HISTORY AND DEVELOPMENT
OF THE COMPANY.</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Overview</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We are a retailer and distributor
of pharmaceutical and other healthcare products typically found in retail pharmacies in the People&#8217;s Republic of China (&#8220;PRC&#8221;
or &#8220;China&#8221;). Prior to acquiring Zhejiang Jiuxin Medicine Co., Ltd. (&#8220;Jiuxin Medicine&#8221;) in August 2011 (see &#8220;<i>Our
Corporate History and Structure - HJ Group</i>&#8221; 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 &#8220;Jiuzhou Grand Pharmacy&#8221; in Hangzhou city. We acquired
four single drugstores in fiscal 2021. After the acquisition, we liquidated them and then opened four new stores with the four licenses
of local government medical insurance reimbursement program. On the other side, we have been concentrating on new stores within Hangzhou
metropolitan area and opened three stores in the fiscal year 2023. As China has been successfully controlling the spread of COVID-19,
and the recurrences of the pandemic have not materially affected our business, the negative impacts are limited.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We currently operate in four
business segments in China: (1) retail drugstores, (2) online pharmacy, (3) wholesale business selling products similar to those we carry
in our pharmacies, and (4) farming and selling herbs used for traditional Chinese medicine (&#8220;TCM&#8221;). All of the above business
are performed in China with no international sales.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our stores provide customers
with a wide variety of pharmaceutical products, including prescription and over-the-counter (&#8220;OTC&#8221;) drugs, nutritional supplements,
TCM, personal and family care products, and medical devices, as well as convenience products, including consumable, seasonal, and promotional
items. Additionally, we have doctors licensed in both western medicine and TCM on site for consultation, examination and treatment of
common ailments at scheduled hours. Four (4) stores have adjacent medical clinics offering urgent care (to provide treatment for minor
ailments such as sprains, minor lacerations, and dizziness that can be treated on an outpatient basis), TCM (including acupuncture, therapeutic
massage, and cupping) and minor outpatient surgical treatments (such as suturing). Our stores vary in size, but presently average close
to 200 square meters per store. We attempt to tailor each store&#8217;s product offerings, physician access, and operating hours to suit
the community where the store is located.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We operate our pharmacies (including the medical clinics) through the
following companies in China that we manage through contractual arrangements (refer to &#8220;<i>Contractual Arrangements with HJ Group
and the Key Personnel&#8221; below in this report regarding the details of contractual arrangements</i>:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="vertical-align: top">
    <td style="width: 48px; text-align: justify">&#160;</td>
    <td style="width: 24px; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Hangzhou Jiuzhou Grand Pharmacy Chain Co., Ltd. (&#8220;Jiuzhou Pharmacy&#8221;), which we manage contractually, operates our &#8220;Jiuzhou Grand Pharmacy&#8221; stores;</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

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  <tr style="vertical-align: top">
    <td style="width: 48px; text-align: justify">&#160;</td>
    <td style="width: 24px; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Hangzhou Jiuzhou Clinic of Integrated Traditional and Western Medicine (General Partnership) (&#8220;Jiuzhou Clinic&#8221;), which we manage contractually, operates one (1) of our three (3) medical clinics; and</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="vertical-align: top">
    <td style="width: 48px; text-align: justify">&#160;</td>
    <td style="width: 24px; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Hangzhou Jiuzhou Medical &amp; Public Health Service Co., Ltd. (&#8220;Jiuzhou Service&#8221;), which we manage contractually, operates our other medical clinics.</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We also offer OTC drugs and
nutritional supplements for sale through a website (<span style="text-decoration:underline">www.dada360.com</span>) operated by Jiuzhou Pharmacy. 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.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">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, 2023, wholesale revenue accounted for approximately 22.2% of our total revenue.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">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. (&#8220;Qianhong Agriculture&#8221;), a wholly-owned subsidiary. During the fiscal year ended March 31, 2023, our herb farming
business generated approximately 0% of our retail revenue.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">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 &#8220;HJ Group.&#8221;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Corporate History </b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">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 (&#8220;2022 Annual Report&#8221;) under the caption &#8220;Corporate History.&#8221;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Contractual Arrangements with HJ Group and
the Key Personnel</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Information relating to the
contractual arrangements with HJ Group and the Key Personnel is incorporated by reference from our <a href="http://www.sec.gov/ix?doc=/Archives/edgar/data/1856084/000121390022042481/f20f2022_chinajojo.htm">2022 Annual Report</a> under the caption
&#8220;Contractual Arrangements with HJ Group and the Key Personnel.&#8221;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Corporate Information</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our principal executive office
is located at 6<sup>th</sup> Floor, Hai Wai Hai Tongxin Mansion, Gong Shu District, Hangzhou City, Zhejiang Province, and China. 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.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our transfer agent is American
Stock Transfer &amp; Trust Company, LLC, whose address is 6201, 15th Avenue, Brooklyn, 11219, and whose telephone number is (718) 921-8206.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">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.</p><div>

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</div><div><a id="a_011"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><b>B. BUSINESS OVERVIEW.</b></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Pharmacies</i></b></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">As of March 31, 2023, we currently
have one hundred and fourteen (114) pharmacies throughout Hangzhou, the provincial capital of Zhejiang and neighborhood cities. 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.
We offer primarily third-party products at our pharmacies, including:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

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    <td style="width: 24px; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Approximately 1,500 prescription drugs (322 of which require a physician&#8217;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;</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

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    <td style="width: 48px; text-align: justify">&#160;</td>
    <td style="width: 24px; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">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;</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="vertical-align: top">
    <td style="width: 48px; text-align: justify">&#160;</td>
    <td style="width: 24px; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">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;</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="vertical-align: top">
    <td style="width: 48px; text-align: justify">&#160;</td>
    <td style="width: 24px; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">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;</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="vertical-align: top">
    <td style="width: 48px; text-align: justify">&#160;</td>
    <td style="width: 24px; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">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</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="vertical-align: top">
    <td style="width: 48px; text-align: justify">&#160;</td>
    <td style="width: 24px; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">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.</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We favor retail locations
in well-established residential communities with relatively concentrated consumer purchasing power or are located in close proximity to
local hospitals, and evaluate potential store sites to assess consumer traffic, visibility and convenience. Depending on its size, each
drugstore has between two (2) to twenty-five (25) pharmacists on staff, all of whom are properly licensed. We only accept prescriptions
from licensed health care providers, and verify the validity, accuracy, and completeness of all prescriptions. We also ask all prescription
customers to disclose their drug allergies, current medical conditions, and current medications. Most pharmacies also maintain a TCM counter
staffed by licensed herbalists.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">After opening, a location
without SHI (Social Health Insurance) coverage may take up to one year to achieve our projected revenue goals for that particular location.
Various factors influence individual store revenue including, but not limited to: location, nearby competition, local population demographics,
square footage, and government insurance coverage.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">All of our one hundred and
fourteen (114) of our drugstores are located in Hangzhou city.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">To enhance our customers&#8217;
experience, we have licensed physicians available at several of our &#8220;Jiuzhou Grand Pharmacy&#8221; locations for consultation, examination
and treatment of common ailments at scheduled hours. 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).</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">To ensure quality and personal
attention for patients, we employ only licensed doctors and certified nurses and technicians. Patient treatment at our five (5) Jiuzhou
Clinics and Jiuzhou Service, follow nationally established clinical practice guidelines from China&#8217;s Ministry of Health. We currently
have fifty-eight (58) physicians and thirty (30) clinic staff. In-store consultations and examinations by our physicians are provided
free-of-charge to ensure that customers are being prescribed and taking the appropriate medication for their ailments, and to afford customers
convenience.</p><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We view our medical services
as more consumer-driven than other health care specialties, because consumers requiring the types of medical services that we provide
often seek treatment on their own accord. We have developed our medical services to respond to the public need for convenient access to
medical consultations and/or care and the significant savings that we can provide as compared to a more traditional medical setting such
as a hospital. Many of our patients often need immediate access to medical services, do not have a regular physician, or may lack suitable
alternatives. Patient flow is derived from the physical presence of our drugstores, not from pre-existing doctor-patient relationships
or referrals from other healthcare providers.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We generate limited revenue
directly from our clinics. However, our clinic brings patients into our stores, where they then purchase medical products.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Online Sales</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Since May 2010, we have been
retailing OTC drugs and nutritional supplements on the Internet at www.dada360.com. Before November 2015, our subsidiary Quannuo Technology
operated and maintained the website pursuant to the Internet Pharmaceutical Transaction Service Qualification Certificate issued by the
National Medical Products Administration (the &#8220;NMPA&#8221;) of Zhejiang Province, which allows us to engage in online retail pharmaceutical
sales throughout China. 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. By using Taobao&#8217;s platform in addition to our own website as
mentioned above, we can be exposed to a wider range of customers.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">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. Online sales accounted for approximately 16.8% of our total revenue, for
the fiscal year ended March 31, 2021.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Wholesale</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Since acquiring Jiuxin Medicine
in August 2011, we have been distributing third-party products primarily to drug distributors throughout China, including:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
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    <td style="width: 48px; text-align: justify">&#160;</td>
    <td style="width: 24px; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
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  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="vertical-align: top">
    <td style="width: 48px; text-align: justify">&#160;</td>
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  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="vertical-align: top">
    <td style="width: 48px; text-align: justify">&#160;</td>
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  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="vertical-align: top">
    <td style="width: 48px; text-align: justify">&#160;</td>
    <td style="width: 24px; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">TCM products, the sales of which accounted for approximately 1.4% of our wholesale revenue for the fiscal year ended March 31, 2023;</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="vertical-align: top">
    <td style="width: 48px; text-align: justify">&#160;</td>
    <td style="width: 24px; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
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  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="vertical-align: top">
    <td style="width: 48px; text-align: justify">&#160;</td>
    <td style="width: 24px; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Medical devices, the sales of which accounted for approximately 1.0% of our wholesale revenue for the fiscal year ended March 31, 2023.</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Wholesale revenue increased
primarily as a result of our ability to resell certain products, which our retail stores made large orders on, to other vendors. As our
retail drugstores achieved large quantity sales of certain brand name merchandise, we were able to negotiate for lower purchase prices
than the market level on such merchandise. As a result, certain vendors who were unable to obtain better prices than ours, will turn to
us for such merchandise, leading the wholesale volume to grow. On the other side, we have been trying to act as a local agent for well-known
health products in Zhejiang Province. For example, we kept a strategic cooperation agreement with Dong&#8217;a Gelatin (DEEJ) and act
as its local sale agent in Zhejiang Province. 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.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Herb Farming</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">From 2010 to the third quarter
of fiscal 2013, we had been cultivating and harvested ten (10) types of herbs, such as fructusrubi (used in TCM to promote blood circulation),
white atractylodes rhizome (used in TCM to treat physical and mental fatigue), atractylodesmacrocephala (used in TCM to control sweating),
ginkgo seeds (used in TCM to treat asthma), and ginkgo trees used for TCM on approximately forty eight (48) acres of leased land in Lin&#8217;an,
approximately thirty (30) miles from Hangzhou.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">A ginkgo tree may have a growth
period of up to twenty years before it is mature enough to harvest. Typically, the longer the plant grows, the more valuable it becomes.
We plan to continue cultivating the trees in order to maximize their market value in the future. We may continue growing trees and cultivating
other herbs&#160;in the future.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">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.&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Our Customers</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Retail Customers</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">For the fiscal year ended
March 31, 2023, our pharmacies collectively served an average of 19,048 customers per day. We periodically conduct qualitative customer
surveys to help us build a stronger understanding of our market position and our customers&#8217; purchasing habits.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Pharmacy customers pay by
cash, debit or credit cards, mobile devices or medical insurance cards under Hangzhou and Zhejiang&#8217;s medical insurance programs.
During the fiscal year ended March 31, 2023, approximately 4% of our pharmacy revenue came from cash sales, 41% from Hangzhou&#8217;s
and Zhejiang&#8217;s medical insurance cards (where most of our pharmacies are located), and 55% from debit and credit cards, Alipay and
other charge cards.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We maintain strict cash control
procedures at our pharmacies. Our integrated information management system records the details of each sale, which we control from our
headquarters. Depending on each location&#8217;s sales activities, cash may be deposited daily or several times per week in designated
bank accounts.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">For sales made to eligible
participants in the national medical insurance program, we generally obtain payments from the relevant government social security bureaus
on a monthly basis. See &#8220;<i>Relevant PRC Regulations - Reimbursement under the National Medical Insurance Program.</i>&#8221; According
to relevant regulations, a drugstore usually needs to operate for at least one (1) year before it can apply to be licensed to accept Hangzhou&#8217;s
medical insurance cards. As of the date of this report, one hundred and ten (110) of our one hundred and fourteen (114) &#8220;Jiuzhou
Grand Pharmacy&#8221; 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.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Online Sales Customers</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">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.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Wholesale Customers</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our wholesale customers are
primarily third-party trading companies that purchase from us to resell to pharmacies throughout China. We also supply some hospitals
and pharmacies, although they collectively make up less than 10.0% of our wholesale customers currently.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Herb Farming Customers</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our farming customers primarily
include local herb vendors. For the fiscal year ended March, 31, 2023, we had not harvested or sold any herbs.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Marketing and Promotion</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Information relating to our
marketing and promotion activities is incorporated by reference from our <a href="http://www.sec.gov/Archives/edgar/data/1856084/000121390022042481/f20f2022_chinajojo.htm">2022 Annual Report</a> under the caption &#8220;Marketing and Promotion.&#8221;
The updates relating to our marketing and promotion during the fiscal year of 2023 is as follows:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">For the fiscal year ended
March 31, 2023, approximately 37.0% of our customers used their rewards cards to make purchases.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Logistics</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Information relating to our
logistics is incorporated by reference from our <a href="http://www.sec.gov/Archives/edgar/data/1856084/000121390022042481/f20f2022_chinajojo.htm">2022 Annual Report</a> under the caption &#8220;Logistics.&#8221;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Suppliers</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">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. 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, 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.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">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. To date, we have not experienced any significant difficulty
in sourcing our suppliers.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Quality Control</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Information relating to our
quality control is incorporated by reference from our <a href="http://www.sec.gov/Archives/edgar/data/1856084/000121390022042481/f20f2022_chinajojo.htm">2022 Annual Report</a> under the caption &#8220;Quality Control.&#8221;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Competition</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Information relating to the
competition we face is incorporated by reference from our <a href="http://www.sec.gov/Archives/edgar/data/1856084/000121390022042481/f20f2022_chinajojo.htm">2022 Annual Report</a> under the caption &#8220;Competition.&#8221;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Intellectual Property</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Information relating to the
our intellectual property is incorporated by reference from our <a href="http://www.sec.gov/Archives/edgar/data/1856084/000121390022042481/f20f2022_chinajojo.htm">2022 Annual Report</a> under the caption &#8220;Intellectual Property.&#8221; </p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Employees</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">As of March 31, 2023, we had
938 employees combined in our retail and wholesale operations, consisting of 885 full-time and 53 part-time employees. The number of employees
for each area of operations, and such employees as a percentage of our total workforce, are as follows:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
  <tr style="vertical-align: bottom">
    <td style="white-space: nowrap; text-indent: -0.125in; padding-left: 0.125in; text-align: center">&#160;</td><td style="white-space: nowrap; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="6" style="white-space: nowrap; text-align: center; border-bottom: Black 1.5pt solid">As of March&#160;31, 2023</td><td style="white-space: nowrap; padding-bottom: 1.5pt">&#160;</td></tr>
  <tr style="vertical-align: bottom">
    <td style="text-indent: -0.125in; padding-left: 0.125in; text-align: center">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
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    <td colspan="2" style="text-align: center; border-bottom: Black 1.5pt solid">Percentage</td><td style="padding-bottom: 1.5pt">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="width: 1%; text-align: left">&#160;</td><td style="width: 9%; text-align: right">45.9</td><td style="width: 1%; text-align: left">%</td></tr>
  <tr style="vertical-align: bottom; ">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-indent: -0.125in; padding-left: 0.125in; text-align: left">Management - non-pharmacists</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; ">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; ">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-indent: -0.125in; padding-left: 0.125in; padding-bottom: 4pt">Total</td><td style="padding-bottom: 4pt">&#160;</td>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">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. We provide extensive training for newly recruited employees in the first three months of their employment. The training is
designed to encompass a number of areas, such as knowledge of our products and effective customer service. In addition, we regularly carry
out training programs on medicinal information, nutritional information, and selling skills for our store staff and in-store pharmacists.
We believe these programs have played an important role in strengthening the capabilities of our employees.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Various drug manufacturers
also pay us to have their representatives in our drugstores, and accordingly, we train them under our store policies and procedures.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Relevant PRC Regulations</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Information relating to the
relevant PRC Regulations is incorporated by reference from our <a href="http://www.sec.gov/Archives/edgar/data/1856084/000121390022042481/f20f2022_chinajojo.htm">2022 Annual Report</a> under the caption &#8220;Relevant PRC Regulations.&#8221;
Please also refer to the above Risk Factor sections &#8220;Risks Related to Our Corporate Structure&#8221; and &#8220;Risks Related to
Doing Business in China&#8221;.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Dividend Distribution</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">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.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></p><div>

</div><!-- Field: Page; Sequence: 43; Value: 1 --><div>
    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><p style="text-align: center; margin-top: 0pt; margin-bottom: 0pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->38<!-- Field: /Sequence --></p></div><div>
    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Environmental Matters</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Information relating to the environmental matters
is incorporated by reference from our <a href="http://www.sec.gov/Archives/edgar/data/1856084/000121390022042481/f20f2022_chinajojo.htm">2022 Annual Report</a> under the caption &#8220;Environmental Matters.&#8221;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><div><a id="a_012"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><b>C. ORGANIZATIONAL STRUCTURE</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The following diagram illustrates
our current corporate structure as of June 15, 2023:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center">&#160;<img alt="" src="image_001.jpg"/></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The table below summarizes
the status of the registered capital of our PRC subsidiaries and controlled companies as of the date of this report:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: bottom">
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    <td style="width: 1%; padding-bottom: 1.5pt; text-align: center">&#160;</td>
    <td style="width: 11%; border-bottom: black 1.5pt solid">
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    <td style="width: 1%; padding-bottom: 1.5pt; text-align: center">&#160;</td>
    <td style="width: 11%; border-bottom: black 1.5pt solid">
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    <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">Capital</p></td>
    <td style="width: 1%; padding-bottom: 1.5pt; text-align: center">&#160;</td>
    <td style="width: 11%; border-bottom: black 1.5pt solid">
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    <td style="width: 1%; padding-bottom: 1.5pt; text-align: center">&#160;</td>
    <td style="width: 11%; border-bottom: black 1.5pt solid">
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    <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">for&#160;Unpaid</p>
    <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">Registered</p>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Jiutong Medical </span></td>
    <td>&#160;</td>
    <td style="text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Subsidiary </span></td>
    <td>&#160;</td>
    <td style="text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">USD 2,600,000 </span></td>
    <td>&#160;</td>
    <td style="text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">USD 2,600,000 </span></td>
    <td>&#160;</td>
    <td style="text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">N/A </span></td></tr>
  <tr style="vertical-align: bottom; ">
    <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Jiuzhou Clinic </span></td>
    <td>&#160;</td>
    <td style="text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">VIE </span></td>
    <td>&#160;</td>
    <td style="text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">N/A </span></td>
    <td>&#160;</td>
    <td style="text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">N/A </span></td>
    <td>&#160;</td>
    <td style="text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">N/A </span></td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Jiuzhou Pharmacy </span></td>
    <td>&#160;</td>
    <td style="text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">VIE </span></td>
    <td>&#160;</td>
    <td style="text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">USD&#160;733,500 </span></td>
    <td>&#160;</td>
    <td style="text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">USD&#160;733,500 </span></td>
    <td>&#160;</td>
    <td style="text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">N/A </span></td></tr>
  <tr style="vertical-align: bottom; ">
    <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Jiuzhou Service </span></td>
    <td>&#160;</td>
    <td style="text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">VIE </span></td>
    <td>&#160;</td>
    <td style="text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">USD 73,350 </span></td>
    <td>&#160;</td>
    <td style="text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">USD 73,350 </span></td>
    <td>&#160;</td>
    <td style="text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">N/A </span></td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Jiuxin Management </span></td>
    <td>&#160;</td>
    <td style="text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Subsidiary </span></td>
    <td>&#160;</td>
    <td style="text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">USD&#160;24,500,000 </span></td>
    <td>&#160;</td>
    <td style="text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">USD&#160;23,500,000 </span></td>
    <td>&#160;</td>
    <td style="text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">N/A </span></td></tr>
  <tr style="vertical-align: bottom; ">
    <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Jiuxin Medicine </span></td>
    <td>&#160;</td>
    <td style="text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">VIE </span></td>
    <td>&#160;</td>
    <td style="text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">USD 1,564,000 </span></td>
    <td>&#160;</td>
    <td style="text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">USD 1,564,000 </span></td>
    <td>&#160;</td>
    <td style="text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">N/A </span></td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Qianhong Agriculture </span></td>
    <td>&#160;</td>
    <td style="text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Subsidiary </span></td>
    <td>&#160;</td>
    <td style="text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">USD&#160;1,497,000 </span></td>
    <td>&#160;</td>
    <td style="text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">USD&#160;1,497,000 </span></td>
    <td>&#160;</td>
    <td style="text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">N/A </span></td></tr>
  <tr style="vertical-align: bottom; ">
    <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Shouantang Technology </span></td>
    <td>&#160;</td>
    <td style="text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Subsidiary </span></td>
    <td>&#160;</td>
    <td style="text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">USD 11,000,000 </span></td>
    <td>&#160;</td>
    <td style="text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">USD 11,000,000 </span></td>
    <td>&#160;</td>
    <td style="text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">N/A </span></td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Shouantang Bio </span></td>
    <td>&#160;</td>
    <td style="text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Subsidiary </span></td>
    <td>&#160;</td>
    <td style="text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">USD 162,900 </span></td>
    <td>&#160;</td>
    <td style="text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">USD 162,900 </span></td>
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    <td style="text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">N/A </span></td></tr>
  <tr>
    <td style="vertical-align: top"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Jiuyi Technology </span></td>
    <td style="vertical-align: top">&#160;</td>
    <td style="vertical-align: top; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Subsidiary </span></td>
    <td style="vertical-align: top; text-align: center">&#160;</td>
    <td style="vertical-align: top; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">USD 5,000,000 </span></td>
    <td style="vertical-align: top; text-align: center">&#160;</td>
    <td style="vertical-align: top; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">USD 2,500,000 </span></td>
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    <td style="vertical-align: bottom; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">September 25, 2026 </span></td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td>&#160;</td>
    <td style="text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">VIE </span></td>
    <td>&#160;</td>
    <td style="text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">USD 2,979,460 </span></td>
    <td>&#160;</td>
    <td style="text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">USD 1,489,730</span></td>
    <td>&#160;</td>
    <td style="text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">N/A </span></td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Hongtong Service</span></td>
    <td>&#160;</td>
    <td style="text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">VIE</span></td>
    <td>&#160;</td>
    <td style="text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">USD 14,615</span></td>
    <td>&#160;</td>
    <td style="text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">USD 0</span></td>
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    <td style="text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">N/A </span></td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Jiuzhen Health</span></td>
    <td>&#160;</td>
    <td style="text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">VIE</span></td>
    <td>&#160;</td>
    <td style="text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">USD 14,615</span></td>
    <td>&#160;</td>
    <td style="text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">USD 14,615</span></td>
    <td>&#160;</td>
    <td style="text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">N/A </span></td></tr>
  <tr style="vertical-align: bottom; ">
    <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Shouantang Clinic</span></td>
    <td>&#160;</td>
    <td style="text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">VIE</span></td>
    <td>&#160;</td>
    <td style="text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">USD 14,615</span></td>
    <td>&#160;</td>
    <td style="text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">USD 14,615</span></td>
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    <td style="text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">N/A </span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></p><div>

</div><!-- Field: Page; Sequence: 44; Value: 1 --><div>
    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><p style="text-align: center; margin-top: 0pt; margin-bottom: 0pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->39<!-- Field: /Sequence --></p></div><div>
    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">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.&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>Consolidating Statements of Income Information</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>&#160;</b></p><div>

</div><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
  <tr style="vertical-align: bottom">
    <td style="text-align: center">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
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  <tr style="vertical-align: bottom">
    <td style="text-align: center">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; ">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">(4,198,791</td><td style="text-align: left">)</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; ">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">(2,261,118</td><td style="text-align: left">)</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; ">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">(6,459,909</td><td style="text-align: left">)</td><td>&#160;</td>
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  </table><div>


</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>&#160;</b></p><div>

</div><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
  <tr style="vertical-align: bottom">
    <td style="text-align: center">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">43,042</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">(1,480,796</td><td style="text-align: left">)</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(819,438</td><td style="text-align: left">)</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(350,614</td><td style="text-align: left">)</td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">(21,931</td><td style="text-align: left">)</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>&#160;</b></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>&#160;</b></p><div>

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  <tr style="vertical-align: bottom">
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></p><div>

</div><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>Consolidating Cash Flows Information</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>&#160;</b></p><div>

</div><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>&#160;</b></p><div>

</div><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
  <tr style="vertical-align: bottom">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">90,000</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>&#160;</b>&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
  <tr style="vertical-align: bottom">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; ">
    <td style="text-align: justify; text-indent: -9pt; padding-left: 9pt">Net cash used in investing activities</td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">(297,265</td><td style="text-align: left">)</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(2,355,805</td><td style="text-align: left">)</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">654,745</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(1,998,325</td><td style="text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: justify; text-indent: -9pt; padding-left: 9pt">Net cash (used in)/provided by financing activities</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">9,364,600</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(346,960</td><td style="text-align: left">)</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(3,241,948</td><td style="text-align: left">)</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(2,695,839</td><td style="text-align: left">)</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">3,079,853</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="text-align: justify; text-indent: -9pt; padding-left: 9pt">Effect of exchange rate on cash and cash equivalents</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">-</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">1,597,554</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(27,986</td><td style="text-align: left">)</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">1,101,234</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">2,670,802</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: justify; text-indent: -9pt; padding-left: 9pt">Net increase in cash and cash equivalents</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">-</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">3,151,646</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">538,392</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">-</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">3,690,038</td><td style="text-align: left">&#160;</td></tr>
  </table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></p><div>

</div><!-- Field: Page; Sequence: 46; Value: 1 --><div>
    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><p style="text-align: center; margin-top: 0pt; margin-bottom: 0pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->41<!-- Field: /Sequence --></p></div><div>
    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><div><a id="a_013"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify"><b>D. PROPERTY, PLANTS AND EQUIPMENT</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We are headquartered in Hangzhou,
China. We own three properties. Additionally, our current leased properties are as follows:&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: bottom">
    <td style="width: 25%; border-bottom: black 1.5pt solid"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Description</span></td>
    <td style="width: 1%; text-align: center">&#160;</td>
    <td style="width: 36%; border-bottom: black 1.5pt solid; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Location</span></td>
    <td style="width: 1%; text-align: center">&#160;</td>
    <td style="width: 18%; border-bottom: black 1.5pt solid; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Size<br/>
 (square meters)</span></td>
    <td style="width: 1%; text-align: center">&#160;</td>
    <td style="width: 18%; border-bottom: black 1.5pt solid; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Lease expiration <br/>
date</span></td></tr>
  <tr style="vertical-align: top; background-color: rgb(204,238,255)">
    <td style="padding-left: 9pt; text-indent: -9pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Principal executive office</span></td>
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    <td>
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    <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Gong Shu District, Hangzhou City&#160;</p>
    <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Zhejiang Province, China</p></td>
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">4,000</span></td>
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">June 27, 2023</span></td></tr>
  <tr style="vertical-align: top; ">
    <td style="padding-left: 9pt; text-indent: -9pt">&#160;</td>
    <td style="text-align: justify">&#160;</td>
    <td>&#160;</td>
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: center">&#160;</td>
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: center">&#160;</td></tr>
  <tr style="vertical-align: top; background-color: rgb(204,238,255)">
    <td style="padding-left: 9pt; text-indent: -9pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Pharmacies (1)</span></td>
    <td style="text-align: justify">&#160;</td>
    <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Various locations in Hangzhou, Zhejiang Province, China</span></td>
    <td style="text-align: justify">&#160;</td>
    <td>
    <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">Range&#160;from&#160;</p>
    <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">79 to 1,713</p></td>
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">July 2022 to<br/>
 October 2033</span></td></tr>
  <tr style="vertical-align: top; ">
    <td style="padding-left: 9pt; text-indent: -9pt">&#160;</td>
    <td style="text-align: justify">&#160;</td>
    <td>&#160;</td>
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: center">&#160;</td>
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: center">&#160;</td></tr>
  <tr style="vertical-align: top; background-color: rgb(204,238,255)">
    <td style="padding-left: 9pt; text-indent: -9pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Farmland for herb cultivation (2)</span></td>
    <td style="text-align: justify">&#160;</td>
    <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Qianhong Township, Hangzhou, Zhejiang Province, China</span></td>
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">196,677</span></td>
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">February 1, 2040</span></td></tr>
  <tr style="vertical-align: top; ">
    <td style="padding-left: 9pt; text-indent: -9pt">&#160;</td>
    <td style="text-align: justify">&#160;</td>
    <td>&#160;</td>
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: center">&#160;</td>
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: center">&#160;</td></tr>
  <tr style="vertical-align: top; background-color: rgb(204,238,255)">
    <td style="padding-left: 9pt; text-indent: -9pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Land (2)</span></td>
    <td style="text-align: justify">&#160;</td>
    <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Lin&#8217;An District, Hangzhou, Zhejiang Province, China</span></td>
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">18,616</span></td>
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">February 1, 2040</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 24px; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(1)</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">As of the date of this report, we maintain operating leases in connection with our 114 pharmacies. See Note 11, &#8220;Long Term Deposits&#8221;. The leases do not contain any material escalating lease payments or contingent rental payment terms. We must negotiate with the landlords for an extension of the current leases or enter into new leases upon their termination, upon which our landlords may request a rent increase. Under applicable PRC law, we have priority over other potential lessees with respect to the leased store space on the same terms. We also do not expect any significant difficulties in renewing the existing leases upon their expiration, where desired. Our community stores are normally relatively small in size and the fixtures inside such stores are easily movable. As a result, we do not expect our drugstore operations to be materially and adversely affected by any failure to renew current leases or enter into new leases.</span></td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(2)</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We lease the land from the People&#8217;s Government of Qianhong Village under a 30-year lease entered in February 2010. The rent for the land was prepaid in full in May 2010. See Note 12, &#8220;Other Noncurrent Assets,&#8221; and Note 14, &#8220;Intangible Assets,&#8221; to the Financial Statements.</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;<b>&#160;&#160;</b></p><div>

</div><div><a id="a_014"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>ITEM 4A. UNRESOLVED STAFF COMMENTS</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify">None.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><div><a id="a_015"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>ITEM&#160;5. OPERATING AND FINANCIAL REVIEW
AND PROSPECTS</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><div><a id="a_016"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify"><b>A<i>. </i>OPERATING RESULTS.</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><i>The following discussion
and analysis of our results of operations and financial condition for the fiscal years ended March 31, 2023, 2022 and 2021 should be read
in conjunction with our financial statements and the notes to those financial statements that are included elsewhere in this report. Our
discussion includes forward-looking statements based upon current expectations that involve risks and uncertainties, such as our plans,
objectives, expectations and intentions. Actual results and the timing of events could differ materially from those anticipated in these
forward-looking statements as a result of a number of factors, including those set forth under the &#8220;Risk Factors,&#8221; &#8220;Cautionary
Notice Regarding Forward-Looking Statements&#8221; and &#8220;Description of Business&#8221; sections and elsewhere in this report. We
use words such as &#8220;anticipate,&#8221; &#8220;estimate,&#8221; &#8220;plan,&#8221; &#8220;project,&#8221; &#8220;continuing,&#8221;
&#8220;ongoing,&#8221; &#8220;expect,&#8221; &#8220;believe,&#8221; &#8220;intend,&#8221; &#8220;may,&#8221; &#8220;will,&#8221; &#8220;should,&#8221;
&#8220;could,&#8221; &#8220;predict&#8221; and similar expressions to identify forward-looking statements. Although we believe the expectations
expressed in these forward-looking statements are based on reasonable assumptions within the bound of our knowledge of our business, our
actual results could differ materially from those discussed in these statements. Factors that could contribute to such differences include,
but are not limited to, those discussed in the &#8220;Risk Factors&#8221; section of this report. We undertake no obligation to update
publicly any forward-looking statements for any reason even if new information becomes available or other events occur in the future other
than in compliance with the SEC rules and regulations.</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><i>Our financial statements
are prepared in U.S. Dollars and in accordance with accounting principles generally accepted in the United States. See &#8220;Exchange
Rates&#8221; at the end of this section for information concerning the exchanges rates at which Renminbi (&#8220;RMB&#8221;) were translated
into U.S. Dollars (&#8220;USD&#8221; or &#8220;$&#8221;) at various pertinent dates and for pertinent periods.</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Overview</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">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 (&#8220;TCM&#8221;).</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></p><div>

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    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our drugstores offer customers a wide variety of pharmaceutical products,
including prescription and over-the-counter (&#8220;OTC&#8221;) drugs, nutritional supplements, TCM, personal and family care products,
medical devices, and convenience products, including consumable, seasonal, and promotional items. 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&#8217;An Jiuzhou Pharmacy Co., Ltd (&#8220;Lin&#8217;An Jiuzhou&#8221;), which runs
ten stores in Linan City, to local investors for a total proceeds of $. 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 &#8220;Jiuzhou Grand
Pharmacy&#8221;.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Since May 2010, we have also
been selling certain OTC drugs, medical devices, nutritional supplements and other sundry products online. Our online pharmacy sells through
several third-party platforms such as Alibaba&#8217;s Tmall, JD.com and Amazon.com, and the Company&#8217;s own platform all over China.
In fiscal year 2020, in order to keep competitive in certain third-party platforms such as Tmall, we have spent reasonable resources on
marketing our products through these third-party platforms. Our sales through our own platform are primarily generated by customers who
use their private commercial medical insurances package.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We operate a wholesale business
through Jiuxin Medicine distributing third-party pharmaceutical products (similar to those carried by our pharmacies) primarily to trading
companies and other local drugstores in China. We also farm certain herbs used in TCM but have not made sales in the year ended March
31, 2023.&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">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. In order to keep pace with customers&#8217; 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. 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.
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.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Critical Accounting Policies and Estimates</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In preparing our audited consolidated
financial statements in accordance with accounting principles generally accepted in the United States of America, we are required to make
judgments, estimates and assumptions that affect: (i) the reported amounts of our assets and liabilities; (ii) the disclosure of our contingent
assets and liabilities at the end of each reporting period; and (iii) the reported amounts of revenue and expenses during each reporting
period. We continually evaluate these estimates based on our own historical experience, knowledge and assessment of current business and
other conditions, our expectations regarding the future based on available information and reasonable assumptions, which together form
our basis for making judgments about matters that are not readily apparent from other sources. Since the use of estimates is an integral
component of the financial reporting process, our actual results could differ materially from those estimates.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We believe that any reasonable
deviation from those judgments and estimates would not have a material impact on our financial condition or results of operations. To
the extent that the estimates used differ from actual results, however, adjustments to the statement of operations and corresponding balance
sheet accounts would be necessary. These adjustments would be made in future financial statements.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">When reading our financial
statements, you should consider: (i) our critical accounting policies; (ii) the judgment and other uncertainties affecting the application
of such policies; and (iii) the sensitivity of reported results to changes in conditions and assumptions.&#160;The critical accounting
policies and related judgments and estimates used to prepare our financial statements are identified in Note 2 to our audited consolidated
financial statements accompanying in this report.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>Revenue recognition</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In May 2014, the FASB issued
ASU No. 2014-09, which creates Topic 606, Revenue from Contracts with Customers. The new guidance outlines a single comprehensive model
for entities to use in accounting for revenue arising from contracts with customers. The core principle of the guidance is that an entity
should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration
to which the entity expects to be entitled in exchange for those goods and services. Additionally, the guidance requires improved disclosure
to help users of financial statements better understand the nature, amount, timing, and uncertainty of revenue that is recognized. The
new guidance supersedes most current revenue recognition guidance, including industry-specific guidance. The standard is effective for
annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period, and permits early
adoption on a limited basis. The update permits the use of either the retrospective or cumulative effect transition method. On April 1,
2018, we adopted the guidance in ASC 606 and all the related amendments and applied the new revenue standard to all contracts using the
modified retrospective method. Based on the new standard our revenue recognition policies related to membership rewards programs has changed.
Membership rewards, usually membership points, are accumulated by customers based on their historical spending levels. The Company has
determined that there is an additional performance obligation to those customers at the time of the initial transaction. The customers
can then redeem these points against the prices of merchandises they purchase in the future. At the end of each period, unredeemed membership
rewards are reflected as a contract liability. 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.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></p><div>

</div><!-- Field: Page; Sequence: 48; Value: 1 --><div>
    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><p style="text-align: center; margin-top: 0pt; margin-bottom: 0pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->43<!-- Field: /Sequence --></p></div><div>
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    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>Impairment of definite-lived intangible assets</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">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. These long-lived assets are grouped and evaluated for impairment at the lowest level at which individual
cash flows can be identified. When evaluating these long-lived assets for potential impairment, the Company first compares the carrying
amount of the asset group to the asset group&#8217;s estimated future cash flows (undiscounted and without interest charges). If the estimated
future cash flows are less than that carrying amount of the asset group, an impairment loss calculation is prepared. The impairment loss
calculation compares the carrying amount of the asset group to the asset group&#8217;s estimated future cash flows (discounted and with
interest charges). If required, an impairment loss is recorded for the portion of the asset group&#8217;s carrying value that exceeds
the asset group&#8217;s estimated future cash flows (discounted and with interest charges).</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The long-lived asset impairment
loss calculation contains uncertainty since management must use judgment to estimate each asset group&#8217;s future sales, profitability
and cash flows. When preparing these estimates, the Company considers historical results and current operating trends and consolidated
sales, profitability and cash flow results and forecasts. These estimates can be affected by a number of factors including, but not limited
to, general economic and regulatory conditions, efforts of third party organizations to reduce their prescription drug costs and/or increased
member co-payments, the continued efforts of competitors to gain market share and consumer spending patterns.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">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. Based on the evaluation of the forest land use rights, the Company recorded an impairment of $0
and $148,795.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Results of Operations</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><b><i>Comparison of years
ended March 31, 2023, 2022 and 2021</i></b>&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The following table summarizes
our results of operations for the years ended March 31, 2023, 2022 and 2021:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
  <tr style="vertical-align: bottom">
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  <tr style="vertical-align: bottom">
    <td style="text-indent: -0.125in; padding-left: 0.125in">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="text-align: left">$</td><td style="text-align: right">36,519,040</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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    <td style="text-align: left">$</td><td style="text-align: right">29,243,809</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; ">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">19.6</td><td style="text-align: left">%</td><td>&#160;</td>
    <td style="text-align: left">$</td><td style="text-align: right">30,876,959</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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    <td style="text-align: left">$</td><td style="text-align: right">26,954,914</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="text-align: left">$</td><td style="text-align: right">15,668,684</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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    <td style="text-align: left">$</td><td style="text-align: right">8,187,176</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="text-align: left">$</td><td style="text-align: right">148,795</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; ">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">(1.6</td><td style="text-align: left">)%</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; ">
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></p><div>

</div><!-- Field: Page; Sequence: 49; Value: 1 --><div>
    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><p style="text-align: center; margin-top: 0pt; margin-bottom: 0pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->44<!-- Field: /Sequence --></p></div><div>
    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Revenue by Segment</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Comparison of years ended March 31, 2023 and
2022</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The following table breaks
down the revenue for our four business segments for the years ended March 31, 2023 and 2022:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">33,075,119</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">148,811,976</td><td style="padding-bottom: 4pt; text-align: left">&#160;</td><td style="padding-bottom: 4pt">&#160;</td>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">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. Same-store sales decreased by approximately $1,569,549, or 1.9%, while new stores contributed approximately
$692,824 in revenue in the year ended March 31, 2023.However, after removing the impact of exchange rate fluctuation, the actual retail
drugstores sales increased 5.6%.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The actual increase in our
retail drugstore sales is primarily due to continuous efforts in promoting non-NHSA covered products, close cooperation with major suppliers,
and contribution from the new store sales.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Due to stricter budget control
on medical reimbursement program from local National Healthcare Security Administration (&#8220;NHSA&#8221;) and competitive market condition,
we spent significant efforts in selecting and replacing our merchandises at stores. To minimize the effect from local NHSA&#8217;s budget
control, we expand the categories of our merchandises. As a result, we were able to depend less on the medical reimbursement program and
increase our cash sales.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">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 major
player in local retail pharmaceutical market, our stores are densely located in major communities in Hangzhou City. As a prime local sales
network, we were able to attract large pharmaceutical manufacturers to support us in performing a series of sale campaigns, in which large
manufacturers provide ads, prices cutback and specialist support. As a result, our sales were able to increase slightly although NHSA
tightened its budget.&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our new stores have also contributed
additional sales. Our store count is 111 at March 31, 2022 and 114 at March 31, 2023.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our online pharmacy sales increased by approximately $2,165,725, or
7.2% for the year ended March 31, 2023, as compared to the year ended March 31, 2022. The increase was primarily caused by an increase
in sales via e-commerce platforms such as Tmall. We maintained a membership care program targeted at chronic disease customers. We have
closely interacted with our members via WeChat by providing healthcare knowledge and reminding our customers to refill medicine. By implementing
a personalized customer care program, we were able to promote our sales. Additionally, we increasingly cooperate with certain manufacturers
to promote their products such as Dendrobium Candidum. These manufacturers reward us with lower supply prices and more advertising supports.
As a result, we are able to better promote our sales.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">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. As a result, the sale of prescription drugs was $10,606,244 in the year ended March 31, 2023 as compared to $10,331,652
in the year ended March 31, 2022.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Wholesale revenue decreased
by $16,869,580 or 33.8%. Hospitals are still the dominant drug distributors in China. 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.&#160;As a relatively
small wholesale distributor in pharmaceutical products, our sales are subject to significant variance. Wholesale business usually carries
low gross profit margin. However, we incurred labor, logistic and tax cost for our wholesale business. As a result, to keep reasonable
profitability, we abandoned certain wholesales at low gross profit margin in the year ended March 31, 2023.&#160;As a result, the wholesale
revenue declined.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">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. Usually, the longer it
grows the more valuable it becomes. We plan to continue cultivating the trees in order to maximize their market value in the future.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Comparison of years ended March 31, 2022 and
2021</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The following table breaks
down the revenue for our four business segments for the years ended March 31, 2022 and 2021:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">49,944,699</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">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. 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.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">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.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Due to stricter budget control
on medical reimbursement program from local National Healthcare Security Administration (&#8220;NHSA&#8221;) and competitive market condition,
we spent significant efforts in selecting and replacing our merchandises at stores. To minimize the effect from local NHSA&#8217;s budget
control, we expand the categories of our merchandises . 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.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">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&#8217; compensation with sales and profits margin.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our new stores have also contributed additional sales. Our store count
is 109 at March 31, 2021 and 111 at March 31, 2022. In January 2021, we sold Lin&#8217;An Jiuzhou Pharmacy which had ten stores. In the
nine months ended December 31, 2020, the sale from Lin&#8217;An Jiuzhou Pharmacy was approximately $1,721,606.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">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. 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. (&#8220;Yingda&#8221;),
a national insurance company. Certain companies bought private health insurances from Yingda for their employees. By linking our online
pharmacy platform with Yingda and educating these employees, they are able to buy health products on our online stores. The sales from
these customers contributed significantly to our official website sales.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">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. 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.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Wholesale revenue increased by $15,394,960 or 44.6%. 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. 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.&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">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. A ginkgo tree may have a growth period of up to twenty years before it is mature enough for harvest. Usually, the longer it
grows the more valuable it becomes. We plan to continue cultivating the trees in order to maximize their market value in the future.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Gross Profit</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The average gross margins for each of our four
business segments for the years ended March 31, 2023, 2022 and 2021 are as follows:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
  <tr style="vertical-align: bottom">
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  <tr style="vertical-align: bottom">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; ">
    <td style="text-indent: -0.125in; padding-left: 0.125in; text-align: left">Average gross margin for online sales</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">12.0</td><td style="text-align: left">%</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">11.9</td><td style="text-align: left">%</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">10.4</td><td style="text-align: left">%</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-indent: -0.125in; padding-left: 0.125in; text-align: left">Average gross margin for wholesale business</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">10.9</td><td style="text-align: left">%</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">12.0</td><td style="text-align: left">%</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">11.3</td><td style="text-align: left">%</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="text-indent: -0.125in; padding-left: 0.125in; text-align: left">Average gross margin for farming business</td><td>&#160;</td>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Comparison of years ended March 31, 2023 and
2022</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Gross profit decreased by
$2,238,576&#160;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. At the same time, gross margin increased from 22.2% to 23.0% due to higher retail drugstores
profit margins.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Retail gross margins increased
slightly primarily reflecting our stable and balanced operation. As described in detail below, in order to increase the gross margin of
our store sales, we have introduced certain popular products with high profit margin and lowered the sale percentile of DTC (Direct-to-Customer)
products. However, extremely high profit margin products may hinder certain customers. As a matter of fact, certain popular brand products
usually do not carry high profit margin but are crucial to retain customers. In other words, extremely high profit margin may have negative
effect on overall sales volume. As a result, we try to balance our sales profit margin and sales volume.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Gross margin of online pharmacy
sales increased only slightly primarily due to the competitive market. 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.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Wholesale gross margin decreased
primarily due to various products with different profit margin we carried and sold to certain pharmaceutical vendors. Although we have
attempted to market our products to major local hospitals and other pharmacies, we have not been able to make significant progress. 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.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><b>Comparison of years ended March 31, 2022 and
2021</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0pt; text-align: justify; text-indent: 0.5in">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. At the same time, gross margin increased from 22.0% to 22.2% due to higher retail drugstores profit margins.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0pt; text-align: justify; text-indent: 0.5in">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. 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. 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. . We expect to keep our profit margin
at a stable level in the future.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify; text-indent: 36pt">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0pt; text-align: justify; text-indent: 0.5in">Gross margin of online pharmacy
sales increased primarily due to selection of high-profit margin products. We conduct our business either through certain e-commerce platforms
such as Tmall and JD.com or via our own official online pharmacy website, www.dada360.com. 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.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify; text-indent: 36pt">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0pt; text-align: justify; text-indent: 0.5in">Wholesale
gross margin increased primarily due to various products with different profit margin we carried and sold to certain pharmaceutical vendors.
Although we have attempted to market our products to major local hospitals and other pharmacies, we have not been able to make significant
progress. 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.</p><div>



</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: center">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><b><i>Selling and Marketing Expenses</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0pt; text-align: justify; text-indent: 0.5in">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. Because the COVID 19 National Control continued to impose restrictions in 2022 and impeded the local business
significantly, we made significant efforts in renegotiating our rental agreements. As a result, the rent expense decreased by approximately
$3.39 million. 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.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify; text-indent: 36pt">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0pt; text-align: justify; text-indent: 0.5in">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. 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. 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.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><b><i>General and Administrative Expenses</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0pt; text-align: justify; text-indent: 0.5in">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.&#160;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.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify; text-indent: 36pt">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0pt; text-align: justify; text-indent: 0.5in">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.&#160;Such expenses as a percentage of revenue decreased to 5.0% from 5.2% for the same period a year
ago. &#160;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.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify; text-indent: 36pt">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><b><i>Share-based
Compensation</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0pt; text-align: justify; text-indent: 0.5in">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 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.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><b><i>Impairment of Long-lived Assets</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify; text-indent: 36pt">We recorded an impairment of
long-lived assets of $0, $148,795 and $228,506 for the year ended March 31, 2023, 2021 and 2020. In the year ended March 31, 2023, we
evaluated the forest land use rights and did not record an impairment. 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.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><b><i>Loss from Operations</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0pt; text-align: justify; text-indent: 0.5in">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.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><b><i>Income Taxes</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0pt; text-align: justify; text-indent: 0.5in">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.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify; text-indent: 36pt">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0pt; text-align: justify; text-indent: 0.5in">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.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><b><i>Net Loss</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0pt; text-align: justify; text-indent: 0.5in">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.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: center"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: center">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><b><i>Accounts receivable</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0pt; text-align: justify; text-indent: 0.5in">Accounts receivable, which
are unsecured, are stated at the amount we expect to collect. We continuously monitor collections and payments from our customers (our
distributors) and maintain a provision for estimated credit losses.&#160;To prepare for potential loss in such accounts, we made corresponding
reserves.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0pt; text-align: justify; text-indent: 0.5in">Our accounts receivable aging
was as follows for the periods described below:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
  <tr style="vertical-align: bottom">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">2,575,793</td><td style="width: 1%; text-align: left">&#160;</td><td style="width: 1%">&#160;</td>
    <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">5,180,062</td><td style="width: 1%; text-align: left">&#160;</td><td style="width: 1%">&#160;</td>
    <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">&#160;&#160;&#160;&#160;&#160;&#160;-</td><td style="width: 1%; text-align: left">&#160;</td><td style="width: 1%">&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">239,942</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">15,584</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">832,699</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">811,361</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">424</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; ">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">1,903,362</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">-</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">-</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; ">
    <td style="text-align: left; padding-bottom: 4pt; text-indent: -9pt; padding-left: 9pt">Total accounts receivable</td><td style="padding-bottom: 4pt">&#160;</td>
    <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">5,024,192</td><td style="padding-bottom: 4pt; text-align: left">&#160;</td><td style="padding-bottom: 4pt">&#160;</td>
    <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">3,051,656</td><td style="padding-bottom: 4pt; text-align: left">&#160;</td><td style="padding-bottom: 4pt">&#160;</td>
    <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">6,043,758</td><td style="padding-bottom: 4pt; text-align: left">&#160;</td><td style="padding-bottom: 4pt">&#160;</td>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0pt; text-align: justify; text-indent: 0.5in">Accounts receivable from our
retail business mainly consist of reimbursements from local government health insurance bureaus and commercial health insurance programs.&#160;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.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0pt; text-align: justify; text-indent: 0.5in">Accounts receivables from our
online pharmacy business mainly consist of receivables from insurance company and a service company handling with insurance companies.
As we continue to expand our business with commercial insurance company, our receivables from them increased. Additionally, certain receivables
are from third-party platforms such as JD.com where we sell products. Usually the third-party platforms will collect from customers ordering
on their platforms and then reimburse us at a later date, such reimbursement periods times ranging from several days to a month after
orders are placed.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify; text-indent: 36pt">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0pt; text-align: justify; text-indent: 0.5in">Accounts receivable from our
drug wholesale business consist of receivables from our customers such as pharmaceutical distributors and local drugstores primarily in
Zhejiang Province. In fiscal 2023, we accelerated collection of certain aged accounts from customers which we no longer or rarely sold
products to. By doing so, we are able to take better use of our cash. As a result, the overall reserve on wholesale accounts receivables
decreased.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify; text-indent: 36pt">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0pt; text-align: justify; text-indent: 0.5in">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.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><b><i>Advances to suppliers</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0pt; text-align: justify; text-indent: 0.5in">Advances to suppliers are mainly
prepayments to secure certain products or services at favorable pricing.&#160;The aging of our advances to suppliers is as follows for
the periods described below:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
  <tr style="vertical-align: bottom">
    <td style="border-bottom: Black 1.5pt solid">From date of cash prepayment to suppliers</td><td style="padding-bottom: 1.5pt">&#160;</td>
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    <td colspan="2" style="text-align: center; border-bottom: Black 1.5pt solid">Online <br/>Pharmacy</td><td style="padding-bottom: 1.5pt">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" style="text-align: center; border-bottom: Black 1.5pt solid">Drug <br/>wholesale</td><td style="padding-bottom: 1.5pt">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" style="text-align: center; border-bottom: Black 1.5pt solid">Herb <br/>farming</td><td style="padding-bottom: 1.5pt">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" style="text-align: center; border-bottom: Black 1.5pt solid">Total <br/>amount</td><td style="padding-bottom: 1.5pt">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="width: 40%; text-indent: -9pt; padding-left: 9pt">1- 3 months</td><td style="width: 1%">&#160;</td>
    <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">35,054</td><td style="width: 1%; text-align: left">&#160;</td><td style="width: 1%">&#160;</td>
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  <tr style="vertical-align: bottom; ">
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0pt; text-align: justify; text-indent: 0.5in">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. As a result, our retail chain made few advances to suppliers as of March 31, 2023.
At the end of 2023 we had outstanding advances to suppliers with which we have ceased doing business. These advances have been fully reserved.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify; text-indent: 36pt">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: center"></p><div>

</div><!-- Field: Page; Sequence: 55; Value: 1 --><div>
    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><p style="text-align: center; margin-top: 0pt; margin-bottom: 0pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->50<!-- Field: /Sequence --></p></div><div>
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    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: center">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Advances to suppliers for
our drug wholesale business consist of prepayments to our vendors such as pharmaceutical manufacturers and other distributors.&#160;We
typically receive products from vendors within three to nine months after making prepayments.&#160;We continuously monitor delivery from
and payments to our vendors while maintaining a provision for estimated credit losses based upon past experience and any supplier-specific
issues such as the discontinuation of inventory supply that have been identified.&#160;If we are having difficulty receiving products
from a vendor, we take the following steps: cease purchasing products from the vendor, ask for return of our prepayment promptly, and
if necessary, take legal action.&#160;If all of these steps are unsuccessful, management then determines whether or not the prepayments
should be reserved or written off. 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.</p><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify; text-indent: 36pt">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><b>Contractual Obligations and Off-Balance Sheet
Arrangements</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><i>Contractual Obligations</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0pt; text-align: justify; text-indent: 0.5in">The following table summarizes
our contractual obligations:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify; text-indent: 36pt">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
  <tr style="vertical-align: bottom">
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  <tr style="vertical-align: bottom">
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than <br/>5 years</td><td style="padding-bottom: 1.5pt">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; text-indent: -9pt; padding-left: 9pt">Short-term loan payable</td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">-</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; ">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; padding-bottom: 1.5pt; text-indent: -9pt; padding-left: 9pt">Long-term loan payable</td><td style="padding-bottom: 1.5pt">&#160;</td>
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  <tr style="vertical-align: bottom; ">
    <td style="padding-bottom: 4pt; text-indent: -9pt; padding-left: 9pt">Total</td><td style="padding-bottom: 4pt">&#160;</td>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><i>Off-balance Sheet Arrangements</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0pt; text-align: justify; text-indent: 0.5in">We do not have any outstanding
financial guarantees or commitments to guarantee the payment obligations of any third parties. We have not entered into any derivative
contracts that are indexed to our shares and classified as stockholder&#8217;s equity or that are not reflected in our consolidated financial
statements. Furthermore, we do not have any retained or contingent interest in assets transferred to an unconsolidated entity that serves
as credit, liquidity or market risk support to such entity. We do not have any variable interest in any unconsolidated entity that provides
financing, liquidity, market risk or credit support to us or engages in leasing, hedging or research and development services with us.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><b>Exchange Rates</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify; text-indent: 36pt">Our subsidiaries, the VIEs and affiliated companies in the PRC maintain
their books and records in RMB, the lawful currency of the PRC. In general, for consolidation purposes, we translate their assets and&#160;liabilities
into USD using the applicable exchange rates prevailing at the balance sheet date, and the statement of income is translated at average
exchange rates during the reporting period. Adjustments resulting from the translation of&#160;their financial statements are recorded
as accumulated&#160;other comprehensive income.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify; text-indent: 36pt">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0pt; text-align: justify; text-indent: 0.5in">The exchange rates used to
translate amounts in RMB into USD for the purposes of preparing the audited consolidated financial statements or otherwise&#160;disclosed
in this&#160;report were as follows:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
  <tr style="vertical-align: bottom; ">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="text-align: center">USD1: RMB 6.8516</td><td>&#160;</td>
    <td style="text-align: center">USD1: RMB 6.4180</td><td>&#160;</td>
    <td style="text-align: center">USD1: RMB&#160;6.7722</td></tr>
  </table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: center"></p><div>

</div><!-- Field: Page; Sequence: 56; Value: 1 --><div>
    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><p style="text-align: center; margin-top: 0pt; margin-bottom: 0pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->51<!-- Field: /Sequence --></p></div><div>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: center">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><b>Inflation</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0pt; text-align: justify; text-indent: 0.5in">We believe that inflation has
not had a material effect on our operations to date.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify">&#160;</p><div>

</div><div><a id="a_017"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0pt; text-align: justify; text-indent: 0.5in"><b>B. LIQUIDITY AND CAPITAL
RESOURCES</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0pt; text-align: justify; text-indent: 0.5in">Our cash flows for the periods
indicated are as follows:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
  <tr style="vertical-align: bottom">
    <td style="text-align: center">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td colspan="10" style="text-align: center; border-bottom: Black 1.5pt solid">For the year ended March 31,</td><td style="padding-bottom: 1.5pt">&#160;</td></tr>
  <tr style="vertical-align: bottom">
    <td style="text-align: center">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" style="text-align: center; border-bottom: Black 1.5pt solid">2023</td><td style="padding-bottom: 1.5pt">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="width: 64%; text-align: left; text-indent: -9pt; padding-left: 9pt">Net cash&#160;used in operating activities</td><td style="width: 1%">&#160;</td>
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    <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">(5,385,973</td><td style="width: 1%; text-align: left">)</td><td style="width: 1%">&#160;</td>
    <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">(62,292</td><td style="width: 1%; text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="text-align: left; text-indent: -9pt; padding-left: 9pt">Net cash used in investing activities</td><td>&#160;</td>
    <td style="text-align: left">$</td><td style="text-align: right">(316,097</td><td style="text-align: left">)</td><td>&#160;</td>
    <td style="text-align: left">$</td><td style="text-align: right">(306,138</td><td style="text-align: left">)</td><td>&#160;</td>
    <td style="text-align: left">$</td><td style="text-align: right">(1,998,325</td><td style="text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; text-indent: -9pt; padding-left: 9pt">Net cash provided by financing activities</td><td>&#160;</td>
    <td style="text-align: left">$</td><td style="text-align: right">2,366,156</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">$</td><td style="text-align: right">4,836,898</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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  </table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><i>Net cash&#160;used in operating activities</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0pt; text-align: justify; text-indent: 0.5in">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. The change is primarily attributable
to a decrease in cash provided by inventories and biological assets of $2,045,648, a decrease in cash provided by customer deposits of
$1,714,057, a decrease in cash provided by net loss of $17,940,411 offset by an increase of $10,360,000 in stock compensation, an increase
in cash provided by accounts payable of $5,323,538.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify; text-indent: 36pt">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0pt; text-align: justify; text-indent: 0.5in">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. 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.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify; text-indent: 36pt">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><i>Net cash used in investing activities</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><i>&#160;</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0pt; text-align: justify; text-indent: 0.5in">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.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify; text-indent: 36pt">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0pt; text-align: justify; text-indent: 0.5in">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.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify; text-indent: 36pt">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><i>Net cash provided by financing activities&#160;</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><i>&#160;</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify; text-indent: 36pt">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.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify; text-indent: 36pt">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.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify; text-indent: 36pt">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify; text-indent: 36pt">As of March 31, 2023, we had
cash of approximately $31,570,644. 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.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify; text-indent: 36pt">&#160;</p><div>

</div><div><a id="a_018"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 36pt; text-align: justify"><b>C. RESEARCH AND DEVELOPMENT, PATENTS
AND LICENSES, ETC.</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0pt; text-align: justify; text-indent: 0.5in">The Company has no research
and development policy for the past three years.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify">&#160;</p><div>

</div><div><a id="a_019"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0pt; text-align: justify; text-indent: 0.5in"><b>D. TREND INFORMATION.</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify; text-indent: 36pt"><b>Industry and Market Outlook</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0pt; text-align: justify; text-indent: 0.5in">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.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: center"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: center">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0pt; text-align: justify; text-indent: 0.5in"><b><i>CRITICAL ACCOUNTING ESTIMATES</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0pt; text-align: justify; text-indent: 0.5in">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. The preparation of these audited consolidated financial
statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses.
We evaluate our estimates on an ongoing basis, including those related to revenue recognition and income taxes. We base our estimates
on our historical experience and on various other assumptions that we believe to be reasonable under the circumstances, the results of
which form the basis for making the judgments we make about the carrying values of our assets and liabilities that are not readily apparent
from other sources. Because these estimates can vary depending on the situation, actual results may differ from the estimates.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify; text-indent: 36pt">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify; text-indent: 36pt">The critical accounting policies
summarized in this section are discussed in further detail in the notes to the audited consolidated financial statements appearing elsewhere
in this annual report. 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.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><b>&#160;</b></p><div>

</div><div><a id="a_020"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0pt; text-align: justify; text-indent: 0.5in"><b>E. OFF-BALANCE SHEET ARRANGEMENT.</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify; text-indent: 36pt"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0pt; text-align: justify; text-indent: 0.5in">Please refer to the disclosure
under <i>Off-balance Sheet Arrangements</i> on page 51 of this report.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify; text-indent: 36pt"><b>&#160;</b></p><div>

</div><div><a id="a_021"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0pt; text-align: justify; text-indent: 0.5in"><b>F. TABULAR DISCLOSURE OF
CONTRACTUAL OBLIGATIONS.</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify; text-indent: 36pt"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0pt; text-align: justify; text-indent: 0.5in">Please refer to the table under
<i>Contractual Obligations</i> on page 51 of this report.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><b>&#160;</b></p><div>

</div><div><a id="a_022"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><b>ITEM&#160;6. DIRECTORS, SENIOR MANAGEMENT AND
EMPLOYEES.</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify">&#160;</p><div>

</div><div><a id="a_023"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0pt; text-align: justify; text-indent: 0.5in"><b>A. DIRECTORS AND SENIOR MANAGEMENT.</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0pt; text-align: justify; text-indent: 0.5in">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:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: bottom">
    <td style="border-bottom: black 1.5pt solid"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Name</span></td>
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Appointment</p></td></tr>
  <tr style="background-color: rgb(204,238,255)">
    <td style="vertical-align: top; width: 25%; padding-left: 9pt; text-indent: -9pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Lei Liu</span></td>
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    <td style="padding-left: 9pt; text-indent: -9pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Li Qi</span></td>
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    <td style="text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">March 29, 2017</span></td></tr>
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    <td style="text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">72</span></td>
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    <td style="text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">March 28, 2014</span></td></tr>
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    <td style="text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">58</span></td>
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    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Director</span></td>
    <td>&#160;</td>
    <td style="text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">October 26, 2018</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 24px; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(1)</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">As of the date of this report.</span></td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(2)</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Member of the Audit Committee.</span></td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(3)</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Member of the Compensation Committee.</span></td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(4)</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Member of the Nominating Committee.</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><b>Biographical Information of Our Current Directors
and Executive Officers</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0pt; text-align: justify; text-indent: 0.5in"><b>Lei Liu</b> has served as
our Chief Executive Officer and Chairman of our Board of Directors since September 17, 2009. Mr. Liu is one of the three founders of Hangzhou
Jiuzhou Grand Pharmacy Chain Co., Ltd. (&#8220;Jiuzhou Pharmacy&#8221;), Hangzhou Jiuzhou Clinic of Integrated Traditional and Western
Medicine (General Partnership) (&#8220;Jiuzhou Clinic&#8221;) and Hangzhou Jiuzhou Service &amp; Public Health Service Co., Ltd. (&#8220;Jiuzhou
Service&#8221;) (Jiuzhou Pharmacy, Jiuzhou Clinic and Jiuzhou Service, as well as the subsidiaries of Jiuzhou Pharmacy, collectively as
&#8220;HJ Group&#8221;), and has been the executive director of Jiuzhou Pharmacy since September 2003 and the supervising director of Jiuzhou
Service since November 2005. From December 1997 to August 2003, Mr. Liu worked in Tai He Drugstore as a general manager. From September
1992 to November 1997, Mr. Liu was an administration official of Hangzhou Medical Junior College, his alma mater, where he was also a
researcher and an anatomy instructor from September 1983 to July 1992. Mr. Liu has been a licensed researcher in the PRC since September
1988. As the founder and CEO responsible for our vision and direction, Mr. Liu is invaluable to us and our Board of Directors.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify; text-indent: 36pt">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0pt; text-align: justify; text-indent: 0.5in"><b>Ming Zhao</b> has served
as our Chief Financial Officer since August 2011. From September 2010 to July 2011, Mr. Zhao was a senior manager at CFO Oncall, Inc.,
a financial consulting firm providing CFO services to U.S.-listed, China-based publicly traded companies. From December 2006 through August
2010, Mr. Zhao was a senior auditor at Sherb &amp; Co., LLP. From January through June 2003, Mr. Zhao worked as a financial analyst at
Microsoft Corporation. Mr. Zhao is a licensed certified public accountant. He graduated with a bachelor&#8217;s degree in accounting from
Central University of Finance and Economic in Beijing in July 1999, and obtained a master&#8217;s degree in professional accounting from
the University of Washington in December 2002.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify; text-indent: 36pt">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: center"></p><div>

</div><!-- Field: Page; Sequence: 58; Value: 1 --><div>
    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><p style="text-align: center; margin-top: 0pt; margin-bottom: 0pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->53<!-- Field: /Sequence --></p></div><div>
    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: center">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0pt; text-align: justify; text-indent: 0.5in"><b>Li Qi</b> is one of the
three founders of HJ Group. Ms. Qi had served as our secretary since October 23, 2009 to September 4, 2018, and is currently the general
manager of both Jiuzhou Pharmacy and Jiuzhou Service. From January 2000 to June 2003, Ms. Qi worked in Zhejiang Yikang Drugstore as a
general manager. From October 1991 to January 2000, Ms. Qi worked in the Branch Hospital of Hangzhou No. 1 People&#8217;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 highly qualified to serve on our Board of Directors.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify; text-indent: 36pt">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0pt; text-align: justify; text-indent: 0.5in"><b>Caroline
Wang</b> 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 &#8220;city management&#8221;, performing internal audit and projects management for a
variety of financial products since October 2015. 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 was an audit department
assistant manager with KPMG Huazhen LLP Hangzhou Branch, conducting financial report audits and internal control audits for listing
companies and also providing audit services to pre-IPO companies. None of these companies are related to or affiliated with the
registrant. Ms. Wang holds a master&#8217;s degree in public administration from the London School of Economics and Political
Science, and a bachelor&#8217;s degree in finance from Beijing Language and Culture University. The Board has determined that Ms.
Wang has the qualification to serve as a member of the Board given her extensive financial, accounting and auditing experience, as
well as her English and Chinese bilingual capabilities to facilitate the Board&#8217;s supervision of the management.&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0pt; text-align: justify; text-indent: 0.5in"><b>Jiangliang He</b>, has extensive
experience as a professional attorney. He has served as a partner in Dentons China, a large law firm with a presence in approximately
45 cities in China, since August 2008. From July 1997 to July 2008, he was a partner in the Zhejiang Jiuyao law firm. From July 1984 to
June 1997, he was a professor at Hangzhou School of Law. Mr. He received his bachelor&#8217;s degree in law from Beijing University.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify; text-indent: 36pt">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0pt; text-align: justify; text-indent: 0.5in"><b>Genghua Gu</b> is a retired
physician, professor and published scientific researcher in the field of stomatology. From 2003 to 2013, Dr. Gu was a member of the Standing
Committee of Zhejiang Province Political Consultative Conference. From 2000 to 2009, Dr. Gu was the Vice President of the Women&#8217;s
Hospital of Zhejiang University&#8217;s School of Medicine (the &#8220;School of Medicine&#8221;), where, in addition to being a chief
physician, professor and researcher, he was also in charge of logistics and financial control as part of the hospital&#8217;s management.
From 1998 to 2000, Dr. Gu was the Vice President of the Second Affiliate Hospital of the School of Medicine (the &#8220;Affiliate Hospital&#8221;),
where, in addition to his medical, teaching and research duties, he was also in charge of the hospital&#8217;s logistics. From 1995 to
1998, Dr. Gu served as the Deputy Magistrate with the Shuichang County Government in Zhejiang Province, in charge of the county&#8217;s
culture, education and hygiene programs. From 1988 to 1995, Dr. Gu was the Head of the Medical Department at the Affiliate Hospital and
was involved in planning and management of the medical department. Dr. Gu served as an oral surgeon from 1977 to 1988 at the Affiliate
Hospital. Dr. Gu graduated from Shanghai Jiaotong University&#8217;s School of Medicine, Department of Stomatology in 1977. The Board
has determined that Dr. Gu should serve as a director given his extensive medical and scientific research experience, as well as his government
and hospital management and logistics experience.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify; text-indent: 36pt">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0pt; text-align: justify; text-indent: 0.5in"><b>Pingfan Wu</b> 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. 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 (&#8220;Cardinal China&#8221;).
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 (&#8220;DTC&#8221;) pharmacy. The DTC pharmacy is mainly a hospital-side
pharmacy and the products are primarily high-value drugs.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><b>Family Relationships</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0pt; text-align: justify; text-indent: 0.5in">There are no family relationships
among our officers and directors and those of our subsidiaries and affiliated companies.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify; text-indent: 36pt">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><b>Board Diversity</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify; text-indent: 36pt">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. In considering candidates for the Board of Directors, the Board
of Directors and the Nominating Committee consider the entirety of each candidate&#8217;s credentials in the context of the factors mentioned
above. 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.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: center"></p><div>

</div><!-- Field: Page; Sequence: 59; Value: 1 --><div>
    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><p style="text-align: center; margin-top: 0pt; margin-bottom: 0pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->54<!-- Field: /Sequence --></p></div><div>
    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: center"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: center"></p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: bottom">
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  <tr style="vertical-align: bottom; background-color: #CCEEFF">
    <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Country of Principal Executive Offices</b></span></td>
    <td>&#160;</td>
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  <tr style="vertical-align: bottom">
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    <td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: #CCEEFF">
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    <td>&#160;</td>
    <td style="text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>No</b></span></td></tr>
  <tr style="vertical-align: bottom">
    <td style="width: 89%"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Total Number of Directors</b></span></td>
    <td style="width: 1%">&#160;</td>
    <td style="width: 10%; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>6</b></span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: center"></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><b>&#160;</b></p><div>

</div><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
  <tr style="vertical-align: bottom">
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    <td style="padding-bottom: 1.5pt; text-align: center">&#160;</td>
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    <td style="padding-bottom: 1.5pt; text-align: center">&#160;</td>
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    <td style="padding-bottom: 1.5pt; text-align: center">&#160;</td>
    <td style="padding-bottom: 1.5pt; text-align: center">&#160;</td>
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  <tr style="vertical-align: bottom; background-color: #CCEEFF">
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    <td style="width: 1%; text-align: center">&#160;</td>
    <td style="width: 1%; text-align: center">&#160;</td>
    <td style="width: 1%; text-align: center">&#160;</td>
    <td style="width: 9%; text-align: center"><span style="font-size: 10pt">3</span></td>
    <td style="width: 1%; text-align: center">&#160;</td>
    <td style="width: 1%; text-align: center">&#160;</td>
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    <td style="width: 1%; text-align: center">&#160;</td>
    <td style="width: 1%; text-align: center">&#160;</td>
    <td style="width: 1%; text-align: center">&#160;</td>
    <td style="width: 9%; text-align: center"><span style="font-size: 10pt">0</span></td>
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  <tr style="vertical-align: bottom; ">
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  <tr style="vertical-align: bottom; background-color: #CCEEFF">
    <td><span style="font-size: 10pt">Underrepresented Individual in Home Country Jurisdiction</span></td>
    <td>&#160;</td>
    <td>&#160;</td>
    <td style="text-align: center"><span style="font-size: 10pt">0</span></td>
    <td>&#160;</td>
    <td>&#160;</td>
    <td>&#160;</td>
    <td style="text-align: center"><span style="font-size: 10pt">0&#160;</span></td>
    <td style="text-align: center">&#160;</td>
    <td style="text-align: center">&#160;</td>
    <td style="text-align: center">&#160;</td>
    <td style="text-align: center"><span style="font-size: 10pt">0&#160;</span></td>
    <td style="text-align: center">&#160;</td>
    <td style="text-align: center">&#160;</td>
    <td style="text-align: center">&#160;</td>
    <td style="text-align: center"><span style="font-size: 10pt">0&#160;</span></td>
    <td>&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td><span style="font-size: 10pt">LGBTQ+</span></td>
    <td>&#160;</td>
    <td>&#160;</td>
    <td style="text-align: center"><span style="font-size: 10pt">0</span></td>
    <td>&#160;</td>
    <td>&#160;</td>
    <td>&#160;</td>
    <td style="text-align: center"><span style="font-size: 10pt">0&#160;</span></td>
    <td style="text-align: center">&#160;</td>
    <td style="text-align: center">&#160;</td>
    <td style="text-align: center">&#160;</td>
    <td style="text-align: center"><span style="font-size: 10pt">0&#160;</span></td>
    <td style="text-align: center">&#160;</td>
    <td style="text-align: center">&#160;</td>
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    <td>&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: #CCEEFF">
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    <td>&#160;</td>
    <td>&#160;</td>
    <td style="text-align: center"><span style="font-size: 10pt">0</span></td>
    <td>&#160;</td>
    <td>&#160;</td>
    <td>&#160;</td>
    <td style="text-align: center"><span style="font-size: 10pt">0&#160;</span></td>
    <td style="text-align: center">&#160;</td>
    <td style="text-align: center">&#160;</td>
    <td style="text-align: center">&#160;</td>
    <td style="text-align: center"><span style="font-size: 10pt">0&#160;</span></td>
    <td style="text-align: center">&#160;</td>
    <td style="text-align: center">&#160;</td>
    <td style="text-align: center">&#160;</td>
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    <td>&#160;</td></tr>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0"><b>&#160;</b></p><div>

</div><div><a id="a_024"></a></div><p style="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><b>B. COMPENSATION.</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify"><b>Compensation of Directors and Executive
Officers</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">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.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
  <tr style="vertical-align: bottom">
    <td colspan="37" style="text-align: center; border-bottom: Black 1.5pt solid">Summary Compensation Table</td></tr>
  <tr style="vertical-align: bottom">
    <td style="border-bottom: Black 1.5pt solid">Name and Principal Position</td><td style="padding-bottom: 1.5pt">&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  </table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 24px; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(1)</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Reflects the full fair value of stock issued during the applicable fiscal year for financial statement reporting purposes.</span></td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(2)</span></td>
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  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><b>Employment Agreements, Termination of Employment
and Change-in-Control Arrangements</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">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&#8217;s responsibilities following a change-in-control.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="text-decoration:underline">Agreement with Ming Zhao</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">We entered into an employment
agreement with Mr. 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 &#8220;Shares&#8221;) under our 2010 Equity Incentive Plan. 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. Zhao is subject to certain restrictive covenants, including (i) prohibition
against engaging in any work that competes with us and our business and soliciting our customers, potential customers and employees, and
(ii) requirement to maintain our confidential information.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; text-align: justify">Mr. Zhao&#8217;s employment
agreement terminates upon his death or disability. If Mr. Zhao is unable to perform his duties for 60 days during any 12 month period,
we may terminate the employment agreement upon 30-day written notice. We may also terminate the employment agreement for cause, upon notice
if at any time Mr. Zhao commits (a) fraudulent, unlawful or grossly negligent conduct in connection with his employment duties; (b) willful
misconduct; (c) willful and continued failure to perform his duties; (d) any felony or any crime involving moral turpitude; (e) any violation
of any of our material policies; or (f) any material breach of any written agreement with us. Mr. Zhao may terminate his employment agreement
immediately upon written notice if we breach our agreement with him.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: center"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: center">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><b>Outstanding Equity Awards at Fiscal Year Ended
March 31, 2023</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
  <tr style="vertical-align: bottom">
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underlying<br/>
unexercised<br/>
options<br/>
exercisable</span></td>
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incentive plan <br/>
awards: <br/>
number of <br/>
securities <br/>
underlying <br/>
unexercised <br/>
options <br/>
unexercisable</span></td>
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incentive<br/>
plan awards: number of <br/>
securities <br/>
underlying <br/>
unexercised <br/>
unearned <br/>
options</span></td>
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price <br/>
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expiration <br/>
date</span></td>
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shares or<br/>
units of<br/>
stock that <br/>
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incentive<br/>
plan awards:<br/>
number of<br/>
unearned<br/>
shares, units<br/>
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rights that<br/>
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plan awards: <br/>
market or<br/>
payout <br/>
value of unearned <br/>
shares, units <br/>
or other rights <br/>
that have not<br/>
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  <tr style="vertical-align: bottom; background-color: #CCEEFF">
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify">&#160;&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><b>Equity Compensation Plan Information</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
  <tr style="vertical-align: bottom">
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  </table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: center"></p><div>

</div><!-- Field: Page; Sequence: 61; Value: 1 --><div>
    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><p style="text-align: center; margin-top: 0pt; margin-bottom: 0pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->56<!-- Field: /Sequence --></p></div><div>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: center">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><b>Discussion of Summary Compensation and Grants
of Plan-based Awards Tables</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0pt; text-align: justify">A summary of certain material
terms of our existing compensation plans and arrangements is set forth below.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify; text-indent: 36pt">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0pt; text-indent: 0.5in; text-align: justify">On September 21, 2010, our
Board of Directors approved a stock incentive plan for officers, directors, employees, and consultants entitled &#8220;China Jo-Jo Drugstores,
Inc. 2010 Equity Incentive Plan&#8221; (the &#8220;Plan&#8221;). The maximum number of shares that may be issued under the Plan is 168,750
shares of our ordinary shares. The Plan was approved by our shareholders at our annual meeting held on November 2, 2010. On February 24,
2015, our Board of Directors adopted and approved Amendment No. 1 to the Plan to increase the number of shares of the Company&#8217;s
ordinary shares available for issuance thereunder from 168,750 share limit to 360,417 shares. Amendment No. 1 was approved by the stockholders
at the annual shareholders meeting on March 23, 2015. On January 27, 2016, our Board of Directors adopted and approved Amendment No. 2
to the Plan to increase the number of shares of the Company&#8217;s ordinary shares available for issuance thereunder from 360,417 share
limit to 597,917 shares. Amendment No. 2 was approved by the stockholders at the annual shareholders meeting on March 23, 2016. Under
the Plan, the Company may issue ordinary shares and/or options to purchase ordinary shares to our officers, directors, employees and consultants.
The Plan is administered either by our Board of Directors or a committee that it designates comprising of at least two (2) &#8220;non-employee&#8221;
directors. The board (or the committee, if one is designated) has full and complete authority, in its discretion, but subject to the express
provisions of the Plan, to grant awards, to determine the number of awards to be granted and the time or times at which awards shall be
granted; to establish the terms and conditions upon which awards may be exercised; to remove or adjust any restrictions and conditions
upon awards; to specify, at the time of grant, provisions relating to exercisability of awards and to accelerate or otherwise modify the
exercisability of any awards; and to adopt such rules and regulations and to make all other determinations deemed necessary or desirable
for the administration of the Plan. On February 14, 2017, our Board of Directors adopted and approved Amendment No. 3 to the Plan to increase
the number of shares of the Company&#8217;s ordinary shares available for issuance thereunder from 597,917 share limit to 808,039 shares.
Amendment No. 3 was approved by the stockholders at the annual shareholders meeting on March 29, 2017. On March 26, 2018, the shareholders
of the Company approved the Amendment No. 4 to the Plan which increased the total shares of ordinary shares available for issuance thereunder
to 1,016,372. On June 30, 2018, the Compensation Committee of the Board approved the Amendment No. 5 to the Plan as The Tax Cuts and Jobs
Act of 2017 removed the 162(m) qualified performance based compensation exemption to the $1 million cap on deductions for compensation
to covered executives. Section 1.3.2 was in the Plan to permit grants under the Plan to fit within that exemption. As that exemption no
longer applies for grants made in 2018 or thereafter, the Plan had been amended to remove the provisions intended to comply with that
exemption, including the one in Section 1.3.2. of the Plan. On March 5, 2020, the shareholders of the Company approved the Amended and
Restated 2010 Equity Incentive Plan, which in addition to the incorporation of the Amendment No. 4 and Amendment No. 5 to the Plan, clarified
the term of the Plan in order to render the Plan being available for incentive stock options grants in the future and approved the proposal
of adding a ten-year term to the Plan. The Plan, effective since November 2, 2010, shall terminate automatically on January 14, 2030 (the
tenth anniversary of the Board&#8217;s approval of this Plan), unless terminated earlier by the Board, except with respect to Awards then
outstanding. The Plan, as amended and restated, has authorized, with the stockholders&#8217; approval previously obtained, to reserve
a total of 1,016,372 shares of our ordinary shares for issuance under the Plan. As of March 31, 2023, there were 58,379 shares of our
ordinary shares available for future issuance under the Plan.&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify">&#160;&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: center"></p><div>

</div><!-- Field: Page; Sequence: 62; Value: 1 --><div>
    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><p style="text-align: center; margin-top: 0pt; margin-bottom: 0pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->57<!-- Field: /Sequence --></p></div><div>
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    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: center">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><b>Director Compensation</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0pt; text-indent: 0.5in; text-align: justify">The following table provides
compensation information for our directors during the fiscal year ended March 31, 2023:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify">&#160;</p><div>

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  <tr style="vertical-align: bottom">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0pt; text-indent: 0.5in; text-align: justify">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. We intend to develop such a policy in the near future.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="text-decoration:underline">Agreement with Genghua Gu</span></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0pt; text-indent: 0.5in; text-align: justify">On December 9, 2013, we entered
into an agreement with Dr. Gu in the form of a director offer letter, pursuant to which we have agreed to compensate him $6,000 annually
for his services, payable in monthly installments on the last day of each month. Additionally, he is entitled to be included as an insured
under our directors and officers insurance policy.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="text-decoration:underline">Agreement with Caroline Wang</span></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0pt; text-indent: 0.5in; text-align: justify">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, she is entitled to be included as an insured under our directors and officers insurance policy.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="text-decoration:underline">Agreement with Jiangliang He</span></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0pt; text-indent: 0.5in; text-align: justify">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.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><span style="text-decoration:underline">Agreement with Pingfan Wu</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify">&#160;</p><div>

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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)
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: center"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><b>The Board of Directors and Committees</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0pt; text-indent: 0.5in; text-align: justify">We seek directors with established
strong professional reputations and experience in areas relevant to the strategy and operation of our businesses. We also seek directors
who possess the qualities of integrity and candor, who have strong analytical skills, and who are willing to engage with the management
and each other in a constructive and collaborative fashion. We also seek directors who have the ability and commitment to devote significant
time and energy to service on the board and its committees. We believe that all of our directors meet the foregoing qualifications.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify; text-indent: 36pt">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.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify">&#160;</p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify">&#160;</p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><b><i>Audit Committee</i></b></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0pt; text-indent: 0.5in; text-align: justify">Our Audit Committee operates
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Governance&#8221;&#8211;&#8220;Documents&#8221;, and is composed of our three (3) independent directors. Our Board of Directors has determined,
based on information furnished by Ms. Caroline Wang and other available information, that she meets the requirements of an &#8220;audit
committee financial expert&#8221; as that term is defined in the rules promulgated under the Securities Act and the Exchange Act, and
has accordingly designated her as such. Our Board of Directors has also appointed her chairperson of the committee.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0pt; text-indent: 0.5in; text-align: justify">The responsibilities of our
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify">&#160;</p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0">&#160;</p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: center"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: center">&#160;</p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><b><i>Compensation Committee</i></b></p><div>

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the committee. Our Compensation Committee oversees and, as appropriate, makes recommendations to the Board of Directors regarding the
annual salaries and other compensation of our executive officers and our employees, and other employee policies; it also provides assistance
and recommendations with respect to our compensation policies and practices.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify">&#160;</p><div>

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under a written charter, a copy of which is available on our website at http://www.jiuzhou360.com under the tabs &#8220;Investor&#8221;&#8211;&#8220;Corporate
Governance&#8221;&#8211;&#8220;Documents&#8221;, and is made up of our four (4) independent directors. Genghua Gu is chairperson of the
committee. Our Nominating Committee assists in the selection of director nominees, approves director nominations to be presented for stockholder
approval at our annual general meeting, fills any vacancies on our Board of Directors, considers any nominations of director candidates
validly made by shareholders, and reviews and considers developments in corporate governance practices.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><b>Code of Ethics</b></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0pt; text-indent: 0.5in; text-align: justify">The Company&#8217;s Code of
Ethics, which applies to all officers, directors and employees, was adopted by the Board on March 15, 2010. The Code of Ethics was filed
as Exhibit 14 to the Company&#8217;s Current Report on <span style="text-decoration:underline">Form 8-K</span> filed with the SEC on March 23, 2010, a copy of which is available
on our website at http://www.jiuzhou360.com under the tabs &#8220;Investor&#8221;&#8211;&#8220;Corporate Governance&#8221;&#8211;&#8220;Documents&#8221;.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><b>&#160;</b></p><div>

</div><div><a id="a_026"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0pt; text-indent: 0.5in; text-align: justify"><b>D. EMPLOYEES.</b></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0pt; text-indent: 0.5in; text-align: justify">As of March 31, 2023, we had
938 employees combined in our retail and wholesale operations, consisting of 885 full-time and 53 part-time employees. The number of employees
for each area of operations, and such employees as a percentage of our total workforce, are as follows:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify">&#160;</p><div>

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  <tr style="vertical-align: bottom; ">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; ">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: center"></p><div>

</div><!-- Field: Page; Sequence: 65; Value: 1 --><div>
    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><p style="text-align: center; margin-top: 0pt; margin-bottom: 0pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->60<!-- Field: /Sequence --></p></div><div>
    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: center">&#160;</p><div>

</div><div><a id="a_027"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0pt; text-indent: 0.5in; text-align: justify"><b>E. SHARE OWNERSHIP.</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><b>Security Ownership of Certain Beneficial Owners
and Management</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0pt; text-indent: 0.5in; text-align: justify">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. To the best of our knowledge, subject to community and
marital property laws, all persons named have sole voting and investment power with respect to such shares, except as otherwise noted.&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
  <tr style="vertical-align: bottom">
    <td colspan="9" style="text-align: center; border-bottom: Black 1.5pt solid">Ordinary Shares Beneficially Owned</td></tr>
  <tr style="vertical-align: bottom">
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 of class<br/>
 beneficially<br/>
 owned (3)</td><td style="padding-bottom: 1.5pt">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; ">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; ">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Genghua Gu, Director <sup>(6)</sup></span></td><td>&#160;</td>
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  <tr style="vertical-align: bottom; ">
    <td style="text-align: left">Jiangliang, He, Director</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">-</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left">Pingfan Wu, Director</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">-</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; ">
    <td style="text-align: left">All directors and executive officers as a group (8 persons)</td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">6.1</td><td style="text-align: left">%</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td>&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; ">
    <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">5% Shareholders: <sup>(1)</sup></span></td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td>N/A</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  </table><div>


</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 24px; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">*</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Less than 0.1%.&#160;</span></td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(1)</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Unless otherwise noted, the address for each of the named beneficial owners is: 6<sup>th</sup> Floor, Hai Wai Hai Tongxin Mansion, Gong Shu District, Hangzhou City, Zhejiang Province, China, 310008.</span></td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(2)</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Under Rule 13d-3, a beneficial owner of a security includes any person who, directly or indirectly, through any contract, arrangement, understanding, relationship, or otherwise has or shares: (i) voting power, which includes the power to vote, or to direct the voting of shares; and (ii) investment power, which includes the power to dispose or direct the disposition of shares. Certain shares may be deemed to be beneficially owned by more than one person (if, for example, persons share the power to vote or the power to dispose of the shares). In addition, shares are deemed to be beneficially owned by a person if the person has the right to acquire the shares (for example, upon exercise of an option) within 60 days of the date as of which the information is provided. In computing the percentage ownership of any person, the amount of shares outstanding is deemed to include the amount of shares beneficially owned by such person (and only such person) by reason of these acquisition rights. As a result, the percentage of outstanding shares of any person as shown in this table does not necessarily reflect the person&#8217;s actual ownership or voting power with respect to the number of shares of ordinary shares actually outstanding.</span></td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(3)</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Unless otherwise noted, the number and percentage of outstanding shares of ordinary shares is based upon&#160;23,697,210 shares outstanding as of June 15, 2023.</span></td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(4)</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The address of Super Marvel Limited (&#8220;Super Marvel&#8221;) 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%). They are also its directors. As such, they are deemed to have or share investment control over Super Marvel&#8217;s portfolio. According to Rule 13d-5, when two or more persons agree to act together for the purpose of acquiring, holding, voting or disposing of equity securities of an issuer, the group formed thereby shall be deemed to have acquired beneficial ownership, for purposes of sections 13(d) and (g) of the Exchange Act, as of the date of such agreement, of all equity securities of that issuer beneficially owned by any such persons. 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.</span></td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(5)</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Ms. Wang&#8217;s address is: 3601B The Center, Changle Road, Xuhui District, and Shanghai, China.</span></td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(6)</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Dr. Gu&#8217;s address is: No.1, Xueshi Road, Hangzhou, China.</span></td></tr>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0"><b>&#160;</b></p><div>

</div><div><a id="a_075"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0pt; text-indent: 0.5in; text-align: justify"><b>F. Disclosure of a registrant&#8217;s action to recover erroneously
awarded compensation.&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0pt; text-indent: 0.5in; text-align: justify">Not
applicable.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: center"></p><div>

</div><!-- Field: Page; Sequence: 66; Value: 1 --><div>
    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><p style="text-align: center; margin-top: 0pt; margin-bottom: 0pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->61<!-- Field: /Sequence --></p></div><div>
    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: center"><b>&#160;</b></p><div>

</div><div><a id="a_028"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><b>ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY
TRANSACTIONS.</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify">&#160;</p><div>

</div><div><a id="a_029"></a></div><p style="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0pt; text-align: justify"><b>A. MAJOR SHAREHOLDERS</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0pt; text-indent: 0.5in; text-align: justify">Please refer to Item 6.E &#8220;Directors,
Senior Management and Employees &#8212; Share Ownership.&#8221;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0pt; text-indent: 0.5in; text-align: justify">To our knowledge, (A)&#160;we
are not directly or indirectly owned or controlled by (i)&#160;another corporation or (ii)&#160;any foreign government and (B)&#160;there
are no arrangements (including any announced or expected takeover bid), the operation of which may at a subsequent date result in a change
in our control.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0pt; text-indent: 0.5in; text-align: justify">The voting rights of our major
shareholders do not differ from the voting rights of other holders of the same class of shares.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify">&#160;</p><div>

</div><div><a id="a_030"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify; text-indent: 36pt"><b>B. RELATED PARTY TRANSACTIONS.&#160;BUSINESS
RELATIONSHIPS.</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><b>Our Officers and Directors&#8217; Relationship
with Us, Our Subsidiaries and VIE</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify; text-indent: 36pt">As described in &#8220;<i>Business
- Our Corporate History and Structure</i>&#8221; above, we control HJ Group through contractual arrangements between Jiuxin Management,
our wholly-owned subsidiary, and each of Jiuzhou Pharmacy, Jiuzhou Service and Jiuzhou Clinic. HJ Group is owned by Mr. Lei Liu and Mr.
Li Qi (the &#8220;Key Personnel&#8221;), whom also hold positions as our executive officers and/or directors. Because the Key Personnel
also collectively own a substantial amount of our issued and outstanding ordinary shares, we believe that our interests are aligned with
those of HJ Group and the Key Personnel. However, see &#8221; <i>Risk Factors - Risks Related to Our Corporate Structure</i> - <i>Our
contractual arrangements with HJ Group and the Key Personnel may not be as effective in providing control over these entities as direct
ownership,&#8221; and &#8220;Management members of HJ Group have potential conflicts of interest with us, which may adversely affect our
business and your ability for recourse.&#8221;</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><b>Other Related Party Transactions</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
  <tr style="vertical-align: bottom">
    <td style="text-align: center">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" style="text-align: center; border-bottom: Black 1.5pt solid">March&#160;31, <br/>2023</td><td style="padding-bottom: 1.5pt">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" style="text-align: center; border-bottom: Black 1.5pt solid">March&#160;31, <br/>2022</td><td style="padding-bottom: 1.5pt">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="width: 76%; text-align: left; padding-bottom: 1.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Due to a director and CEO <sup>(1)</sup>:</span></td><td style="width: 1%; padding-bottom: 1.5pt">&#160;</td>
    <td style="width: 1%; border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="width: 9%; border-bottom: Black 1.5pt solid; text-align: right">683,560</td><td style="width: 1%; padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="width: 1%; padding-bottom: 1.5pt">&#160;</td>
    <td style="width: 1%; border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="width: 9%; border-bottom: Black 1.5pt solid; text-align: right">1,561,244</td><td style="width: 1%; padding-bottom: 1.5pt; text-align: left">&#160;</td></tr>
  </table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="vertical-align: top">
    <td style="width: 24px; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(1)</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Due to foreign exchange restrictions, the Company&#8217;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.</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0pt; text-indent: 0.5in; text-align: justify">The Company leases a retail
space from Mr. Lei Liu. The lease will expire in September 2025.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0pt; text-indent: 0.5in; text-align: justify">On April 28, 2018, 10% of Jiuxin Medicine was sold to Hangzhou Kangzhou
Biotech Co. Ltd. for a total proceeds of approximately $75,643 (RMB507,760). On January 29, 2021, The Company acquired back 10% of Jiuxin
Medicine for a total price of $77,410 (RMB507,760). Mr. Lei Liu owns 51% of Hangzhou Kangzhou Biotech Co. Ltd.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify">&#160;</p><div>

</div><div><a id="a_031"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0pt; text-indent: 0.5in; text-align: justify"><b>C. INTERESTS OF EXPERTS
AND COUNSEL.</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0pt; text-indent: 0.5in; text-align: justify">Not applicable.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: center"></p><div>

</div><!-- Field: Page; Sequence: 67; Value: 1 --><div>
    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><p style="text-align: center; margin-top: 0pt; margin-bottom: 0pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->62<!-- Field: /Sequence --></p></div><div>
    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: center"><b>&#160;</b></p><div>

</div><div><a id="a_032"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><b>ITEM&#160;8. FINANCIAL INFORMATION.</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify">&#160;</p><div>

</div><div><a id="a_033"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0pt; text-indent: 0.5in; text-align: justify"><b>A. CONSOLIDATED STATEMENTS
AND OTHER FINANCIAL INFORMATION.</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0pt; text-indent: 0.5in; text-align: justify">See &#8220;Item 18. Financial
Statements.&#8221;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><b>Legal Proceedings</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0pt; text-indent: 0.5in; text-align: justify">From time to time, we may be
subject to legal proceedings, investigations and claims during the ordinary course of our business. We know of no material, existing or
pending legal proceedings against us, nor are we involved as a plaintiff in any material proceeding or pending litigation. There are no
proceedings in which any of our directors, officers or affiliates, or any registered or beneficial stockholder holding more than five
percent of our ordinary shares, is an adverse party or has a material interest adverse to our company.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify; text-indent: 36pt">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><b>Dividend Policy</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0pt; text-indent: 0.5in; text-align: justify">While there are no restrictions
that limit our ability to pay dividends, we have not paid, and do not currently intend to pay cash dividends on our ordinary shares in
the foreseeable future. Our policy is to retain all earnings, if any, to provide funds for the operation and expansion of our business.
The declaration of dividends, if any, will be subject to the discretion of our Board of Directors, who may consider such factors as our
results of operations, financial condition, capital needs and acquisition strategy, among others, in making its determination.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify; text-indent: 36pt">Our ability to receive dividends
from our subsidiaries may limit our ability to pay dividends on our ordinary shares. See Risk Factors&#160;&#8211;&#160;Risks Related
to Doing Business in China&#160;&#8211;&#160;Our holding company structure may limit the payment of dividends&#8221; and &#8220;Item 10.
Additional Information &#8211; D. Exchange Controls &#8211; Dividend Distribution&#8221;.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify">&#160;</p><div>

</div><div><a id="a_034"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0pt; text-indent: 0.5in; text-align: justify"><b>B. SIGNIFICANT CHANGES.</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0pt; text-indent: 0.5in; text-align: justify">N/A</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify">&#160;</p><div>

</div><div><a id="a_035"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><b>ITEM&#160;9. THE OFFER AND LISTING</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify">&#160;</p><div>

</div><div><a id="a_036"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0pt; text-indent: 0.5in; text-align: justify"><b>A. OFFER AND LISTING DETAILS.</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0pt; text-indent: 0.5in; text-align: justify">Not Applicable.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify">&#160;</p><div>

</div><div><a id="a_037"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0pt; text-indent: 0.5in; text-align: justify"><b>B. PLAN OF DISTRIBUTION.</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify; text-indent: 36pt">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0pt; text-indent: 0.5in; text-align: justify">Not Applicable.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify; text-indent: 36pt">&#160;</p><div>

</div><div><a id="a_038"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0pt; text-indent: 0.5in; text-align: justify"><b>C. MARKETS.</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0pt; text-indent: 0.5in; text-align: justify">Our ordinary shares trade on
the Nasdaq Capital Market under the symbol &#8220;CJJD&#8221;.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0pt; text-indent: 0.5in; text-align: justify">Based on the records of our
transfer agent, we had 23,697,210 shares of ordinary shares issued and outstanding as of June 15, 2023.&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify; text-indent: 36pt">&#160;</p><div>

</div><div><a id="a_039"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0pt; text-indent: 0.5in; text-align: justify"><b>D. SELLING SHAREHOLDERS.</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify; text-indent: 36pt">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0pt; text-indent: 0.5in; text-align: justify">Not applicable.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify; text-indent: 36pt">&#160;</p><div>

</div><div><a id="a_040"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0pt; text-indent: 0.5in; text-align: justify"><b>E. DILUTION.</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify; text-indent: 36pt">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0pt; text-indent: 0.5in; text-align: justify">Not applicable.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify; text-indent: 36pt">&#160;</p><div>

</div><div><a id="a_041"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0pt; text-indent: 0.5in; text-align: justify"><b>F. EXPENSES OF THE ISSUE.</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify; text-indent: 36pt">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0pt; text-indent: 0.5in; text-align: justify">Not applicable.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify; text-indent: 36pt">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify; text-indent: 36pt"></p><div>

</div><!-- Field: Page; Sequence: 68; Value: 1 --><div>
    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><p style="text-align: center; margin-top: 0pt; margin-bottom: 0pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->63<!-- Field: /Sequence --></p></div><div>
    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify; text-indent: 36pt">&#160;</p><div>

</div><div><a id="a_042"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><b>ITEM&#160;10. ADDITIONAL INFORMATION.</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify; text-indent: 36pt">&#160;</p><div>

</div><div><a id="a_043"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0pt; text-indent: 0.5in; text-align: justify"><b>A. SHARE CAPITAL</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify; text-indent: 36pt">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0pt; text-indent: 0.5in; text-align: justify">Not applicable.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify; text-indent: 36pt">&#160;</p><div>

</div><div><a id="a_044"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0pt; text-indent: 0.5in; text-align: justify"><b>B. MEMORANDUM AND ARTICLES
OF ASSOCIATION</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify; text-indent: 36pt">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0pt; text-indent: 0.5in; text-align: justify">We are an exempted company
incorporated with limited liability under the laws of the Cayman Islands and our affairs are governed by our Memorandum and Articles of
Association, the Companies Law (as amended) of the Caymans Islands, which is referred to as the Companies Law below, and common law of
the Cayman Islands. Our authorized share capital is US$6,010,000 divided into (i) 500,000,000 Ordinary Shares of a par value of US$0.012
each, and (ii) 10,000,000 preferred shares of a par value of US$0.001 each.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0pt; text-indent: 0.5in; text-align: justify">We have included summaries
of material provisions of our amended and restated memorandum and articles of association insofar as they relate to the material terms
of our share capital. The summaries do not purport to be complete and are qualified in their entirety by reference to our amended and
restated memorandum and articles of association, which is filed as Exhibit 1.1 to this annual report.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0"><b><i>Ordinary Shares</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0"><b><i>&#160;</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0pt; text-indent: 0.5in; text-align: justify">All of our outstanding ordinary
shares are fully paid and non-assessable.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0"><b>Issuance of Shares and Changes to Capital</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0pt; text-indent: 0.5in; text-align: justify">Our board of directors with
the power for the Company, insofar as is permitted by law, is able to redeem or purchase any of its shares and to increase or reduce the
said share capital subject to the provisions of the Companies Act (Revised) and the Articles of Association of the Company and to issue
any part of its capital, whether original, redeemed or increased, with or without any preference, priority or special privilege or subject
to any postponement of rights or to any conditions or restrictions; and so that, unless the conditions of issue shall otherwise expressly
declare, every issue of shares, whether declared to be preference or otherwise, shall be subject to the power otherwise regulated in our
Second Amend and Restated Memorandum and Articles of the Association.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 8.35pt; text-align: justify; text-indent: 16.2pt">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0pt; text-indent: 0.5in; text-align: justify">Subject to the Law, these Articles
and, where applicable, the rules of the Designated Stock Exchange and without prejudice to any special rights or restrictions for the
time being attached to any shares or any class of shares, the unissued shares of the Company (whether forming part of the original or
any increased capital) shall be at the disposal of the Board, which may offer, allot, grant options over or otherwise dispose of them
to such persons, at such times and for such consideration and upon such terms and conditions as the Board may in its absolute discretion
determine but so that no shares shall be issued at a discount, except in accordance with the provisions of Law. In particular and without
prejudice to the generality of the foregoing, the Board is hereby empowered to authorize by resolution or resolutions from time to time
the issuance of one or more classes or series of preferred shares and to fix the designations, powers, preferences and relative, participating,
optional and other rights, if any, and the qualifications, limitations and restrictions thereof, if any, including, without limitation,
the number of shares constituting each such class or series, dividend rights, conversion rights, redemption privileges, voting powers,
full or limited or no voting powers, and liquidation preferences, and to increase or decrease the size of any such class or series (but
not below the number of shares of any class or series of preferred shares then outstanding) to the extent permitted by Law. Without limiting
the generality of the foregoing, the resolution or resolutions providing for the establishment of any class or series of preferred shares
may, to the extent permitted by law, provide that such class or series shall be superior to, rank equally with or be junior to the preferred
shares of any other class or series. Neither the Company nor the Board shall be obliged, when making or granting any allotment of, offer
of, option over or disposal of shares, to make, or make available, any such allotment, offer, option or shares to Members or others with
registered addresses in any particular territory or territories being a territory or territories where, in the absence of a registration
statement or other special formalities, this would or might, in the opinion of the Board, be unlawful or impracticable. Members affected
as a result of the foregoing sentence shall not be, or be deemed to be, a separate class of members for any purpose whatsoever. The Board
may issue options, warrants or convertible securities or securities of similar nature conferring the right upon the holders thereof to
subscribe for, purchase or receive any class of shares or securities in the capital of the Company on such terms as it may from time to
time determine.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: center"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: center">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0pt; text-indent: 0.5in; text-align: justify">The Company may in connection
with the issue of any shares exercise all powers of paying commission and brokerage conferred or permitted by the Law. Subject to the
Law, the commission may be satisfied by the payment of cash or by the allotment of fully or partly paid shares or partly in one and partly
in the other.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0pt; text-indent: 0.5in; text-align: justify">Except as required by law,
no person shall be recognized by the Company as holding any share upon any trust and the Company shall not be bound by or required in
any way to recognize (even when having notice thereof) any equitable, contingent, future or partial interest in any share or any fractional
part of a share or (except only as otherwise provided by these Articles or by law) any other rights in respect of any share except an
absolute right to the entirety thereof in the registered holder.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0pt; text-indent: 0.5in; text-align: justify">Subject to the Law and these
Articles, the Board may at any time after the allotment of shares but before any person has been entered in the Register as the holder,
recognize a renunciation thereof by the allottee in favor of some other person and may accord to any allottee of a share a right to effect
such renunciation upon and subject to such terms and conditions as the Board considers fit to impose.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 8.35pt; text-align: justify; text-indent: 16.2pt">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0"><b>Dividends</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify; text-indent: 36pt">Subject to the Companies Law,
our shareholders may, by resolution passed by a simple majority of the voting rights entitled to vote at the general meeting, declare
dividends (including interim dividends) to be paid to our shareholders but no dividend shall be declared in excess of the amount recommended
by our board of directors. Dividends may be declared and paid out of funds lawfully available to us. Except as otherwise provided by the
rights attached to shares, all dividends shall be declared and paid according to the amounts paid up on the shares on which the dividend
is paid. All dividends shall be paid in proportion to the number of ordinary shares a shareholder holds during any portion or portions
of the period in respect of which the dividend is paid; but, if any share is issued on terms providing that it shall rank for dividend
as from a particular date, that share shall rank for dividend accordingly. Our board of directors may also declare and pay dividends out
of the share premium account or any other fund or account which can be authorized for this purpose in accordance with the Companies Law.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0pt; text-indent: 0.5in; text-align: justify">Whenever the Board or the Company
in general meeting has resolved that a dividend be paid or declared, the Board may further resolve that such dividend be satisfied wholly
or in part by the distribution of specific assets of any kind and in particular of paid up shares, debentures or warrants to subscribe
securities of the Company or any other company, or in any one or more of such ways, and where any difficulty arises in regard to the distribution
the Board may settle the same as it thinks expedient, and in particular may issue certificates in respect of fractions of shares, disregard
fractional entitlements or round the same up or down, and may fix the value for distribution of such specific assets, or any part thereof,
and may determine that cash payments shall be made to any Members upon the footing of the value so fixed in order to adjust the rights
of all parties, and may vest any such specific assets in trustees as may seem expedient to the Board and may appoint any person to sign
any requisite instruments of transfer and other documents on behalf of the persons entitled to the dividend, and such appointment shall
be effective and binding on the Members. The Board may resolve that no such assets shall be made available to Members with registered
addresses in any particular territory or territories where, in the absence of a registration statement or other special formalities, such
distribution of assets would or might, in the opinion of the Board, be unlawful or impracticable and in such event the only entitlement
of the Members aforesaid shall be to receive cash payments as aforesaid. Members affected as a result of the foregoing sentence shall
not be or be deemed to be a separate class of Members for any purpose whatsoever.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 8.35pt; text-align: justify; text-indent: 16.2pt">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0"><b>Voting and Meetings</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 8.35pt"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0pt; text-indent: 0.5in; text-align: justify">As a condition of admission
to a shareholders&#8217; meeting, a shareholder must be duly registered as our shareholder at the applicable record date for that meeting
and all calls or installments then payable by such shareholder to us in respect of our ordinary shares must have been paid. Subject to
any special rights or restrictions as to voting then attached to any shares, at any general meeting every shareholder who is present in
person or by proxy (or, in the case of a shareholder being a corporation, by its duly authorized representative not being himself or herself
a shareholder entitled to vote) shall have one vote per share.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 8.35pt; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: center"></p><div>

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    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: center">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0pt; text-indent: 0.5in; text-align: justify">As a Cayman Islands exempted company, we are not obliged by the Companies
Law to call annual general meetings; however, our Second Amended And Restated Memorandum and Articles of Association provide that in each
year we will hold an annual general meeting of shareholders at a time determined by our board of directors. Also, we may, but are not
required to (unless required by the Law), in each year hold any other extraordinary general meeting.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 8.35pt; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0pt; text-indent: 0.5in; text-align: justify">The Companies Law of the Cayman
Islands provides shareholders with only limited rights to requisition a general meeting, and does not provide shareholders with any right
to put any proposal before a general meeting. However, these rights may be provided in a company&#8217;s articles of association. Our
Second Amended and Restated Memorandum And Articles of Association provide that upon the requisition of shareholders representing not
less than two-thirds of the voting rights entitled to vote at general meetings, our board will convene an extraordinary general meeting
and put the resolutions so requisitioned to a vote at such meeting. However, shareholders may propose only ordinary resolutions to be
put to a vote at such meeting and shall have no right to propose resolutions with respect to the election, appointment or removal of directors
or with respect to the size of the board. Our amended and restated memorandum and articles of association provide no other right to put
any proposals before annual general meetings or extraordinary general meetings. Subject to regulatory requirements, our annual general
meeting and any extraordinary general meetings must be called by not less than ten (10) clear days&#8217; notice prior to the relevant
shareholders meeting and convened by a notice discussed below. Alternatively, upon the prior consent of all holders entitled to attend
and vote (with regards to an annual general meeting), and the holders of 95% in par value of the shares entitled to attend and vote (with
regard to an extraordinary general meeting), that meeting may be convened by a shorter notice and in a manner deemed appropriate by those
holders.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 8.35pt; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0pt; text-indent: 0.5in; text-align: justify">We will give notice of each
general meeting of shareholders by publication on our website and in any other manner that we may be required to follow in order to comply
with Cayman Islands law, Nasdaq and SEC requirements. The holders of registered shares may be convened for a shareholders&#8217; meeting
by means of letters sent to the addresses of those shareholders as registered in our shareholders&#8217; register, or, subject to certain
statutory requirements, by electronic means. We will observe the statutory minimum convening notice period for a general meeting of shareholders.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 8.35pt; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0pt; text-indent: 0.5in; text-align: justify">A quorum for a general meeting
consists of any one or more persons holding or representing by proxy not less than one-third of our issued voting shares entitled to vote
upon the business to be transacted.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 8.35pt; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0pt; text-indent: 0.5in; text-align: justify">A resolution put to the vote
of the meeting shall be decided on a poll. An ordinary resolution to be passed by the shareholders requires the affirmative vote of a
simple majority of the votes cast by, or on behalf of, the shareholders entitled to vote present in person or by proxy and voting at the
meeting. A special resolution requires the affirmative vote of no less than two-thirds of the votes cast by the shareholders entitled
to vote who are present in person or by proxy at a general meeting (except for certain matters described below which require an affirmative
vote of two-thirds). Both ordinary resolutions and special resolutions may also be passed by a unanimous written resolution signed by
all the shareholders of our company, as permitted by the Companies Law and our amended and restated memorandum and articles of association.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0pt; text-indent: 0.5in; text-align: justify">Our Second Amended and Restated
Memorandum and Articles of Association provide that the affirmative vote of no less than two-thirds of votes cast by the shareholders
entitled to vote who are present in person or by proxy at a general meeting shall be required to approve a) to reduce its share capital
or any capital redemption reserve or other undistributable reserve; b) the necessary quorum (whether at a separate general meeting or
at its adjourned meeting) shall be a person or persons or (in the case of a Member being a corporation) its duly authorized representative
together holding or representing by proxy not less than one-third in nominal value of the issued voting shares of that class; c) every
holder of shares of the class shall be entitled on a poll to one vote for every such share held by him; and d) any holder of shares of
the class present in person or by proxy or authorized representative may demand a poll.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 8.35pt; text-align: justify; text-indent: 16.2pt">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: center"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: center">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0"><b>Transfers of Shares</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 8.35pt"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0pt; text-indent: 0.5in; text-align: justify">Subject to these Articles and
the requirements of the Designated Stock Exchange, any Member may transfer all or any of his shares by an instrument of transfer in the
usual or common form or in a form prescribed by the Designated Stock Exchange or in any other form approved by the Board and may be under
hand or, if the transferor or transferee is a clearing house or a central depository house or its nominee(s), by hand or by machine imprinted
signature or by Electronic Signature or by such other manner of execution as the Board may approve from time to time. The Board may, in
its absolute discretion, and without giving any reason therefor, refuse to register a transfer of any share made in accordance with Article
46 but only where such share is not a fully paid up share (and being transferred to a person of whom it does not approve), or any share
issued under any share incentive scheme for employees or pursuant to any other agreement, contract or other such arrangement, upon which
a restriction on transfer imposed thereby still subsists, and it may also, without prejudice to the foregoing generality, refuse to register
a transfer of any share to more than four joint holders.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0pt; text-indent: 0.5in; text-align: justify">The Board in so far as permitted
by any applicable law may, in its absolute discretion, at any time and from time to time transfer any share upon the Register to any branch
register or any share on any branch register to the Register or any other branch register. In the event of any such transfer, the shareholder
requesting such transfer shall bear the cost of effecting the transfer unless the Board otherwise determines.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify; text-indent: 36pt">Unless the Board otherwise
agrees (which agreement may be on such terms and subject to such conditions as the Board in its absolute discretion may from time to time
determine, and which agreement the Board shall, without giving any reason therefore, be entitled in its absolute discretion to give or
withhold), no shares upon the Register shall be transferred to any branch register nor shall shares on any branch register be transferred
to the Register or any other branch register and all transfers and other documents of title shall be lodged for registration, and registered,
in the case of any shares on a branch register, at the relevant Registration Office, and, in the case of any shares on the Register, at
the Office or such other place at which the Register is kept in accordance with the Law.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify; text-indent: 16.2pt">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0"><b>Liquidation</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 8.35pt"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0pt; text-indent: 0.5in; text-align: justify">Subject to any special rights,
privileges or restrictions as to the distribution of available surplus assets on liquidation for the time being attached to any class
or classes of shares (i) if the Company shall be wound up and the assets available for distribution amongst the Members of the Company
shall be more than sufficient to repay the whole of the capital paid up at the commencement of the winding up, the excess shall be distributed&#160;<i>pari
passu</i>&#160;amongst such members in proportion to the amount paid up on the shares held by them respectively and (ii) if the Company
shall be wound up and the assets available for distribution amongst the Members as such shall be insufficient to repay the whole of the
paid-up capital such assets shall be distributed so that, a nearly as may be, the losses shall be borne by the Members in proportion to
the capital paid up, or which ought to have been paid up, at the commencement of the winding up on the shares held by them respectively.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0pt; text-indent: 0.5in; text-align: justify">If the Company shall be wound
up (whether the liquidation is voluntary or by the court) the liquidator may, with the authority of a special resolution and any other
sanction required by the Law, divide among the Members in specie or kind the whole or any part of the assets of the Company and whether
or not the assets shall consist of properties of one kind or shall consist of properties to be divided as aforesaid of different kinds,
and may for such purpose set such value as he deems fair upon any one or more class or classes of property and may determine how such
division shall be carried out as between the Members or different classes of Members. The liquidator may, with the like authority, vest
any part of the assets in trustees upon such trusts for the benefit of the Members as the liquidator with the like authority shall think
fit, and the liquidation of the Company may be closed and the Company dissolved, but so that no contributory shall be compelled to accept
any shares or other property in respect of which there is a liability.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify; text-indent: 36pt">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0"><b>Anti-Takeover Provisions</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 8.35pt"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0pt; text-indent: 0.5in; text-align: justify">Some provisions of our Second
Amended And Restated Memorandum and Articles Of Association may discourage, delay or prevent a change of control of our company or management
that shareholders may consider favorable, including provisions that authorize our board of directors to issue preferred shares in one
or more series and to designate the price, rights, preferences, privileges and restrictions of such preferred shares without any further
vote or action by our shareholders.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 8.35pt; text-align: justify; text-indent: 16.2pt">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: center"></p><div>

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    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: center">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0"><b>Inspection of Books and Records</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 8.35pt"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0pt; text-indent: 0.5in; text-align: justify">Holders of ordinary shares
will have no general right under Cayman Islands law to inspect or obtain copies of our list of shareholders or our corporate records.
No Member (other than a Director) shall have any right of inspecting any accounting record or book or document of the Company except as
conferred by law or authorized by the Board or the Company in general meeting. Notwithstanding the above, our Second Amended and Restated
Memorandum and Articles of Association provide our shareholders with the right to receive annual audited financial statements. Such right
to receive annual audited financial statements may be satisfied by filing such annual reports as we are required to file with the SEC.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 8.35pt; text-align: justify; text-indent: 16.2pt">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><b>Register of Shareholders</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 8.35pt; text-align: justify"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0pt; text-indent: 0.5in; text-align: justify">Under Cayman Islands law, we
must keep a register of shareholders that includes: the names and addresses of the shareholders, a statement of the shares held by each
member, and of the amount paid or agreed to be considered as paid, on the shares of each member; the date on which the name of any person
was entered on the register as a member; and the date on which any person ceased to be a member.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 8.35pt; text-align: justify; text-indent: 16.2pt">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><b>Exempted Company</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 8.35pt; text-align: justify"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify; text-indent: 36pt">We are an exempted company
with limited liability under the Companies Law. The Companies Law distinguishes between ordinary resident companies and exempted companies.
Any company that is registered in the Cayman Islands but conducts business mainly outside of the Cayman Islands may apply to be registered
as an exempted company. An exempted company:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 8.35pt; text-align: justify; text-indent: 16.2pt">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="vertical-align: top">
    <td style="width: 0.5in">&#160;</td>
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  <tr style="vertical-align: top">
    <td>&#160;</td>
    <td>&#160;</td>
    <td>&#160;</td></tr>
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    <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">is not required to open its register of members for inspection;</span></td></tr>
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    <td>&#160;</td>
    <td>&#160;</td>
    <td>&#160;</td></tr>
  <tr style="vertical-align: top">
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    <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
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  <tr style="vertical-align: top">
    <td>&#160;</td>
    <td>&#160;</td>
    <td>&#160;</td></tr>
  <tr style="vertical-align: top">
    <td>&#160;</td>
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  <tr style="vertical-align: top">
    <td>&#160;</td>
    <td>&#160;</td>
    <td>&#160;</td></tr>
  <tr style="vertical-align: top">
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    <td>&#160;</td>
    <td>&#160;</td>
    <td>&#160;</td></tr>
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    <td>&#160;</td>
    <td>&#160;</td>
    <td>&#160;</td></tr>
  <tr style="vertical-align: top">
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    <td>&#160;</td>
    <td>&#160;</td>
    <td>&#160;</td></tr>
  <tr style="vertical-align: top">
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 8.35pt; text-align: justify; text-indent: 16.2pt">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0pt; text-indent: 0.5in; text-align: justify">&#8220;Limited liability&#8221;
means that the liability of each shareholder is limited to the amount unpaid by the shareholder on the shares of the Company (except in
exceptional circumstances, such as involving fraud, the establishment of an agency relationship or an illegal or improper purpose or other
circumstances in which a court may be prepared to pierce or lift the corporate veil).</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 8.35pt; text-align: justify; text-indent: 16.2pt">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><b><i>Preferred Shares</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><b><i>&#160;</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0pt; text-indent: 0.5in; text-align: justify">Our board of directors is empowered
to designate and issue from time to time one or more classes or series of preferred shares and to fix and determine the relative rights,
preferences, designations, qualifications, privileges, options, conversion rights, limitations and other special or relative rights of
each such class or series so authorized. Such action could adversely affect the voting power and other rights of the holders of our ordinary
shares or could have the effect of discouraging any attempt by a person or group to obtain control of us.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: center"></p><div>

</div><!-- Field: Page; Sequence: 73; Value: 1 --><div>
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    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: center">&#160;</p><div>

</div><div><a id="a_045"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0pt; text-indent: 0.5in; text-align: justify"><b>C. MATERIAL CONTRACTS</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify; text-indent: 36pt">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0pt; text-indent: 0.5in; text-align: justify">None.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><b>&#160;&#160;</b></p><div>

</div><div><a id="a_046"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0pt; text-indent: 0.5in; text-align: justify"><b>D. EXCHANGE CONTROLS.</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify; text-indent: 36pt">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0pt; text-indent: 0.5in; text-align: justify">This section sets forth a summary
of the most significant regulations or requirements that affect our business activities in China or our shareholders&#8217; right to receive
dividends and other distributions from us.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><b>Regulation of Foreign Exchange in Certain Onshore
and Offshore Transactions</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify; text-indent: 36pt">In October 2005, the SAFE issued
the Notice on Issues Relating to the Administration of Foreign Exchange in Fund-raising and Return Investment Activities of Domestic Residents
Conducted via Offshore Special Purpose Companies, or SAFE Notice 75, which became effective as of November 1, 2005, and was further supplemented
by two implementation notices issued by the SAFE on November 24, 2005 and May 29, 2007, respectively. Under Circular 75, prior registration
with the local SAFE branch is required for PRC residents to establish or to control an offshore company for the purposes of financing
that offshore company with assets or equity interests in an onshore enterprise located in the PRC. An amendment to the registration or
filing with the local SAFE branch by such PRC resident is also required for the injection of equity interests or assets of an onshore
enterprise in the offshore company or overseas funds raised by such offshore company, or any other material change with respect to the
offshore company in connection with any increase or decrease of capital, transfer of shares, merger, division, equity investment, debt
investment, or creation of any security interest over any assets located in the PRC.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0pt; text-indent: 0.5in; text-align: justify">Under SAFE Notice 75, PRC residents
are further required to repatriate into the PRC all of their dividends, profits or capital gains obtained from their shareholdings in
the offshore entity within 180 days of their receipt of such dividends, profits or capital gains. The registration and filing procedures
under SAFE Notice 75 are prerequisites for other approval and registration procedures necessary for capital inflow from the offshore entity,
such as inbound investments or shareholders loans, or capital outflow to the offshore entity, such as the payment of profits or dividends,
liquidating distributions, equity sale proceeds, or the return of funds upon a capital reduction. Therefore, failure to comply with such
registration may subject us to certain restrictions on, including but not limited to, the increase of the registered capital of our PRC
subsidiary, making loans to our PRC subsidiary, and making distributions to us from our on-shore companies.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><b><i>&#160;</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><b><i>Dividend Distribution</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0pt; text-indent: 0.5in; text-align: justify">Under current applicable laws
and regulations, each of our consolidated PRC entities, including WFOEs and domestic companies, may pay dividends only out of their accumulated
profits, if any, determined in accordance with PRC accounting standards and regulations. In addition, each of our consolidated PRC entities
is required to deposit at least ten percent (10%) of its after-tax profit based on PRC accounting standards each year into its statutory
surplus reserve fund until the accumulative amount of such reserve reaches fifty percent (50%) of its registered capital. These reserves
are not distributable as cash dividends. 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 $36.04 million.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify; text-indent: 36pt">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><b><i>Interim Regulations on Administration of
Sino-Foreign Joint Venture and Cooperative Medical Institutions</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0pt; text-indent: 0.5in; text-align: justify">As per China&#8217;s commitments
to the World Trade Organization, &#8220;Foreign service suppliers are permitted to establish joint venture hospitals or clinics with local
Chinese partners with quantitative limitations in line with China&#8217;s needs. Foreign majority ownership is permitted.&#8221; In accordance
with the <i>Interim Regulations on Administration of Sino-Foreign Joint Venture and Cooperative Medical Institutions</i> issued jointly
by the Ministry of Health (&#8220;MOH&#8221;) and the Ministry of Commerce (&#8220;MOFCOM&#8221;) in 2000, the Chinese party of Sino-foreign
joint ventures and cooperative medical institutions shall hold no less than thirty percent (30%) of shares and legal rights or interest,
which also mean foreign investors are allowed to hold a maximum stake of seventy percent (70%). Such regulations also specify that the
establishment of Sino-foreign joint venture and cooperative medical institutions should be approved respectively by MOH and MOFCOM. In
other words, foreigners are allowed to run hospitals or clinics in the form of equity or co-operative joint ventures with an equity interest
of up to seventy percent (70%) lasting up to twenty (20) years.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: center"></p><div>

</div><!-- Field: Page; Sequence: 74; Value: 1 --><div>
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    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: center">&#160;</p><div>

</div><div><a id="a_047"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify; text-indent: 36pt"><b>E. TAXATION</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0pt; text-indent: 0.5in; text-align: justify">The current PRC Enterprise
Income Tax Law (the &#8220;EIT Law&#8221;), and the implementation regulations for the EIT Law issued by China&#8217;s State Council, became
effective as of January 1, 2008. Under the EIT Law, enterprises are classified as either resident or non-resident enterprises. An enterprise
established outside of China with its &#8220;de facto management bodies&#8221; located within China is considered a &#8220;resident enterprise,&#8221;
meaning that it can be treated in a manner similar to a Chinese enterprise for enterprise income tax purposes. The implementing rules
of the EIT Law defines a &#8220;de facto management body&#8221; as a managing body that in practice exercises &#8220;substantial and overall
management and control over the production and operations, personnel, accounting, and properties&#8221; of the enterprise; however, it
remains unclear whether the PRC tax authorities would deem our managing body as being located within China. Due to the relatively short
history of the EIT Law and lack of applicable legal precedents, the PRC tax authorities determine the PRC tax resident treatment of entities
organized under the laws of foreign jurisdictions on a case-by-case basis.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify; text-indent: 36pt">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0pt; text-indent: 0.5in; text-align: justify">If the PRC tax authorities
determine that we are a resident enterprise for PRC enterprise income tax purposes, a number of PRC tax consequences could follow. First,
we may be subject to enterprise income tax at a rate of twenty five percent (25%) on our respective worldwide taxable income, as well
as PRC enterprise income tax reporting obligations. Second, although the EIT Law provides that &#8220;dividends, bonuses and other equity
investment proceeds between qualified resident enterprises&#8221; is exempted income, and the implementing rules of the EIT Law refer
to &#8220;dividends, bonuses and other equity investment proceeds between qualified resident enterprises&#8221; as the investment proceeds
obtained by a resident enterprise from its direct investment in another resident enterprise, it is still unclear whether the dividends
we receive from Jiuxin Management would be classified as &#8220;dividends between qualified resident enterprises&#8221; and therefore qualify
for tax exemption.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify; text-indent: 36pt">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0pt; text-indent: 0.5in; text-align: justify">If we are treated as a non-resident
enterprise under the EIT Law, any dividends that we receive from Jiuxin Management (assuming such dividends are deemed to be sourced from
within the PRC) (i) may be subject to a five percent (5%) PRC withholding tax, provided that we own more than twenty five percent (25%)
of the registered capital of Jiuxin Management incessantly within twelve (12) months immediately prior to obtaining such dividends from
Jiuxin Management, and if the <i>Arrangement between the Mainland of China and the Hong Kong Special Administrative Region for the Avoidance
of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income</i> (the &#8220;Arrangement&#8221;) is applicable,
or (ii) if the Arrangement does not apply (i.e. the PRC tax authorities may deem us to be a conduit not entitled to treaty benefits),
may be subject to a ten percent (10%) PRC withholding tax. Similarly, if we are treated as a non-resident enterprise, and Renovation is
treated as a resident enterprise, then any dividends that we receive from Renovation (assuming such dividends were considered sourced
within the PRC) may be subject to a ten percent (10%) PRC withholding tax. Any such taxes on dividends could materially reduce the amount
of dividends, if any, that we could pay to our shareholders.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify; text-indent: 36pt">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0pt; text-indent: 0.5in; text-align: justify">Finally, the new &#8220;resident
enterprise&#8221; classification could result in a situation in which a ten percent (10%) PRC tax is imposed on dividends we pay to our
investors that are non-resident enterprises so long as such non-resident enterprise investors do not have an establishment or place of
business in China or, despite the existence of such establishment of place of business in China, the relevant income is not effectively
connected with such establishment or place of business in China, to the extent that such dividends have their sources within the PRC.
Similarly, any gain realized on the transfer of our shares by such investors is also subject to a ten percent (10%) PRC income tax if
such gain is regarded as income derived from sources within China. In such event, we may be required to withhold a ten percent (10%) PRC
tax on any dividends paid to our investors that are non-resident enterprises. Our investors that are non-resident enterprises also may
be responsible for paying PRC tax at a rate of ten percent (10%) on any gain realized from the sale or transfer of our common shares in
certain circumstances. We would not, however, have an obligation to withhold PRC tax with respect to such gain.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify; text-indent: 36pt">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0pt; text-indent: 0.5in; text-align: justify">Moreover, the State Administration
of Taxation issued the <i>Notice on Strengthening the Administration of Enterprise Income Tax on Share Transfer Income of Non-Resident
Enterprises No. 698</i> (&#8220;Circular 698&#8221;) on December 10, 2009, which reinforces taxation on transfer of non-listed shares by
non-resident enterprises through overseas holding vehicles. Circular 698 applies retroactively and was deemed to be effective as of January
2008. Pursuant to Circular 698, where (i) a foreign investor who indirectly holds equity interest in a PRC resident enterprise through
an offshore holding company indirectly transfers equity interests in a PRC resident enterprise by selling the shares of the offshore holding
company, and (ii) the offshore holding company is located in a jurisdiction where the effective tax rate is lower than twelve and a half
percent (12.5%) or where the offshore income of its residents is not taxable, the foreign investor is required to provide the tax authority
in charge of that PRC resident enterprise with certain relevant information within thirty (30) days of the transfer. The tax authorities
in charge will evaluate the offshore transaction for tax purposes. In the event that the tax authorities determine that such transfer
is abusing forms of business organization and there is no reasonable commercial purpose other than avoidance of PRC enterprise income
tax, the tax authorities will have the power to conduct a substance-over-form re-assessment of the nature of the equity transfer. A reasonable
commercial purpose may be established when the overall offshore structure is set up to comply with the requirements of supervising authorities
of international capital markets. If the State Administration of Taxation&#8217;s challenge of a transfer is successful, they will deny
the existence of the offshore holding company that is used for tax planning purposes. Since Circular 698 has a brief history, there is
uncertainty as to its application.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify; text-indent: 36pt">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: center"></p><div>

</div><!-- Field: Page; Sequence: 75; Value: 1 --><div>
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    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: center">&#160;</p><div>

</div><div><a id="a_048"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0pt; text-indent: 0.5in; text-align: justify"><b>F. DIVIDENDS AND PAYING
AGENTS.</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0pt; text-indent: 0.5in; text-align: justify">Not applicable.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify">&#160;</p><div>

</div><div><a id="a_049"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0pt; text-indent: 0.5in; text-align: justify"><b>G. STATEMENT BY EXPERTS.</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0pt; text-indent: 0.5in; text-align: justify">None.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify">&#160;</p><div>

</div><div><a id="a_050"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0pt; text-indent: 0.5in; text-align: justify"><b>H. DOCUMENTS ON DISPLAY.</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify; text-indent: 18pt">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0pt; text-indent: 0.5in; text-align: justify">We are subject to certain of
the information reporting requirements of the Securities and&#160;Exchange Act of 1934, as amended. As a foreign private issuer we are
exempt from the rules and regulations under the&#160;Securities Exchange Act&#160;prescribing the furnishing and content of proxy statements,
and our officers, directors and principal shareholders are exempt from the reporting and &#8220;short-swing&#8221; profit recovery provisions
contained in Section 16 of the Securities Exchange Act, with respect to their purchase and sale of our shares. In addition, we are not
required to file reports and financial statements with the SEC as frequently or as promptly as U.S. companies whose securities are registered
under the&#160;Securities Exchange Act. Nasdaq rules generally require that companies send an annual report to shareholders prior to the
annual general meeting, however we rely upon an exception under the Nasdaq rules. Specifically, we file annual reports on Form 20-F, which
contain financial statements audited by an independent accounting firm, electronically with the SEC and post a copy on our website.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify; text-indent: 36pt">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0pt; text-indent: 0.5in; text-align: justify">The SEC maintains a website
that contains reports, proxy and information statements and other information regarding registrants that file electronically with the
SEC, and our SEC reports can be viewed or downloaded there. The address of this web site is http://www.sec.gov. In addition, information
that we furnish or file with the SEC, including annual reports on Form 20-F, current reports on Form 6-K, proxy and information statements
and any amendments to, or exhibits included in, those reports are available to be viewed or download, free of charge, on our website at
www.jiuzhou360.com as soon as reasonably practicable after such materials are filed or furnished with the SEC. Information contained,
or that can be accessed through, our website does not constitute a part of this annual report and is not incorporated by reference herein,
and we have included our website address in this annual report solely for informational purposes.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify">&#160;</p><div>

</div><div><a id="a_051"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0pt; text-indent: 0.5in; text-align: justify"><b>I. SUBSIDIARY INFORMATION</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0pt; text-indent: 0.5in; text-align: justify">For a listing of our subsidiaries,
see &#8220;Item 4. Information on the Company &#8211; C. Organizational Structure.&#8221;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify">&#160;</p><div>

</div><div><a id="a_052"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><b>ITEM&#160;11. QUANTITATIVE AND QUALITATIVE
DISCLOSURES ABOUT MARKET RISK.</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><b>Exchange Rate Risk</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0pt; text-indent: 0.5in; text-align: justify">While our reporting currency
is the U.S. dollar, the majority of our revenues and costs are denominated in RMB and a significant portion of our assets and liabilities
are denominated in RMB. As a result, we are exposed to foreign exchange risk because our revenues and results of operations may be affected
by fluctuations in the exchange rate between the U.S. dollar and the RMB. To the extent that the Company needs to convert the U.S. dollar
into RMB for capital expenditures and working capital and other business purposes, appreciation of RMB against the U.S. dollar would have
an adverse effect on the RMB amount the Company would receive from the conversion. Conversely, if the Company decides to convert RMB into
the U.S. dollar for the purpose of making payments for dividends on ordinary shares, strategic acquisitions or investments or other business
purposes, appreciation of the U.S. dollar against RMB would have a negative effect on the U.S. dollar amount available to the Company.
In addition, a significant depreciation of the RMB against the U.S. dollar may significantly reduce the U.S. dollar equivalent of the
Company&#8217;s earnings or losses. Since 2005, China reformed its exchange rate regime and the RMB is no longer pegged to the U.S. dollar.
In 2010, the People&#8217;s Bank of China decided to move to further reform the RMB exchange rate regime to enhance the flexibility of
the RMB exchange rate. For RMB against U.S. dollar, there was depreciation of approximately&#160;5.2%&#160;and&#160;appreciation of approximately
6.8%&#160;during the years ended March 31, 2022 and 2023, respectively. It is difficult to predict how market forces or PRC or U.S. government
policy may impact the exchange rate between the RMB and the U.S. dollar in the future, but the RMB may appreciate or depreciate more significantly
in value against the U.S. dollar or other foreign currencies, depending on the market supply and demand with reference to a basket of
currencies.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: center"></p><div>

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    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: center">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0pt; text-indent: 0.5in; text-align: justify">While the Chinese RMB is freely
convertible under the current account, it remains strictly regulated in the capital account. Chinese authorities have expressed their
willingness to allow the RMB to be fully convertible in the near future.&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0pt; text-indent: 0.5in; text-align: justify">To date, we have not entered
into any hedging transactions in an effort to reduce our exposure to foreign currency exchange risk. While we may decide to enter into
hedging transactions in the future, the effectiveness of these hedges may be limited and we may not be able to successfully hedge our
exposure. Accordingly, we may incur economic losses in the future due to foreign exchange rate fluctuations, which could have a negative
impact on our financial condition and results of operations.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><b>Interest Rate Risk</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0pt; text-indent: 0.5in; text-align: justify">We had cash, cash equivalents,
restricted cash and certificate of deposit totaling $31.57 million and notes receivable of $0.02 million as of March 31, 2023. Cash and
cash equivalents are held for working capital purposes. We do not enter into investments for trading or speculative purposes. As of March
31, 2023, we had $0 million of short-term bank loans and $0 million of long-term loans outstanding. Our exposure to interest rate risk
primarily relates to the interest income generated from cash held in bank deposits and notes receivable, and interest expenses generated
from short-term bank loans. We believe that we do not have any material exposure to changes in fair value as a result of changes in interest
rates due to the short term nature of our cash equivalents. We have not been exposed nor do we anticipate being exposed to material risks
due to changes in interest rates.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><b>Inflation Rate Risk</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0pt; text-indent: 0.5in; text-align: justify">According to the Consumer Price
Index (CPI) released by National Bureau of Statistics of China, in 2022, the average annual inflation rate in China ranged at around 2
percent compared to the previous year. Projections by the IMF published in April 2021 expect the average annual inflation rate to reach
about 2.1 percent in the year of 2023. In March 2023, the monthly inflation rate in China ranged at 0.7 percent compared to the same month
in the previous year, up from 1.5 percent in the previous month.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><b>Economic and Political Risks</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0pt; text-indent: 0.5in; text-align: justify">Our operations in China are
subject to special considerations and significant risks not typically associated with companies in North America and Western Europe. These
include risks associated with, among others, the political, economic and legal environment in China and foreign currency exchange. Our
performance may be adversely affected by changes in the political and social conditions in China, and by changes in governmental policies
with respect to laws and regulations, anti-inflationary measures, currency conversion, remittances abroad, and rates and methods of taxation,
among other things.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><b>Credit Risk</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0pt; text-indent: 0.5in; text-align: justify">Credit risk is one of the most
significant risks for the Company&#8217;s business.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: center"></p><div>

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    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: center">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0pt; text-indent: 0.5in; text-align: justify">Financial instruments that
potentially subject the Company to significant concentrations of credit risk consist primarily of cash and accounts receivable. Cash held
at major financial institutions located in the PRC are not insured by the government. While we believe that these financial institutions
are of high credit quality, it also continually monitors their credit worthiness.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0pt; text-indent: 0.5in; text-align: justify">Accounts receivable are typically
unsecured and derived from revenue earned from customers, thereby exposed to credit risk. Credit risk is controlled by the application
of credit approvals, limits and monitoring procedures. The Company manages credit risk through in-house research and analysis of the Chinese
economy and the underlying obligors and transaction structures. To minimize credit risk, the Company normally require prepayment from
the customers prior to begin production or delivery products. The Company identifies credit risk collectively based on industry, geography
and customer type. This information is monitored regularly by management.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify">&#160;</p><div>

</div><div><a id="a_053"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><b>ITEM&#160;12. DESCRIPTION OF SECURITIES OTHER
THAN EQUITY SECURITIES.</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify; text-indent: 36pt">&#160;</p><div>

</div><div><a id="a_054"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0pt; text-indent: 0.5in; text-align: justify"><b>A. DEBT SECURITIES.</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify; text-indent: 36pt">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0pt; text-indent: 0.5in; text-align: justify">Not applicable.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify; text-indent: 36pt">&#160;</p><div>

</div><div><a id="a_055"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0pt; text-indent: 0.5in; text-align: justify"><b>B. WARRANTS AND RIGHTS.</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify; text-indent: 36pt">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0pt; text-indent: 0.5in; text-align: justify">Not applicable.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify; text-indent: 36pt">&#160;</p><div>

</div><div><a id="a_056"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0pt; text-indent: 0.5in; text-align: justify"><b>C. OTHER SECURITIES.</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify; text-indent: 36pt">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0pt; text-indent: 0.5in; text-align: justify">Not applicable.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify; text-indent: 36pt">&#160;</p><div>

</div><div><a id="a_057"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0pt; text-indent: 0.5in; text-align: justify"><b>D. AMERICAN DEPOSITARY SHARES.</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify; text-indent: 36pt">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0pt; text-indent: 0.5in; text-align: justify">Not applicable.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: center"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: center"><b>&#160;</b></p><div>

</div><div><a id="a_058"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: center"><b>PART II</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify">&#160;</p><div>

</div><div><a id="a_059"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><b>ITEM&#160;13. DEFAULTS, DIVIDEND ARREARAGES
AND DELINQUENCIES.</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0pt; text-indent: 0.5in; text-align: justify">None.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify">&#160;</p><div>

</div><div><a id="a_060"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><b>ITEM&#160;14. MATERIAL MODIFICATIONS TO THE
RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS.</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0pt; text-indent: 0.5in; text-align: justify">Not applicable.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify">&#160;</p><div>

</div><div><a id="a_061"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><b>ITEM&#160;15. CONTROLS AND PROCEDURES.</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><b><i>Disclosure Controls and Procedures</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0pt; text-indent: 0.5in; text-align: justify">We maintain disclosure controls
and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the &#8220;Exchange
Act&#8221;)), that are designed to ensure that information required to be disclosed in our Exchange Act reports is recorded, processed,
summarized and reported within the time periods specified in the SEC&#8217;s rules and forms, and that such information is accumulated
and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely
decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognizes that
any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired
control objectives, and management necessarily is required to apply its judgment in evaluating the cost-benefit relationship of possible
controls and procedures.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify; text-indent: 36pt">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify; text-indent: 36pt">As of March 31, 2023, the end
of the fiscal year covered by this report, our management, under the supervision and with the participation of our Chief Executive Officer
and Chief Financial Officer, performed an evaluation of the effectiveness of our disclosure controls and procedures.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify; text-indent: 36pt">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify; text-indent: 36pt">Based on the evaluation, our
Chief Executive Officer and Chief Financial Officer concluded that, as of March 31, 2023, our disclosure controls and procedures were
ineffective. They reached this conclusion due to the presence of material weaknesses in internal controls over financial reporting as
described below. Management anticipates that our disclosure controls and procedures will remain ineffective until such material weaknesses
are remediated.&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><b><i>Management&#8217;s Report on Internal Control
over Financial Reporting</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0pt; text-indent: 0.5in; text-align: justify">We assessed the effectiveness
of the Company&#8217;s internal control over financial reporting as of March 31, 2023. In making this assessment, we used the criteria
set forth by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (COSO) in the Internal Control-Integrated
Framework. We are responsible for establishing and maintaining adequate internal control over financial reporting. Based on our evaluation,
management concluded that our internal control over financial reporting was ineffective as of March 31, 2023 due to the following material
weaknesses:&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify; text-indent: 36pt">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify"><i>Accounting and Finance Personnel Weaknesses</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0pt; text-indent: 0.5in; text-align: justify">Management concluded that in
light of the inexperience of our accounting staff with respect to the requirements of U.S. GAAP-based reporting and SEC rules and regulations,
we did not maintain effective controls and did not implement adequate and proper supervisory review to ensure that significant internal
control deficiencies can be detected or prevented.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify; text-indent: 36pt">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; margin-left: 0; text-align: justify; text-indent: 36pt"></p><div>

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    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Management&#8217;s
assessment of the control deficiency over accounting and finance personnel as of March 31, 2023 considered the same factors, including:</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; width: 48px; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; width: 24px; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">the
    number of adjustments proposed by our independent auditors during our quarterly review and annual audit processes;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">how
    adequately we complied with U.S. GAAP on transactions; and</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">how
    accurately we prepared supporting information to provide to our independent auditors on a quarterly and annual basis.</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Based on the above factors,
management concluded that the lack of timely reconciliation of booking and recording from China GAAP to US GAAP, lack of accounting staff
with sufficient US GAAP experience, and lack of timely reconciliation of revenue and accounts receivable collectability are material weaknesses
as of March 31, 2023.</p><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i>Remediation
of Material Weakness for the year ended March 31, 2023</i></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Subsequent to the identification
of the material weakness, we have enhanced existing controls and design and implemented new controls. We have devoted significant time
and attention to remediate the above material weaknesses. For example, we redesigned our system to retrieve data faster, so we are able
to identify and reconcile the GAAP difference more efficiently. In addition, we trained our accounting staff with US GAAP knowledge, so
they can meet the requirement from our auditors more efficiently. Additionally, we plan to more closely monitor the collection of our
accounts receivables. We will check more often about the collectability of their receivables. If we determine that the accounts are uncollectible,
we will quickly seek the potential recovery and recognize any potential loss soon. These improvements to our internal control infrastructure
were implemented, and were in place in connection with the preparation of our financial statements for the year ended March 31, 2023.
As such, we believe that the remediation initiative outlined above will be sufficient to remediate as the changes become operational for
future years the material weakness in internal control over financial reporting as discussed.</p><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Changes
in Internal Control over Financial Reporting</i></b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
the year ended March 31, 2023, we linked our SAP system, a leading ERP system from Germany that was installed in 2017 with a series of
local banks, so it can provide a view of overall and instant cash information. In addition, we hired specialized managers who are able
to program and develop improved procedure in the system. Furthermore, we have been training our staff in implementing the management
system continually. We expect to continually improve our internal control system. There have been no other changes in our internal controls
over financial reporting identified in connection with the evaluation required by paragraph (d) of Exchange Act Rule 13a-15 or Rule 15d-15
that occurred during the year ended March 31, 2023, that have materially affected, or are reasonably likely to materially affect, our
internal control over financial reporting.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Limitations
on Controls</i></b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Management
does not expect that our disclosure controls and procedures or internal control over financial reporting will prevent or detect all errors
and fraud. Any control system, no matter how well designed and operated, is based upon certain assumptions and can provide only reasonable,
not absolute, assurance that its objectives will be met. Further, no evaluation of controls can provide absolute assurance that misstatements
due to error or fraud will not occur or that all control issues and instances of fraud, if any, within the Company have been detected.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><p style="margin: 0"></p><div>

</div><div><a id="a_077"></a></div><p style="text-transform: uppercase; font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>Item 16.&#160;[Reserved]</b></p><div>
</div><p style="margin: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;&#160;</span></p><div>

</div><div><a id="a_062"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>ITEM&#160;16A.
AUDIT COMMITTEE FINANCIAL EXPERT.</b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
Board of Directors has determined, based on information furnished by Ms. Caroline Wang and other available information, that she meets
the requirements of an &#8220;audit committee financial expert&#8221; as that term is defined in the rules promulgated under the Securities
Act and the Exchange Act, and has accordingly designated her as such. Our Board of Directors has also appointed her chairperson of the
committee.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><div><a id="a_063"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>ITEM&#160;16B.
CODE OF ETHICS.</b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Company&#8217;s Code of Ethics, which applies to all officers, directors and employees, was adopted by the Board on March 15, 2010. The
Code of Ethics was filed as Exhibit 14 to the Company&#8217;s Current Report on <span style="text-decoration:underline">Form 8-K</span> filed with the SEC on March 23, 2010,
a copy of which is available on our website at http://www.jiuzhou360.com under the tabs &#8220;Investor&#8221;&#8211;&#8220;Corporate Governance&#8221;&#8211;&#8220;Documents&#8221;.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"></p><div>

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    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><p style="text-align: center; margin-top: 0pt; margin-bottom: 0pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->75<!-- Field: /Sequence --></p></div><div>
    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p><div>

</div><div><a id="a_064"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>ITEM&#160;16C.
PRINCIPAL ACCOUNTANT FEES AND SERVICES.</b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
current principal independent auditor is YCM CPA Inc. (&#8220;YCM&#8221;) whom we engaged on May 31, 2022. The following table shows the
fees for audit and other services provided by YCM in relation to our 2023 and 2022 fiscal years:</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
  <tr style="vertical-align: bottom">
    <td style="text-align: center">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td colspan="6" style="text-align: center; border-bottom: Black 1.5pt solid">For the Fiscal Years ended <br/>March 31,</td><td style="padding-bottom: 1.5pt">&#160;</td></tr>
  <tr style="vertical-align: bottom">
    <td style="text-align: center">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" style="text-align: center; border-bottom: Black 1.5pt solid">2023</td><td style="padding-bottom: 1.5pt">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" style="text-align: center; border-bottom: Black 1.5pt solid">2022</td><td style="padding-bottom: 1.5pt">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="width: 76%; text-align: left">Audit Fees (1)</td><td style="width: 1%">&#160;</td>
    <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">180,000</td><td style="width: 1%; text-align: left">&#160;</td><td style="width: 1%">&#160;</td>
    <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">175,000</td><td style="width: 1%; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="text-align: left">Audit-Related Fees (2)</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">-</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">-</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left">Tax Fees (3)</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">-</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">-</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="text-align: left; padding-bottom: 1.5pt">All Other Fees (4)</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">40,721</td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">-</td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-bottom: 4pt">Total</td><td style="padding-bottom: 4pt">&#160;</td>
    <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">220,721</td><td style="padding-bottom: 4pt; text-align: left">&#160;</td><td style="padding-bottom: 4pt">&#160;</td>
    <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">175,000</td><td style="padding-bottom: 4pt; text-align: left">&#160;</td></tr>
  </table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span>&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; width: 24px; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(1)</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Audit
Fees: This category includes the audit of our annual financial statements, review of financial statements included in our interim semi-annual
report on Form 6-K, and services that are normally provided by independent auditors in connection with statutory and regulatory filings
or the engagement for fiscal years. This category also includes advice on audit and accounting matters that arose during, or as a result
of, the audit or the review of interim financial statements.</span></td></tr>
</table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0"></p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify; width: 24px"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(2)</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Audit-Related
    Fees: This category consists of assurance and related services by our independent auditors that are reasonably related to the performance
    of the audit or review of our financial statements and are not reported above under &#8220;Audit Fees.&#8221;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(3)</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Tax
    Fees: This category consists of professional services rendered by our independent auditors for tax compliance and tax advice. The
    services for the fees disclosed under this category include tax return preparation and technical tax advice.</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(4)</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">All
    Other Fees: This category consists of fees for other miscellaneous items.</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Pre-Approval
Policies and Procedures of the Audit Committee</b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Audit Committee approves the engagement of our independent auditors and is also required to pre-approve all audit and non-audit expenses.
Prior to engaging its accountants to perform particular services, the Audit Committee obtains an estimate for the service to be performed.
All of the services described above were approved by the Audit Committee in accordance with its procedure.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><div><a id="a_065"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>ITEM&#160;16D.
EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES.</b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Not
applicable.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"></p><div>

</div><!-- Field: Page; Sequence: 81; Value: 1 --><div>
    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><p style="text-align: center; margin-top: 0pt; margin-bottom: 0pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->76<!-- Field: /Sequence --></p></div><div>
    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><div><a id="a_066"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>ITEM&#160;16E.
PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS.</b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Not
applicable.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><div><a id="a_067"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>ITEM&#160;16F.
CHANGE IN REGISTRANT&#8217;S CERTIFYING ACCOUNTANT.</b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Not
applicable.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><div><a id="a_068"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>ITEM&#160;16G.
CORPORATE GOVERNANCE.</b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our ordinary shares are listed
on Nasdaq. In order to list on Nasdaq, we are required to comply with certain of the Nasdaq Rules. As a foreign private issuer, we may
follow our home country&#8217;s corporate governance practices in lieu of certain of the Nasdaq Rules. Nevertheless, there are no significant
ways in which our corporate governance practices differ from those followed by domestic companies under the listing standards of Nasdaq
other than disclosed below.</p><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">NASDAQ
Listing Rule 5620(a) requires each issuer to hold an annual meeting of shareholders no later than one year after the end of the issuer&#8217;s
fiscal year end. However, NASDAQ Listing Rule 5615(a)(3) permits a foreign private issuer like us to follow home country practices in
lieu of certain requirements of Listing Rule 5600, provided that such foreign private issuer discloses in its annual report filed with
the SEC each requirement of Rule 5600 that it does not follow and describes the home country practice followed in lieu of such requirement.
We follow home country practice with respect to annual meetings and may forgo annual shareholder meetings from time to time.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">NASDAQ
Listing Rule 5635 generally provides that shareholder approval is required of U.S. domestic companies listed on the NASDAQ Capital
Market prior to issuance (or potential issuance) of securities (i) equaling 20% or more of the company&#8217;s ordinary shares or
voting power for less than the greater of market or book value (ii) resulting in a change of control of the company; and (iii) which
is being issued pursuant to a stock option or purchase plan to be established or materially amended or other equity compensation
arrangement made or materially amended. Notwithstanding this general requirement, NASDAQ Listing Rule 5615(a)(3)(A) permits foreign
private issuers to follow their home country practice rather than these shareholder approval requirements. The Cayman Islands do not
require shareholder approval prior to any of the foregoing types of issuances. The Company, therefore, is not required to obtain
such shareholder approval prior to entering into a transaction with the potential to issue securities as described above. The Board
of Directors of the Company has elected to follow the Company&#8217;s home country rules as to such issuances and will not be
required to seek shareholder approval prior to entering into such a transaction.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><div><a id="a_069"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>ITEM
16H. MINE SAFETY DISCLOSURE.</b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Not
applicable.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><div><a id="a_070"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>ITEM
16I. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS.</b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Not
applicable.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></p><div>

</div><!-- Field: Page; Sequence: 82; Value: 1 --><div>
    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><p style="text-align: center; margin-top: 0pt; margin-bottom: 0pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->77<!-- Field: /Sequence --></p></div><div>
    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><div><a id="a_076"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>ITEM 16J. INSIDER TRADING POLICIES.</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">We have considered and adopted several insider
trading policies under the Company&#8217;s Code of Ethics.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The following procedure is an excerpt to the requirements
to the confidentiality of the material non-public information and shall be followed by the Company&#8217;s employees, officers and directors:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&#8220;Employees, officers, and directors who have
access to confidential information are not permitted to use or share that information for stock trading purposes or for any other purpose
except the conduct of our business.&#8221;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#8220;Employees should take
all appropriate measures to avoid inadvertent disclosure of confidential information. Materials that contain or might contain confidential
information such as presentations, memoranda, working papers, data storage devices or disks, and laptop computers should be stored and
maintained in a secure location. Unauthorized release or posting of information concerning our business via internet is prohibited, including
discussions (anonymous or not) about the Company&#8217;s business in &#8220;web logs&#8221; (also known as &#8220;blogs&#8221;) and &#8220;chat
rooms.&#8221; All Company-related correspondence, e-mail, voicemail, and electronic communications are presumed to be confidential and
should not be disseminated outside of the Company, except for legitimate business purposes.&#8221;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The following procedure is an excerpt to the requirements
to the communications with third parties that are related to insider trading:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&#8220;INSIDER TRADING; COMMUNICATIONS WITH THIRD
PARTIES</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Employees, officers, and directors who have access
to confidential information are not permitted to use or share that information for stock trading purposes or for any other purpose except
the conduct of our business.&#8221;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><i>Insider Trading</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#8220;Inside information
is material information about a publicly traded company that is not known by the public. Information is deemed &#8220;material&#8221;
if it could affect the market price of a security or if a reasonable investor would attach importance to the information in deciding whether
to buy, sell, or hold a security. Inside information typically relates to financial conditions, such as progress toward achieving revenue
and earnings targets or projections of future earnings or losses of the Company. Inside information also includes changes in strategy
regarding a proposed merger, acquisition or tender offer, new products or services, contract awards, and other similar information. Inside
information is not limited to information about the Company. It also includes material non-public information about others, including
the Company&#8217;s customers, suppliers, and competitors.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Insider trading is prohibited
by law. It occurs when an individual with material, non-public information trades securities or communicates such information to others
who trade. The person who trades or &#8220;tips&#8221; information violates the law if he or she has a duty or relationship of trust and
confidence not to use the information.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Trading or helping others
trade while aware of inside information has serious legal consequences, even if the insider does not receive any personal financial benefit.
Insiders may also have an obligation to take appropriate steps to prevent insider trading by others.&#8221;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"></p><div>

</div><!-- Field: Page; Sequence: 83; Value: 1 --><div>
    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><p style="text-align: center; margin-top: 0pt; margin-bottom: 0pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->78<!-- Field: /Sequence --></p></div><div>
    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p><div>

</div><div><a id="a_071"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>PART
III</b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><div><a id="a_072"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>ITEM&#160;17.
FINANCIAL STATEMENTS.</b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
have elected to provide financial statements and related information specified in Item 18.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><div><a id="a_073"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>ITEM&#160;18.
FINANCIAL STATEMENTS.</b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">See
&#8220;Index to Consolidated Financial Statements&#8221; for a list of all financial statements filed as part of this annual report.&#160;The
Financial Statements begin on page F-1.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><div><a id="a_074"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>ITEM&#160;19.
EXHIBITS.</b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">See
the Exhibit Index following the signature page of this report, which is incorporated herein by reference.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"></p><div>

</div><!-- Field: Page; Sequence: 84; Value: 1 --><div>
    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><p style="text-align: center; margin-top: 0pt; margin-bottom: 0pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->79<!-- Field: /Sequence --></p></div><div>
    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>SIGNATURES</b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
registrant hereby certifies that it meets all of the requirements for filing on Form&#160;20-F and that it has duly caused and authorized
the undersigned to sign this annual report on its behalf.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td colspan="2" style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>CHINA
    JO-JO DRUGSTORES, INC.</b></span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td colspan="2" style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; width: 60%"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; width: 4%"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">By:</span></td>
    <td style="border-bottom: black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; width: 36%"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">/s/
    Lei Liu</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Lei
    Liu</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Chief
                                            Executive Officer</span></p>
    <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(Principal
    Executive Officer)</span></p></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">June
15, 2023</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"></p><div>

</div><!-- Field: Page; Sequence: 85; Value: 1 --><div>
    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><p style="text-align: center; margin-top: 0pt; margin-bottom: 0pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->80<!-- Field: /Sequence --></p></div><div>
    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>INDEX</b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
following documents are filed as part of this annual report on Form 20-F.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr>
    <td style="border-bottom: black 1.5pt solid; text-align: left; vertical-align: bottom; width: 8%"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Exhibit</p>
    <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Number</p></td>
    <td style="vertical-align: top; width: 1%; text-align: justify">&#160;</td>
    <td style="border-bottom: black 1.5pt solid; text-align: justify; vertical-align: bottom; width: 91%"><span style="font-size: 10pt">Description</span></td></tr>
  <tr style="background-color: rgb(204,238,255)">
    <td style="text-align: left; vertical-align: top"><span style="font-size: 10pt">1.1</span></td>
    <td style="vertical-align: top; text-align: justify">&#160;</td>
    <td style="vertical-align: bottom; text-align: justify"><span style="font-size: 10pt"><a href="http://www.sec.gov/Archives/edgar/data/1856084/000121390022010113/ea156304ex99-2_chinajojo.htm">The Second Amended and Restated Memorandum and Articles of Association (24)</a></span></td></tr>
  <tr style="vertical-align: top; ">
    <td style="text-align: left; vertical-align: top"><span style="font-size: 10pt">2</span>.1</td>
    <td style="text-align: justify">&#160;</td>
    <td style="vertical-align: bottom; text-align: justify"><span style="font-size: 10pt"><a href="http://www.sec.gov/Archives/edgar/data/1413263/000114420409049673/v160849_ex2-1.htm">Share Exchange Agreement among Kerrisdale Mining Corporation, certain of its stockholders, Renovation Investment (Hong Kong) Co., Ltd. and its shareholders dated September 17, 2009 (3)</a></span></td></tr>

<tr style="background-color: rgb(204,238,255)">
    <td style="vertical-align: top; font-size: 10pt"><span style="font-size: 10pt">2.2</span></td>
    <td style="vertical-align: top; font-size: 10pt; text-align: justify">&#160;</td>
    <td style="vertical-align: bottom; font-size: 10pt; text-align: justify"><span style="font-size: 10pt"><a href="f20f2023ex2-2_chinajojo.htm">Description of Securities*</a></span></td></tr>

<tr style="vertical-align: top; ">
    <td style="text-align: left; vertical-align: top; width: 8%"><span style="font-size: 10pt">4.1</span></td>
    <td style="text-align: justify; width: 1%">&#160;</td>
    <td style="vertical-align: bottom; text-align: justify; width: 91%"><a href="http://www.sec.gov/Archives/edgar/data/1413263/000113705007000236/exh41.htm"><span style="font-size: 10pt">Specimen of Ordinary shares Certificate (1)</span></a></td></tr>
  <tr style="vertical-align: top; background-color: rgb(204,238,255)">
    <td style="text-align: left; vertical-align: top"><span style="font-size: 10pt">4.2</span></td>
    <td style="text-align: justify">&#160;</td>
    <td style="vertical-align: bottom; text-align: justify"><a href="http://www.sec.gov/Archives/edgar/data/1413263/000121390020001478/def14a0120_chinajojodrugs.htm"><span style="font-size: 10pt">Amended and Restated 2010 Equity Incentive Plan (20)</span></a></td></tr>
  <tr style="vertical-align: top; ">
    <td style="text-align: left; vertical-align: top"><span style="font-size: 10pt">4.3</span></td>
    <td style="text-align: justify">&#160;</td>
    <td style="vertical-align: bottom; text-align: justify"><a href="http://www.sec.gov/Archives/edgar/data/1413263/000121390015005307/f8k072015ex4i_chinajojo.htm"><span style="font-size: 10pt">Form of Warrant to the investors in July 2015 (17)</span></a></td></tr>
  <tr style="vertical-align: top; background-color: rgb(204,238,255)">
    <td style="text-align: left; vertical-align: top"><span style="font-size: 10pt">4.4</span></td>
    <td style="text-align: justify">&#160;</td>
    <td style="vertical-align: bottom; text-align: justify"><a href="http://www.sec.gov/Archives/edgar/data/1413263/000121390019006208/f8k041119ex4-1_chinajojo.htm"><span style="font-size: 10pt">Form of Warrant to the investors in April 2019 (14)</span></a></td></tr>
  <tr style="vertical-align: top; ">
    <td style="text-align: left; vertical-align: top"><span style="font-size: 10pt">4.5</span></td>
    <td style="text-align: justify">&#160;</td>
    <td style="vertical-align: bottom; text-align: justify"><span style="font-size: 10pt"><a href="http://www.sec.gov/Archives/edgar/data/1413263/000121390020013867/ea122567ex4-1_chinajojo.htm">Form of Warrant to the investors in June 2020 (8)</a></span></td></tr>
  <tr style="vertical-align: top; background-color: rgb(204,238,255)">
    <td style="text-align: left; vertical-align: top"><span style="font-size: 10pt">4.6</span></td>
    <td style="text-align: justify">&#160;</td>
    <td style="vertical-align: bottom; text-align: justify"><span style="font-size: 10pt"><a href="https://www.sec.gov/Archives/edgar/data/1413263/000121390020013867/ea122567ex4-2_chinajojo.htm">Form of Warrant to the placement agent in June 2020 (8)</a></span></td></tr>
  <tr style="vertical-align: top; ">
    <td style="text-align: left; vertical-align: top"><p style="margin: 0pt 0; font: 10pt Times New Roman, Times, Serif">8.1</p></td>
    <td style="text-align: justify">&#160;</td>
    <td style="vertical-align: bottom; text-align: justify"><a href="f20f2023ex8-1_chinajojo.htm">List of Subsidiaries*</a></td></tr>
  <tr style="vertical-align: top; background-color: rgb(204,238,255)">
    <td style="text-align: left; vertical-align: top"><span style="font-size: 10pt">10.1</span></td>
    <td style="text-align: justify">&#160;</td>
    <td style="vertical-align: bottom; text-align: justify"><span style="font-size: 10pt"><a href="http://www.sec.gov/Archives/edgar/data/1413263/000114420409049673/v160849_ex99-5.htm">Consulting Services Agreement between Zhejiang Jiuxin Investment Management Co., Ltd. (&#8220;Jiuxin Management&#8221;) and Hangzhou Jiuzhou Grand Pharmacy Chain Co., Ltd. (&#8220;Jiuzhou Pharmacy&#8221;) dated August 1, 2009 (3)</a></span></td></tr>
  <tr style="vertical-align: top; ">
    <td style="text-align: left; vertical-align: top"><span style="font-size: 10pt">10.2</span></td>
    <td style="text-align: justify">&#160;</td>
    <td style="vertical-align: bottom; text-align: justify"><span style="font-size: 10pt"><a href="http://www.sec.gov/Archives/edgar/data/1413263/000114420409049673/v160849_ex99-6.htm">Operating Agreement among Jiuxin Management, Jiuzhou Pharmacy and its owners dated August 1, 2009 (3</a>)</span></td></tr>
  <tr style="vertical-align: top; background-color: rgb(204,238,255)">
    <td style="text-align: left; vertical-align: top"><span style="font-size: 10pt">10.3</span></td>
    <td style="text-align: justify">&#160;</td>
    <td style="vertical-align: bottom; text-align: justify"><span style="font-size: 10pt"><a href="http://www.sec.gov/Archives/edgar/data/1413263/000114420409049673/v160849_ex99-7.htm">Equity Pledge Agreement among Jiuxin Management, Jiuzhou Pharmacy and its owners dated August 1, 2009 (3)</a></span></td></tr>
  <tr style="vertical-align: top; ">
    <td style="text-align: left; vertical-align: top"><span style="font-size: 10pt">10.4</span></td>
    <td style="text-align: justify">&#160;</td>
    <td style="vertical-align: bottom; text-align: justify"><span style="font-size: 10pt"><a href="http://www.sec.gov/Archives/edgar/data/1413263/000114420409049673/v160849_ex99-8.htm">Option Agreement among Jiuxin Management, Jiuzhou Pharmacy and its owners dated August 1, 2009 (3)</a></span></td></tr>
  <tr style="vertical-align: top; background-color: rgb(204,238,255)">
    <td style="text-align: left; vertical-align: top"><span style="font-size: 10pt">10.5</span></td>
    <td style="text-align: justify">&#160;</td>
    <td style="vertical-align: bottom; text-align: justify"><span style="font-size: 10pt"><a href="http://www.sec.gov/Archives/edgar/data/1413263/000114420409049673/v160849_ex99-9.htm">Voting Rights Proxy Agreement among Jiuxin Management, Jiuzhou Pharmacy and its owners dated August 1, 2009 (3)</a></span></td></tr>
  <tr style="vertical-align: top; ">
    <td style="text-align: left; vertical-align: top"><span style="font-size: 10pt">10.6</span></td>
    <td style="text-align: justify">&#160;</td>
    <td style="vertical-align: bottom; text-align: justify"><span style="font-size: 10pt"><a href="http://www.sec.gov/Archives/edgar/data/1413263/000114420409049673/v160849_ex99-10.htm">Consulting Services Agreement between Jiuxin Management and Hangzhou Jiuzhou Clinic of Integrated Traditional and Western Medicine (General Partnership) (&#8220;Jiuzhou Clinic&#8221;) dated August 1, 2009 (3)</a></span></td></tr>
  <tr style="vertical-align: top; background-color: rgb(204,238,255)">
    <td style="text-align: left; vertical-align: top"><span style="font-size: 10pt">10.7</span></td>
    <td style="text-align: justify">&#160;</td>
    <td style="vertical-align: bottom; text-align: justify"><span style="font-size: 10pt"><a href="http://www.sec.gov/Archives/edgar/data/1413263/000114420409049673/v160849_ex99-11.htm">Operating Agreement among Jiuxin Management, Jiuzhou Clinic and its owners dated August 1, 2009 (3)</a></span></td></tr>
  <tr style="vertical-align: top; ">
    <td style="text-align: left; vertical-align: top"><span style="font-size: 10pt">10.8</span></td>
    <td style="text-align: justify">&#160;</td>
    <td style="vertical-align: bottom; text-align: justify"><span style="font-size: 10pt"><a href="http://www.sec.gov/Archives/edgar/data/1413263/000114420409049673/v160849_ex99-12.htm">Equity Pledge Agreement among Jiuxin Management, Jiuzhou Clinic and its owners dated August 1, 2009 (3)</a></span></td></tr>
  <tr style="vertical-align: top; background-color: rgb(204,238,255)">
    <td style="text-align: left; vertical-align: top"><span style="font-size: 10pt">10.9</span></td>
    <td style="text-align: justify">&#160;</td>
    <td style="vertical-align: bottom; text-align: justify"><span style="font-size: 10pt"><a href="http://www.sec.gov/Archives/edgar/data/1413263/000114420409049673/v160849_ex99-13.htm">Option Agreement among Jiuxin Management, Jiuzhou Clinic and its owners dated August 1, 2009 (3)</a></span></td></tr>
  <tr style="vertical-align: top; ">
    <td style="text-align: left; vertical-align: top"><span style="font-size: 10pt">10.10</span></td>
    <td style="text-align: justify">&#160;</td>
    <td style="vertical-align: bottom; text-align: justify"><span style="font-size: 10pt"><a href="http://www.sec.gov/Archives/edgar/data/1413263/000114420409049673/v160849_ex99-14.htm">Voting Rights Proxy Agreement among Jiuxin Management, Jiuzhou Clinic and its owners dated August 1, 2009 (3)</a></span></td></tr>
  <tr style="vertical-align: top; background-color: rgb(204,238,255)">
    <td style="text-align: left; vertical-align: top"><span style="font-size: 10pt">10.11</span></td>
    <td style="text-align: justify">&#160;</td>
    <td style="vertical-align: bottom; text-align: justify"><span style="font-size: 10pt"><a href="http://www.sec.gov/Archives/edgar/data/1413263/000114420409049673/v160849_ex99-5.htm">Consulting Services Agreement between Jiuxin Management and Hangzhou Jiuzhou Medical &amp; Public Health Service Co., Ltd. (&#8220;Jiuzhou Service&#8221;) dated August 1, 2009 (3)</a></span></td></tr>
  <tr style="vertical-align: top; ">
    <td style="text-align: left; vertical-align: top"><span style="font-size: 10pt">10.12</span></td>
    <td style="text-align: justify">&#160;</td>
    <td style="vertical-align: bottom; text-align: justify"><span style="font-size: 10pt"><a href="http://www.sec.gov/Archives/edgar/data/1413263/000114420409049673/v160849_ex99-16.htm">Operating Agreement among Jiuxin Management, Jiuzhou Service and its owners dated August 1, 2009 (3)</a></span></td></tr>
  <tr style="vertical-align: top; background-color: rgb(204,238,255)">
    <td style="text-align: left; vertical-align: top"><span style="font-size: 10pt">10.13</span></td>
    <td style="text-align: justify">&#160;</td>
    <td style="vertical-align: bottom; text-align: justify"><span style="font-size: 10pt"><a href="http://www.sec.gov/Archives/edgar/data/1413263/000114420409049673/v160849_ex99-17.htm">Equity Pledge Agreement among Jiuxin Management, Jiuzhou Service and its owners dated August 1, 2009 (3)</a></span></td></tr>
  <tr style="vertical-align: top; ">
    <td style="text-align: left; vertical-align: top"><span style="font-size: 10pt">10.14</span></td>
    <td style="text-align: justify">&#160;</td>
    <td style="vertical-align: bottom; text-align: justify"><span style="font-size: 10pt"><a href="http://www.sec.gov/Archives/edgar/data/1413263/000114420409049673/v160849_ex99-18.htm">Option Agreement among Jiuxin Management, Jiuzhou Service and its owners dated August 1, 2009 (3)</a></span></td></tr>
  <tr style="vertical-align: top; background-color: rgb(204,238,255)">
    <td style="text-align: left; vertical-align: top"><span style="font-size: 10pt">10.15</span></td>
    <td style="text-align: justify">&#160;</td>
    <td style="vertical-align: bottom; text-align: justify"><span style="font-size: 10pt"><a href="http://www.sec.gov/Archives/edgar/data/1413263/000114420409049673/v160849_ex99-19.htm">Voting Rights Proxy Agreement among Jiuxin Management, Jiuzhou Service and its owners dated August 1, 2009 (3)</a></span></td></tr>

<tr style="vertical-align: top; ">
    <td style="text-align: left; vertical-align: top"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">10.16</span></td>
    <td style="text-align: justify">&#160;</td>
    <td style="vertical-align: bottom; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><a href="http://www.sec.gov/Archives/edgar/data/1413263/000114420409055556/v164096_ex99-1.htm">Amendment to Consulting Services Agreement between Jiuxin Management and Jiuzhou Pharmacy dated October 27, 2009 (4)</a></span></td></tr>
  <tr style="vertical-align: top; background-color: rgb(204,238,255)">
    <td style="text-align: left; vertical-align: top"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">10.17</span></td>
    <td style="text-align: justify">&#160;</td>
    <td style="vertical-align: bottom; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><a href="http://www.sec.gov/Archives/edgar/data/1413263/000114420409055556/v164096_ex99-2.htm">Amendment to Operating Agreement between Jiuxin Management and Jiuzhou Pharmacy dated October 27, 2009 (4)</a></span></td></tr>
  <tr style="vertical-align: top; ">
    <td style="text-align: left; vertical-align: top"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">10.18</span></td>
    <td style="text-align: justify">&#160;</td>
    <td style="vertical-align: bottom; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><a href="http://www.sec.gov/Archives/edgar/data/1413263/000114420409055556/v164096_ex99-3.htm">Amendment to Option Agreement between Jiuxin Management and Jiuzhou Pharmacy dated October 27, 2009 (4)</a></span></td></tr>
</table><div>
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</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top; background-color: rgb(204,238,255)">
    <td style="text-align: left; width: 8%; vertical-align: top"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">10.19</span></td>
    <td style="text-align: justify; width: 1%">&#160;</td>
    <td style="vertical-align: bottom; text-align: justify; width: 91%"><a href="https://www.sec.gov/Archives/edgar/data/1413263/000114420409055556/v164096_ex99-4.htm"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Amendment to Voting Rights Proxy Agreement between Jiuxin Management and Jiuzhou Pharmacy dated October 27, 2009 (4)</span></a></td></tr>
  <tr style="vertical-align: top; ">
    <td style="text-align: left; vertical-align: top"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">10.20</span></td>
    <td style="text-align: justify">&#160;</td>
    <td style="vertical-align: bottom; text-align: justify"><a href="https://www.sec.gov/Archives/edgar/data/1413263/000114420409055556/v164096_ex99-5.htm"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Amendment to Consulting Services Agreement between Jiuxin Management and Jiuzhou Clinic dated October 27, 2009 (4)</span></a></td></tr>
  <tr style="vertical-align: top; background-color: rgb(204,238,255)">
    <td style="text-align: left; vertical-align: top"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">10.21</span></td>
    <td style="text-align: justify">&#160;</td>
    <td style="vertical-align: bottom; text-align: justify"><a href="https://www.sec.gov/Archives/edgar/data/1413263/000114420409055556/v164096_ex99-6.htm"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Amendment to Operating Agreement between Jiuxin Management and Jiuzhou Clinic dated October 27, 2009 (4)</span></a></td></tr>
  <tr style="vertical-align: top; ">
    <td style="text-align: left; vertical-align: top"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">10.22</span></td>
    <td style="text-align: justify">&#160;</td>
    <td style="vertical-align: bottom; text-align: justify"><a href="https://www.sec.gov/Archives/edgar/data/1413263/000114420409055556/v164096_ex99-7.htm"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Amendment to Option Agreement between Jiuxin Management and Jiuzhou Clinic dated October 27, 2009 (4)</span></a></td></tr>
  <tr style="vertical-align: top; background-color: rgb(204,238,255)">
    <td style="text-align: left; vertical-align: top"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">10.23</span></td>
    <td style="text-align: justify">&#160;</td>
    <td style="vertical-align: bottom; text-align: justify"><a href="https://www.sec.gov/Archives/edgar/data/1413263/000114420409055556/v164096_ex99-8.htm"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Amendment to Voting Rights Proxy Agreement between Jiuxin Management and Jiuzhou Clinic dated October 27, 2009 (4)</span></a></td></tr>
  <tr style="vertical-align: top; ">
    <td style="text-align: left; vertical-align: top"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">10.24</span></td>
    <td style="text-align: justify">&#160;</td>
    <td style="vertical-align: bottom; text-align: justify"><a href="https://www.sec.gov/Archives/edgar/data/1413263/000114420409055556/v164096_ex99-9.htm"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Amendment to Consulting Services Agreement between Jiuxin Management and Jiuzhou Service dated October 27, 2009 (4)</span></a></td></tr>
  <tr style="vertical-align: top; background-color: rgb(204,238,255)">
    <td style="text-align: left; vertical-align: top"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">10.25</span></td>
    <td style="text-align: justify">&#160;</td>
    <td style="vertical-align: bottom; text-align: justify"><a href="https://www.sec.gov/Archives/edgar/data/1413263/000114420409055556/v164096_ex99-10.htm"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Amendment to Operating Agreement between Jiuxin Management and Jiuzhou Service dated October 27, 2009 (4)</span></a></td></tr>
  <tr style="vertical-align: top; ">
    <td style="text-align: left; vertical-align: top"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">10.26</span></td>
    <td style="text-align: justify">&#160;</td>
    <td style="vertical-align: bottom; text-align: justify"><a href="https://www.sec.gov/Archives/edgar/data/1413263/000114420409055556/v164096_ex99-11.htm"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Amendment to Option Agreement between Jiuxin Management and Jiuzhou Service dated October 27, 2009 (4)</span></a></td></tr>
  <tr style="vertical-align: top; background-color: rgb(204,238,255)">
    <td style="text-align: left; vertical-align: top"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">10.27</span></td>
    <td style="text-align: justify">&#160;</td>
    <td style="vertical-align: bottom; text-align: justify"><a href="https://www.sec.gov/Archives/edgar/data/1413263/000114420409055556/v164096_ex99-12.htm"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Amendment to Voting Rights Proxy Agreement between Jiuxin Management and Jiuzhou Service dated October 27, 2009 (4)</span></a></td></tr>
  <tr style="vertical-align: top; ">
    <td style="text-align: left; vertical-align: top"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">10.28</span></td>
    <td style="text-align: justify">&#160;</td>
    <td style="vertical-align: bottom; text-align: justify"><a href="https://www.sec.gov/Archives/edgar/data/1413263/000115752312002946/a50280908ex10_1.htm"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Consulting Services Agreement between Jiuxin Management and Zhejiang Jiuying Grand Pharmacy Co., Ltd. (&#8220;Jiuying Pharmacy&#8221;) dated May 15, 2012 (10)</span></a></td></tr>
  <tr style="vertical-align: top; background-color: rgb(204,238,255)">
    <td style="text-align: left; vertical-align: top"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">10.29</span></td>
    <td style="text-align: justify">&#160;</td>
    <td style="vertical-align: bottom; text-align: justify"><a href="https://www.sec.gov/Archives/edgar/data/1413263/000115752312002946/a50280908ex10_2.htm"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Operating Agreement between Jiuxin Management and Jiuying Pharmacy dated May 15, 2012 (10)</span></a></td></tr>
  <tr style="vertical-align: top; ">
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    <td style="text-align: justify">&#160;</td>
    <td style="vertical-align: bottom; text-align: justify"><a href="https://www.sec.gov/Archives/edgar/data/1413263/000115752312002946/a50280908ex10_3.htm"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Voting Rights Proxy Agreement between Jiuxin Management and Jiuying Pharmacy dated May 15, 2012 (10)</span></a></td></tr>
  <tr style="vertical-align: top; background-color: rgb(204,238,255)">
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    <td style="text-align: justify">&#160;</td>
    <td style="vertical-align: bottom; text-align: justify"><a href="https://www.sec.gov/Archives/edgar/data/1413263/000115752312002946/a50280908ex10_4.htm"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Equity Pledge Agreement between Jiuxin Management and Jiuying Pharmacy dated May 15, 2012 (10)</span></a></td></tr>
  <tr style="vertical-align: top; ">
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    <td style="text-align: justify">&#160;</td>
    <td style="vertical-align: bottom; text-align: justify"><a href="https://www.sec.gov/Archives/edgar/data/1413263/000115752312002946/a50280908ex10_5.htm"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Option Agreement between Jiuxin Management and Jiuying Pharmacy dated May 15, 2012 (10)</span></a></td></tr>
  <tr style="vertical-align: top; background-color: rgb(204,238,255)">
    <td style="text-align: left; vertical-align: top"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">10.33</span></td>
    <td style="text-align: justify">&#160;</td>
    <td style="vertical-align: bottom; text-align: justify"><a href="https://www.sec.gov/Archives/edgar/data/1413263/000121390017006960/f10k2017ex10xxxiii_chinajojo.htm"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Director Offer Letter with Caroline Wang dated as of March 29, 2017 (21)</span></a></td></tr>
  <tr style="vertical-align: top; ">
    <td style="text-align: left; vertical-align: top"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">10.34</span></td>
    <td style="text-align: justify">&#160;</td>
    <td style="vertical-align: bottom; text-align: justify"><a href="https://www.sec.gov/Archives/edgar/data/1413263/000121390013007173/f8k120913ex99i_chinajo-jo.htm"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Director Offer Letter with Genghua Gu dated December 9, 2013 (13)</span></a></td></tr>
  <tr style="vertical-align: top; background-color: rgb(204,238,255)">
    <td style="text-align: left; vertical-align: top"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">10.35</span></td>
    <td style="text-align: justify">&#160;</td>
    <td style="vertical-align: bottom; text-align: justify"><a href="https://www.sec.gov/Archives/edgar/data/1413263/000121390014008553/f8k111814ex10ii_chinajojo.htm"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Form of the Non-statutory Stock Option Agreement (16)</span></a></td></tr>
  <tr style="vertical-align: top; ">
    <td style="text-align: left; vertical-align: top"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">10.36</span></td>
    <td style="text-align: justify">&#160;</td>
    <td style="vertical-align: bottom; text-align: justify"><a href="https://www.sec.gov/Archives/edgar/data/1413263/000121390015005307/f8k072015ex10i_chinajojo.htm"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Securities Purchase Agreement between the Company and an Investor dated July 19, 2015 (17)</span></a></td></tr>
  <tr style="vertical-align: top; background-color: rgb(204,238,255)">
    <td style="text-align: left; vertical-align: top"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">10.37</span></td>
    <td style="text-align: justify">&#160;</td>
    <td style="vertical-align: bottom; text-align: justify"><a href="https://www.sec.gov/Archives/edgar/data/1413263/000121390015005307/f8k072015ex10ii_chinajojo.htm"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Engagement Letter between the Company and H.C. Wainwright &amp; Co., LLC dated July 19, 2015 (17)</span></a></td></tr>
  <tr style="vertical-align: top; ">
    <td style="text-align: left; vertical-align: top"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">10.38</span></td>
    <td style="text-align: justify">&#160;</td>
    <td style="vertical-align: bottom; text-align: justify"><a href="https://www.sec.gov/Archives/edgar/data/1413263/000121390015009220/f8k112715ex10i_chinajojo.htm"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Form of the Restricted Stock Award Agreement for the issuance on November 27, 2015 (18)</span></a></td></tr>
  <tr style="vertical-align: top; background-color: rgb(204,238,255)">
    <td style="text-align: left; vertical-align: top"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">10.39</span></td>
    <td style="text-align: justify">&#160;</td>
    <td style="vertical-align: bottom; text-align: justify"><a href="https://www.sec.gov/Archives/edgar/data/1413263/000121390017000044/f8k010317ex10i_chinajojo.htm"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Securities Purchase Agreement by and between the Company and CareRetail Holdings Limited dated January 3, 2017 (19)</span></a></td></tr>
  <tr style="vertical-align: top; ">
    <td style="text-align: left; vertical-align: top"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">10.40</span></td>
    <td style="text-align: justify">&#160;</td>
    <td style="vertical-align: bottom; text-align: justify"><a href="https://www.sec.gov/Archives/edgar/data/1413263/000121390017000044/f8k010317ex10ii_chinajojo.htm"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Investor Rights Agreement by and among the Company, Jiuzhou Pharmacy, Mr. Lei Liu, Ms. Li Qi and CareRetail Holdings Limited dated January 3, 2017 (19)</span></a></td></tr>
  <tr style="vertical-align: top; background-color: rgb(204,238,255)">
    <td style="text-align: left; vertical-align: top"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">10.41</span></td>
    <td style="text-align: justify">&#160;</td>
    <td style="vertical-align: bottom; text-align: justify"><a href="https://www.sec.gov/Archives/edgar/data/1413263/000121390018012184/f8k090418ex10-1_chinajojo.htm"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Offer Letter to Mr. Jiangliang He dated September 4, 2018 (22)</span></a></td></tr>
  <tr style="vertical-align: top; ">
    <td style="text-align: left; vertical-align: top"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">10.42</span></td>
    <td style="text-align: justify">&#160;</td>
    <td style="vertical-align: bottom; text-align: justify"><a href="https://www.sec.gov/Archives/edgar/data/1413263/000121390018012184/f8k090418ex10-2_chinajojo.htm"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Offer Letter to Mr. Yan Liu dated September 4, 2018 (22)</span></a></td></tr>
  <tr style="vertical-align: top; background-color: rgb(204,238,255)">
    <td style="text-align: left; vertical-align: top"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">10.41</span></td>
    <td style="text-align: justify">&#160;</td>
    <td style="vertical-align: bottom; text-align: justify"><a href="https://www.sec.gov/Archives/edgar/data/1413263/000121390018014512/f8k102618ex10-1_chinajojo.htm"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Director Offer Letter with Ms. Pingfan Wu, dated October 26, 2018 (15)</span></a></td></tr>
  <tr style="vertical-align: top; ">
    <td style="text-align: left; vertical-align: top"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">10.42</span></td>
    <td style="text-align: justify">&#160;</td>
    <td style="vertical-align: bottom; text-align: justify"><a href="https://www.sec.gov/Archives/edgar/data/1413263/000121390019006208/f8k041119ex10-1_chinajojo.htm"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Form of Securities Purchase Agreement dated April 11, 2019 (14)</span></a></td></tr>
  <tr style="vertical-align: top; background-color: rgb(204,238,255)">
    <td style="text-align: left; vertical-align: top"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">10.43</span></td>
    <td style="text-align: justify">&#160;</td>
    <td style="vertical-align: bottom; text-align: justify"><a href="https://www.sec.gov/Archives/edgar/data/1413263/000121390019006208/f8k041119ex10-2_chinajojo.htm"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Engagement Agreement with H.C. Wainwright &amp; Co. dated April 10, 2019 (14)</span></a></td></tr>
  <tr style="vertical-align: top; ">
    <td style="text-align: left; vertical-align: top"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">10.44</span></td>
    <td style="text-align: justify">&#160;</td>
    <td style="vertical-align: bottom; text-align: justify"><a href="https://www.sec.gov/Archives/edgar/data/1413263/000121390020013867/ea122567ex10-1_chinajojo.htm"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Form of Securities Purchase Agreement dated June 1, 2020 (8)</span></a></td></tr>
  <tr style="vertical-align: top; background-color: rgb(204,238,255)">
    <td style="text-align: left; vertical-align: top"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">10.45</span></td>
    <td style="text-align: justify">&#160;</td>
    <td style="vertical-align: bottom; text-align: justify"><a href="https://www.sec.gov/Archives/edgar/data/1413263/000121390020013867/ea122567ex10-2_chinajojo.htm"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Engagement Agreement with H.C. Wainwright &amp; Co. dated May 31, 2020 (8)</span></a></td></tr>
  <tr style="vertical-align: top; ">
    <td style="text-align: left; vertical-align: top"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">10.46</span></td>
    <td style="text-align: justify">&#160;</td>
    <td style="vertical-align: bottom; text-align: justify"><a href="https://www.sec.gov/Archives/edgar/data/1413263/000121390021026554/ea140940ex2-1_chinajojo.htm"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Agreement and Plan of Merger by and between China Jo-Jo Drugstores, Inc. and China Jo-Jo Drugstores Holdings, Inc., dated May 14, 2021 (23)</span></a></td></tr>
  <tr style="vertical-align: top; background-color: rgb(204,238,255)">
    <td style="text-align: left; vertical-align: top"><p style="margin: 0pt 0; font: 10pt Times New Roman, Times, Serif">12.1</p></td>
    <td style="text-align: justify">&#160;</td>
    <td style="vertical-align: bottom; text-align: justify"><a href="f20f2023ex12-1_chinajojo.htm">Section 302 Certification by the Corporation&#8217;s Chief Executive Officer *</a></td></tr>
  <tr style="vertical-align: top; ">
    <td style="text-align: left; vertical-align: top"><p style="margin: 0pt 0; font: 10pt Times New Roman, Times, Serif">12.2</p></td>
    <td style="text-align: justify">&#160;</td>
    <td style="vertical-align: bottom; text-align: justify"><p style="margin: 0pt 0; font: 10pt Times New Roman, Times, Serif"><a href="f20f2023ex12-2_chinajojo.htm">Section 302 Certification by the Corporation&#8217;s Chief Financial Officer *</a></p></td></tr>
  <tr style="vertical-align: top; background-color: rgb(204,238,255)">
    <td style="text-align: left; vertical-align: top"><p style="margin: 0pt 0; font: 10pt Times New Roman, Times, Serif">13.1</p></td>
    <td style="text-align: justify">&#160;</td>
    <td style="vertical-align: bottom; text-align: justify"><p style="margin: 0pt 0; font: 10pt Times New Roman, Times, Serif"><a href="f20f2023ex13-1_chinajojo.htm">Section 906 Certification by the Corporation&#8217;s Chief Executive Officer and Chief Financial Officer *</a></p></td></tr>
  <tr style="vertical-align: top; ">
    <td style="text-align: left; vertical-align: top"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">14.1</span></td>
    <td style="text-align: justify">&#160;</td>
    <td style="vertical-align: bottom; text-align: justify"><a href="https://www.sec.gov/Archives/edgar/data/1413263/000115752310001598/a6216752ex14-1.htm"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Code of Business Conduct and Ethics (5)</span></a></td></tr>
  <tr style="vertical-align: top; background-color: rgb(204,238,255)">
    <td style="text-align: left; vertical-align: top"><p style="margin: 0pt 0; font: 10pt Times New Roman, Times, Serif">15.1</p></td>
    <td style="text-align: justify">&#160;</td>
    <td style="vertical-align: bottom; text-align: justify"><p style="margin: 0pt 0; font: 10pt Times New Roman, Times, Serif"><a href="f20f2023ex15-1_chinajojo.htm">Consent of Company&#8217;s previous Independent Publicly Registered Accounting Firm, BDO China Shu Lun Pan Certified Public Accountants LLP *</a></p></td></tr>
  <tr style="vertical-align: top; ">
    <td style="text-align: left; vertical-align: top"><p style="margin: 0pt 0; font: 10pt Times New Roman, Times, Serif">15.2</p></td>
    <td style="text-align: justify">&#160;</td>
    <td style="vertical-align: bottom; text-align: justify"><p style="margin: 0pt 0; font: 10pt Times New Roman, Times, Serif"><a href="f20f2023ex15-2_chinajojo.htm">Consent of Company&#8217;s current Independent Publicly Registered Accounting Firm, YCM CPA, Inc.*</a></p></td></tr>
  <tr style="vertical-align: top; background-color: rgb(204,238,255)">
    <td style="text-align: left; vertical-align: top"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">99.1</span></td>
    <td style="text-align: justify">&#160;</td>
    <td style="vertical-align: bottom; text-align: justify"><a href="https://www.sec.gov/Archives/edgar/data/1413263/000115752310003865/a6343246ex994.htm"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Project Agreement between The People&#8217;s Government of Qianhong Village, Lin&#8217;an, Zhejiang Province (the &#8220;Qianhong Local Government&#8221;) and Jiuzhou Pharmacy dated February 27, 2010 (7)</span></a></td></tr>
  <tr style="vertical-align: top; ">
    <td style="text-align: left; vertical-align: top"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">99.2</span></td>
    <td style="text-align: justify">&#160;</td>
    <td style="vertical-align: bottom; text-align: justify"><a href="https://www.sec.gov/Archives/edgar/data/1413263/000115752310003865/a6343246ex995.htm"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Security Deposit Agreement between the Qianhong Local Government and Jiuzhou Pharmacy dated February 27, 2010 (7)</span></a></td></tr>
</table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&#160;</p><div>

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    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
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</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top; background-color: rgb(204,238,255)">
    <td style="text-align: left; vertical-align: bottom; width: 8%"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">101.INS</span></td>
    <td style="text-align: justify; width: 1%">&#160;</td>
    <td style="vertical-align: bottom; text-align: left; width: 91%"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Inline
    XBRL Instance Document</span></td></tr>
  <tr style="vertical-align: top; ">
    <td style="text-align: left; vertical-align: bottom"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">101.SCH</span></td>
    <td style="text-align: justify">&#160;</td>
    <td style="vertical-align: bottom; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Inline
    XBRL Taxonomy Extension Scheme Document</span></td></tr>
  <tr style="vertical-align: top; background-color: rgb(204,238,255)">
    <td style="text-align: left; vertical-align: bottom"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">101.CAL</span></td>
    <td style="text-align: justify">&#160;</td>
    <td style="vertical-align: bottom; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Inline
    XBRL Taxonomy Extension Calculation Linkbase Document</span></td></tr>
  <tr style="vertical-align: top; ">
    <td style="text-align: left; vertical-align: bottom"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">101.DEF</span></td>
    <td style="text-align: justify">&#160;</td>
    <td style="vertical-align: bottom; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Inline
    XBRL Taxonomy Extension Definition Linkbase Document</span></td></tr>
  <tr style="vertical-align: top; background-color: rgb(204,238,255)">
    <td style="text-align: left; vertical-align: bottom"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">101.LAB</span></td>
    <td style="text-align: justify">&#160;</td>
    <td style="vertical-align: bottom; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Inline
    XBRL Taxonomy Extension Label Linkbase Document</span></td></tr>
  <tr style="vertical-align: top; ">
    <td style="text-align: left; vertical-align: bottom"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">101.PRE</span></td>
    <td style="text-align: justify">&#160;</td>
    <td style="vertical-align: bottom; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Inline
    XBRL Taxonomy Extension Presentation Linkbase Document</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 0.25in; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">*</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Filed herewith</span></td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(1)</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Incorporated by reference from the predecessor of the registrant&#8217;s Registration Statement on Form SB-2 filed on November 28, 2007</span></td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(2)</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Incorporated by reference from the predecessor of the registrant&#8217;s Current Report on Form 8-K filed on July 15, 2008</span></td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(3)</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Incorporated by reference from the predecessor of the registrant&#8217;s Current Report on Form 8-K filed on September 24, 2009</span></td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(4)</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Incorporated by reference from the predecessor of the registrant&#8217;s Current Report on Form 8-K filed on October 30, 2009</span></td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(5)</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Incorporated by reference from the predecessor of the registrant&#8217;s Current Report on Form 8-K filed on March 16, 2010</span></td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(6)</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Incorporated by reference from the predecessor of the registrant&#8217;s Current Report on Form 8-K filed on April 14, 2010</span></td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(7)</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Incorporated by reference from the predecessor of the registrant&#8217;s Annual Report on Form 10-K filed on June 29, 2010</span></td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(8)</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Incorporated by reference from the predecessor of the registrant&#8217;s Current Report on Form 8-K filed on June 2, 2020</span></td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(9)</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Incorporated by reference from the predecessor of the registrant&#8217;s Quarterly Report on Form 10-Q filed on February 14, 2011</span></td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(10)</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Incorporated by reference from the predecessor of the registrant&#8217;s Current Report on Form 8-K filed on May 17, 2012</span></td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(11)</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Incorporated by reference from the predecessor of the registrant&#8217;s Current Report on Form 8-K filed on November 30, 2012</span></td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(12)</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Incorporated by reference from the predecessor of the registrant&#8217;s Current Report on Form 8-K filed on January 4, 2013</span></td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(13)</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Incorporated by reference from the predecessor of the registrant&#8217;s Current Report on Form 8-K filed on December 12, 2013</span></td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(14)</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Incorporated by reference from the predecessor of the registrant&#8217;s Current Report on Form 8-K filed on April 11, 2019</span></td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(15)</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Incorporated by reference from the predecessor of the registrant&#8217;s Current Report on Form 8-K filed on October 26, 2018</span></td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(16)</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Incorporated by reference from the predecessor of the registrant&#8217;s Current Report on Form 8-K filed on November 24, 2014</span></td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(17)</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Incorporated by reference from the predecessor of the registrant&#8217;s Current Report on Form 8-K filed on July 21, 2015</span></td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(18)</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Incorporated by reference from the predecessor of the registrant&#8217;s Current Report on Form 8-K filed on December 2, 2015</span></td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(19)</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Incorporated by reference from the predecessor of the registrant&#8217;s Current Report on Form 8-K filed on January 4, 2017</span></td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(20)</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Incorporated by reference from the predecessor of the registrant&#8217;s Exhibit A to the proxy statement on Schedule 14A filed on January 21, 2020</span></td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(21)</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Incorporated by reference from Exhibit 10.33 of the predecessor of the registrant&#8217;s Annual Report on Form 10-K filed on June 29, 2017</span></td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(22)</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Incorporated by reference from the predecessor of the registrant&#8217;s Current Report on Form 8-K filed on September 6, 2018</span></td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(23)</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Incorporated by reference from the predecessor of the registrant&#8217;s Current Report on Form 8-K filed on May 14, 2021</span></td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(24)</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Incorporated by reference to Exhibit 99.2 on Form 6-K filed with the Securities and Exchange Commission on March 1, 2022</span></td></tr>
  </table><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>China
Jo-Jo Drugstores, Inc. and Subsidiaries</b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><div><a id="b_001"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">CONSOLIDATED
FINANCIAL STATEMENTS</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">TABLE
OF CONTENTS</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; background-color: #CCEEFF">
    <td style="font: 10pt Times New Roman, Times, Serif; width: 92%; text-align: justify"><a href="#f_001"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Reports
    of Independent Registered Public Accounting Firms</span></a></td>
    <td style="font: 10pt Times New Roman, Times, Serif; width: 8%; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">F-2</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom">
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><a href="#f_002"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Consolidated
    Balance Sheets as of March 31, 2023 and 2022</span></a></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">F-5</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; background-color: #CCEEFF">
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><a href="#f_003"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Consolidated
    Statements of Operations and Comprehensive Loss for the Years Ended March 31, 2023, 2022 and 2021</span></a></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">F-6</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom">
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><a href="#f_004"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Consolidated
    Statements of Changes in Shareholders&#8217; Equity for the Years Ended March 31, 2023, 2022 and 2021</span></a></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">F-7</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; background-color: #CCEEFF">
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><a href="#f_005"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Consolidated
    Statements of Cash Flows for the Years Ended March 31, 2023, 2022 and 2021</span></a></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">F-8</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom">
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><a href="#f_006"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Notes
    to Consolidated Financial Statements</span></a></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">F-9</span></td></tr>
  </table><div>
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    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><div><a id="f_001"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM</b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><img alt="IMG_257" src="image_002.jpg" style="width: 102px; height: 59px"/></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">To
the Board of Directors and</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Shareholders
of China Jo-Jo Drugstores, Inc.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Opinion
on the Financial Statements</b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
have audited the accompanying consolidated balance sheets of China Jo-Jo Drugstores, Inc. and subsidiaries (collectively, the &#8220;Company&#8221;)
as of March 31, 2023 and 2022, and the related consolidated statements of operations and comprehensive income (loss), changes in shareholders&#8217;
equity, and cash flows for the years ended March 31, 2023 and 2022, and the related notes (collectively referred to as the &#8220;financial
statements&#8221;). In our opinion, the financial statements referred to above present fairly, in all material respects, the financial
position of the Company as of March 31, 2023 and 2022, and the results of its operations and its cash flows for years ended March 31,
2023 and 2022, in conformity with accounting principles generally accepted in the United States of America.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>




</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Basis
for Opinion</b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">These consolidated financial statements are the
responsibility of the Company&#8217;s management. Our responsibility is to express an opinion on the Company&#8217;s consolidated financial
statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United
States) (&#8220;PCAOB&#8221;) and are required to be independent with respect to the Company in accordance with the U.S. federal securities
laws and the applicable rules&#160;and regulations of the Securities and Exchange Commission and the PCAOB.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">We conducted our audits in accordance with the
standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged
to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding
of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company&#8217;s
internal control over financial reporting. Accordingly, we express no such opinion.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="text-align: justify; margin: 0pt 0; font: 10pt Times New Roman, Times, Serif">Our audits included performing procedures to
assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures
that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the
consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made
by management, as well as evaluating the overall presentation of the financial statement. We believe that our audits provide a reasonable
basis for our opinion.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Critical
Audit Matters</b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The critical audit matters communicated below are matters arising from
the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee
and that: (1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially
challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the
consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate
opinions on the critical audit matters or on the accounts or disclosures to which they relate.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"></p><div>

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    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;<i>&#160;</i></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; "><span><b><i>Allowance
for Credit Losses</i></b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; "><i>Description of the
Matter</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">As described in Note
2 to the consolidated financial statements, management exercises significant accounting judgments, estimates, and assumptions in relation
to the allowance for credit losses. The Company recognized $7.64 million in allowances for credit losses on its consolidated balance sheet
using a current expected credit loss model (CECL). The CECL is an unbiased and probability-weighted estimate of credit losses expected
to occur in the future, which is based on the combination of aging as a risk characteristic, migration rate, historical default rate,
and forward looking default rate relating to the underlying financial asset. The CECL is determined by evaluating a range of possible
outcomes incorporating the unbiased and probability weighted amount, time value of money if applicable, and reasonable and supportable
information about past events, current conditions, and future economic forecasts. CECL allowances are measured at amounts equal to either
(i) 12-month CECL; or (ii) lifetime CECL for those financial instruments that have experienced a significant increase in credit risk since
initial recognition or when there is objective evidence of impairment.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; ">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Auditing the allowance for credit losses was
complex and required the application of significant judgment because of the forward-looking nature of the key assumptions and the inherent
interrelationship of the critical variables used in measuring the CECL. Key areas of judgment include evaluating: (i) the models and
methodologies used for measuring both the 12-month and lifetime expected credit losses; (ii) the assumptions used in the CECL scenarios
including forward-looking information and assigning probability weighting, and (iii) the assessment of the qualitative component applied
to the modelled CECL based on management&#8217;s judgment. Management has applied a significant level of judgment in the areas noted
above in determining the impact on the allowance for credit losses.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i>&#160;</i></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>How We Addressed the Matter in Our Audit</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">To test the allowance for credit losses, our audit
procedures included, amongst others, assessing whether the methodology and assumptions used in significant models that estimate the CECL
are consistent with the requirements of U.S. GAAP and industry standards. We evaluated the process used by management to develop historical
default rate and determine the CECL scenario probability weights. We recalculated the CECL to test the mathematical accuracy of management&#8217;s
models. We tested the completeness and accuracy of data used in measuring the CECL and evaluated management&#8217;s accounts receivable
and other receivable aging policies. We also assessed the adequacy of disclosures related to the allowance for credit losses.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span>/s/ <ix:nonNumeric contextRef="c0" name="dei:AuditorName">YCM CPA, Inc.</ix:nonNumeric></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span>We have served as the Company&#8217;s
auditor since 2022. </span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span>PCAOB ID <ix:nonNumeric contextRef="c0" name="dei:AuditorFirmId">6781</ix:nonNumeric></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><ix:nonNumeric contextRef="c0" name="dei:AuditorLocation"><span>Irvine, California</span></ix:nonNumeric></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="margin: 0pt 0; font: 10pt Times New Roman, Times, Serif"><span>June 15, 2023</span></p><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"></p><div>

</div><!-- Field: Page; Sequence: 91; Value: 1 --><div>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><img alt="IMG_258" src="image_003.jpg" style="width: 624px; height: 85px"/></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span style="text-decoration:underline">REPORT
OF INDEPENDENT REGISTERED ACCOUNTING FIRM</span></b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Board
of Directors</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">China
Jo-Jo Drugstores, Inc.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Carson
City, Nevada</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Opinion
on the Consolidated Financial Statements</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">We have audited the accompanying consolidated
statements of operations and comprehensive loss, stockholders&#8217; equity, and cash flows for the year ended March 31, 2021 and the
related notes (collectively referred to as the &#8220;consolidated financial statements&#8221;). In our opinion, the consolidated financial
statements for the year ended March 31, 2021 present fairly, in all material respects, the results of its operations and its cash flows
for the year then ended, in conformity with accounting principles generally accepted in the United States of America.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Basis for Opinion</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">These consolidated financial statements are the
responsibility of the Company&#8217;s management. Our responsibility is to express an opinion on the Company&#8217;s consolidated financial
statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States)
(&#8220;PCAOB&#8221;) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws
and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">We conducted our audit in accordance with the
standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated
financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we
engaged to perform, an audit of its internal control over financial reporting. As part of our audit we are required to obtain an understanding
of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company&#8217;s
internal control over financial reporting. Accordingly, we express no such opinion.&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="margin: 0pt 0; font: 10pt Times New Roman, Times, Serif">Our audit included performing procedures to assess the risks of material
misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those
risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial
statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as
evaluating the overall presentation of the consolidated financial statements. We believe that our audit provides a reasonable basis for
our opinion.</p><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">/s/
BDO China Shu Lun Pan Certified Accountants LLP (PCAOB ID 1818)</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
served as the Company&#8217;s auditor from year 2015 to year 2021.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Shanghai,
People&#8217;s Republic of China</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">June
28, 2021</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></p><div>

</div><!-- Field: Page; Sequence: 92; Value: 1 --><div>
    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt">F-<!-- Field: Sequence; Type: Arabic; Name: PageNo -->4<!-- Field: /Sequence --></p></div><div>
    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><div><a id="f_002"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">CHINA
JO-JO DRUGSTORES, INC. AND SUBSIDIARIES</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">CONSOLIDATED
BALANCE SHEETS</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
  <tr style="vertical-align: bottom">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; ">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; ">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; ">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; ">
    <td style="padding-left: 0.125in; text-indent: -0.125in">&#160;</td><td style="padding-left: 0.125in; text-indent: -0.125in">&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 0.125in; text-indent: -0.125in; text-decoration: underline; text-align: left">LIABILITIES AND SHAREHOLDERS&#8217; EQUITY</td><td style="padding-left: 0.125in; text-indent: -0.125in">&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; ">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; ">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 0.25in; text-indent: -0.125in; text-align: left">Customer deposits</td><td style="padding-left: 0.125in; text-indent: -0.125in">&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction contextRef="c2" decimals="0" format="ixt:num-dot-decimal" name="cjjd:CustomerDepositCurrent" scale="0" unitRef="usd">695,931</ix:nonFraction></td><td style="text-align: left">&#160;</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; ">
    <td style="padding-left: 0.25in; text-indent: -0.125in; text-align: left">Taxes payable</td><td style="padding-left: 0.125in; text-indent: -0.125in">&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction contextRef="c2" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:TaxesPayableCurrent" scale="0" unitRef="usd">1,706,909</ix:nonFraction></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction contextRef="c3" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:TaxesPayableCurrent" scale="0" unitRef="usd">1,381,108</ix:nonFraction></td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 0.25in; text-indent: -0.125in; text-align: left">Accrued liabilities</td><td style="padding-left: 0.125in; text-indent: -0.125in">&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction contextRef="c2" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:AccruedLiabilitiesCurrent" scale="0" unitRef="usd">756,516</ix:nonFraction></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction contextRef="c3" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:AccruedLiabilitiesCurrent" scale="0" unitRef="usd">556,037</ix:nonFraction></td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="padding-left: 0.25in; text-indent: -0.125in; text-align: left">Loan payable - current portion</td><td style="padding-left: 0.125in; text-indent: -0.125in">&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><div style="-sec-ix-hidden: hidden-fact-1">-</div></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction contextRef="c3" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:LoansPayableCurrent" scale="0" unitRef="usd">1,957,956</ix:nonFraction></td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 0.25in; text-indent: -0.125in; text-align: left; padding-bottom: 1.5pt">Current portion of operating lease liabilities</td><td style="padding-left: 0.125in; text-indent: -0.125in; padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right"><ix:nonFraction contextRef="c2" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:OperatingLeaseLiabilityCurrent" scale="0" unitRef="usd">5,131,373</ix:nonFraction></td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right"><ix:nonFraction contextRef="c3" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:OperatingLeaseLiabilityCurrent" scale="0" unitRef="usd">3,329,619</ix:nonFraction></td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="padding-left: 0.375in; text-indent: -0.125in; text-align: left; padding-bottom: 1.5pt">Total current liabilities</td><td style="padding-left: 0.125in; text-indent: -0.125in; padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right"><ix:nonFraction contextRef="c2" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:LiabilitiesCurrent" scale="0" unitRef="usd">66,535,234</ix:nonFraction></td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right"><ix:nonFraction contextRef="c3" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:LiabilitiesCurrent" scale="0" unitRef="usd">74,448,396</ix:nonFraction></td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 0.125in; text-indent: -0.125in">&#160;</td><td style="padding-left: 0.125in; text-indent: -0.125in">&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
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    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right"><ix:nonFraction contextRef="c2" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:OperatingLeaseLiabilityNoncurrent" scale="0" unitRef="usd">7,768,216</ix:nonFraction></td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right"><ix:nonFraction contextRef="c3" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:OperatingLeaseLiabilityNoncurrent" scale="0" unitRef="usd">9,197,027</ix:nonFraction></td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 0.375in; text-indent: -0.125in; text-align: left; padding-bottom: 1.5pt">Total liabilities</td><td style="padding-left: 0.125in; text-indent: -0.125in; padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right"><ix:nonFraction contextRef="c2" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:Liabilities" scale="0" unitRef="usd">74,303,450</ix:nonFraction></td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right"><ix:nonFraction contextRef="c3" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:Liabilities" scale="0" unitRef="usd">83,645,423</ix:nonFraction></td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="padding-left: 0.125in; text-indent: -0.125in">&#160;</td><td style="padding-left: 0.125in; text-indent: -0.125in">&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 0.125in; text-indent: -0.125in; text-align: left">COMMITMENTS AND CONTINGENCIES</td><td style="padding-left: 0.125in; text-indent: -0.125in">&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><div style="-sec-ix-hidden: hidden-fact-2">&#160;</div></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><div style="-sec-ix-hidden: hidden-fact-3">&#160;</div></td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="padding-left: 0.125in; text-indent: -0.125in">&#160;</td><td style="padding-left: 0.125in; text-indent: -0.125in">&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 0.125in; text-indent: -0.125in; text-align: left">SHAREHOLDERS&#8217; EQUITY</td><td style="padding-left: 0.125in; text-indent: -0.125in">&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; ">
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  <tr style="vertical-align: bottom; ">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; ">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; ">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; ">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  </table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
accompanying notes are an integral part of these consolidated financial statements.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"></p><div>

</div><!-- Field: Page; Sequence: 93; Value: 1 --><div>
    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt">F-<!-- Field: Sequence; Type: Arabic; Name: PageNo -->5<!-- Field: /Sequence --></p></div><div>
    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><div><a id="f_003"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">CHINA
JO-JO DRUGSTORES, INC. AND SUBSIDIARIES</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">CONSOLIDATED
STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
  <tr style="vertical-align: bottom">
    <td>&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
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  <tr style="vertical-align: bottom">
    <td>&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" style="text-align: center; border-bottom: Black 1.5pt solid">2023</td><td style="padding-bottom: 1.5pt">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right"><ix:nonFraction contextRef="c0" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:Revenues" scale="0" unitRef="usd">148,811,976</ix:nonFraction></td><td style="width: 1%; text-align: left">&#160;</td><td style="width: 1%">&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; ">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; ">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; ">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; ">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-indent: -0.125in; padding-left: 0.125in">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; ">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  </table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
accompanying notes are an integral part of these consolidated financial statements.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"></p><div>

</div><!-- Field: Page; Sequence: 94; Value: 1 --><div>
    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt">F-<!-- Field: Sequence; Type: Arabic; Name: PageNo -->6<!-- Field: /Sequence --></p></div><div>
    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><div><a id="f_004"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">CHINA
JO-JO DRUGSTORES, INC. AND SUBSIDIARIES</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">CONSOLIDATED
STATEMENTS OF CHANGES IN SHAREHOLDERS&#8217; EQUITY</span></p><div>

</div><p style="font: 7pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 7pt">&#160;</span></p><div>

</div><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
  <tr style="vertical-align: bottom">
    <td style="padding-left: 0.125in; text-indent: -0.125in">&#160;</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; ">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; ">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; ">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; ">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="text-align: left">&#160;</td><td style="text-align: right"><div style="-sec-ix-hidden: hidden-fact-70">-</div></td><td style="text-align: left">&#160;</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; ">
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  </table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
accompanying notes are an integral part of these consolidated financial statements.</span></p><div>

</div><p style="font: 7pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 7pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"></p><div>

</div><!-- Field: Page; Sequence: 95; Value: 1 --><div>
    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt">F-<!-- Field: Sequence; Type: Arabic; Name: PageNo -->7<!-- Field: /Sequence --></p></div><div>
    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><div><a id="f_005"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">CHINA
JO-JO DRUGSTORES, INC. AND SUBSIDIARIES</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">CONSOLIDATED
STATEMENTS OF CASH FLOWS</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
  <tr style="vertical-align: bottom">
    <td>&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
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  <tr style="vertical-align: bottom">
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  <tr style="vertical-align: bottom">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; ">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">(<ix:nonFraction contextRef="c0" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:IncreaseDecreaseInOtherReceivables" scale="0" unitRef="usd">958,671</ix:nonFraction></td><td style="text-align: left">)</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; ">
    <td style="text-align: left; text-indent: -9pt; padding-left: 0.25in">Advances to suppliers</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; text-indent: -9pt; padding-left: 0.25in">Long term deposit</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; ">
    <td style="text-align: left; text-indent: -9pt; padding-left: 0.25in">Other current assets</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; text-indent: -9pt; padding-left: 0.25in">Other noncurrent assets</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(<ix:nonFraction contextRef="c0" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:IncreaseDecreaseInOtherNoncurrentAssets" scale="0" unitRef="usd">30,483</ix:nonFraction></td><td style="text-align: left">)</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; ">
    <td style="text-align: left; text-indent: -9pt; padding-left: 0.25in">Accounts payable, trade</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction contextRef="c0" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:IncreaseDecreaseInAccountsPayableTrade" scale="0" unitRef="usd">1,765,488</ix:nonFraction></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(<ix:nonFraction contextRef="c4" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:IncreaseDecreaseInAccountsPayableTrade" scale="0" sign="-" unitRef="usd">3,558,050</ix:nonFraction></td><td style="text-align: left">)</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; text-indent: -9pt; padding-left: 0.25in">Other payables and accrued liabilities</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(<ix:nonFraction contextRef="c0" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:IncreaseDecreaseInOtherAccountsPayableAndAccruedLiabilities" scale="0" sign="-" unitRef="usd">1,341,447</ix:nonFraction></td><td style="text-align: left">)</td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">(<ix:nonFraction contextRef="c5" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:IncreaseDecreaseInOtherAccountsPayableAndAccruedLiabilities" scale="0" sign="-" unitRef="usd">183,111</ix:nonFraction></td><td style="text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="text-align: left; text-indent: -9pt; padding-left: 0.25in">Customer deposits</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(<ix:nonFraction contextRef="c0" decimals="0" format="ixt:num-dot-decimal" name="cjjd:IncreaseDecreaseInCustomerDeposit" scale="0" sign="-" unitRef="usd">1,035,456</ix:nonFraction></td><td style="text-align: left">)</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction contextRef="c4" decimals="0" format="ixt:num-dot-decimal" name="cjjd:IncreaseDecreaseInCustomerDeposit" scale="0" unitRef="usd">678,601</ix:nonFraction></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction contextRef="c5" decimals="0" format="ixt:num-dot-decimal" name="cjjd:IncreaseDecreaseInCustomerDeposit" scale="0" unitRef="usd">368,690</ix:nonFraction></td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; padding-bottom: 1.5pt; text-indent: -9pt; padding-left: 0.25in">Taxes payable</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right"><ix:nonFraction contextRef="c0" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:IncreaseDecreaseInAccruedTaxesPayable" scale="0" unitRef="usd">433,054</ix:nonFraction></td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right"><ix:nonFraction contextRef="c4" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:IncreaseDecreaseInAccruedTaxesPayable" scale="0" unitRef="usd">1,162,084</ix:nonFraction></td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right"><ix:nonFraction contextRef="c5" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:IncreaseDecreaseInAccruedTaxesPayable" scale="0" unitRef="usd">66,648</ix:nonFraction></td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="text-align: left; padding-bottom: 1.5pt; text-indent: -9pt; padding-left: 27pt">Net cash used in operating activities</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">(<ix:nonFraction contextRef="c0" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:NetCashProvidedByUsedInOperatingActivities" scale="0" sign="-" unitRef="usd">3,283,513</ix:nonFraction></td><td style="padding-bottom: 1.5pt; text-align: left">)</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">(<ix:nonFraction contextRef="c4" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:NetCashProvidedByUsedInOperatingActivities" scale="0" sign="-" unitRef="usd">5,385,973</ix:nonFraction></td><td style="padding-bottom: 1.5pt; text-align: left">)</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">(<ix:nonFraction contextRef="c5" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:NetCashProvidedByUsedInOperatingActivities" scale="0" sign="-" unitRef="usd">62,292</ix:nonFraction></td><td style="padding-bottom: 1.5pt; text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-indent: -9pt; padding-left: 9pt">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="text-align: left; text-indent: -9pt; padding-left: 9pt">CASH FLOWS FROM INVESTING ACTIVITIES:</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; text-indent: -9pt; padding-left: 0.25in">Disposal of financial&#160;assets&#160;available&#160;for&#160;sale</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><div style="-sec-ix-hidden: hidden-fact-84">-</div></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><div style="-sec-ix-hidden: hidden-fact-85">-</div></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction contextRef="c5" decimals="0" format="ixt:num-dot-decimal" name="cjjd:PurchaseOfFinancialAssetsAvailableForSale" scale="0" sign="-" unitRef="usd">75,973</ix:nonFraction></td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="text-align: left; text-indent: -9pt; padding-left: 0.25in">Acquisition of equipment&#160;and building</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(<ix:nonFraction contextRef="c0" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:PaymentsToAcquirePropertyPlantAndEquipment" scale="0" unitRef="usd">118,272</ix:nonFraction></td><td style="text-align: left">)</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(<ix:nonFraction contextRef="c4" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:PaymentsToAcquirePropertyPlantAndEquipment" scale="0" unitRef="usd">89,960</ix:nonFraction></td><td style="text-align: left">)</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(<ix:nonFraction contextRef="c5" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:PaymentsToAcquirePropertyPlantAndEquipment" scale="0" unitRef="usd">126,766</ix:nonFraction></td><td style="text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; text-indent: -9pt; padding-left: 0.25in">Investment in a joint venture</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(<ix:nonFraction contextRef="c0" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:PaymentsToAcquireInterestInJointVenture" scale="0" unitRef="usd">4,379</ix:nonFraction></td><td style="text-align: left">)</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><div style="-sec-ix-hidden: hidden-fact-86">-</div></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(<ix:nonFraction contextRef="c5" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:PaymentsToAcquireInterestInJointVenture" scale="0" unitRef="usd">1,470,119</ix:nonFraction></td><td style="text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="text-align: left; text-indent: -9pt; padding-left: 0.25in">Purchases of intangible assets</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(<ix:nonFraction contextRef="c0" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:PaymentsToAcquireIntangibleAssets" scale="0" unitRef="usd">12,774</ix:nonFraction></td><td style="text-align: left">)</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(<ix:nonFraction contextRef="c4" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:PaymentsToAcquireIntangibleAssets" scale="0" unitRef="usd">7,012</ix:nonFraction></td><td style="text-align: left">)</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(<ix:nonFraction contextRef="c5" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:PaymentsToAcquireIntangibleAssets" scale="0" unitRef="usd">97,802</ix:nonFraction></td><td style="text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; padding-bottom: 1.5pt; text-indent: -9pt; padding-left: 0.25in">Additions to leasehold improvements</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">(<ix:nonFraction contextRef="c0" decimals="0" format="ixt:num-dot-decimal" name="cjjd:AdditionsToLeaseholdImprovements" scale="0" unitRef="usd">180,672</ix:nonFraction></td><td style="padding-bottom: 1.5pt; text-align: left">)</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">(<ix:nonFraction contextRef="c4" decimals="0" format="ixt:num-dot-decimal" name="cjjd:AdditionsToLeaseholdImprovements" scale="0" unitRef="usd">209,166</ix:nonFraction></td><td style="padding-bottom: 1.5pt; text-align: left">)</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">(<ix:nonFraction contextRef="c5" decimals="0" format="ixt:num-dot-decimal" name="cjjd:AdditionsToLeaseholdImprovements" scale="0" unitRef="usd">379,611</ix:nonFraction></td><td style="padding-bottom: 1.5pt; text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="text-align: left; padding-bottom: 1.5pt; text-indent: -9pt; padding-left: 27pt">Net cash used in investing activities</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">(<ix:nonFraction contextRef="c0" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:NetCashProvidedByUsedInInvestingActivities" scale="0" sign="-" unitRef="usd">316,097</ix:nonFraction></td><td style="padding-bottom: 1.5pt; text-align: left">)</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">(<ix:nonFraction contextRef="c4" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:NetCashProvidedByUsedInInvestingActivities" scale="0" sign="-" unitRef="usd">306,138</ix:nonFraction></td><td style="padding-bottom: 1.5pt; text-align: left">)</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">(<ix:nonFraction contextRef="c5" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:NetCashProvidedByUsedInInvestingActivities" scale="0" sign="-" unitRef="usd">1,998,325</ix:nonFraction></td><td style="padding-bottom: 1.5pt; text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-indent: -9pt; padding-left: 9pt">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="text-align: left; text-indent: -9pt; padding-left: 9pt">CASH FLOWS FROM FINANCING ACTIVITIES:</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; text-indent: -9pt; padding-left: 0.25in">Proceeds from short-term bank loan</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; ">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; text-indent: -9pt; padding-left: 0.25in">Proceeds from third parties loan</td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right"><div style="-sec-ix-hidden: hidden-fact-92">-</div></td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="text-align: left; text-indent: -9pt; padding-left: 0.25in">Repayment of third parties loan</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; text-indent: -9pt; padding-left: 0.25in">Proceeds from notes payable</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; ">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; text-indent: -9pt; padding-left: 0.25in">Increase in financial liability</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; ">
    <td style="text-indent: -9pt; padding-left: 0.25in">Exercise of warrants</td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right"><div style="-sec-ix-hidden: hidden-fact-96">-</div></td><td style="text-align: left">&#160;</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; text-indent: -9pt; padding-left: 0.25in">Proceeds from issuance of shares and warrants in private placements</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; ">
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    <td style="text-align: left">&#160;</td><td style="text-align: right"><div style="-sec-ix-hidden: hidden-fact-98">-</div></td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; padding-bottom: 1.5pt; text-indent: -9pt; padding-left: 0.25in">Repayment of other payable-related parties</td><td style="padding-bottom: 1.5pt">&#160;</td>
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    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">&#160;</td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">(<ix:nonFraction contextRef="c5" decimals="0" format="ixt:num-dot-decimal" name="cjjd:RepaymentsOfOtherRelatedPartyDebt" scale="0" unitRef="usd">73,426</ix:nonFraction></td><td style="padding-bottom: 1.5pt; text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="text-align: left; padding-bottom: 1.5pt; text-indent: -9pt; padding-left: 27pt">Net cash provided by financing activities</td><td style="padding-bottom: 1.5pt">&#160;</td>
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    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right"><ix:nonFraction contextRef="c4" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:NetCashProvidedByUsedInFinancingActivities" scale="0" unitRef="usd">4,836,898</ix:nonFraction></td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right"><ix:nonFraction contextRef="c5" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:NetCashProvidedByUsedInFinancingActivities" scale="0" unitRef="usd">3,079,853</ix:nonFraction></td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-indent: -9pt; padding-left: 9pt">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="text-align: left; padding-bottom: 1.5pt; text-indent: -9pt; padding-left: 9pt">EFFECT OF EXCHANGE RATE ON CASH</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">(<ix:nonFraction contextRef="c0" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:EffectOfExchangeRateOnCashCashEquivalentsRestrictedCashAndRestrictedCashEquivalents" scale="0" sign="-" unitRef="usd">2,535,479</ix:nonFraction></td><td style="padding-bottom: 1.5pt; text-align: left">)</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right"><ix:nonFraction contextRef="c4" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:EffectOfExchangeRateOnCashCashEquivalentsRestrictedCashAndRestrictedCashEquivalents" scale="0" unitRef="usd">1,522,146</ix:nonFraction></td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right"><ix:nonFraction contextRef="c5" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:EffectOfExchangeRateOnCashCashEquivalentsRestrictedCashAndRestrictedCashEquivalents" scale="0" unitRef="usd">2,670,802</ix:nonFraction></td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-indent: -9pt; padding-left: 9pt">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="text-align: left; text-indent: -9pt; padding-left: 9pt">INCREASE IN CASH AND CASH EQUIVALENTS AND RESTRICTED CASH</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(<ix:nonFraction contextRef="c0" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:CashCashEquivalentsRestrictedCashAndRestrictedCashEquivalentsPeriodIncreaseDecreaseIncludingExchangeRateEffect" scale="0" sign="-" unitRef="usd">3,768,933</ix:nonFraction></td><td style="text-align: left">)</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction contextRef="c4" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:CashCashEquivalentsRestrictedCashAndRestrictedCashEquivalentsPeriodIncreaseDecreaseIncludingExchangeRateEffect" scale="0" unitRef="usd">666,933</ix:nonFraction></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction contextRef="c5" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:CashCashEquivalentsRestrictedCashAndRestrictedCashEquivalentsPeriodIncreaseDecreaseIncludingExchangeRateEffect" scale="0" unitRef="usd">3,690,038</ix:nonFraction></td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; padding-bottom: 1.5pt; text-indent: -9pt; padding-left: 9pt">CASH AND CASH EQUIVALENTS AND RESTRICTED CASH, beginning of year</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right"><ix:nonFraction contextRef="c3" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:CashCashEquivalentsRestrictedCashAndRestrictedCashEquivalents" scale="0" unitRef="usd">35,339,577</ix:nonFraction></td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right"><ix:nonFraction contextRef="c39" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:CashCashEquivalentsRestrictedCashAndRestrictedCashEquivalents" scale="0" unitRef="usd">34,672,644</ix:nonFraction></td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right"><ix:nonFraction contextRef="c12" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:CashCashEquivalentsRestrictedCashAndRestrictedCashEquivalents" scale="0" unitRef="usd">30,982,606</ix:nonFraction></td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="text-align: left; padding-bottom: 4pt; text-indent: -9pt; padding-left: 9pt">CASH AND CASH EQUIVALENTS AND RESTRICTED CASH, end of year</td><td style="padding-bottom: 4pt">&#160;</td>
    <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right"><ix:nonFraction contextRef="c2" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:CashCashEquivalentsRestrictedCashAndRestrictedCashEquivalents" scale="0" unitRef="usd">31,570,644</ix:nonFraction></td><td style="padding-bottom: 4pt; text-align: left">&#160;</td><td style="padding-bottom: 4pt">&#160;</td>
    <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right"><ix:nonFraction contextRef="c3" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:CashCashEquivalentsRestrictedCashAndRestrictedCashEquivalents" scale="0" unitRef="usd">35,339,577</ix:nonFraction></td><td style="padding-bottom: 4pt; text-align: left">&#160;</td><td style="padding-bottom: 4pt">&#160;</td>
    <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right"><ix:nonFraction contextRef="c39" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:CashCashEquivalentsRestrictedCashAndRestrictedCashEquivalents" scale="0" unitRef="usd">34,672,644</ix:nonFraction></td><td style="padding-bottom: 4pt; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-indent: -9pt; padding-left: 9pt">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="text-align: left; text-indent: -9pt; padding-left: 9pt">SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; text-indent: -9pt; padding-left: 0.25in">Cash paid for income taxes</td><td>&#160;</td>
    <td style="text-align: left">$</td><td style="text-align: right"><ix:nonFraction contextRef="c0" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:IncomeTaxesPaid" scale="0" unitRef="usd">63,668</ix:nonFraction></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">$</td><td style="text-align: right"><ix:nonFraction contextRef="c4" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:IncomeTaxesPaid" scale="0" unitRef="usd">3,955</ix:nonFraction></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">$</td><td style="text-align: right"><ix:nonFraction contextRef="c5" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:IncomeTaxesPaid" scale="0" unitRef="usd">37,738</ix:nonFraction></td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
accompanying notes are an integral part of these consolidated financial statements.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"></p><div>

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    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt">F-<!-- Field: Sequence; Type: Arabic; Name: PageNo -->8<!-- Field: /Sequence --></p></div><div>
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    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><div><a id="f_006"></a></div><ix:nonNumeric contextRef="c0" continuedAt="_OrganizationConsolidationAndPresentationOfFinancialStatementsDisclosureTextBlock-c0_cont_1" escape="true" name="us-gaap:OrganizationConsolidationAndPresentationOfFinancialStatementsDisclosureTextBlock"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Note
1 &#8211; DESCRIPTION OF BUSINESS AND ORGANIZATION</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">China
Jo-Jo Drugstores, Inc. (&#8220;Jo-Jo Drugstores&#8221; or the &#8220;Company&#8221;), was incorporated in Nevada on December 19, 2006,
originally under the name &#8220;Kerrisdale Mining Corporation&#8221;. On September 24, 2009, the Company changed its name to &#8220;China
Jo-Jo Drugstores, Inc.&#8221; in connection with a share exchange transaction as described below.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
September 17, 2009, the Company completed a share exchange transaction with Renovation Investment (Hong Kong) Co., Ltd. (&#8220;Renovation&#8221;),
whereby <ix:nonFraction contextRef="c64" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:StockIssuedDuringPeriodSharesNewIssues" scale="0" unitRef="shares">7,900,000</ix:nonFraction> shares of ordinary shares were issued to the stockholders of Renovation in exchange for <ix:nonFraction contextRef="c65" decimals="2" format="ixt:num-dot-decimal" name="us-gaap:BusinessAcquisitionPercentageOfVotingInterestsAcquired" scale="-2" unitRef="pure">100</ix:nonFraction>% of the capital stock of
Renovation. The completion of the share exchange transaction resulted in a change of control. The share exchange transaction was accounted
for as a reverse acquisition and recapitalization and, as a result, the consolidated financial statements of the Company (the legal acquirer)
are, in substance, those of Renovation (the accounting acquirer), with the assets and liabilities, and revenues and expenses, of the
Company being included effective from the date of the share exchange transaction. Renovation has no substantive operations of its own
except for its holdings of Zhejiang Jiuxin Investment Management Co., Ltd. (&#8220;Jiuxin Management&#8221;), Zhejiang Shouantang Medical
Technology Co., Ltd. (&#8220;Shouantang Technology&#8221;) and Hangzhou Jiutong Medical Technology Co., Ltd (&#8220;Jiutong Medical&#8221;),
Hangzhou Jiuyi Medical Technology Co. Ltd. (&#8220;Jiuyi Technology&#8221;), its wholly-owned subsidiaries.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Company is an online and offline retailer and wholesale distributor of pharmaceutical and other healthcare products in the People&#8217;s
Republic of China (&#8220;China&#8221; or the &#8220;PRC&#8221;). The Company&#8217;s offline retail business is comprised primarily of
pharmacies, which are operated by Hangzhou Jiuzhou Grand Pharmacy Chain Co., Ltd. (&#8220;Jiuzhou Pharmacy&#8221;), a company that the
Company controls through contractual arrangements.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Company&#8217;s offline retail business also includes four medical clinics through Hangzhou Jiuzhou Clinic of Integrated Traditional
and Western Medicine (&#8220;Jiuzhou Clinic&#8221;) and Hangzhou Jiuzhou Medical and Public Health Service Co., Ltd. (&#8220;Jiuzhou Service&#8221;),
both of which are also controlled by the Company through contractual arrangements. In May 2014, Shouantang Technology established Hangzhou
Shouantang Bio-technology Co., Ltd. (&#8220;Shouantang Bio&#8221;). In May 2016, Shouantang Bio set up and held <ix:nonFraction contextRef="c66" decimals="2" format="ixt:num-dot-decimal" name="us-gaap:BusinessAcquisitionPercentageOfVotingInterestsAcquired" scale="-2" unitRef="pure">49</ix:nonFraction>% of Hangzhou Kahamadi
Bio-technology Co., Ltd. (&#8220;Kahamadi Bio&#8221;), a joint venture specializing in brand name development for nutritional supplements.
In 2018, Jiuzhou Pharmacy invested a total of $<ix:nonFraction contextRef="c67" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:InvestmentOwnedAtCost" scale="0" unitRef="usd">741,540</ix:nonFraction> (RMB<ix:nonFraction contextRef="c67" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:InvestmentOwnedAtCost" scale="0" unitRef="cny">5,100,000</ix:nonFraction>) in and held <ix:nonFraction contextRef="c67" decimals="2" format="ixt:num-dot-decimal" name="us-gaap:BusinessAcquisitionPercentageOfVotingInterestsAcquired" scale="-2" unitRef="pure">51</ix:nonFraction>% of Zhejiang Jiuzhou Linjia Medical Investment and
Management Co. Ltd (&#8220;Linjia Medical&#8221;), which has ceased its operation as of March 31, 2021.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Company currently conducts its online retail pharmacy business through Jiuzhou Pharmacy, which holds the Company&#8217;s online
pharmacy license. On September 10, 2015, Renovation set up Jiuyi Technology to provide additional technical support such as webpage
development to our online pharmacy business. In November 2015, the technical support function was transferred back to Jiuzhou
Pharmacy, which hosts our online pharmacy.</span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p></ix:nonNumeric><div>

</div><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"></p><div>

</div><!-- Field: Page; Sequence: 97; Value: 1 --><div>
    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt">F-<!-- Field: Sequence; Type: Arabic; Name: PageNo -->9<!-- Field: /Sequence --></p></div><div>
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    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

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Company&#8217;s wholesale business is primarily conducted through Zhejiang Jiuxin Medicine Co., Ltd. (&#8220;Jiuxin Medicine&#8221;),
which is licensed to distribute prescription and non-prescription pharmaceutical products throughout China. Jiuzhou Pharmacy acquired
Jiuxin Medicine on August 25, 2011. On April 20, 2018, <ix:nonFraction contextRef="c68" decimals="2" format="ixt:num-dot-decimal" name="us-gaap:BusinessAcquisitionPercentageOfVotingInterestsAcquired" scale="-2" unitRef="pure">10</ix:nonFraction>% of Jiuxin Medicine shares were sold to Hangzhou Kangzhou Biotech Co. Ltd.
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Company&#8217;s herb farming business is conducted by Hangzhou Qianhong Agriculture Development Co., Ltd. (&#8220;Qianhong Agriculture&#8221;),
a wholly-owned subsidiary of Jiuxin Management. Due to the complexity of the cultivation business, Qianhong Agriculture has not grown
herbs in fiscal 2022.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
July 30, 2021, China Jo-Jo Drugstores, Inc., a Nevada corporation (&#8220;CJJD&#8221;), completed a corporate reorganization (the &#8220;Reorganization&#8221;
or &#8220;Redomicile Merger&#8221;), resulting in China Jo-Jo Drugstores Holdings, Inc., a company incorporated under the laws of the
Cayman Islands (&#8220;CJJD Cayman&#8221;), becoming the publicly held parent company of CJJD, with CJJD merged with and into CJJD Cayman,
pursuant to the Agreement and Plan of Merger, dated as of May 14, 2021, by and between CJJD and CJJD Cayman (the &#8220;Merger Agreement&#8221;).
Prior to the Reorganization, shares of CJJD&#8217;s ordinary shares were registered pursuant to Section 12(b) of the Securities Exchange
Act of 1934, as amended (the &#8220;Exchange Act&#8221;), and listed on the NASDAQ Capital Market under the symbol &#8220;CJJD.&#8221;
As a result of the Reorganization, each issued and outstanding share of CJJD&#8217;s ordinary shares was converted into the right to
receive one CJJD Cayman ordinary share, which shares were issued by CJJD Cayman as part of the Reorganization.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
April 7, 2022&#65292;the Company effected a 1-for-12&#160;reverse stock split on its ordinary shares. Upon the effectiveness of the reverse
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and outstanding ordinary share. No fractional shares were issued as a result of the reverse stock split. Instead, any fractional shares
that would have resulted from the split were rounded up to the next whole number. The reverse stock split affects all shareholders uniformly
and will not alter any shareholder&#8217;s percentage interest in the Company&#8217;s outstanding ordinary shares, except for adjustments
that may result from the treatment of fractional shares.</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
accompanying consolidated financial statements reflect the activities of the Company and each of the following entities:</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<ix:nonNumeric contextRef="c0" continuedAt="_ScheduleOfCondensedFinancialStatementsTableTextBlock-c0_cont_1" escape="true" name="srt:ScheduleOfCondensedFinancialStatementsTableTextBlock"><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
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    <td>&#160;</td>
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    <td>&#160;</td>
    <td style="padding-left: 0.25in; text-indent: -0.25in">&#160;</td>
    <td>&#160;</td>
    <td>&#160;</td></tr>
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    <td>&#160;</td>
    <td>&#160;</td>
    <td style="padding-left: 0.25in; text-indent: -0.25in">&#160;</td>
    <td>&#160;</td>
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  <tr style="vertical-align: top; ">
    <td>&#160;</td>
    <td>&#160;</td>
    <td style="padding-left: 0.25in; text-indent: -0.25in">&#160;</td>
    <td>&#160;</td>
    <td>&#160;</td></tr>
  <tr style="vertical-align: top; background-color: rgb(204,238,255)">
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></p><div>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p>

<ix:continuation continuedAt="_ScheduleOfCondensedFinancialStatementsTableTextBlock-c0_cont_5" id="_ScheduleOfCondensedFinancialStatementsTableTextBlock-c0_cont_4"><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p>

<ix:continuation id="_ScheduleOfCondensedFinancialStatementsTableTextBlock-c0_cont_5"><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse"> <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top"> <td style="font: 10pt Times New Roman, Times, Serif; width: 24px; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(1)</span></td> <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><ix:footnote id="ix_0_footnote" xml:lang="en-US"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Jiuzhou Pharmacy, Jiuzhou Clinic and Jiuzhou Service had been under the common control of Mr. Lei Liu and Ms. Li Qi, the three shareholders (the &#8220;Owners&#8221;) since their respective establishment dates, pursuant to agreements among the Owners to vote their interests in concert as memorialized in a voting rights agreement. Based on such voting agreement, the Company has determined that common control exists among these three companies. The Owners have operated these three companies in conjunction with one another since each company&#8217;s respective establishment date. Jiuxin Medicine is also deemed under the common control of the Owners as a subsidiary of Jiuzhou Pharmacy.</span></ix:footnote></td></tr> <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top"> <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td> <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr> <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top"> <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(2)</span></td> <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><ix:footnote id="ix_1_footnote" xml:lang="en-US"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">To comply with certain foreign ownership restrictions of pharmacy and medical clinic operators, Jiuxin Management entered into a series of contractual arrangements with Jiuzhou Pharmacy, Jiuzhou Clinic and Jiuzhou Service on August 1, 2009. These contractual arrangements are comprised of five agreements: a consulting services agreement, an operating agreement, an equity pledge agreement, a voting rights agreement and an option agreement. Because such agreements obligate Jiuxin Management to absorb all of the risks of loss from the activities of Jiuzhou Pharmacy, Jiuzhou Clinic and Jiuzhou Service, and enable the Company (through Jiuxin Management) to receive all of their expected residual returns, the Company accounts for each of the three companies (as well as subsidiaries of Jiuzhou Pharmacy) as a variable interest entity (&#8220;VIE&#8221;) under the accounting standards of the Financial Accounting Standards Board (&#8220;FASB&#8221;). Accordingly, the financial statements of Jiuzhou Pharmacy, Jiuzhou Clinic and Jiuzhou Service, as well as the subsidiaries under the control of Jiuzhou Pharmacy, Jiuxin Medicine and Shouantang Bio are consolidated into the financial statements of the Company.</span></ix:footnote></td></tr> </table></ix:continuation></ix:continuation><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"></p><div>

</div><!-- Field: Page; Sequence: 100; Value: 1 --><div>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><ix:nonNumeric contextRef="c0" continuedAt="_SignificantAccountingPoliciesTextBlock-c0_cont_1" escape="true" name="us-gaap:SignificantAccountingPoliciesTextBlock"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Note
2 &#8211; SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES</b></span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<ix:nonNumeric contextRef="c0" continuedAt="_BasisOfPresentationAndSignificantAccountingPoliciesTextBlock-c0_cont_1" escape="true" name="us-gaap:BasisOfPresentationAndSignificantAccountingPoliciesTextBlock"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><span style="text-decoration:underline">Basis
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<ix:continuation id="_BasisOfPresentationAndSignificantAccountingPoliciesTextBlock-c0_cont_1"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
accompanying consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United
States of America (&#8220;US GAAP&#8221;). The consolidated financial statements include the financial statements of the Company, its
wholly-owned subsidiaries and VIEs. All significant inter-company transactions and balances between the Company, its subsidiaries and
VIEs are eliminated upon consolidation.</span></p></ix:continuation>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<ix:continuation continuedAt="_ConsolidationVariableInterestEntityPolicy-c0_cont_2" id="_ConsolidationVariableInterestEntityPolicy-c0_cont_1"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
accordance with accounting standards regarding consolidation of variable interest entities, VIEs are generally entities that lack sufficient
equity to finance their activities without additional financial support from other parties or whose equity holders lack adequate decision
making ability. All VIEs with which the Company is involved must be evaluated to determine the primary beneficiary of the risks and rewards
of the VIE. The primary beneficiary is required to consolidate the VIE for financial reporting purposes.</span></p></ix:continuation>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

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Company has concluded, based on the contractual arrangements, that Jiuzhou Pharmacy (including its subsidiaries and controlled entities),
Jiuzhou Clinic and Jiuzhou Service are each a VIE and that the Company&#8217;s wholly-owned subsidiary, Jiuxin Management, absorbs a
majority of the risk of loss from the activities of these companies, thereby enabling the Company, through Jiuxin Management, to receive
a majority of their respective expected residual returns.</span></p></ix:continuation>




<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<ix:continuation id="_ConsolidationVariableInterestEntityPolicy-c0_cont_3"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Control
and common control are defined under the accounting standards as &#8220;an individual, enterprise, or immediate family members who hold
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Jiuzhou Clinic and Jiuzhou Service, and have agreed to vote their interests in concert since the establishment of each of these three
companies as memorialized in the voting rights agreement, the Company believes that the Owners collectively have control and common control
of the three companies. Accordingly, the Company believes that Jiuzhou Pharmacy, Jiuzhou Clinic and Jiuzhou Service were constructively
held under common control by Jiuxin Management as of the time the Contractual Agreements were entered into, establishing Jiuxin Management
as their primary beneficiary. Jiuxin Management, in turn, is owned by Renovation, which is owned by the Company. <b>&#160;</b></span></p></ix:continuation>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

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the accounting principles generally accepted in the United States of America (&#8220;U.S. GAAP&#8221;) on a going concern basis. The going
concern basis assumes that assets are realized and liabilities are extinguished in the ordinary course of business at amounts disclosed
in the financial statements. The Company&#8217;s ability to continue as a going concern depends upon aligning its sources of funding (debt
and equity) with its expenditure requirements and repayment of the short-term debts as and when they become due.</p></ix:continuation>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<ix:continuation continuedAt="cjjd_LiquidityAndCapitalResourcesPoliciesPolicyTextBlock-c0_cont_4" id="cjjd_LiquidityAndCapitalResourcesPoliciesPolicyTextBlock-c0_cont_3"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
order to meet its capital demand, the Company strived to raise funds in the capital market, increase its credit line from the local banks,
and improve its store performance in the near future.</span></p></ix:continuation>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<ix:continuation continuedAt="cjjd_LiquidityAndCapitalResourcesPoliciesPolicyTextBlock-c0_cont_6" id="cjjd_LiquidityAndCapitalResourcesPoliciesPolicyTextBlock-c0_cont_5"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
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of the aforementioned bank credit line was available for further borrowing. As the economy growth slows down, the national interest continues
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<ix:continuation continuedAt="cjjd_LiquidityAndCapitalResourcesPoliciesPolicyTextBlock-c0_cont_7" id="cjjd_LiquidityAndCapitalResourcesPoliciesPolicyTextBlock-c0_cont_6"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Company has also obtained additional government insurance reimbursement certificates for its stores opened in the last two years. In
a mature store, nearly half of the revenue are generated by customers utilizing the government insurance program. With these certificates,
mature stores are able to attract more customers who are eligible for the insurance program, and its sales may significantly increase
in the next 12 months.</span></p></ix:continuation>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<ix:continuation id="cjjd_LiquidityAndCapitalResourcesPoliciesPolicyTextBlock-c0_cont_7"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Based
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</div><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></p><div>

</div><!-- Field: Page; Sequence: 101; Value: 1 --><div>
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    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><ix:continuation continuedAt="_SignificantAccountingPoliciesTextBlock-c0_cont_2" id="_SignificantAccountingPoliciesTextBlock-c0_cont_1"><ix:nonNumeric contextRef="c0" continuedAt="_UseOfEstimates-c0_cont_1" escape="true" name="us-gaap:UseOfEstimates"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><span style="text-decoration:underline">Use
of estimates</span></span></p></ix:nonNumeric>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<ix:continuation id="_UseOfEstimates-c0_cont_1"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The preparation of consolidated financial statements in conformity
with&#160;U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities,
disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses
during the reporting period. The significant estimates made in the preparation of the accompanying consolidated financial statements relate
to the assessment of the carrying values of accounts receivable, related allowance for doubtful accounts, losses. Because of the use of
estimates inherent in the financial reporting process, actual results could materially differ from those estimates.</p></ix:continuation>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<ix:nonNumeric contextRef="c0" continuedAt="_FairValueMeasurementPolicyPolicyTextBlock-c0_cont_1" escape="true" name="us-gaap:FairValueMeasurementPolicyPolicyTextBlock"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><span style="text-decoration:underline">Fair
value measurements</span></span></p></ix:nonNumeric>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<ix:continuation continuedAt="_FairValueMeasurementPolicyPolicyTextBlock-c0_cont_2" id="_FairValueMeasurementPolicyPolicyTextBlock-c0_cont_1"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Company establishes a three-level valuation hierarchy of valuation techniques based on observable and unobservable inputs, which may
be used to measure fair value and include the following:</span></p></ix:continuation>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<ix:continuation continuedAt="_FairValueMeasurementPolicyPolicyTextBlock-c0_cont_3" id="_FairValueMeasurementPolicyPolicyTextBlock-c0_cont_2"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Level
1 &#8211; Quoted prices in active markets for identical assets or liabilities.</span></p></ix:continuation>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<ix:continuation continuedAt="_FairValueMeasurementPolicyPolicyTextBlock-c0_cont_4" id="_FairValueMeasurementPolicyPolicyTextBlock-c0_cont_3"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Level
2 &#8211; Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities;
quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for
substantially the full term of the assets or liabilities.</span></p></ix:continuation>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<ix:continuation continuedAt="_FairValueMeasurementPolicyPolicyTextBlock-c0_cont_5" id="_FairValueMeasurementPolicyPolicyTextBlock-c0_cont_4"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Level
3 &#8211; Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets
or liabilities.</span></p></ix:continuation>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<ix:continuation continuedAt="_FairValueMeasurementPolicyPolicyTextBlock-c0_cont_6" id="_FairValueMeasurementPolicyPolicyTextBlock-c0_cont_5"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Classification
within the hierarchy is determined based on the lowest level of input that is significant to the fair value measurement.</span></p></ix:continuation>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<ix:continuation id="_FairValueMeasurementPolicyPolicyTextBlock-c0_cont_6"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Unless
otherwise disclosed, the fair value of the Company&#8217;s financial instruments including cash, restricted cash, accounts receivable,
advances to suppliers, other current assets, accounts payable, due to related parties, other current liabilities, short-term bank loans
and bank acceptance notes payable approximate their recorded values due to their short-term maturities. The fair value of longer term
long-term bank loan and operating lease liabilities approximate their recorded values as their stated interest rates approximate the
rates currently available.&#160;</span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p></ix:continuation></ix:continuation><div>

</div><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></p><div>

</div><!-- Field: Page; Sequence: 102; Value: 1 --><div>
    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt">F-<!-- Field: Sequence; Type: Arabic; Name: PageNo -->14<!-- Field: /Sequence --></p></div><div>
    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><ix:continuation continuedAt="_SignificantAccountingPoliciesTextBlock-c0_cont_3" id="_SignificantAccountingPoliciesTextBlock-c0_cont_2"><ix:nonNumeric contextRef="c0" continuedAt="_RevenueRecognitionPolicyTextBlock-c0_cont_1" escape="true" name="us-gaap:RevenueRecognitionPolicyTextBlock"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><span style="text-decoration:underline">Revenue
recognition</span></span></p></ix:nonNumeric>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<ix:continuation continuedAt="_RevenueRecognitionPolicyTextBlock-c0_cont_2" id="_RevenueRecognitionPolicyTextBlock-c0_cont_1"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Effective
March 31, 2018, the Company began recognizing revenue under Accounting Standards Codification (&#8220;ASC&#8221;) Topic 606, Revenue from
Contracts with Customers (&#8220;ASC 606&#8221;), using the modified retrospective transition method. The impact of adopting the new revenue
standard was not material to the Company&#8217;s consolidated financial statements. The core principle of this new revenue standard is
that a company should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects
the consideration to which the Company expects to be entitled in exchange for those goods or services. The following five steps are applied
to achieve that core principle:</span></p></ix:continuation>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<ix:continuation continuedAt="_RevenueRecognitionPolicyTextBlock-c0_cont_3" id="_RevenueRecognitionPolicyTextBlock-c0_cont_2"><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; width: 24px; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; width: 24px; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Step
    1: Identify the contract with the customer</span></td></tr>
  </table></ix:continuation>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<ix:continuation continuedAt="_RevenueRecognitionPolicyTextBlock-c0_cont_4" id="_RevenueRecognitionPolicyTextBlock-c0_cont_3"><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; width: 24px; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; width: 24px; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Step
    2: Identify the performance obligations in the contract</span></td></tr>
  </table></ix:continuation>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<ix:continuation continuedAt="_RevenueRecognitionPolicyTextBlock-c0_cont_5" id="_RevenueRecognitionPolicyTextBlock-c0_cont_4"><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; width: 24px; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; width: 24px; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Step
    3: Determine the transaction price</span></td></tr>
  </table></ix:continuation>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<ix:continuation continuedAt="_RevenueRecognitionPolicyTextBlock-c0_cont_6" id="_RevenueRecognitionPolicyTextBlock-c0_cont_5"><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; width: 24px; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; width: 24px; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Step
    4: Allocate the transaction price to the performance obligations in the contract</span></td></tr>
  </table></ix:continuation>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<ix:continuation continuedAt="_RevenueRecognitionPolicyTextBlock-c0_cont_7" id="_RevenueRecognitionPolicyTextBlock-c0_cont_6"><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; width: 24px; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; width: 24px; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Step
    5: Recognize revenue when the company satisfies a performance obligation</span></td></tr>
  </table></ix:continuation>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<ix:continuation continuedAt="_RevenueRecognitionPolicyTextBlock-c0_cont_8" id="_RevenueRecognitionPolicyTextBlock-c0_cont_7"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
order to identify the performance obligations in a contract with a customer, a company must assess the promised goods or services in
the contract and identify each promised good or service that is distinct. A performance obligation meets ASC 606&#8217;s definition
of a &#8220;distinct&#8221; good or service (or bundle of goods or services) if both of the following criteria are met:</span></p></ix:continuation>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<ix:continuation continuedAt="_RevenueRecognitionPolicyTextBlock-c0_cont_9" id="_RevenueRecognitionPolicyTextBlock-c0_cont_8"><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; width: 24px; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; width: 24px; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
    customer can benefit from the good or service either on its own or together with other resources that are readily available to the
    customer (i.e., the good or service is capable of being distinct).</span></td></tr>
  </table></ix:continuation>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<ix:continuation continuedAt="_RevenueRecognitionPolicyTextBlock-c0_cont_10" id="_RevenueRecognitionPolicyTextBlock-c0_cont_9"><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; width: 24px; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; width: 24px; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
    entity&#8217;s promise to transfer the good or service to the customer is separately identifiable from other promises in the contract
    (i.e., the promise to transfer the good or service is distinct within the context of the contract).</span></td></tr>
  </table></ix:continuation>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<ix:continuation continuedAt="_RevenueRecognitionPolicyTextBlock-c0_cont_11" id="_RevenueRecognitionPolicyTextBlock-c0_cont_10"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">If
a good or service is not distinct, the good or service is combined with other promised goods or services until a bundle of goods or services
is identified that is distinct.</span></p></ix:continuation>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<ix:continuation continuedAt="_RevenueRecognitionPolicyTextBlock-c0_cont_12" id="_RevenueRecognitionPolicyTextBlock-c0_cont_11"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
transaction price is the amount of consideration to which an entity expects to be entitled in exchange for transferring promised goods
or services to a customer, excluding amounts collected on behalf of third parties (for example, some sales taxes). The consideration
promised in a contract with a customer may include fixed amounts, variable amounts, or both. Variable consideration is included in the
transaction price only to the extent that it is probable that a significant reversal in the amount of cumulative revenue recognized will
not occur when the uncertainty associated with the variable consideration is subsequently resolved.</span></p></ix:continuation>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<ix:continuation continuedAt="_RevenueRecognitionPolicyTextBlock-c0_cont_13" id="_RevenueRecognitionPolicyTextBlock-c0_cont_12"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
transaction price is allocated to each performance obligation on a relative standalone selling price basis. The transaction price allocated
to each performance obligation is recognized when that performance obligation is satisfied, at a point in time or over time as appropriate.</span></p></ix:continuation>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<ix:continuation continuedAt="_RevenueRecognitionPolicyTextBlock-c0_cont_14" id="_RevenueRecognitionPolicyTextBlock-c0_cont_13"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Company&#8217;s revenue is net of value added tax (&#8220;VAT&#8221;) collected on behalf of the PRC tax authorities with respect to the
sales of merchandise. VAT collected from customers, net of VAT paid for purchases, is recorded as a liability in the accompanying consolidated
balance sheets until it is paid to the relevant PRC tax authorities.</span></p></ix:continuation>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<ix:continuation continuedAt="_RevenueRecognitionPolicyTextBlock-c0_cont_15" id="_RevenueRecognitionPolicyTextBlock-c0_cont_14"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Certain
contract liabilities primarily represent the Company&#8217;s obligation to transfer additional goods or services to a customer for which
the Company has received consideration, for example, membership points. The consideration received remains a contract liability until
goods or services have been provided to the retail customer. The estimated amount based on accrued membership points was deducted from
sales revenue.</span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p></ix:continuation></ix:continuation><div>

</div><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"></p><div>

</div><!-- Field: Page; Sequence: 103; Value: 1 --><div>
    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt">F-<!-- Field: Sequence; Type: Arabic; Name: PageNo -->15<!-- Field: /Sequence --></p></div><div>
    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><ix:continuation continuedAt="_SignificantAccountingPoliciesTextBlock-c0_cont_4" id="_SignificantAccountingPoliciesTextBlock-c0_cont_3"><ix:continuation continuedAt="_RevenueRecognitionPolicyTextBlock-c0_cont_16" id="_RevenueRecognitionPolicyTextBlock-c0_cont_15"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
following is a discussion of the Company&#8217;s revenue recognition policies by segment under the new revenue recognition accounting
standard:</span>

</p></ix:continuation><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<ix:continuation continuedAt="_RevenueRecognitionPolicyTextBlock-c0_cont_17" id="_RevenueRecognitionPolicyTextBlock-c0_cont_16"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i>Pharmacy
retail sales</i></span></p></ix:continuation>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<ix:continuation continuedAt="_RevenueRecognitionPolicyTextBlock-c0_cont_18" id="_RevenueRecognitionPolicyTextBlock-c0_cont_17"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
physical pharmacies sell prescription drugs, over-the-counter (&#8220;OTC&#8221;) drugs, traditional Chinese medicine, nutritional
supplements, medical devices and sundry products. Revenue from sales of prescription medicine at drugstores is recognized when the
prescription is filled and the customer picks up and pays for the prescription. Revenue from sales of other merchandise at
drugstores is recognized at the point of sale, which is when a customer pays for and receives the merchandise. Usually the majority
merchandise, such as prescription and OTC drugs, are not refundable after the customers leave the counter. Returns of other
products, such as sundry products, are minimal. Sales of drugs reimbursed by the local government medical insurance agency and
receivables from the agency are recognized when a customer pays for the drugs at a store. The Company based on historical
experience, a reserve for potential losses from denial of reimbursement on certain unqualified drugs is made to the receivables from
the government agency. Additionally, several onsite clinics adjacent to pharmacies provide limited medical services. Revenue from
medical services is recognized after the service has been rendered to a customer. As revenue from medical services is minimal
compared to pharmacy retail sales, it is included as part of the pharmacy retail sales.</span></p></ix:continuation>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<ix:continuation continuedAt="_RevenueRecognitionPolicyTextBlock-c0_cont_19" id="_RevenueRecognitionPolicyTextBlock-c0_cont_18"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Company deduct the membership rewards directly from the retail revenue, and present such amounts in net sales as opposed to the current
reduction of operation expense classification. Membership rewards, usually membership points, are accumulated by customers based on their
historical spending levels. The Company has determined that there is an additional performance obligation to those customers at the time
of the initial transaction. The customers can then redeem these points against the prices of merchandises they purchase in the future.
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<ix:continuation continuedAt="_RevenueRecognitionPolicyTextBlock-c0_cont_20" id="_RevenueRecognitionPolicyTextBlock-c0_cont_19"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i>Online
pharmacy sales</i></span></p></ix:continuation>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<ix:continuation continuedAt="_RevenueRecognitionPolicyTextBlock-c0_cont_21" id="_RevenueRecognitionPolicyTextBlock-c0_cont_20"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Revenue
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company. The Company&#8217;s sales policy allows for the return of certain merchandises without reason within seven days after a customer&#8217;s
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<ix:continuation continuedAt="_RevenueRecognitionPolicyTextBlock-c0_cont_22" id="_RevenueRecognitionPolicyTextBlock-c0_cont_21"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i>Wholesale</i></span></p></ix:continuation>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

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Medicine purchases medicine in quantity and distributes products primarily to local pharmacies and medical products dealers. Revenue
from sales of merchandise to non-retail customers is recognized when the merchandise is transferred to customers. Historically, sales
returns have been minimal.</span></p></ix:continuation>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

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Company&#8217;s revenue is net of VAT collected on behalf of PRC tax authorities in respect to the sales of merchandise. VAT collected
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paid to the relevant PRC tax authorities.</span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p></ix:continuation></ix:continuation><div>

</div><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><ix:continuation continuedAt="_SignificantAccountingPoliciesTextBlock-c0_cont_5" id="_SignificantAccountingPoliciesTextBlock-c0_cont_4"><ix:continuation continuedAt="_RevenueRecognitionPolicyTextBlock-c0_cont_25" id="_RevenueRecognitionPolicyTextBlock-c0_cont_24"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i>Disaggregation
of Revenue</i></span></p></ix:continuation>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<ix:continuation continuedAt="_RevenueRecognitionPolicyTextBlock-c0_cont_26" id="_RevenueRecognitionPolicyTextBlock-c0_cont_25"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
following table disaggregates the Company&#8217;s revenue by major source in each segment for the years ended March 31, 2023, 2022 and
2021:</span></p></ix:continuation>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; ">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; ">
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</div><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><ix:continuation continuedAt="_SignificantAccountingPoliciesTextBlock-c0_cont_6" id="_SignificantAccountingPoliciesTextBlock-c0_cont_5"><ix:nonNumeric contextRef="c0" continuedAt="_CashAndCashEquivalentsRestrictedCashAndCashEquivalentsPolicy-c0_cont_1" escape="true" name="us-gaap:CashAndCashEquivalentsRestrictedCashAndCashEquivalentsPolicy"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><span style="text-decoration:underline">Restricted
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

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Company&#8217;s restricted cash consists of cash and long-term deposits in a bank as security for its notes payable. The Company has
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<ix:nonNumeric contextRef="c0" continuedAt="_ReceivablesPolicyTextBlock-c0_cont_1" escape="true" name="us-gaap:ReceivablesPolicyTextBlock"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><span style="text-decoration:underline">Accounts
receivable</span></span></p></ix:nonNumeric>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<ix:continuation continuedAt="_ReceivablesPolicyTextBlock-c0_cont_2" id="_ReceivablesPolicyTextBlock-c0_cont_1"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Accounts
receivable represents the following: (1) amounts due from banks relating to retail sales that are paid or settled by the customers&#8217;
debit or credit cards, (2) amounts due from government social security bureaus and commercial health insurance programs relating to retail
sales of drugs, prescription medicine, and medical services that are paid or settled by the customers&#8217; medical insurance cards,
(3) amounts due from non-bank third party payment instruments such as Alipay and certain e-commerce platforms and (4) amounts due from
non-retail customers for sales of merchandise.&#160;</span></p></ix:continuation>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<ix:continuation continuedAt="_ReceivablesPolicyTextBlock-c0_cont_3" id="_ReceivablesPolicyTextBlock-c0_cont_2"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Accounts
receivable are recorded at net realizable value consisting of the carrying amount less an allowance for uncollectible accounts, as&#160;necessary.
In the Company&#8217;s retail business, accounts receivable mainly consist of reimbursements due from the government insurance bureaus
and commercial health insurance programs and are usually collected within two or three months. The Company directly writes off delinquent
account balances, which it determines to be uncollectible after confirming with the appropriate bureau or program each month. Additionally,
the Company also makes estimated reserves on related outstanding accounts receivable based on expected credit loss.</span></p></ix:continuation>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<ix:continuation continuedAt="_ReceivablesPolicyTextBlock-c0_cont_4" id="_ReceivablesPolicyTextBlock-c0_cont_3"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
the Company&#8217;s online pharmacy business, accounts receivable primarily consist of amounts due from non-bank third party payment
instruments such as Alipay and certain e-commerce platforms. To purchase pharmaceutical products from an e-commerce platforms such as
Tmall, customers are required to submit payment to certain non-bank third party payment instruments, such as Alipay, which, in turn,
reimburse the Company within seven days to a month. Except for customer returns of sold products, the receivables from these payments
instruments are rarely uncollectible.</span></p></ix:continuation>




<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<ix:continuation id="_ReceivablesPolicyTextBlock-c0_cont_4"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
its wholesale business, the Company uses the expected credit loss method to estimate the allowance for anticipated uncollectible receivable
balances. At each reporting period, the allowance balance is adjusted to reflect the amount computed as a result of the expected credit
loss method. When facts subsequently become available to indicate that the allowance provided requires an adjustment, a corresponding
adjustment is made to the allowance account as a change in estimate.</span></p></ix:continuation>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;&#160;</span></p>

<ix:nonNumeric contextRef="c0" continuedAt="cjjd_CreditLossRollForwardPolicyTextBlock-c0_cont_1" escape="true" name="cjjd:CreditLossRollForwardPolicyTextBlock"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><span style="text-decoration:underline">Credit
loss roll forward</span></span></p></ix:nonNumeric>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<ix:continuation continuedAt="cjjd_CreditLossRollForwardPolicyTextBlock-c0_cont_2" id="cjjd_CreditLossRollForwardPolicyTextBlock-c0_cont_1"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">With
the adoption of the current expected credit loss standard in 2020, the company estimates future expected losses on accounts receivable
and other receivables over the remaining collection period of the instrument. The roll forward for the allowance for credit losses for
the year end March 31, 2023, is as follows:</span></p></ix:continuation>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></p>

<ix:nonNumeric contextRef="c0" escape="true" name="cjjd:ScheduleOfEstimatesFutureExpectedLossesOnAccountsReceivableAndOtherReceivablesOverTheRemainingCollectionPeriodOfTheInstrument"><ix:continuation id="cjjd_CreditLossRollForwardPolicyTextBlock-c0_cont_2"><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
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  <tr style="vertical-align: bottom">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; padding-bottom: 4pt; text-indent: -9pt; padding-left: 9pt">Ending allowance for credit losses</td><td style="padding-bottom: 4pt">&#160;</td>
    <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right"><ix:nonFraction contextRef="c158" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:AllowanceForDoubtfulAccountsReceivable" scale="0" unitRef="usd">2,313,306</ix:nonFraction></td><td style="padding-bottom: 4pt; text-align: left">&#160;</td><td style="padding-bottom: 4pt">&#160;</td>
    <td style="border-bottom: Black 4pt double; text-align: left">&#160;</td><td style="border-bottom: Black 4pt double; text-align: right"><ix:nonFraction contextRef="c159" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:AllowanceForDoubtfulAccountsReceivable" scale="0" unitRef="usd">5,329,440</ix:nonFraction></td><td style="padding-bottom: 4pt; text-align: left">&#160;</td><td style="padding-bottom: 4pt">&#160;</td>
    <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right"><ix:nonFraction contextRef="c2" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:AllowanceForDoubtfulAccountsReceivable" scale="0" unitRef="usd">7,642,746</ix:nonFraction></td><td style="padding-bottom: 4pt; text-align: left">&#160;</td></tr>
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</div><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"></p><div>

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    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><ix:continuation continuedAt="_SignificantAccountingPoliciesTextBlock-c0_cont_7" id="_SignificantAccountingPoliciesTextBlock-c0_cont_6"><ix:nonNumeric contextRef="c0" continuedAt="_InventoryPolicyTextBlock-c0_cont_1" escape="true" name="us-gaap:InventoryPolicyTextBlock"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><span style="text-decoration:underline">Inventories</span></span></p></ix:nonNumeric>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<ix:continuation id="_InventoryPolicyTextBlock-c0_cont_1"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Inventories
are stated at the lower of cost or net realizable value. Cost is determined using the first in first out (FIFO) method. The Company carries
out physical inventory counts on a monthly basis at each store and warehouse location. Herbs that the Company farms are recorded at their
cost, which includes direct costs such as seed selection, fertilizer, labor costs that are spent in growing herbs on the leased farmland,
and indirect costs such as amortization of farmland development cost. All costs are accumulated until the time of harvest and then allocated
to harvested herbs costs when the herbs are sold. The Company periodically reviews its inventory and records write-downs to inventories
for shrinkage losses and damaged merchandise that are identified. The Company provides a reserve for estimated inventory obsolescence
or excess quantities on hand equal to the difference, if any, between the cost of the inventory and its estimated realizable value.</span></p></ix:continuation>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<ix:nonNumeric contextRef="c0" continuedAt="cjjd_FarmlandAssetsPolicyTextBlock-c0_cont_1" escape="true" name="cjjd:FarmlandAssetsPolicyTextBlock"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><span style="text-decoration:underline">Farmland
assets</span></span></p></ix:nonNumeric>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<ix:continuation continuedAt="cjjd_FarmlandAssetsPolicyTextBlock-c0_cont_2" id="cjjd_FarmlandAssetsPolicyTextBlock-c0_cont_1"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Herbs
that the Company farms are recorded at their cost, which includes direct costs such as seed selection, fertilizer, and labor costs that
are spent in growing herbs on the leased farmland, and indirect costs such as amortization of farmland development costs. Since April
2014, amortization of farmland development costs has been expensed instead of allocated into inventory due to unpredictable future market
value of planted gingko trees.</span></p></ix:continuation>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<ix:continuation id="cjjd_FarmlandAssetsPolicyTextBlock-c0_cont_2"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">All
related costs described in the above are accumulated until the time of harvest and then allocated to harvested herbs when they are sold.</span></p></ix:continuation>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<ix:nonNumeric contextRef="c0" continuedAt="_PropertyPlantAndEquipmentPolicyTextBlock-c0_cont_1" escape="true" name="us-gaap:PropertyPlantAndEquipmentPolicyTextBlock"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><span style="text-decoration:underline">Property
and equipment</span></span></p></ix:nonNumeric>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<ix:continuation continuedAt="_PropertyPlantAndEquipmentPolicyTextBlock-c0_cont_2" id="_PropertyPlantAndEquipmentPolicyTextBlock-c0_cont_1"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Property
and equipment are stated at cost, net of accumulated depreciation or amortization. Depreciation is calculated on the straight-line method
over the estimated useful lives of the assets, taking into consideration the assets&#8217; estimated residual value. Leasehold improvements
are amortized over the shorter of lease term or remaining lease period of the underlying assets. Following are the estimated useful lives
of the Company&#8217;s property and equipment:</span></p></ix:continuation>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<ix:nonNumeric contextRef="c0" escape="true" name="cjjd:PropertyPlantAndEquipmentEstimatedUsefulLifeTableTextBlock"><ix:continuation continuedAt="_PropertyPlantAndEquipmentPolicyTextBlock-c0_cont_3" id="_PropertyPlantAndEquipmentPolicyTextBlock-c0_cont_2"><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom">
    <td style="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt; padding-left: 9pt; text-indent: -9pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
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  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; background-color: #CCEEFF">
    <td style="font: 10pt Times New Roman, Times, Serif; width: 89%; padding-left: 9pt; text-indent: -9pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Leasehold
    improvements</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; width: 1%"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
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  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom">
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    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
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    <td style="font: 10pt Times New Roman, Times, Serif; padding-left: 9pt; text-indent: -9pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Office
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<ix:continuation id="_PropertyPlantAndEquipmentPolicyTextBlock-c0_cont_3"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Maintenance,
repairs and minor renewals are charged to expenses as incurred. Major additions and betterment to property and equipment are capitalized.</span></p></ix:continuation>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<ix:nonNumeric contextRef="c0" continuedAt="_GoodwillAndIntangibleAssetsPolicyTextBlock-c0_cont_1" escape="true" name="us-gaap:GoodwillAndIntangibleAssetsPolicyTextBlock"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><span style="text-decoration:underline">Intangible
assets</span></span></p></ix:nonNumeric>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<ix:continuation continuedAt="_GoodwillAndIntangibleAssetsPolicyTextBlock-c0_cont_2" id="_GoodwillAndIntangibleAssetsPolicyTextBlock-c0_cont_1"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Intangible
assets are acquired individually or as part of a group of assets, and are initially recorded at their fair value. The cost of a group
of assets acquired in a transaction is allocated to the individual assets based on their relative fair values.</span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p></ix:continuation></ix:continuation><div>

</div><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"></p><div>

</div><!-- Field: Page; Sequence: 107; Value: 1 --><div>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><ix:continuation continuedAt="_SignificantAccountingPoliciesTextBlock-c0_cont_8" id="_SignificantAccountingPoliciesTextBlock-c0_cont_7"><ix:continuation continuedAt="_GoodwillAndIntangibleAssetsPolicyTextBlock-c0_cont_3" id="_GoodwillAndIntangibleAssetsPolicyTextBlock-c0_cont_2"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
estimated useful lives of the Company&#8217;s intangible assets are as follows:</span></p></ix:continuation>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<ix:nonNumeric contextRef="c0" escape="true" name="cjjd:ScheduleOfEstimatedUsefulLivesTableTextBlock"><ix:continuation continuedAt="_GoodwillAndIntangibleAssetsPolicyTextBlock-c0_cont_4" id="_GoodwillAndIntangibleAssetsPolicyTextBlock-c0_cont_3"><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<ix:continuation id="_GoodwillAndIntangibleAssetsPolicyTextBlock-c0_cont_4"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Company evaluates intangible assets for impairment whenever events or changes in circumstances indicate that the assets might be impaired.&#160;</span></p></ix:continuation>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<ix:continuation id="_ImpairmentOrDisposalOfLongLivedAssetsPolicyTextBlock-c0_cont_1"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Company evaluates long lived tangible and intangible assets for impairment, whenever events or changes in circumstances indicate that
the carrying value may not be recoverable from its estimated future cash flows. Recoverability is measured by comparing the assets&#8217;
net book value to the related projected undiscounted cash flows from these assets, considering a number of factors including past operating
results, budgets, economic projections, market trends and product development cycles. If the net book value of the asset exceeds the
related undiscounted cash flows, the asset is considered impaired, and a second test is performed to measure the amount of impairment
loss. In the year ended March 31, 2021, 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. Based on the evaluation of the
forest land use rights, the Company recorded an impairment of $<ix:nonFraction contextRef="c0" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:OtherAssetImpairmentCharges" scale="0" unitRef="usd">228,506</ix:nonFraction>. In the year ended March 31, 2022, we evaluated the use rights
of the forest land, which is currently used to cultivate Ginkgo trees. Based on the evaluation of the forest land use rights, the Company
recorded an impairment of $<ix:nonFraction contextRef="c0" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:ImpairmentOfLeasehold" scale="0" unitRef="usd">148,795</ix:nonFraction>. In the year ended March 31, 2023, we evaluated the use rights of the forest land, which is currently
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<ix:nonNumeric contextRef="c0" continuedAt="cjjd_NotesPayablePolicyTextBlock-c0_cont_1" escape="true" name="cjjd:NotesPayablePolicyTextBlock"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><span style="text-decoration:underline">Notes
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<ix:continuation id="cjjd_NotesPayablePolicyTextBlock-c0_cont_1"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">During
the normal course of business, the Company regularly issues bank acceptance bills as a payment method to settle outstanding accounts
payables with various material suppliers. The Company records such bank acceptance bills as notes payable. Such notes payable are generally
short term in nature due to their short maturity period of six to nine months.</span></p></ix:continuation>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<ix:nonNumeric contextRef="c0" continuedAt="_IncomeTaxPolicyTextBlock-c0_cont_1" escape="true" name="us-gaap:IncomeTaxPolicyTextBlock"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><span style="text-decoration:underline">Income
taxes</span></span></p></ix:nonNumeric>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>




<ix:continuation continuedAt="_IncomeTaxPolicyTextBlock-c0_cont_2" id="_IncomeTaxPolicyTextBlock-c0_cont_1"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Company follows FASB ASC Topic 740, &#8220;Income Taxes,&#8221; which requires the recognition of deferred tax assets and liabilities
for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method,
deferred income taxes are recognized for the tax consequences in future years of differences between the tax bases of assets and liabilities
and their financial reporting amounts at each period end based on enacted tax laws and statutory tax rates, applicable to the periods
in which the differences are expected to affect taxable income. Valuation allowances are established, when necessary, to reduce deferred
tax assets to the amount expected to be realized.</span></p></ix:continuation>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<ix:continuation id="_IncomeTaxPolicyTextBlock-c0_cont_2"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
accounting standards clarify the accounting and disclosure requirements for uncertain tax positions and prescribe a recognition threshold
and measurement attribute for recognition and measurement of a tax position taken or expected to be taken in a tax return. The accounting
standards also provide guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosures,
and transition.&#160;No significant penalties, uncertain tax provisions or interest relating to income taxes were incurred during the
periods ended March 31, 2023 and 2022.</span></p></ix:continuation>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<ix:nonNumeric contextRef="c0" continuedAt="cjjd_ValueAddedTaxPolicyTextBlock-c0_cont_1" escape="true" name="cjjd:ValueAddedTaxPolicyTextBlock"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><span style="text-decoration:underline">Value
added tax</span></span></p></ix:nonNumeric>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p>

<ix:continuation id="cjjd_ValueAddedTaxPolicyTextBlock-c0_cont_1"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Sales
revenue represents the invoiced value of goods, net of VAT. All of the Company&#8217;s products are sold in the PRC and are subject to
a VAT on the gross sales price. The VAT rates&#160;range up to <ix:nonFraction contextRef="c0" decimals="2" format="ixt:num-dot-decimal" name="cjjd:VATPercentage" scale="-2" unitRef="pure">17</ix:nonFraction>%, depending on the type of products sold. The VAT may be offset by
VAT paid by the Company on raw materials and other materials included in the cost of producing or acquiring its finished products. The
Company recorded a VAT payable net of payments in the accompanying financial statements.</span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p></ix:continuation></ix:continuation><div>

</div><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"></p><div>

</div><!-- Field: Page; Sequence: 108; Value: 1 --><div>
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    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><ix:continuation id="_SignificantAccountingPoliciesTextBlock-c0_cont_8"><ix:nonNumeric contextRef="c0" continuedAt="_CompensationRelatedCostsPolicyTextBlock-c0_cont_1" escape="true" name="us-gaap:CompensationRelatedCostsPolicyTextBlock"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="text-decoration:underline">Share-based compensation</span></p></ix:nonNumeric>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<ix:continuation id="_CompensationRelatedCostsPolicyTextBlock-c0_cont_1"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company complies with the accounting and
disclosure requirement of ASC Topic 718, &#8220;Compensation &#8211; Stock Compensation.&#8221; Share-based compensation to
employees and non-employees is recognized over the requisite service period based on the estimated grant-date fair value of the
awards. Share-based awards with graded-vesting schedules are recognized on a straight-line basis over the requisite service period
for each separately vesting portion of the award. The Company recognizes the expense for share-based compensation awards subject to
performance-based milestone vesting over the remaining service period when management determines that achievement of the milestone
is probable. Management evaluates when the achievement of a performance-based milestone is probable based on the expected
satisfaction of the performance conditions at each reporting date. Share-based compensation will be recognized in general and
administrative expense in the consolidated statements of operations.</p></ix:continuation>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<ix:nonNumeric contextRef="c0" continuedAt="_AdvertisingCostsPolicyTextBlock-c0_cont_1" escape="true" name="us-gaap:AdvertisingCostsPolicyTextBlock"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="text-decoration:underline">Advertising and promotion costs</span></p></ix:nonNumeric>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<ix:continuation id="_AdvertisingCostsPolicyTextBlock-c0_cont_1"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Advertising and promotion costs are expensed as
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consist primarily of print and promotional materials such as flyers to local communities.</p></ix:continuation>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<ix:nonNumeric contextRef="c0" continuedAt="_ForeignCurrencyTransactionsAndTranslationsPolicyTextBlock-c0_cont_1" escape="true" name="us-gaap:ForeignCurrencyTransactionsAndTranslationsPolicyTextBlock"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="text-decoration:underline">Foreign currency translation</span></p></ix:nonNumeric>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

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dollars&#8221; or &#8220;USD&#8221;) for financial reporting purposes. The Company&#8217;s subsidiaries and VIEs maintain their books and
records in their functional currency the Renminbi (&#8220;RMB&#8221;), the currency of the PRC.</p></ix:continuation>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<ix:continuation continuedAt="_ForeignCurrencyTransactionsAndTranslationsPolicyTextBlock-c0_cont_3" id="_ForeignCurrencyTransactionsAndTranslationsPolicyTextBlock-c0_cont_2"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In general, for consolidation purposes, the Company
translates the assets and liabilities of its subsidiaries and VIEs into U.S. dollars using the applicable exchange rates prevailing at
the balance sheet date, and the statements of income and cash flows are translated at average exchange rates during the reporting period.
As a result, amounts related to assets and liabilities reported on the statement of cash flows will not necessarily agree with changes
in the corresponding balances on the balance sheet. Equity accounts are translated at historical rates. Adjustments resulting from the
translation of the financial statements of the subsidiaries and VIEs are recorded as accumulated other comprehensive income.</p></ix:continuation>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<ix:nonNumeric contextRef="c0" name="us-gaap:ForeignCurrencyTranslationAdjustmentDescription"><ix:continuation id="_ForeignCurrencyTransactionsAndTranslationsPolicyTextBlock-c0_cont_3"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The balance sheet amounts, with the exception
of equity, at March 31, 2023 and 2022 were translated at 1 USD to 6.8676 RMB and at 1 USD to 6.3393 RMB, respectively. The average translation
rates applied to income and cash flow statement amounts for years ended March 31, 2023 and 2022 were at 1 USD to 6.8516 RMB and at 1 USD
to 6.4180 RMB, respectively.</p></ix:continuation></ix:nonNumeric>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<ix:nonNumeric contextRef="c0" continuedAt="_NewAccountingPronouncementsPolicyPolicyTextBlock-c0_cont_1" escape="true" name="us-gaap:NewAccountingPronouncementsPolicyPolicyTextBlock"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="text-decoration:underline">Recent Accounting Pronouncements</span></p></ix:nonNumeric>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<ix:continuation id="_NewAccountingPronouncementsPolicyPolicyTextBlock-c0_cont_1"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company&#8217;s management does not believe
that any recently issued, but not yet effective, accounting standards updates, if currently adopted, would have a material effect on the
accompanying consolidated financial statements.&#160;</p></ix:continuation></ix:continuation><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></p><div>

</div><!-- Field: Page; Sequence: 109; Value: 1 --><div>
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    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><ix:nonNumeric contextRef="c0" escape="true" name="us-gaap:CommitmentsAndContingenciesDisclosureTextBlock"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>NOTE 3 &#8211; COMMITMENTS AND CONTINGENCIES</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="text-decoration:underline">Risks and Uncertainties</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The operations of the Company are located in the
PRC. Accordingly, the Company&#8217;s business, financial condition, and results of operations may be influenced by political, economic,
and legal environments in the PRC, as well as by the general state of the PRC economy. The Company&#8217;s operations in the PRC are subject
to special considerations and significant risks not typically associated with companies in North America and Western Europe. These include
risks associated with, among others, the political, economic and legal environment and foreign currency exchange. The Company&#8217;s
results may be adversely affected by changes in the political, regulatory and social conditions in the PRC. Although the Company has not
experienced losses from these situations and believes that it is in compliance with existing laws and regulations including its organization
and structure disclosed in Note 1, this may not be indicative of future results.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company has significant cash deposits with
suppliers in order to obtain and maintain inventory. The Company&#8217;s ability to obtain products and maintain inventory at existing
and new locations is dependent upon its ability to post and maintain significant cash deposits with its suppliers. In the PRC, many vendors
are unwilling to extend credit terms for product sales that require cash deposits to be made. The Company does not generally receive interest
on any of its supplier deposits, and such deposits are subject to loss as a result of the creditworthiness or bankruptcy of the party
who holds such funds, as well as the risk from illegal acts such as conversion, fraud, theft or dishonesty associated with the third party.
If these circumstances were to arise, the Company would 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 its suppliers.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Members of the current management team own controlling
interests in the Company and are also the Owners of the VIEs in the PRC. The Company only controls the VIEs through contractual arrangements
which obligate it to absorb the risk of loss and to receive the residual expected returns. As such, the controlling shareholders of the
Company and the VIEs could cancel these agreements or permit them to expire at the end of the agreement terms, as a result of which the
Company would not retain control of the VIEs.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="text-decoration:underline">Concentrations and Credit Risk</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Certain financial instruments, which subject the
Company to concentration of credit risk, consist of cash and restricted cash. The Company has cash balances at financial institutions
located in Hong Kong and PRC. Balances at financial institutions in Hong Kong may, from time to time, exceed Hong Kong Deposit Protection
Board&#8217;s insured limits. Since March 31, 2015, balances at financial institutions and state-owned banks within the PRC are covered
by insurance up to RMB <ix:nonFraction contextRef="c170" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:CashAndDueFromBanks" scale="0" unitRef="cny">500,000</ix:nonFraction> (USD <ix:nonFraction contextRef="c170" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:CashAndDueFromBanks" scale="0" unitRef="usd">79,600</ix:nonFraction>) per bank. As of March 31, 2023 and March 31, 2022, the Company had deposits totaling $<ix:nonFraction contextRef="c2" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:Deposits" scale="0" unitRef="usd">31,558,338</ix:nonFraction>
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">For the fiscal year ended March 31, 2023, <ix:nonFraction contextRef="c0" decimals="0" format="ixt-sec:numwordsen" name="cjjd:NumberOfVendors" scale="0" unitRef="pure">four</ix:nonFraction>
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">For the fiscal year ended March 31, 2023, <ix:nonFraction contextRef="c0" decimals="0" format="ixt-sec:numwordsen" name="cjjd:NumberOfCustomers" scale="0" unitRef="pure">one</ix:nonFraction>
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than <ix:nonFraction contextRef="c4" decimals="2" format="ixt:num-dot-decimal" name="cjjd:TotalAccountsReceivableRate" scale="-2" unitRef="pure">10</ix:nonFraction>% of total accounts receivable.</p></ix:nonNumeric><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><ix:nonNumeric contextRef="c0" escape="true" name="us-gaap:LoansNotesTradeAndOtherReceivablesDisclosureTextBlock"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>NOTE 4 &#8211; TRADE RECEIVABLES</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="margin: 0pt 0; font: 10pt Times New Roman, Times, Serif">Trade receivables consisted of the following:</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

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  <tr style="vertical-align: bottom">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="width: 76%; text-align: left">Accounts receivable</td><td style="width: 1%">&#160;</td>
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  <tr style="vertical-align: bottom; ">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction contextRef="c2" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:ReceivablesNetCurrent" scale="0" unitRef="usd">14,098,793</ix:nonFraction></td><td style="text-align: left">&#160;</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; ">
    <td style="text-align: left">Note receivable</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction contextRef="c2" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:AccountsNotesAndLoansReceivableNetCurrent" scale="0" unitRef="usd">20,813</ix:nonFraction></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">-</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  </table></ix:nonNumeric>


<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">For the years ended March 31, 2023 and 2022, $<ix:nonFraction contextRef="c0" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:AllowanceForDoubtfulAccountsReceivableWriteOffs" scale="0" unitRef="usd">50,275</ix:nonFraction>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><ix:nonNumeric contextRef="c0" escape="true" name="us-gaap:OtherCurrentAssetsTextBlock"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Note 5 &#8211; OTHER CURRENT ASSETS</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Other current assets consisted of the following:</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<ix:nonNumeric contextRef="c0" continuedAt="_ScheduleOfOtherCurrentAssetsTableTextBlock-c0_cont_1" escape="true" name="us-gaap:ScheduleOfOtherCurrentAssetsTableTextBlock"><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
  <tr style="vertical-align: bottom">
    <td style="text-align: center">&#160;</td><td style="text-align: center; padding-bottom: 1.5pt">&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; ">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  </table></ix:nonNumeric>


<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p>

<ix:continuation id="_ScheduleOfOtherCurrentAssetsTableTextBlock-c0_cont_1"><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%"> <tr style="vertical-align: top"> <td style="width: 24px; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(1)</span></td> <td style="text-align: justify"><ix:footnote id="ix_2_footnote" xml:lang="en-US"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The balance as of March 31, 2023 and March 31, 2022 includes short-term refundable rental security deposits.</span></ix:footnote></td></tr> </table></ix:continuation></ix:nonNumeric><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><ix:nonNumeric contextRef="c0" escape="true" name="us-gaap:PropertyPlantAndEquipmentDisclosureTextBlock"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Note&#160;6 &#8211; PROPERTY AND EQUIPMENT</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Property and equipment consisted of the following:</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<ix:nonNumeric contextRef="c0" continuedAt="_PropertyPlantAndEquipmentTextBlock-c0_cont_1" escape="true" name="us-gaap:PropertyPlantAndEquipmentTextBlock"><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
  <tr style="vertical-align: bottom">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right"><ix:nonFraction contextRef="c172" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:PropertyPlantAndEquipmentGrossPeriodIncreaseDecrease" scale="0" unitRef="usd">6,072,388</ix:nonFraction></td><td style="width: 1%; text-align: left">&#160;</td><td style="width: 1%">&#160;</td>
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  <tr style="vertical-align: bottom; ">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; ">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p>

<ix:continuation id="_PropertyPlantAndEquipmentTextBlock-c0_cont_1"><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%"> <tr style="vertical-align: top"> <td style="width: 0.25in; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">*</span></td> <td style="text-align: justify"><ix:footnote id="ix_3_footnote" xml:lang="en-US"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The variance of impairment from March 31, 2022 to March 31, 2023 is
solely caused by exchange rate variance.</span></ix:footnote></td></tr> </table></ix:continuation>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Total
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Symbol"> </span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&#160;</p><div>

</div><ix:nonNumeric contextRef="c0" escape="true" name="us-gaap:LongTermDebtTextBlock"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Note&#160;7 &#8211; LONG-TERM INVESTMENT</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Long-term investment consists of the following:</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<ix:nonNumeric contextRef="c0" continuedAt="_ScheduleOfDebtInstrumentsTextBlock-c0_cont_1" escape="true" name="us-gaap:ScheduleOfDebtInstrumentsTextBlock"><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
  <tr style="vertical-align: bottom">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; ">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; ">
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    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right"><div style="-sec-ix-hidden: hidden-fact-106">-</div></td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p>

<ix:continuation continuedAt="_ScheduleOfDebtInstrumentsTextBlock-c0_cont_2" id="_ScheduleOfDebtInstrumentsTextBlock-c0_cont_1"><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%"> <tr style="vertical-align: top"> <td style="width: 0.25in; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(1)</span></td> <td style="text-align: justify"><ix:footnote id="ix_4_footnote" xml:lang="en-US"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">It represents <ix:nonFraction contextRef="c182" decimals="2" format="ixt:num-dot-decimal" name="cjjd:InvestmentPercentage" scale="-2" unitRef="pure">49</ix:nonFraction>% investment in Kahamadi Bio. The investment is recorded using the equity method. Kahamadi Bio suffered loss of $<ix:nonFraction contextRef="c183" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:EquityMethodInvestmentRealizedGainLossOnDisposal" scale="0" unitRef="usd">0</ix:nonFraction> and $<ix:nonFraction contextRef="c184" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:EquityMethodInvestmentRealizedGainLossOnDisposal" scale="0" unitRef="usd">0</ix:nonFraction> in the year ended March 31, 2023 and 2022.</span></ix:footnote></td></tr> </table></ix:continuation>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p>

<ix:continuation continuedAt="_ScheduleOfDebtInstrumentsTextBlock-c0_cont_3" id="_ScheduleOfDebtInstrumentsTextBlock-c0_cont_2"><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%"> <tr style="vertical-align: top"> <td style="width: 0.25in; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(2)</span></td> <td style="text-align: justify"><ix:footnote id="ix_5_footnote" xml:lang="en-US"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">It represents <ix:nonFraction contextRef="c185" decimals="2" format="ixt:num-dot-decimal" name="cjjd:InvestmentPercentage" scale="-2" unitRef="pure">39</ix:nonFraction>% investment in Zhejiang Zhuoli Life Service Co., LTD (&#8220;Zhuoli Service&#8221;), formerly known as Zhejiang Zhetong Medical Co., Ltd. Zhuoli Service was established in March 2020 to target potential acquisitions or to cooperate with local pharmacies. By attracting more funds from local investors, the Company expects to continue growing its local network in the future. In the year ended March 31, 2021, Jiuzhou Pharmacy injected funds of approximately $<ix:nonFraction contextRef="c186" decimals="0" format="ixt:num-dot-decimal" name="cjjd:InjectedFunds" scale="0" unitRef="usd">1,443,752</ix:nonFraction> into Zhuoli Service. The investment is recorded using the equity method. Zhuoli Service suffered loss of $<ix:nonFraction contextRef="c187" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:EquityMethodInvestmentRealizedGainLossOnDisposal" scale="0" unitRef="usd">2,402,376</ix:nonFraction> in the year ended March 31, 2023.</span></ix:footnote></td></tr> </table></ix:continuation>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Advances to suppliers consist of deposits, with
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><ix:nonNumeric contextRef="c0" escape="true" name="us-gaap:InventoryDisclosureTextBlock"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Note 9 &#8211; INVENTORY</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Inventory consisted of finished goods, valued
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products and is allowed to return products close to their expiration date to its suppliers. Any loss on damaged items is immaterial and
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><ix:nonNumeric contextRef="c0" escape="true" name="cjjd:FarmlandAssetsTextBlock"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Note 10 &#8211; FARMLAND ASSETS</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Farmland assets consist of ginkgo trees planted
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follows:</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<ix:nonNumeric contextRef="c0" continuedAt="cjjd_ScheduleOfFarmlandAssetsTableTextBlock-c0_cont_1" escape="true" name="cjjd:ScheduleOfFarmlandAssetsTableTextBlock"><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
  <tr style="vertical-align: bottom">
    <td style="text-align: center">&#160;</td><td style="text-align: center">&#160;</td>
    <td colspan="2" style="text-align: center">March 31,</td><td style="text-align: center">&#160;</td><td style="text-align: center">&#160;</td>
    <td colspan="2" style="text-align: center">March 31,</td><td style="text-align: center">&#160;</td></tr>
  <tr style="vertical-align: bottom">
    <td style="text-align: center">&#160;</td><td style="text-align: center; padding-bottom: 1.5pt">&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="width: 76%; text-align: left">Farmland assets</td><td style="width: 1%">&#160;</td>
    <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right"><ix:nonFraction contextRef="c2" decimals="0" format="ixt:num-dot-decimal" name="cjjd:FarmlandAssetsGross" scale="0" unitRef="usd">2,287,836</ix:nonFraction></td><td style="width: 1%; text-align: left">&#160;</td><td style="width: 1%">&#160;</td>
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  <tr style="vertical-align: bottom; ">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; padding-bottom: 4pt">Farmland assets, net</td><td style="padding-bottom: 4pt">&#160;</td>
    <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right"><ix:nonFraction contextRef="c2" decimals="0" format="ixt:num-dot-decimal" name="cjjd:LongTermFarmlandAssets" scale="0" unitRef="usd">666,721</ix:nonFraction></td><td style="padding-bottom: 4pt; text-align: left">&#160;</td><td style="padding-bottom: 4pt">&#160;</td>
    <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right"><ix:nonFraction contextRef="c3" decimals="0" format="ixt:num-dot-decimal" name="cjjd:LongTermFarmlandAssets" scale="0" unitRef="usd">722,283</ix:nonFraction></td><td style="padding-bottom: 4pt; text-align: left">&#160;</td></tr>
  </table></ix:nonNumeric>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><ix:nonNumeric contextRef="c0" escape="true" name="cjjd:LongTermDepositsTextBlock"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Note&#160;11 &#8211; LONG TERM DEPOSITS</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">As of March 31, 2023 and March 31, 2022, long
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for the purpose of securing retail store leases that the Company does not anticipate applying or being returned within the next twelve
months. Most of the Company&#8217;s landlords require a minimum payment of nine months&#8217; rent, paid up front, plus additional deposits.</p></ix:nonNumeric><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><ix:nonNumeric contextRef="c0" escape="true" name="us-gaap:InvestmentsAndOtherNoncurrentAssetsTextBlock"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Note&#160;12 &#8211; OTHER NONCURRENT ASSETS</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Other noncurrent assets consisted of the following:</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<ix:nonNumeric contextRef="c0" continuedAt="_ScheduleOfOtherAssetsNoncurrentTextBlock-c0_cont_1" escape="true" name="us-gaap:ScheduleOfOtherAssetsNoncurrentTextBlock"><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
  <tr style="vertical-align: bottom">
    <td style="text-align: center">&#160;</td><td style="text-align: center; padding-bottom: 1.5pt">&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="width: 76%; text-align: left">Forest land use rights*</td><td style="width: 1%">&#160;</td>
    <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right"><ix:nonFraction contextRef="c2" decimals="0" format="ixt:num-dot-decimal" id="ix_25_fact" name="cjjd:ForestLandUseRights" scale="0" unitRef="usd">691,537</ix:nonFraction></td><td style="width: 1%; text-align: left">&#160;</td><td style="width: 1%">&#160;</td>
    <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right"><ix:nonFraction contextRef="c3" decimals="0" format="ixt:num-dot-decimal" id="ix_26_fact" name="cjjd:ForestLandUseRights" scale="0" unitRef="usd">770,057</ix:nonFraction></td><td style="width: 1%; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="padding-bottom: 1.5pt">Others</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right"><ix:nonFraction contextRef="c2" decimals="0" format="ixt:num-dot-decimal" name="cjjd:Others" scale="0" unitRef="usd">98,519</ix:nonFraction></td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-bottom: 4pt">Total</td><td style="padding-bottom: 4pt">&#160;</td>
    <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right"><ix:nonFraction contextRef="c2" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:OtherAssetsNoncurrent" scale="0" unitRef="usd">790,056</ix:nonFraction></td><td style="padding-bottom: 4pt; text-align: left">&#160;</td><td style="padding-bottom: 4pt">&#160;</td>
    <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right"><ix:nonFraction contextRef="c3" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:OtherAssetsNoncurrent" scale="0" unitRef="usd">822,950</ix:nonFraction></td><td style="padding-bottom: 4pt; text-align: left">&#160;</td></tr>
  </table></ix:nonNumeric>


<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p>

<ix:continuation id="_ScheduleOfOtherAssetsNoncurrentTextBlock-c0_cont_1"><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%"> <tr style="vertical-align: top"> <td style="width: 0.25in; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">*</span></td> <td style="text-align: justify"><ix:footnote id="ix_9_footnote" xml:lang="en-US"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The prepayment for lease of forest land use rights is made to a local government in connection with an operating land lease agreement. The land is currently used to cultivate Ginkgo trees. <ix:nonNumeric contextRef="c0" name="cjjd:DescriptionOfLeasePrepaymentLife">The forest rights certificate from the local village extends the life of the lease to January 31, 2060.</ix:nonNumeric></span></ix:footnote></td></tr> </table></ix:continuation>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The amortization of the prepayment for the lease
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company&#8217;s amortizations of the prepayment
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<ix:nonNumeric contextRef="c0" escape="true" name="us-gaap:ScheduleOfPropertySubjectToOrAvailableForOperatingLeaseTextBlock"><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
  <tr style="vertical-align: bottom">
    <td style="text-align: left; border-bottom: Black 1.5pt solid">Years ending March 31,</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" style="border-bottom: Black 1.5pt solid; text-align: center">Amount</td><td style="padding-bottom: 1.5pt">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right"><ix:nonFraction contextRef="c2" decimals="0" format="ixt:num-dot-decimal" name="cjjd:AmortizationOfFutureMinimumPrepaymentDueNextTwelveMonths" scale="0" unitRef="usd">19,328</ix:nonFraction></td><td style="width: 1%; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="text-align: left">2024</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left">2025</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction contextRef="c2" decimals="0" format="ixt:num-dot-decimal" name="cjjd:AmortizationOfFutureMinimumPrepaymentDueInFourYears" scale="0" unitRef="usd">19,328</ix:nonFraction></td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="text-align: left">2026</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left">2027</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; ">
    <td style="text-align: left">Thereafter</td><td>&#160;</td>
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  </table></ix:nonNumeric></ix:nonNumeric><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: left">&#160;</p><div>

</div><ix:nonNumeric contextRef="c0" escape="true" name="us-gaap:LesseeOperatingLeasesTextBlock"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Note 13 &#8211; Leases</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company leases most of its retail stores and
corporate offices under operating leases, typically with initial terms of <ix:nonNumeric contextRef="c197" format="ixt-sec:duryear" name="cjjd:OperatingLeaseWeightedAverageIinitialTerm">3</ix:nonNumeric> to <ix:nonNumeric contextRef="c198" format="ixt-sec:duryear" name="cjjd:OperatingLeaseWeightedAverageIinitialTerm">10</ix:nonNumeric> years. Usually within one to three months prior to the
expiration date of a lease, the Company is required to notify the lessor and has a priority to continue renting the lease property if
a lessor intends to lease property. The lease itself does not have restriction or covenants. If both parties agree to continue, a new
lease contract with new lease terms has to been signed by both parties. Usually the rent may increase year by year based on the lease
contract. Sublease is typically not allowed. Any damage, if made by the lessee, to the property and equipment within the property has
to been fixed or reimbursed by the lessee. The Company does not have any leases entered into but which have not yet commenced. The net
lease cost for the year ended March 31, 2023 is $<ix:nonFraction contextRef="c0" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:OperatingLeaseInitialDirectCostExpenseOverTerm" scale="0" unitRef="usd">8,075,465</ix:nonFraction>. The Company does not have finance lease according to the definition of ASU
2016-02, <i>Leases </i>(Topic 842). Supplemental cash flow information related to leases for the year ended March 31, 2023 is as follows:</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<ix:nonNumeric contextRef="c0" escape="true" name="cjjd:ScheduleOfCondensedCashFlowStatementRelatedtoLeasesTableTextBlock"><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
  <tr style="vertical-align: bottom">
    <td>Cash paid for amounts included in the measurement of lease liabilities:</td><td>&#160;</td>
    <td colspan="2" style="text-align: center">&#160;</td><td>&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right"><ix:nonFraction contextRef="c2" decimals="0" format="ixt:num-dot-decimal" name="cjjd:CashPaidforOperatingLeaseLiabilities" scale="0" unitRef="usd">8,075,465</ix:nonFraction></td><td style="width: 1%; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="text-align: left">Right-of-use assets obtained in exchange for lease obligations:</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 0.125in; text-align: left">Operating leases</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><div style="-sec-ix-hidden: hidden-fact-109">-</div></td><td style="text-align: left">&#160;</td></tr>
  </table></ix:nonNumeric>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Supplemental balance sheet information related
to leases as of March 31, 2023 is as follows:</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<ix:nonNumeric contextRef="c0" escape="true" name="cjjd:ScheduleOfCondensedBalanceSheetRelatedtoLeasesTableTextBlock"><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
  <tr style="vertical-align: bottom">
    <td style="font-weight: bold">Operating leases:</td><td>&#160;</td>
    <td colspan="2" style="text-align: center">&#160;</td><td>&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="width: 88%; text-align: left; padding-bottom: 4pt">Operating lease right-of-use assets</td><td style="width: 1%; padding-bottom: 4pt">&#160;</td>
    <td style="width: 1%; border-bottom: Black 4pt double; text-align: left">$</td><td style="width: 9%; border-bottom: Black 4pt double; text-align: right"><ix:nonFraction contextRef="c2" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:OperatingLeaseRightOfUseAsset" scale="0" unitRef="usd">13,924,826</ix:nonFraction></td><td style="width: 1%; padding-bottom: 4pt; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td>&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left">Current portion of operating lease liabilities</td><td>&#160;</td>
    <td style="text-align: left">$</td><td style="text-align: right"><ix:nonFraction contextRef="c2" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:OperatingLeaseLiabilityCurrent" scale="0" unitRef="usd">5,131,373</ix:nonFraction></td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="text-align: left; padding-bottom: 1.5pt">Long-term operating lease liabilities</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right"><ix:nonFraction contextRef="c2" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:OperatingLeaseLiabilityNoncurrent" scale="0" unitRef="usd">7,768,216</ix:nonFraction></td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; padding-bottom: 4pt">Total operating lease liabilities</td><td style="padding-bottom: 4pt">&#160;</td>
    <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right"><ix:nonFraction contextRef="c2" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:OperatingLeaseLiability" scale="0" unitRef="usd">12,899,589</ix:nonFraction></td><td style="padding-bottom: 4pt; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td>&#160;</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="font-weight: bold">Weighted average remaining lease term</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="text-align: left">Operating leases</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonNumeric contextRef="c2" format="ixt-sec:duryear" name="us-gaap:OperatingLeaseWeightedAverageRemainingLeaseTerm1">2.2</ix:nonNumeric></td><td style="text-align: left">&#160;</td></tr>
  </table></ix:nonNumeric>


<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The following table summarizes the maturity of
lease liabilities under operating leases as of March 31, 2023:</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<ix:nonNumeric contextRef="c0" escape="true" name="cjjd:ScheduleOfLeaseLiabilitiesUnderOperatingLeasesTableTextBlock"><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
  <tr style="vertical-align: bottom">
    <td style="text-align: left">&#160;</td><td>&#160;</td>
    <td colspan="2" style="text-align: center">Operating</td><td>&#160;</td></tr>
  <tr style="vertical-align: bottom">
    <td style="text-align: left; border-bottom: Black 1.5pt solid">For the year ending March 31,</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" style="border-bottom: Black 1.5pt solid; text-align: center">Leases</td><td style="padding-bottom: 1.5pt">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="width: 88%; text-align: left">2024</td><td style="width: 1%">&#160;</td>
    <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right"><ix:nonFraction contextRef="c2" decimals="0" format="ixt:num-dot-decimal" name="cjjd:OperatingLeasesFutureMinimumPaymentDueInTwelveMonths" scale="0" unitRef="usd">5,644,435</ix:nonFraction></td><td style="width: 1%; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="text-align: left">2025</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction contextRef="c2" decimals="0" format="ixt:num-dot-decimal" name="cjjd:OperatingLeasesFutureMinimumPaymentRemainderOfFiscalYear" scale="0" unitRef="usd">4,363,688</ix:nonFraction></td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left">2026</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction contextRef="c2" decimals="0" format="ixt:num-dot-decimal" name="cjjd:OperatingLeasesFutureMinimumPaymentDueInTwoYears" scale="0" unitRef="usd">2,554,956</ix:nonFraction></td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="text-align: left">2027</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left">2028</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction contextRef="c2" decimals="0" format="ixt:num-dot-decimal" name="cjjd:OperatingLeasesFutureMinimumPaymentDueInFourYears" scale="0" unitRef="usd">560,213</ix:nonFraction></td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="text-align: left; padding-bottom: 1.5pt">Thereafter</td><td style="padding-bottom: 1.5pt">&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 0.125in; text-align: left">Total lease payments</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction contextRef="c2" decimals="0" format="ixt:num-dot-decimal" name="cjjd:OperatingLeasesFutureMinimumPaymentsDueGross" scale="0" unitRef="usd">15,086,471</ix:nonFraction></td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="text-align: left; padding-bottom: 1.5pt">Less: imputed interest</td><td style="padding-bottom: 1.5pt">&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 0.125in; text-align: left; padding-bottom: 4pt">Total lease liabilities</td><td style="padding-bottom: 4pt">&#160;</td>
    <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right"><ix:nonFraction contextRef="c2" decimals="0" format="ixt:num-dot-decimal" name="cjjd:OperatingLeasesFutureMinimumPaymentDue" scale="0" unitRef="usd">12,899,589</ix:nonFraction></td><td style="padding-bottom: 4pt; text-align: left">&#160;</td></tr>
  </table></ix:nonNumeric></ix:nonNumeric><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&#160;</p><div>

</div><ix:nonNumeric contextRef="c0" escape="true" name="us-gaap:GoodwillAndIntangibleAssetsDisclosureTextBlock"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Note&#160;14 &#8211; INTANGIBLE ASSETS</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Net intangible assets consisted of the following
at:</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<ix:nonNumeric contextRef="c0" continuedAt="_ScheduleOfFiniteLivedIntangibleAssetsTableTextBlock-c0_cont_1" escape="true" name="us-gaap:ScheduleOfFiniteLivedIntangibleAssetsTableTextBlock"><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
  <tr style="vertical-align: bottom">
    <td style="text-align: center">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
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    <td colspan="2" style="border-bottom: Black 1.5pt solid; text-align: center">March&#160;31, <br/>2022</td><td style="padding-bottom: 1.5pt">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="width: 76%"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">License <sup>(1)</sup></span></td><td style="width: 1%">&#160;</td>
    <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right"><ix:nonFraction contextRef="c199" decimals="0" format="ixt:num-dot-decimal" id="ix_27_fact" name="us-gaap:FiniteLivedIntangibleAssetsGross" scale="0" unitRef="usd">2,354,534</ix:nonFraction></td><td style="width: 1%; text-align: left">&#160;</td><td style="width: 1%">&#160;</td>
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  <tr style="vertical-align: bottom; ">
    <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Software <sup>(2)</sup></span></td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction contextRef="c201" decimals="0" format="ixt:num-dot-decimal" id="ix_29_fact" name="us-gaap:FiniteLivedIntangibleAssetsGross" scale="0" unitRef="usd">1,172,465</ix:nonFraction></td><td style="text-align: left">&#160;</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; padding-bottom: 1.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Land use rights <sup>(3)</sup></span></td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right"><ix:nonFraction contextRef="c203" decimals="0" format="ixt:num-dot-decimal" id="ix_31_fact" name="us-gaap:FiniteLivedIntangibleAssetsGross" scale="0" unitRef="usd">1,419,936</ix:nonFraction></td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
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  <tr style="vertical-align: bottom; ">
    <td style="text-align: left">Total intangible assets</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction contextRef="c2" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:FiniteLivedIntangibleAssetsGross" scale="0" unitRef="usd">4,946,935</ix:nonFraction></td><td style="text-align: left">&#160;</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; ">
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    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">(<ix:nonFraction contextRef="c2" decimals="0" format="ixt:num-dot-decimal" id="ix_33_fact" name="cjjd:ImpairmentOfIntangibleAssetIndefinitelivedExcludingGoodwill" scale="0" sign="-" unitRef="usd">637,159</ix:nonFraction></td><td style="padding-bottom: 1.5pt; text-align: left">)</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">(<ix:nonFraction contextRef="c3" decimals="0" format="ixt:num-dot-decimal" id="ix_34_fact" name="cjjd:ImpairmentOfIntangibleAssetIndefinitelivedExcludingGoodwill" scale="0" sign="-" unitRef="usd">690,258</ix:nonFraction></td><td style="padding-bottom: 1.5pt; text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right"><ix:nonFraction contextRef="c2" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:FiniteLivedIntangibleAssetsNet" scale="0" unitRef="usd">3,195,748</ix:nonFraction></td><td style="padding-bottom: 4pt; text-align: left">&#160;</td><td style="padding-bottom: 4pt">&#160;</td>
    <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right"><ix:nonFraction contextRef="c3" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:FiniteLivedIntangibleAssetsNet" scale="0" unitRef="usd">3,547,986</ix:nonFraction></td><td style="padding-bottom: 4pt; text-align: left">&#160;</td></tr>
  </table></ix:nonNumeric>


<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Amortization expense of intangibles amounted to
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company has credit facilities with Hangzhou
United Bank (&#8220;HUB&#8221;), Bank of Hangzhou (&#8220;BOH&#8221;), and China Merchant Bank (&#8220;CMB&#8221;) that provided working
capital in the form of the following bank acceptance notes. Usually, the Company applies to issue a note, which is guaranteed by the bank,
to its supplier to pay off its debt in a future date. Before the payment date, the bank will ask the Company to inject cash into the bank.
On the payment date, the bank will pay the amount to whoever legally holds the note. As of at March 31, 2023 and March 31, 2022, the balances
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p>

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  <tr style="vertical-align: bottom; ">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; ">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; ">
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    <td style="text-align: left">&#160;</td><td style="text-align: right"><div style="-sec-ix-hidden: hidden-fact-130">-</div></td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="text-align: center">HUB</td><td>&#160;</td>
    <td style="text-align: center">03/20/23</td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right"><div style="-sec-ix-hidden: hidden-fact-131">-</div></td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
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    <td style="text-align: center">HUB</td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right"><div style="-sec-ix-hidden: hidden-fact-132">-</div></td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left">Jiuxin Medicine</td><td>&#160;</td>
    <td style="text-align: center">HUB</td><td>&#160;</td>
    <td style="text-align: center">11/17/22</td><td>&#160;</td>
    <td style="text-align: center"><ix:nonNumeric contextRef="c282" format="ixt:date-month-day-year" id="ix_83_fact" name="us-gaap:DebtInstrumentMaturityDate">05/17/23</ix:nonNumeric></td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction contextRef="c283" decimals="0" format="ixt:num-dot-decimal" id="ix_84_fact" name="us-gaap:NotesPayableToBankCurrent" scale="0" unitRef="usd">1,303,221</ix:nonFraction></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><div style="-sec-ix-hidden: hidden-fact-133">-</div></td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="text-align: left">Jiuxin Medicine</td><td>&#160;</td>
    <td style="text-align: center">HUB</td><td>&#160;</td>
    <td style="text-align: center">12/16/22</td><td>&#160;</td>
    <td style="text-align: center"><ix:nonNumeric contextRef="c285" format="ixt:date-month-day-year" id="ix_85_fact" name="us-gaap:DebtInstrumentMaturityDate">06/16/23</ix:nonNumeric></td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right"><div style="-sec-ix-hidden: hidden-fact-134">-</div></td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left">Jiuxin Medicine</td><td>&#160;</td>
    <td style="text-align: center">HUB</td><td>&#160;</td>
    <td style="text-align: center">12/21/22</td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right"><div style="-sec-ix-hidden: hidden-fact-135">-</div></td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="text-align: left">Jiuxin Medicine</td><td>&#160;</td>
    <td style="text-align: center">HUB</td><td>&#160;</td>
    <td style="text-align: center">12/29/22</td><td>&#160;</td>
    <td style="text-align: center"><ix:nonNumeric contextRef="c291" format="ixt:date-month-day-year" id="ix_89_fact" name="us-gaap:DebtInstrumentMaturityDate">06/29/23</ix:nonNumeric></td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right"><div style="-sec-ix-hidden: hidden-fact-136">-</div></td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; padding-bottom: 1.5pt">Jiuxin Medicine</td><td style="padding-bottom: 1.5pt">&#160;</td>
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    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right"><div style="-sec-ix-hidden: hidden-fact-137">-</div></td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="padding-bottom: 4pt">Total</td><td style="padding-bottom: 4pt">&#160;</td>
    <td style="text-align: center; padding-bottom: 4pt">&#160;</td><td style="padding-bottom: 4pt">&#160;</td>
    <td style="text-align: center; padding-bottom: 4pt">&#160;</td><td style="padding-bottom: 4pt">&#160;</td>
    <td style="text-align: center; padding-bottom: 4pt">&#160;</td><td style="padding-bottom: 4pt">&#160;</td>
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    <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right"><ix:nonFraction contextRef="c3" decimals="0" format="ixt:num-dot-decimal" id="ix_94_fact" name="us-gaap:NotesPayableToBankCurrent" scale="0" unitRef="usd">34,189,022</ix:nonFraction></td><td style="padding-bottom: 4pt; text-align: left">&#160;</td></tr>
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p>

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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">As of March 31, 2023, the Company had a credit
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left">&#160;</p><div>

</div><ix:nonNumeric contextRef="c0" escape="true" name="cjjd:LoanPayableTextBlock"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Note 16 &#8211; LOAN PAYABLE</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">On August 2, 2019 and December 11, 2019, the Company
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The Company is required to pledge accounts receivable of three drugstores to Haihui Commercial. The Company has an option to pay off the
debts earlier than the repayment schedule upon approval from Haihui Commercial. As of March 31, 2023, the full amount has been repaid
to Haihui Commercial.</p></ix:nonNumeric><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><ix:nonNumeric contextRef="c0" escape="true" name="us-gaap:IncomeTaxDisclosureTextBlock"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Note&#160;17 &#8211; TAXES</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="text-decoration:underline">Income tax</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Income tax expense includes a provision for federal,
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items which are considered discrete to the period.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The effective tax rates on income before income
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primarily include stock option expenses and legal, accounting and other expenses incurred by the Company that are not deductible for PRC
income tax. The effective tax rate is based on forecasted annual results and these amounts may fluctuate significantly through the rest
of the year as a result of the unpredictable impact of COVID-19 on the Company&#8217;s operating activities.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The effective tax rates on income before income
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that primarily include stock option expenses and legal, accounting and other expenses incurred by the Company that are not deductible
for PRC income tax. The effective tax rate is based on forecasted annual results and these amounts may fluctuate significantly through
the rest of the year as a result of the unpredictable impact of COVID-19 on the Company&#8217;s operating activities.&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The effective tax rate on income before income
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primarily include stock option expenses and legal, accounting and other expenses incurred by the Company that are not deductible for PRC
income tax. The effective tax rate is based on forecasted annual results and these amounts may fluctuate significantly through the rest
of the year as a result of the unpredictable impact of COVID-19 on the Company&#8217;s operating activities.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">A reconciliation of the income tax provision at
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<ix:nonNumeric contextRef="c0" escape="true" name="us-gaap:ScheduleOfEffectiveIncomeTaxRateReconciliationTableTextBlock"><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; ">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left">China income taxes</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; ">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; padding-bottom: 1.5pt">Non-deductible expenses-permanent difference</td><td style="padding-bottom: 1.5pt">&#160;</td>
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    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">(<ix:nonFraction contextRef="c5" decimals="3" format="ixt:num-dot-decimal" name="us-gaap:EffectiveIncomeTaxRateReconciliationNondeductibleExpenseOther" scale="-2" sign="-" unitRef="pure">0.4</ix:nonFraction></td><td style="padding-bottom: 1.5pt; text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="text-align: left; padding-bottom: 4pt">Effective tax rate</td><td style="padding-bottom: 4pt">&#160;</td>
    <td style="border-bottom: Black 4pt double; text-align: left">&#160;</td><td style="border-bottom: Black 4pt double; text-align: right">(<ix:nonFraction contextRef="c0" decimals="3" format="ixt:num-dot-decimal" name="us-gaap:EffectiveIncomeTaxRateContinuingOperations" scale="-2" sign="-" unitRef="pure">1.9</ix:nonFraction></td><td style="padding-bottom: 4pt; text-align: left">)%</td><td style="padding-bottom: 4pt">&#160;</td>
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    <td style="border-bottom: Black 4pt double; text-align: left">&#160;</td><td style="border-bottom: Black 4pt double; text-align: right">(<ix:nonFraction contextRef="c5" decimals="3" format="ixt:num-dot-decimal" name="us-gaap:EffectiveIncomeTaxRateContinuingOperations" scale="-2" sign="-" unitRef="pure">0.4</ix:nonFraction></td><td style="padding-bottom: 4pt; text-align: left">)%</td></tr>
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company has recorded $<ix:nonFraction contextRef="c2" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:UnrecognizedTaxBenefits" scale="0" unitRef="usd">0</ix:nonFraction> unrecognized benefit
as of March 31, 2023. On the information currently available, the Company does not anticipate a significant increase or decrease to its
unrecognized benefit within the next 12 months.</p></ix:nonNumeric><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><ix:nonNumeric contextRef="c0" escape="true" name="us-gaap:PensionAndOtherPostretirementBenefitsDisclosureTextBlock"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Note 18 &#8211; POSTRETIREMENT BENEFITS</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Regulations in the PRC require the Company to
contribute to a defined contribution retirement plan for all permanent employees. The contribution for each employee is based on a percentage
of the employee&#8217;s current compensation as required by the local government. The Company contributed $<ix:nonFraction contextRef="c0" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:PensionAndOtherPostretirementBenefitExpense" scale="0" unitRef="usd">1,284,218</ix:nonFraction>, $<ix:nonFraction contextRef="c4" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:PensionAndOtherPostretirementBenefitExpense" scale="0" unitRef="usd">1,301,315</ix:nonFraction> and $<ix:nonFraction contextRef="c5" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:PensionAndOtherPostretirementBenefitExpense" scale="0" unitRef="usd">1,076,811</ix:nonFraction>
in employment benefits and pension for the years ended March 31, 2023, 2022 and 2021, respectively.</p></ix:nonNumeric><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"></p><div>

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    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: left">&#160;</p><div>

</div><ix:nonNumeric contextRef="c0" escape="true" name="us-gaap:RelatedPartyTransactionsDisclosureTextBlock"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Note 19 &#8211; RELATED PARTY TRANSACTIONS
AND ARRANGEMENTS</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Amounts payable to related parties are summarized
as follows:</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<ix:nonNumeric contextRef="c0" continuedAt="_ScheduleOfRelatedPartyTransactionsTableTextBlock-c0_cont_1" escape="true" name="us-gaap:ScheduleOfRelatedPartyTransactionsTableTextBlock"><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
  <tr style="vertical-align: bottom">
    <td style="text-align: center">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="width: 76%; text-align: left; padding-bottom: 1.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Due to a director and CEO <sup>(1)</sup> :</span></td><td style="width: 1%; padding-bottom: 1.5pt">&#160;</td>
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    <td style="width: 1%; border-bottom: Black 1.5pt solid; text-align: left">$</td><td style="width: 9%; border-bottom: Black 1.5pt solid; text-align: right"><ix:nonFraction contextRef="c304" decimals="0" format="ixt:num-dot-decimal" id="ix_96_fact" name="cjjd:DueToADirectorAndCEO" scale="0" unitRef="usd">1,561,244</ix:nonFraction></td><td style="width: 1%; padding-bottom: 1.5pt; text-align: left">&#160;</td></tr>
  </table></ix:nonNumeric>


<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p>

<ix:continuation id="_ScheduleOfRelatedPartyTransactionsTableTextBlock-c0_cont_1"><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse"> <tr style="vertical-align: top"> <td style="width: 0.25in; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(1)</span></td> <td style="text-align: justify"><ix:footnote id="ix_15_footnote" xml:lang="en-US"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Due to foreign exchange restrictions, the Company&#8217;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.</span></ix:footnote></td></tr> </table></ix:continuation>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company leases a retail space from Mr. Lei
Liu. The lease expires in September 2025. Rent expenses totaled $<ix:nonFraction contextRef="c301" decimals="0" format="ixt:num-dot-decimal" name="cjjd:OperatingLeasesRentExpenesNet" scale="0" unitRef="usd">112,681</ix:nonFraction> and $<ix:nonFraction contextRef="c302" decimals="0" format="ixt:num-dot-decimal" name="cjjd:OperatingLeasesRentExpenesNet" scale="0" unitRef="usd">28,850</ix:nonFraction> for the twelve months ended March&#160;31, 2023 and
2022, respectively. The amounts owed under the lease for the twelve months ended March&#160;31, 2023 were paid to Mr. Liu as of March
31, 2023.</p></ix:nonNumeric><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;&#160;</p><div>

</div><ix:nonNumeric contextRef="c0" continuedAt="_StockholdersEquityNoteDisclosureTextBlock-c0_cont_1" escape="true" name="us-gaap:StockholdersEquityNoteDisclosureTextBlock"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Note 20 &#8211; SHAREHOLDER&#8217;S EQUITY</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="text-decoration:underline">Ordinary shares</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">On April 7, 2022, the Company effected a 1-for-12&#160;reverse
stock split on its ordinary shares. Upon the effectiveness of the reverse stock split, every 12 shares of the Company&#8217;s issued and
outstanding ordinary shares were automatically be converted into one issued and outstanding ordinary share. No fractional shares were
issued as a result of the reverse stock split. Instead, any fractional shares that would have resulted from the split were rounded up
to the next whole number. The reverse stock split affects all shareholders uniformly and will not alter any shareholder&#8217;s percentage
interest in the Company&#8217;s outstanding ordinary shares, except for adjustments that may result from the treatment of fractional shares.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">On August 3, 2022, the Company closed a private
placement of <ix:nonFraction contextRef="c305" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:SharesIssued" scale="0" unitRef="shares">1,000,000</ix:nonFraction> shares of ordinary shares at $<ix:nonFraction contextRef="c305" decimals="2" format="ixt:num-dot-decimal" name="us-gaap:SaleOfStockPricePerShare" scale="0" unitRef="usdPershares">1.50</ix:nonFraction> per share with gross proceeds of $<ix:nonFraction contextRef="c305" decimals="0" format="ixt:num-dot-decimal" name="cjjd:GrossProceeds" scale="0" unitRef="usd">1,500,000</ix:nonFraction>.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">On October 11, 2022, the Company closed a private
placement of <ix:nonFraction contextRef="c306" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:SharesIssued" scale="0" unitRef="shares">3,200,000</ix:nonFraction> shares of ordinary shares at $<ix:nonFraction contextRef="c306" decimals="2" format="ixt:num-dot-decimal" name="us-gaap:SharesIssuedPricePerShare" scale="0" unitRef="usdPershares">1.00</ix:nonFraction> per share with gross proceeds of $<ix:nonFraction contextRef="c306" decimals="0" format="ixt:num-dot-decimal" name="cjjd:GrossProceeds" scale="0" unitRef="usd">3,200,000</ix:nonFraction>.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">On January 20, 2023, the Company closed a registered
direct offering of <ix:nonFraction contextRef="c307" decimals="0" format="ixt:num-dot-decimal" name="cjjd:WarrantsToPurchase" scale="0" unitRef="shares">1,750,000</ix:nonFraction> shares of ordinary shares at $<ix:nonFraction contextRef="c307" decimals="2" format="ixt:num-dot-decimal" name="us-gaap:SaleOfStockPricePerShare" scale="0" unitRef="usdPershares">1.50</ix:nonFraction> per share with gross proceeds of $<ix:nonFraction contextRef="c308" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:ProceedsFromIssuanceOfPrivatePlacement" scale="0" unitRef="usd">2,625,000</ix:nonFraction> from its effective shelf registration
statement.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="text-decoration:underline">Warrants</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Concurrent with the registered direct offering
of common stock that closed on April 15, 2019, the Company issued to several investors in a private placement warrants to purchase up
to <ix:nonFraction contextRef="c309" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:SharesIssued" scale="0" unitRef="shares">250,001</ix:nonFraction> shares of common stock. In connection with the offering, the Company also issued a warrant to its placement agent of this offering,
pursuant to which the agent may purchase up to <ix:nonFraction contextRef="c310" decimals="2" format="ixt:num-dot-decimal" name="cjjd:AggregateSharePercentage" scale="-2" unitRef="pure">6</ix:nonFraction>% of the aggregate number of shares of common stock sold in the offering, i.e. <ix:nonFraction contextRef="c311" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:ExcessStockSharesIssued" scale="0" unitRef="shares">20,000</ix:nonFraction>
shares at an exercise price of $<ix:nonFraction contextRef="c311" decimals="1" format="ixt:num-dot-decimal" name="us-gaap:SharesIssuedPricePerShare" scale="0" unitRef="usdPershares">37.5</ix:nonFraction> per share. The warrant became exercisable on October 11, 2019 and will expire on April 11, 2024.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Concurrent with the registered direct offering
of common stock that closed on June 3, 2020, the Company issued to several investors in a private placement warrants to purchase up to
<ix:nonFraction contextRef="c312" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:SharesIssued" scale="0" unitRef="shares">312,500</ix:nonFraction> shares of common stock. In connection with the offering, the Company also issued warrants to its placement agent of this offering,
pursuant to which the agent may purchase up to <ix:nonFraction contextRef="c312" decimals="3" format="ixt:num-dot-decimal" name="cjjd:AggregateSharePercentage" scale="-2" unitRef="pure">6.5</ix:nonFraction>% of the aggregate number of shares of common stock sold in the offering, i.e. <ix:nonFraction contextRef="c312" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:ExcessStockSharesIssued" scale="0" unitRef="shares">25,000</ix:nonFraction>
shares at an exercise price of $<ix:nonFraction contextRef="c312" decimals="2" format="ixt:num-dot-decimal" name="us-gaap:SharesIssuedPricePerShare" scale="0" unitRef="usdPershares">30.84</ix:nonFraction> per share. The warrant becomes exercisable on December 2, 2020 and will expire on June 2, 2025.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;&#160;</p>

<p style="text-align: justify; margin: 0pt 0; font: 10pt Times New Roman, Times, Serif">Concurrent with the private placement of ordinary shares that closed
on August 3, 2022, the Company issued to several investors in a private placement warrants to purchase up to <ix:nonFraction contextRef="c313" decimals="0" format="ixt:num-dot-decimal" name="cjjd:WarrantsToPurchase" scale="0" unitRef="shares">1,000,000</ix:nonFraction> shares of ordinary
shares at an exercise price of $<ix:nonFraction contextRef="c314" decimals="2" format="ixt:num-dot-decimal" name="us-gaap:WarrantExercisePriceIncrease" scale="0" unitRef="usdPershares">1.50</ix:nonFraction>. The warrant became exercisable on August 3, 2022 and valid for thirty-six months. As the Comany
completed another private placement on October 11, 2022 at a share purchase price of $<ix:nonFraction contextRef="c315" decimals="2" format="ixt:num-dot-decimal" name="us-gaap:SaleOfStockPricePerShare" scale="0" unitRef="usdPershares">1.00</ix:nonFraction> as described below, the warrant exercise price
was adjusted to $<ix:nonFraction contextRef="c316" decimals="2" format="ixt:num-dot-decimal" name="us-gaap:SharePrice" scale="0" unitRef="usdPershares">1.00</ix:nonFraction> based on the anti-dilutive term in the Warrants Form. On December 12, 2022, the investors chose to cashless exercise
all their warrants for a total of <ix:nonFraction contextRef="c317" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:ExcessStockSharesIssued" scale="0" unitRef="shares">842,272</ix:nonFraction> ordinary shares</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p></ix:nonNumeric><div>

</div><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left">&#160;</p><div>

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shares that closed on October 11, 2022, the Company issued to several investors in a private placement warrants to purchase up to <ix:nonFraction contextRef="c315" decimals="0" format="ixt:num-dot-decimal" name="cjjd:WarrantsToPurchase" scale="0" unitRef="shares">9,600,000</ix:nonFraction>
shares of ordinary shares at an exercise price of $<ix:nonFraction contextRef="c318" decimals="2" format="ixt:num-dot-decimal" name="us-gaap:WarrantExercisePriceIncrease" scale="0" unitRef="usdPershares">1.66</ix:nonFraction>. The warrant became exercisable on October 11, 2022 and and valid for thirty-six
months. On December 12, 2022, the investors chose to cashless exercise all the warrants for a total of <ix:nonFraction contextRef="c319" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:ExcessStockSharesIssued" scale="0" unitRef="shares">7,086,432</ix:nonFraction> ordinary shares..</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Concurrent with the registered direct offering
of ordinary shares that closed on January 20, 2023, the Company issued to several investors warrants to purchase up to <ix:nonFraction contextRef="c320" decimals="0" format="ixt:num-dot-decimal" name="cjjd:WarrantsToPurchase" scale="0" unitRef="shares">5,250,000</ix:nonFraction> shares
of ordinary shares at an exercise price of $<ix:nonFraction contextRef="c321" decimals="2" format="ixt:num-dot-decimal" name="us-gaap:WarrantExercisePriceIncrease" scale="0" unitRef="usdPershares">2.50</ix:nonFraction>. The warrant became exercisable on January 20, 2023 and valid for thirty-six months.
On February 13, 2023. the investors chose to cashless exercise all the warrants for a total of <ix:nonFraction contextRef="c322" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:ExcessStockSharesIssued" scale="0" unitRef="shares">3,331,146</ix:nonFraction> ordinary shares.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="text-decoration:underline">Share-based compensation</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company accounts for share-based payment awards
granted to employees and directors by recording compensation expense based on estimated fair values. The Company estimates the fair value
of share-based payment awards on the date of grant. The value of the portion of the award that is ultimately expected to vest is recognized
as an expense over the requisite service periods in the Company&#8217;s consolidated statements of operations. Share-based awards are
attributed to expenses using the straight-line method over the vesting period. The Company determines the value of each option award that
contains a market condition using a Monte Carlo Simulation valuation model, while all other option awards are valued using the Black-Scholes
valuation model as permitted under FASB ASC 718 &#8220;Compensation - Stock Compensation.&#8221; The assumptions used in calculating the
fair value of share-based payment awards represent the Company&#8217;s best estimates. The Company&#8217;s estimates of the fair values
of stock options granted and the resulting amounts of share-based compensation recognized may be impacted by certain variables including
stock price volatility, employee stock option exercise behaviors, additional stock option modifications, estimates of forfeitures, and
the related income tax impact.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">On April 28, 2022, the Company granted a total
of <ix:nonFraction contextRef="c323" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:StockIssuedDuringPeriodSharesShareBasedCompensationForfeited" scale="0" unitRef="shares">850,000</ix:nonFraction> shares of restricted ordinary shares to its key employees in its retail drugstores and online pharmacy under the Company&#8217;s
2010 Equity Incentive Plan, as amended (the &#8220;Plan&#8221;). The stock awards vested on the grant date. Each stock is valued at $<ix:nonFraction contextRef="c324" decimals="2" format="ixt:num-dot-decimal" name="us-gaap:SharePrice" scale="0" unitRef="usdPershares">2.02</ix:nonFraction>
per share, the adjusted closing price of April 28, 2022. All $<ix:nonFraction contextRef="c325" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:AllocatedShareBasedCompensationExpense" scale="0" unitRef="usd">1,717,000</ix:nonFraction> of such expense has been recorded as a service compensation expense
in the year ended March 31, 2023.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">On December 19, 2022, the Company granted a total
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2010 Equity Incentive Plan, as amended (the &#8220;Plan&#8221;). The stock awards vested on the grant date. Each stock is valued at $<ix:nonFraction contextRef="c327" decimals="2" format="ixt:num-dot-decimal" name="us-gaap:SaleOfStockPricePerShare" scale="0" unitRef="usdPershares">4.02</ix:nonFraction>
per share, the adjusted closing price of December 19, 2022. All $8,643,000 of such expense has been recorded as a service compensation
expense in the year ended March 31, 2023.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p></ix:continuation><div>
</div><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: left">&#160;</p><div>

</div><ix:continuation id="_StockholdersEquityNoteDisclosureTextBlock-c0_cont_2"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="text-decoration:underline">Statutory reserves</span></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Statutory reserves represent restricted retained
earnings. Based on their legal formation, the Company is required to set aside <ix:nonFraction contextRef="c0" decimals="2" format="ixt:num-dot-decimal" name="cjjd:StatutoryAccountsPercentage" scale="-2" unitRef="pure">10</ix:nonFraction>% of its net income as reported in their statutory accounts
on an annual basis to the Statutory Surplus Reserve Fund (the &#8220;Reserve Fund&#8221;). Once the total amount set aside in the Reserve
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increase the entity&#8217;s registered capital upon approval by relevant government authorities or eliminate its future losses under PRC
GAAP upon a resolution by its board of directors. The Reserve Fund is not distributable to shareholders, as cash dividends or otherwise,
except in the event of liquidation.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Appropriations to the Reserve Fund are accounted
for as a transfer from unrestricted earnings to statutory reserves. During the years ended March 31, 2023 and 2022, the Company did not
make appropriations to statutory reserves.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">There are no legal requirements in the PRC to
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><ix:nonNumeric contextRef="c0" escape="true" name="us-gaap:EarningsPerShareTextBlock"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Note 21 &#8211; NET LOSS PER SHARE</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company reports earnings per share in accordance
with the provisions of the FASB&#8217;s related accounting standard. This standard requires presentation of basic and diluted earnings
per share in conjunction with the disclosure of the methodology used in computing such earnings per share. Basic earnings per share excludes
dilution, but includes vested restricted stocks and is computed by dividing income available to ordinary sharesholders by the weighted
average common shares outstanding during the period. Diluted earnings per share takes into account the potential dilution that could occur
if securities or other contracts to issue ordinary shares were exercised and converted into ordinary shares.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The following is a reconciliation of the basic
and diluted earnings per share computation:</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<ix:nonNumeric contextRef="c0" escape="true" name="us-gaap:ScheduleOfEarningsPerShareBasicAndDilutedTableTextBlock"><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
  <tr style="vertical-align: bottom">
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  <tr style="vertical-align: bottom">
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    <td colspan="2" style="border-bottom: Black 1.5pt solid; text-align: center">2023</td><td style="text-align: center; padding-bottom: 1.5pt">&#160;</td><td style="text-align: center; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" style="border-bottom: Black 1.5pt solid; text-align: center">2022</td><td style="text-align: center; padding-bottom: 1.5pt">&#160;</td><td style="text-align: center; padding-bottom: 1.5pt">&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="width: 64%; text-align: left">Net loss attributable to controlling interest</td><td style="width: 1%">&#160;</td>
    <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">(<ix:nonFraction contextRef="c0" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:NetIncomeLoss" scale="0" sign="-" unitRef="usd">21,138,525</ix:nonFraction></td><td style="width: 1%; text-align: left">)</td><td style="width: 1%">&#160;</td>
    <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">(<ix:nonFraction contextRef="c4" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:NetIncomeLoss" scale="0" sign="-" unitRef="usd">3,192,119</ix:nonFraction></td><td style="width: 1%; text-align: left">)</td><td style="width: 1%">&#160;</td>
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  <tr style="vertical-align: bottom; ">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left">Diluted effect of stock options and warrants</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><div style="-sec-ix-hidden: hidden-fact-139">&#160;</div></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><div style="-sec-ix-hidden: hidden-fact-140">&#160;</div></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td>Loss per share &#8211; Basic:</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="text-align: left">Net loss before noncontrolling interest</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left">Add: Net loss attributable to noncontrolling interest</td><td>&#160;</td>
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    <td style="text-align: left">$</td><td style="text-align: right"><div style="-sec-ix-hidden: hidden-fact-142">-</div></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">$</td><td style="text-align: right"><div style="-sec-ix-hidden: hidden-fact-143">-</div></td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
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    <td style="text-align: left">$</td><td style="text-align: right">(<ix:nonFraction contextRef="c4" decimals="2" format="ixt:num-dot-decimal" name="us-gaap:EarningsPerShareBasic" scale="0" sign="-" unitRef="usdPershares">0.92</ix:nonFraction></td><td style="text-align: left">)</td><td>&#160;</td>
    <td style="text-align: left">$</td><td style="text-align: right">(<ix:nonFraction contextRef="c5" decimals="2" format="ixt:num-dot-decimal" name="us-gaap:EarningsPerShareBasic" scale="0" sign="-" unitRef="usdPershares">2.39</ix:nonFraction></td><td style="text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="text-align: left">Net income before noncontrolling interest</td><td>&#160;</td>
    <td style="text-align: left">$</td><td style="text-align: right">(<ix:nonFraction contextRef="c0" decimals="2" format="ixt:num-dot-decimal" name="cjjd:EarningsPerShareDilutedBeforeNoncontrollingInterest" scale="0" sign="-" unitRef="usdPershares">2.07</ix:nonFraction></td><td style="text-align: left">)</td><td>&#160;</td>
    <td style="text-align: left">$</td><td style="text-align: right">(<ix:nonFraction contextRef="c4" decimals="2" format="ixt:num-dot-decimal" name="cjjd:EarningsPerShareDilutedBeforeNoncontrollingInterest" scale="0" sign="-" unitRef="usdPershares">2.39</ix:nonFraction></td><td style="text-align: left">)</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left">Add: Net loss attributable to noncontrolling interest</td><td>&#160;</td>
    <td style="text-align: left">$</td><td style="text-align: right"><div style="-sec-ix-hidden: hidden-fact-144">-</div></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">$</td><td style="text-align: right"><div style="-sec-ix-hidden: hidden-fact-145">-</div></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">$</td><td style="text-align: right"><div style="-sec-ix-hidden: hidden-fact-146">-</div></td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="text-align: left">Net loss attributable to controlling interest</td><td>&#160;</td>
    <td style="text-align: left">$</td><td style="text-align: right">(<ix:nonFraction contextRef="c0" decimals="2" format="ixt:num-dot-decimal" name="us-gaap:EarningsPerShareDilutedProFormaAdjustment" scale="0" sign="-" unitRef="usdPershares">2.07</ix:nonFraction></td><td style="text-align: left">)</td><td>&#160;</td>
    <td style="text-align: left">$</td><td style="text-align: right">(<ix:nonFraction contextRef="c4" decimals="2" format="ixt:num-dot-decimal" name="us-gaap:EarningsPerShareDilutedProFormaAdjustment" scale="0" sign="-" unitRef="usdPershares">2.39</ix:nonFraction></td><td style="text-align: left">)</td><td>&#160;</td>
    <td style="text-align: left">$</td><td style="text-align: right">(<ix:nonFraction contextRef="c5" decimals="2" format="ixt:num-dot-decimal" name="us-gaap:EarningsPerShareDilutedProFormaAdjustment" scale="0" sign="-" unitRef="usdPershares">2.16</ix:nonFraction></td><td style="text-align: left">)</td></tr>
  </table></ix:nonNumeric>


<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">For the year ended March 31, 2023, <ix:nonFraction contextRef="c0" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:AntidilutiveSecuritiesExcludedFromComputationOfEarningsPerShareAmount" scale="0" unitRef="shares">562,501</ix:nonFraction> shares
underlying outstanding purchase warrants to several investors, and <ix:nonFraction contextRef="c328" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:AntidilutiveSecuritiesExcludedFromComputationOfEarningsPerShareAmount" scale="0" unitRef="shares">45,000</ix:nonFraction> shares underlying outstanding purchase warrrants to an investment
placement agent were excluded from the calculation of diluted loss per share as the options were anti-dilutive.</p></ix:nonNumeric><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">

</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"></p><div>

</div><!-- Field: Page; Sequence: 120; Value: 1 --><div>
    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt">F-<!-- Field: Sequence; Type: Arabic; Name: PageNo -->32<!-- Field: /Sequence --></p></div><div>
    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: left">&#160;</p><div>

</div><ix:nonNumeric contextRef="c0" continuedAt="_SegmentReportingDisclosureTextBlock-c0_cont_1" escape="true" name="us-gaap:SegmentReportingDisclosureTextBlock"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Note 22 &#8211; SEGMENTS</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company operates within four main reportable
segments: retail drugstores, online pharmacy, drug wholesale and herb farming. The retail drugstores segment sells prescription and over-the-counter
(&#8220;OTC&#8221;) medicines, TCM, dietary supplements, medical devices, and sundry items to retail customers.&#160;The online pharmacy
sells OTC drugs, dietary supplements, medical devices and sundry items to customers through several third-party platforms such as Alibaba&#8217;s
Tmall, JD.com and Amazon.com, and the Company&#8217;s own platform all over China. The drug wholesale segment includes supplying the Company&#8217;s
own retail&#160;drugstores with prescription and OTC medicines, TCM, dietary supplement, medical devices and sundry items (which sales
have been eliminated as intercompany transactions), and also selling them to other drug vendors and hospitals. The Company&#8217;s herb
farming segment cultivates selected herbs for sales to other drug vendors. The Company is also involved in online sales and clinic services
that do not meet the quantitative thresholds for reportable segments and are included in the retail drugstores segment. The segments&#8217;
accounting policies are the same as those described in the summary of significant accounting policies. The Company evaluates performance
based on profit or loss from operations before interest and income taxes not including nonrecurring gains and losses.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company&#8217;s reportable business segments
are strategic business units that offer different products and services. Each segment is managed separately because they require different
operations and markets to distinct classes of customers.</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The following table presents summarized information
by segment of the continuing operations for the year ended March 31, 2023:</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<ix:nonNumeric contextRef="c0" continuedAt="_ScheduleOfSegmentReportingInformationBySegmentTextBlock-c0_cont_1" escape="true" name="us-gaap:ScheduleOfSegmentReportingInformationBySegmentTextBlock"><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
  <tr style="vertical-align: bottom">
    <td style="text-align: center">&#160;</td><td style="text-align: center; padding-bottom: 1.5pt">&#160;</td>
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    <td colspan="2" style="border-bottom: Black 1.5pt solid; text-align: center">Total</td><td style="text-align: center; padding-bottom: 1.5pt">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="width: 40%">Revenue</td><td style="width: 1%">&#160;</td>
    <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right"><ix:nonFraction contextRef="c109" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:CostOfRevenue" scale="0" unitRef="usd">83,351,768</ix:nonFraction></td><td style="width: 1%; text-align: left">&#160;</td><td style="width: 1%">&#160;</td>
    <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right"><ix:nonFraction contextRef="c130" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:CostOfRevenue" scale="0" unitRef="usd">32,385,089</ix:nonFraction></td><td style="width: 1%; text-align: left">&#160;</td><td style="width: 1%">&#160;</td>
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    <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right"><ix:nonFraction contextRef="c0" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:CostOfRevenue" scale="0" unitRef="usd">148,811,976</ix:nonFraction></td><td style="width: 1%; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td>Cost of goods</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction contextRef="c109" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:CostOfGoodsAndServicesSold" scale="0" unitRef="usd">56,551,607</ix:nonFraction></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction contextRef="c130" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:CostOfGoodsAndServicesSold" scale="0" unitRef="usd">28,506,228</ix:nonFraction></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction contextRef="c151" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:CostOfGoodsAndServicesSold" scale="0" unitRef="usd">29,473,677</ix:nonFraction></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><div style="-sec-ix-hidden: hidden-fact-148">-</div></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction contextRef="c0" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:CostOfGoodsAndServicesSold" scale="0" unitRef="usd">114,531,512</ix:nonFraction></td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left">Gross profit</td><td>&#160;</td>
    <td style="text-align: left">$</td><td style="text-align: right"><ix:nonFraction contextRef="c109" decimals="0" format="ixt:num-dot-decimal" name="cjjd:GrossProfits" scale="0" unitRef="usd">26,800,161</ix:nonFraction></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">$</td><td style="text-align: right"><ix:nonFraction contextRef="c130" decimals="0" format="ixt:num-dot-decimal" name="cjjd:GrossProfits" scale="0" unitRef="usd">3,878,861</ix:nonFraction></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">$</td><td style="text-align: right"><ix:nonFraction contextRef="c151" decimals="0" format="ixt:num-dot-decimal" name="cjjd:GrossProfits" scale="0" unitRef="usd">3,601,442</ix:nonFraction></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">$</td><td style="text-align: right"><div style="-sec-ix-hidden: hidden-fact-149">-</div></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">$</td><td style="text-align: right"><ix:nonFraction contextRef="c0" decimals="0" format="ixt:num-dot-decimal" name="cjjd:GrossProfits" scale="0" unitRef="usd">34,280,464</ix:nonFraction></td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; ">
    <td style="text-align: left">Selling expenses</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction contextRef="c109" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:SellingExpense" scale="0" unitRef="usd">23,644,339</ix:nonFraction></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction contextRef="c130" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:SellingExpense" scale="0" unitRef="usd">4,266,799</ix:nonFraction></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction contextRef="c151" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:SellingExpense" scale="0" unitRef="usd">1,266,025</ix:nonFraction></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><div style="-sec-ix-hidden: hidden-fact-150">-</div></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction contextRef="c0" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:SellingExpense" scale="0" unitRef="usd">29,177,163</ix:nonFraction></td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left">General and administrative expenses</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction contextRef="c109" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:OtherGeneralAndAdministrativeExpense" scale="0" unitRef="usd">13,800,110</ix:nonFraction></td><td style="text-align: left">&#160;</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; ">
    <td style="text-align: left">Stock based compensation</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction contextRef="c109" decimals="0" format="ixt:num-dot-decimal" name="cjjd:StockBasedCompensation" scale="0" unitRef="usd">10,360,000</ix:nonFraction></td><td style="text-align: left">&#160;</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left">Loss&#160;from operations</td><td>&#160;</td>
    <td style="text-align: left">$</td><td style="text-align: right">(<ix:nonFraction contextRef="c109" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:DisposalGroupIncludingDiscontinuedOperationOperatingIncomeLoss" scale="0" sign="-" unitRef="usd">21,004,288</ix:nonFraction></td><td style="text-align: left">)</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The following table presents summarized information
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<ix:continuation continuedAt="_ScheduleOfSegmentReportingInformationBySegmentTextBlock-c0_cont_2" id="_ScheduleOfSegmentReportingInformationBySegmentTextBlock-c0_cont_1"><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
  <tr style="vertical-align: bottom">
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  <tr style="vertical-align: bottom; ">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; ">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; ">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left">Loss&#160;from operations</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; ">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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</div><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><ix:continuation id="_SegmentReportingDisclosureTextBlock-c0_cont_1"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The following table presents summarized information
by segment of the continuing operations for the year ended March 31, 2021:</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<ix:continuation id="_ScheduleOfSegmentReportingInformationBySegmentTextBlock-c0_cont_2"><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
  <tr style="vertical-align: bottom">
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  <tr style="vertical-align: bottom; ">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company does not have long-lived assets located
outside the PRC. In accordance with the enterprise-wide disclosure requirements of FASB&#8217;s accounting standard, the Company&#8217;s
net revenue from external customers through its retail drugstores by main product category for the years ended March 31, 2023, 2022 and
2021 were as follows:&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<ix:nonNumeric contextRef="c0" continuedAt="_ScheduleOfEntityWideInformationRevenueFromExternalCustomersByProductsAndServicesTextBlock-c0_cont_1" escape="true" name="us-gaap:ScheduleOfEntityWideInformationRevenueFromExternalCustomersByProductsAndServicesTextBlock"><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
  <tr style="vertical-align: bottom">
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  <tr style="vertical-align: bottom">
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  <tr style="vertical-align: bottom">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; ">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company&#8217;s net revenue from external
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<ix:continuation continuedAt="_ScheduleOfEntityWideInformationRevenueFromExternalCustomersByProductsAndServicesTextBlock-c0_cont_2" id="_ScheduleOfEntityWideInformationRevenueFromExternalCustomersByProductsAndServicesTextBlock-c0_cont_1"><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; ">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; ">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; ">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-bottom: 4pt">Total</td><td style="padding-bottom: 4pt">&#160;</td>
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company&#8217;s net revenue from external
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<ix:continuation id="_ScheduleOfEntityWideInformationRevenueFromExternalCustomersByProductsAndServicesTextBlock-c0_cont_2"><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
  <tr style="vertical-align: bottom">
    <td>&#160;</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="width: 64%; text-align: left">Prescription drugs</td><td style="width: 1%">&#160;</td>
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  <tr style="vertical-align: bottom; ">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; ">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; ">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-bottom: 4pt">Total</td><td style="padding-bottom: 4pt">&#160;</td>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><ix:nonNumeric contextRef="c0" escape="true" name="us-gaap:SubsequentEventsTextBlock"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Note 23 &#8211; SUBSEQUENT EVENTS</b></p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p>

<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">On April 18, 2023, the Company entered into a definitive agreement
with an institutional investor (the &#8220;Investor&#8221;) providing for the issuance of <ix:nonFraction contextRef="c353" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:ExcessStockSharesIssued" scale="0" unitRef="shares">2,258,888</ix:nonFraction> ordinary shares, at a purchase price
of $<ix:nonFraction contextRef="c353" decimals="2" format="ixt:num-dot-decimal" name="us-gaap:SaleOfStockPricePerShare" scale="0" unitRef="usdPershares">3.10</ix:nonFraction> per share, in a registered direct offering for aggregate gross proceeds of approximately $<ix:nonFraction contextRef="c353" decimals="-6" format="ixt:num-dot-decimal" name="cjjd:AggregateGrossProceeds" scale="6" unitRef="usd">7</ix:nonFraction> million. The offering was terminated
on April 19, 2023. &#160;</p></ix:nonNumeric><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center">F-34</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></p><div>

</div><!-- Field: Rule-Page --><div style="margin-top: 0pt; margin-bottom: 0pt; width: 100%"><div style="font-size: 1pt; border-top: Black 1.5pt solid">&#160;</div></div><!-- Field: /Rule-Page --><div>

</div><p style="margin-top: 0; margin-bottom: 0">&#160;&#160;</p><div>





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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
20-F
☐
REGISTRATION STATEMENT PURSUANT TO SECTION
12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934
OR
☒
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Fiscal year ended
March 31
,
2023
OR
☐
TRANSITION REPORT PURSUANT TO SECTION 13
OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________ to __________
☐
SHELL COMPANY REPORT PURSUANT TO SECTION
13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of event requiring this shell company report
________
Commission file number:
001-40724
China Jo-Jo Drugstores, Inc.
(Exact name of Registrant as specified in its charter)
Not applicable
(Translation of Registrant's name into English)
Cayman Islands
Hai Wai Hai Tongxin
Mansion Floor 6
Gong Shu District
Hangzhou City
, Zhejiang Province
People's Republic of
China
,
310008
(Jurisdiction of incorporation or organization)
(Address of principal executive offices)
Lei Liu
Hai Wai Hai Tongxin
Mansion Floor 6
Gong Shu District
Hangzhou City
, Zhejiang Province
People's Republic of
China
,
310008
Tel:
+86
-
571-88219579
(Name, telephone, Email and/or facsimile number
and address of company contact person)
Securities registered or to be registered pursuant
to Section 12(b) of the Act:
Title of each class
Trading Symbol(s)
Name of each exchange on which registered
Ordinary shares, par value $0.012 per share
CJJD
Nasdaq
Capital Market
Securities registered or to be registered pursuant
to Section 12(g) of the Act:
none
(Title of Class)
Securities for which there is a reporting obligation
pursuant to Section 15(d) of the Act:
none
(Title of Class)
Indicate the number of outstanding
shares of each of the issuer's classes of capital or ordinary shares as of the close of the period covered by the annual report.
23,697,210
Ordinary Shares and 0 Preferred Shares outstanding as of March 31, 2023.
Indicate by check mark if
the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. ☐ Yes ☒
No
If this report is an annual
or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934. ☐ Yes ☒
No
Indicate by check mark whether
the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. ☒
Yes
☐ No
Indicate by check mark whether
the registrant has submitted electronically every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation
S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit
and post such files). ☒
Yes
☐ No
Indicate by check mark whether
the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or an "emerging growth company."
See definition of "accelerated filer and large accelerated filer" in Rule 12b-2 of the Exchange Act.
Large accelerated filer
☐
Accelerated filer
☐
Non-accelerated filer
☒
Emerging growth company
☐
If an emerging growth company
that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the
extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of
the Exchange Act. ☐
Indicate by check mark whether
the registrant has filed a report on and attestation to its management's assessment of the effectiveness of its internal control
over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting
firm that prepared or issued its audit report.
☐
If securities are registered pursuant to Section 12(b) of the Act, indicate by check
mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued
financial statements.
☐
Indicate by check mark whether
any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the
registrant's executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
Indicate by check mark which
basis of accounting the registrant has used to prepare the financial statements included in this filing.
U.S. GAAP
☒
International Financial Reporting Standards as issued
by the International Accounting Standards Board ☐
Other ☐
If "Other" has
been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to
follow. Item 17 ☐ Item 18 ☐
If this is an annual report,
indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes
☒
No
In this annual report:
●
References to the "Company", "we", "our" and "us" are to China Jo-Jo Drugstores, Inc., a Cayman Islands company, and its predecessor China Jo-Jo Drugstores, Inc., a Nevada corporation, and its consolidated subsidiaries, subsidiaries controlled by contract and therefore deemed as variable interest entities under U.S. GAAP;
●
References to "China" or the "PRC" refers to the People's Republic of China, excluding, for the purposes of this annual report only, Hong Kong, Macau and Taiwan;
●
References to "RMB" and "Renminbi" refer to the legal currency of China;
●
"US$," "U.S. dollars," "$," and "dollars" refer to the legal currency of the United States;
●
References to "variable interest entit[y][ies]" or "VIE[s]" refer to Jiuzhou Pharmacy, Jiuzhou Clinic and Jiuzhou Service, as well as the subsidiaries of Jiuzhou Pharmacy, collectively as "HJ Group"
.
Special Note Regarding Forward-looking Statements
This report contains forward-looking
statements. All forward-looking statements are inherently uncertain as they are based on current expectations and assumptions concerning
future events or future performance of the registrant. Readers are cautioned not to place undue reliance on these forward-looking statements,
which are only predictions and speak only as of the date hereof. Forward-looking statements usually contain the words "estimate,"
"anticipate," "believe," "expect," or similar expressions, and are subject to numerous known and unknown
risks and uncertainties. In evaluating such statements, prospective investors should carefully review various risks and uncertainties
identified in this report, including the matters set forth under the captions "Risk Factors" and in the registrant's
other SEC filings. These risks and uncertainties could cause the registrant's actual results to differ materially from those indicated
in the forward-looking statements. The registrant undertakes no obligation to update or publicly announce revisions to any forward-looking
statements to reflect future events or developments.
Although forward-looking statements
in this report reflect the good faith judgment of our management, such statements can only be based on facts and factors currently known
by us. Consequently, forward-looking statements are inherently subject to risks and uncertainties, and actual results and outcomes may
differ materially from the results and outcomes discussed in or anticipated by the forward-looking statements. Factors that could cause
or contribute to such differences in results and outcomes include, without limitation, those specifically addressed under the heading
"
Risks Relating to Our Business
" below, as well as those discussed elsewhere in this report. Readers are urged not to
place undue reliance on these forward-looking statements, which speak only as of the date of this report. We file reports with the Securities
and Exchange Commission (the "SEC"). You can read and copy any materials we file with the SEC at our internet address at www.jiuzhou360.com.
In addition, the SEC maintains an Internet site (www.sec.gov) that contains reports, proxy and information statements, and other information
regarding issuers that file electronically with the SEC, including the registrant.
We undertake no obligation
to revise or update any forward-looking statements in order to reflect any event or circumstance that may arise after the date of this
report. Readers are urged to carefully review and consider the various disclosures made throughout the entirety of this report, which
attempt to advise interested parties of the risks and factors that may affect our business, financial condition, results of operations
and prospects.
TABLE OF CONTENTS
Part I
Item 1.
Identity of Directors, Senior Management and Advisers
1
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.
Property, Plants and Equipment
42
Item 4A.
Unresolved Staff Comments
42
Item 5.
Operating and Financial Review and Prospects
42
A.
Operating Results
42
B.
Liquidity and Capital Resources
52
C.
Research and Development, Patents and Licenses, etc.
52
D.
Trend Information
52
E.
Off-balance Sheet Arrangements
53
F.
Tabular Disclosure of Contractual Obligations
53
Item 6.
Directors, Senior Management and Employees
53
A.
Directors and Senior Management
53
B.
Compensation
55
C.
Board Practices
59
D.
Employees
60
E.
Share Ownership
61
F.
Disclosure of a registrant's action to recover erroneously awarded
compensation
61
Item 7.
Major Shareholders and Related Party Transactions
62
A.
Major Shareholders
62
B.
Related Party Transactions
62
C.
Interests of Experts and Counsel
62
Item 8.
Financial Information
63
A.
Consolidated Statements and Other Financial Information
63
B.
Significant Changes
63
Item 9.
The Offer and Listing
63
A.
Offer and Listing Details
63
B.
Plan of Distribution
63
C.
Markets
63
D.
Selling shareholders
63
E.
Dilution
63
F.
Expenses of the issue
63
Item 10.
Additional Information
64
A.
Share Capital
64
B.
Memorandum and Articles of Association
64
C.
Material Contracts
69
D.
Exchange Controls
69
E.
Taxation
70
F.
Dividends and Paying Agents
71
G.
Statement by Experts
71
H.
Documents on Display
71
I.
Subsidiary Information
71
i
Item 11.
Quantitative and Qualitative Disclosures about Market Risk
71
Item 12.
Description of Securities Other than Equity Securities
73
A.
Debt Securities
73
B.
Warrants and Rights
73
C.
Other Securities
73
D.
American Depositary Shares
73
Part II
Item 13.
Defaults, Dividend Arrearages and Delinquencies
74
Item 14.
Material Modifications to the Rights of Security Holders and Use of Proceeds
74
Item 15.
Controls and Procedures
74
Item 16.
[Reserved]
75
Item 16A.
Audit Committee Financial Expert
75
Item 16B.
Code of Ethics
75
Item 16C.
Principal Accountant Fees and Services
76
Item 16D.
Exemptions from the Listing Standards for Audit Committees
76
Item 16E.
Purchases of Equity Securities by the Issuer and Affiliated Purchasers
77
Item 16F.
Change in Registrant's Certifying Accountant
77
Item 16G.
Corporate Governance
77
Item 16H.
Mine Safety Disclosure
77
Item 16I
Disclosure Regarding Foreign Jurisdictions That Prevent Inspections
77
Item 16J
Insider trading policies
78
Part III
Item 17.
Financial Statements
79
Item 18.
Financial Statements
79
Item 19.
Exhibits
79
Index to Consolidated Financial Statements
F-1
ii
PART I
ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT
AND ADVISERS.
Not applicable.
ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE.
Not applicable.
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. The statements contained in or incorporated into this report that are not historic facts are forward-looking
statements that are subject to risks and uncertainties that could cause actual results to differ materially from those set forth in or
implied by forward-looking statements. If any of the following risks actually occurs, our business, financial condition or results of
operations could be harmed. In that case, the trading price of our ordinary shares could decline, and you may lose all or part of your
investment.
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.
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.
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.
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.
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.
●
We may be adversely affected by complexity, uncertainties and changes in Chinese regulation of drugstores and the practice of medicine.
●
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.
●
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. 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. Foreign Corrupt Practices Act could subject us to penalties and other adverse consequences.
●
If relations between the United States and China worsen, investors may be unwilling to hold or buy our stock and our stock price may decrease.
●
Our auditor, YCM CPA Inc., is headquartered in California, and is subject to inspection by the PCAOB on a regular basis. 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.
Risks Related to an Investment in Our Securities
●
The market price of our ordinary shares has fluctuated and may continue to fluctuate in the future, and we may not pay dividends on our ordinary shares.
●
Our officers and directors own a substantial portion of our outstanding ordinary shares, which will enable them to influence many significant corporate actions.
Other General Risk Factors
●
Changes in economic conditions and consumer confidence in China may influence the drugstore industry, consumer preferences and spending patterns.
●
Uncertainties with respect to the Chinese legal system could adversely affect us.
●
Techniques employed by manipulative short sellers in Chinese small-cap stocks may drive down the market price of our ordinary shares.
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.
Both the drugstore, online
pharmacy and wholesale pharmaceutical distribution industries in China are highly competitive, and we expect competition to intensify
in the future. Our primary drugstore competitors include other drugstore chains and independent drugstores. Increasingly, we also face
competition from discount stores, convenience stores and supermarkets as we expand our offering of non-drug convenience products and services.
We compete for customers and revenue primarily on the basis of store location, merchandise selection, price, services offered, and our
brand name. Our online pharmacy competitors include other online pharmaceutical vendors. As larger traditional drugstore chain companies
entered into the online sales, we face competition ranging from prices to service. Our primary wholesale competitors include regional
and national players. In addition, we may be subject to additional competition from new entrants to both industries in China. We could
also face increased competition from foreign companies if the Chinese government removes the restrictions on the entry of foreign companies
into these industries.
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.
As a result of the aforementioned
advantages, we may be unable to offer products similar to, or more desirable than, those offered by our competitors, market our products
as effectively as our competitors, or otherwise respond successfully to competitive pressures. As competition increases in the markets
in which we operate, a significant increase in general pricing pressures could occur, which could require us to reevaluate our pricing
structures to remain competitive. Our competitors may be able to offer larger discounts on competing products, and we may not be able
to profitably match those discounts. Furthermore, our competitors may offer products that are more attractive to our customers or that
render our products uncompetitive. In addition, the timing of the introduction of competing products into the market could affect the
market acceptance and market share of our products. 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.
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. Local land use regulations and other regulations
applicable to the kinds of stores we seek to construct may impact our ability to find suitable locations and influence the cost of constructing
our stores. The expiration of leases at existing store locations may adversely affect us if the renewal terms of those leases are unacceptable
to us and we are forced to close or relocate stores. 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.
We have significant cash deposits with our
suppliers and landlords in order to obtain and maintain our inventory and maintain and establish store locations, which we may not be
able to recover in the event of bankruptcy by our suppliers or landlords or other events beyond our control.
Our ability to obtain products
and maintain inventory at, and to establish and maintain leases for, our pharmacies, is dependent upon our ability to post and maintain
significant cash deposits with our suppliers and landlords. 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. If we are unable or unwilling to establish such advances and deposits, our ability to generate sales and expand our business
could be adversely affected. In general, we expect the amounts required for advances and deposits to increase as we undertake our expansion
plans, complete store openings and expand our business through acquisitions or otherwise. We do not generally receive interest on the
deposits made to suppliers or landlords, and such deposits are subject to the risk of loss as a result of the creditworthiness or bankruptcy
of the party who holds our funds, as well as the risk from any illegal acts associated with the third party, such as conversion, fraud,
theft or dishonesty. 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.
Since May 2011, we have been
using Jiuxin Medicine's facility as our distribution center for both our retail and wholesale businesses. Starting from March 31,
2018, we outsourced our logistic service to Astro Boy Cloud Pan (Hangzhou) Storage and Logistic Co. Ltd ("Astro Boy Logistic").
As a result, Jiuxin Medicine's warehouse lease has been terminated. Astro Boy Logistic provides us with a facility with approximately
14,000 square meters located approximately eighteen (18) miles from our headquarters, which served as our central distribution center.
Astro Boy Logistic's staff and vehicles make regular deliveries to our pharmacies and wholesale customers. Our ability to meet customer
demand may be significantly limited if we do not successfully and efficiently conduct our distribution activities, or if Astro Boy Logistic's
facility is destroyed or shut down for any reason, including as the result of natural disasters. Any disruption in the operation of our
distribution activities could result in higher costs or longer lead times associated with distributing our products. Since it is difficult
to predict accurate sales volume in our industry, we may be unable to optimize our distribution activities, which may result in excess
or insufficient inventory, warehousing, fulfillment or distribution capacity. Furthermore, failure to effectively control product damage
during the distribution process could decrease our operating margins and reduce our profitability.
All product procurements are
handled through our corporate headquarters. Such centralization is intended to reduce the cost of goods sold as a result of volume purchase
benefits. However, we may be less successful than anticipated in achieving these volume purchase benefits. In addition, such centralization
is expected to increase the complexity of tracking inventory and could place additional burdens on the management of our supply chain.
If we cannot successfully reduce our costs through centralizing procurement, our profitability and prospects could be materially and adversely
affected.
We depend substantially on the continuing
efforts of the Key Personnel, and our business and prospects may be severely disrupted if we lose their services.
Our future success is dependent
on the continued services of Mr. Lei Liu and Ms. Li Qi (the "Key Personnel") but we do not maintain key-man insurance. If we
lose the services of either of the Key Personnel, we may not be able to locate suitable or qualified replacements, which could severely
disrupt our business and prospects. Each of the Key Personnel has entered into confidentiality and non-competition agreements with us.
However, if any disputes arise between us and the Key Personnel, we cannot provide assurance, in light of uncertainties associated with
the PRC legal system, that any of these agreements can be enforced in China, the jurisdiction in which the Key Personnel reside and hold
some of their assets. See "
Risks Related to Doing Business in China - You may experience difficulties in effecting service of
legal process, enforcing foreign judgments or bringing original actions in China based on United States or other foreign laws against
us or our management.
"
Our retail and wholesale operations require
a number of permits and licenses in order to carry on their business.
We are required to obtain
certain permits and licenses from various PRC governmental authorities, including a Drug Distribution Permit and a GSP certification.
We are also required to obtain food hygiene certificates for the distribution of nutritional supplements and food products. We cannot
provide any assurance that we can maintain all required licenses, permits and certifications to carry on our business at all times, and
from time to time we may have not been in the past, or may not be in the future, in compliance with all such required licenses, permits
and certifications. Moreover, these licenses, permits and certifications are subject to periodic renewal and/or reassessment by the relevant
PRC governmental authorities and the standards of such renewal or reassessment may change from time to time. We intend to apply for renewal
of these licenses, permits and certifications when required by applicable laws and regulations. Any failure by us to obtain and maintain
all licenses, permits and certifications necessary to carry on our business at any time could have a material adverse effect on our business,
financial condition and results of operations. In addition, any inability to renew any of these licenses, permits and certifications could
severely disrupt our business, and prevent us from continuing to carry on our business. Any changes in the standards used by governmental
authorities in considering whether to renew or reassess our business licenses, permits and certifications, as well as any enactment of
new regulations that may restrict the conduct of our business, may also decrease our revenue and/or increase our costs, materially reducing
our profitability and prospects. Furthermore, if the interpretation or implementation of existing laws and regulations changes or if new
regulations come into effect requiring us to obtain any additional licenses, permits or certifications that were previously not required
to operate our existing businesses, we cannot provide assurance that we can successfully obtain such licenses, permits or certifications.
6
Risks Relating to Our Pharmacy Operations
The continued penetration of counterfeit
products into the pharmaceutical market in China may damage our reputation and have a material adverse effect on our business, financial
condition, results of operations and prospects.
Counterfeit products have
continued to make their way into the Chinese pharmaceutical market. Counterfeit products are generally sold at lower prices compared to
their authentic counterparts due to their low production costs, and in some cases may be very similar in appearance to their authentic
counterparts. Counterfeit pharmaceuticals may or may not have the same chemical content as their authentic counterparts, and are typically
manufactured without proper licenses or approvals as well as fraudulently mislabeled with respect to their content and/or manufacturer.
Although China's central government has been increasingly active in combating counterfeit pharmaceutical and other products, China
does not yet have effective regulatory control or an enforcement system over counterfeit pharmaceutical products. Although we have implemented
a series of quality control procedures in our procurement process, we cannot provide assurance that we may not be inadvertently selling
counterfeit pharmaceutical products. Any unintentional sale of counterfeit products may subject us to negative publicity, fines and/or
other administrative penalties, or may even result in litigation against us. Moreover, the increased distribution of counterfeit products
and other products in recent years may reinforce the negative image of drug distributors among consumers in China. 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.
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. 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. Our in-store pharmacists sometimes also have a duty to warn customers regarding any potential negative effects of a
prescription drug if the warning could reduce or negate these effects, and we may be liable for claims arising from any advice given by
our in-store pharmacists. Product liability or personal injury claims may be asserted against us with respect to any of the products or
pharmaceuticals we sell or services we provide, and we may be required to pay for substantial monetary damages for any successful product
liability or personal injury claim against us. We may, however, in product liability claims, have the right under applicable PRC laws,
rules and regulations to recover from the relevant manufacturer any compensation we paid to our customers in connection with such claim.
However, even if we successfully defend ourselves against this type of claim, we could be required to spend significant management, financial
and other resources in the process, which could disrupt our business. Our reputation and our brand names may also suffer as a result of
any product liability or personal injury claims against us. Like many other similar companies in China, we do not carry product liability
insurance. A product recall or damage to our reputation in the event of a product liability or personal injury claim or judgment against
us could have a material adverse effect on our business, financial condition and results of operations.
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.
Eligible participants in China's
national medical insurance program, mainly consisting of urban residents in China, are entitled to buy medicines using their medical insurance
cards from an authorized pharmacy, provided that the medicines they purchase have been included in the national or provincial medical
insurance catalogs. The pharmacy, in turn, obtains reimbursement from the relevant government social security bureaus. Moreover, the applicable
PRC laws, rules and regulations prohibit pharmacies from selling goods other than pre-approved medicines when purchases are made with
medical insurance cards. We have established procedures to prohibit our drugstores from selling unauthorized goods to customers who make
purchases with medical insurance cards. 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.
The success of our medical
services will, in part, be dependent upon the number and quality of doctors, nurses and other medical support personnel that we employ
and our ability to maintain good relationships with them. Our medical staff may terminate their employment with us at any time. 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.
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.
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. 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. The above list of certain regulated areas
is not exhaustive, and it is not possible to anticipate the exact nature of future healthcare legislative reform in China. Depending on
the priorities set by the Chinese Ministry of Health, the political climate at any given time, the continued development of the Chinese
healthcare system and many other factors, future legislative reforms may be highly comprehensive, including stringent infection control
policies, improved rural healthcare facilities, increased regulation of the distribution of pharmaceuticals, and numerous other policy
matters. Consequently, the implications of these future reforms could result in penalties, loss of licensure, additional compliance costs
or other adverse consequences we cannot foresee at the present time.
As a provider of medical services, we are
exposed to inherent risks relating to malpractice claims.
As a provider of medical services,
any misdiagnosis or improper treatment may result in negative publicity regarding us or our services, which would harm our reputation.
If we are found liable for malpractice, we may be required to pay substantial monetary damages. Furthermore, even if we successfully defend
ourselves against a malpractice claim, we could be required to spend significant management, financial and other resources in the process,
which could disrupt our business, and our reputation and brand name may also suffer. Since malpractice claims are not common in China,
we do not carry malpractice insurance. 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. In the future, we may continue to cultivate and sell certain herbs in bulk to third-party vendors, based
on local market prices primarily determined by TCM manufacturers and trading companies. Such market prices have increased significantly
in recent years in response to changes in the supply of and demand for raw herbs, market uncertainty and a variety of additional factors
that are beyond our control, including inflation, changes in weather, disease outbreaks, domestic government regulation, market speculation
and overall economic conditions. There can be no assurance that market prices, which historically have fluctuated widely, will continue
to increase or remain stable, and any future declines in prices may negatively impact the viability of our herb farming business.
Unforeseen and severe weather can reduce
cultivation activities and lead to a decrease in anticipated harvest.
Seasonal climate change and
weather variations such as levels of rainfall and temperature may, among other things, affect the quality, overall supply and availability
of raw herbs. Sustained adverse weather conditions in Zhejiang Province in general and in Lin'an in particular where our herbs are
planted, such as rain, extreme cold or snow, could disrupt or curtail cultivation activities. This in turn could reduce our anticipated
harvest yields, delay the timing of our anticipated harvest and distribution, and negatively affect the quality of our harvest. In addition,
natural disasters such as fires, earthquakes, snowstorms, floods or droughts, or natural conditions such as crop disease, pests or soil
erosion, may also negatively impact our cultivation and harvest.
8
In addition, the actual climatic
conditions of Zhejiang Province and of Lin'an in particular may not conform to historical patterns and may be affected by variations
in weather patterns, including any potential impact of climate change. The effects of climate change may produce more unpredictable weather
events that may adversely affect our ability to cultivate and harvest successfully.
The occurrence of any of these
may materially harm our herb farming business.
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.
We rely on local farmers to
farm and harvest our herbs, but do not employ them directly. Instead, they are recruited and employed by the local villagers' committees
with whom we negotiate. We have limited control over the availability and the quality of this labor force. A shortage of suitable labor
may adversely affect our harvest yields.
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. Any system failure which causes interruptions to the input, retrieval and transmission
of data, or increases in service time could disrupt our normal operations. Although we believe our existing disaster recovery plan that
can handle the failure of our computer software and hardware systems, we cannot provide assurance that we can effectively carry out this
disaster recovery plan and that we will be able to restore our operation within a sufficiently short time frame to avoid disruption to
our business. Any failure in our computer software and/or hardware systems could have a material adverse effect on our business, financial
condition and results of operations. In addition, if the capacity of our computer software and hardware systems fails to meet the increasing
needs of our operations, our ability to grow may be constrained.
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.
Internet-based businesses
in China are highly regulated by China's central government, and numerous regulatory authorities are empowered to issue and implement
regulations governing various aspects of these businesses. Our online business is operated by one of the VIEs, Jiuzhou Pharmacy, which
is required to obtain and maintain certain assets relevant to its business, such as computers and other electrical equipment, as well
as applicable licenses or approvals from different regulatory authorities. These assets and licenses are essential to the operation of
an e-commerce business and are generally subject to annual review by the relevant governmental authorities. Furthermore, we may be required
to obtain additional licenses. If we fail to obtain or maintain any of the required assets, licenses or approvals, our Internet business
may be subject to various penalties, such as confiscation of income, fines, and/or the discontinuation or restriction of its operations.
Any such disruption may materially and adversely affect the prospects of our online business.
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 increase
was primarily caused by an increase in sales via e-commerce platforms such as Tmall. We maintained a membership care program targeted
at chronic disease customers. We have closely interacted with our members via WeChat by providing healthcare knowledge and reminding our
customers to refill medicine. By implementing a personalized customer care program, we were able to promote our sales. Additionally, we
increasingly cooperate with certain manufacturers to promote their products. 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. We have in our possession a substantial amount of personal data related to the employees of our end users and our seconded
employees. We are obliged to keep all the personal data in our possession in such manner required by the laws and regulations relating
to personal data protection implemented in the PRC. If our IT system experiences any functional problems or there is any failure of our
IT system due to power outages, hacker attacks, computer viruses, security breaches and errors in usage by our internal employees causing
any breach of confidentiality by us or any failure to comply with the protection, collection, use and disclosure of personal data as prescribed
under the relevant laws and regulations, resulting in personal data related to the employees of the end-users of our payroll outsourcing
services or our seconded employees being leaked to or obtained by third parties, our reputation will be in jeopardy which could lead to
loss of our major customers. The employees of the end-users of our payroll outsourcing services or our seconded employees may also take
legal actions against us for damages and/or compensation for the loss that may have arisen or been incurred therefrom, in addition to
the penalties prescribed under the relevant laws and regulations in the PRC we are subject to.
The internal control procedures
we have implemented to safeguard the security and confidentiality of our customer database may not effectively prevent leakage of personal
data or unauthorized access to our customer database under all circumstances. If such incident happens, we may be subject to investigation,
litigation, arbitration and other forms of legal proceedings and/or dispute for breach of personal data privacy laws and regulations in
the PRC, and our management team will have to divert substantial time, effort and resources to handle the legal procedures.
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
The collection, storage, hosting,
transfer, processing, disclosure, use, security and retention and destruction of personal information required to provide our services
is subject to national and foreign privacy, data protection and cyber security laws. These laws, which are not uniform, generally do one
or more of the following: regulate the collection, storage, hosting, transfer (including in some cases, the transfer outside the country
of collection), processing, disclosure, use, security and retention and destruction of personal information; require notice to individuals
of privacy practices; give individuals certain access and correction rights with respect to their personal information; and regulate the
use or disclosure of personal information for secondary purposes such as marketing. Under certain circumstances, some of these laws require
us to provide notification to affected individuals, clients, data protection authorities and/or other regulators in the event of a data
breach. In many cases, these laws apply not only to third-party transactions, but also to transfers of information among the Company and
its subsidiaries.
We believe that providing
insights from data, including artificial intelligence and machine learning, will become increasingly important to the value that our solutions
and services deliver to our customers. However, the ability to provide data-driven insights may be constrained by current or future regulatory
requirements or ethical considerations that could restrict or impose burdensome and costly requirements on our ability to leverage data
in innovative ways.
Complying with privacy, data
protection and cyber security laws and requirements may result in significant costs to our business and require us to amend certain of
our business practices. Further, enforcement actions and investigations by regulatory authorities related to data security incidents and
privacy violations continue to increase. The future enactment of more restrictive laws, rules or regulations and/or future enforcement
actions or investigations could have a materially adverse impact on us through increased costs or restrictions on our businesses and noncompliance
could result in significant regulatory penalties and legal liability and damage our reputation. In addition, data security events and
concerns about privacy abuses by other companies are changing consumer and social expectations for enhanced privacy and data protection.
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.
We are a holding company incorporated
in the Cayman Islands. As a holding company with no material operations of our own, we conduct a substantial majority of our operations
through the VIEs in the PRC, Jiuzhou Pharmacy (including its subsidiaries and controlled entities), Jiuzhou Clinic and Jiuzhou Service,
in which we have no equity ownership interest and must rely on contractual arrangements to operate and manage the businesses. These contractual
arrangements are not as effective in management and operations as direct ownership. For example, the VIEs may be unwilling or unable to
perform its contractual obligations under our commercial agreements. Consequently, we would not be able to conduct our operations in the
manner currently planned, we cannot provide assurance that the Key Personnel will act in our best interests. Under such circumstances,
we may have to rely on legal remedies under Chinese law, which may not be effective in providing us any relief. In addition, the VIEs
may seek to renew its agreements on terms that are disadvantageous to us. Although we have entered into a series of agreements that provide
us with substantial ability to operates and manage the VIEs, we may not succeed in enforcing our rights under them insofar as our contractual
rights and legal remedies under PRC law are inadequate. In addition, if we are unable to renew these agreements on favorable terms when
these agreements expire or enter into similar agreements with other parties, our business may not be able to operate or expand, and our
operating expenses may significantly increase.
Since we rely on contractual arrangements
to manage and operate HJ Group and for substantially all of our revenue, the termination of such agreements will severely and detrimentally
affect our continuing business viability under our current corporate structure.
Since we do not own equity
interests of HJ Group, the termination of our contractual arrangements with them would sever our ability to continue receiving payments
from them under our current holding company structure. We cannot provide assurance that there will not be any event or reason that may
cause the contractual arrangements to terminate. In the event that the contractual arrangements terminate, we will lose our management
over them and their business operations and, as a result, over our primary sources of revenue. This may have a severe and detrimental
effect on our continuing business viability under our current corporate structure, which in turn may affect the value of your investment.
Should this occur, we may seek to acquire control of HJ Group through other means, although we cannot guarantee that we will do so, nor
can we guarantee that we will be successful if we do.
Because our holding company
is an exempted company incorporated in the Cayman Islands with limited liability, it is classified as a foreign enterprise under PRC laws
and regulations, and our wholly foreign-owned enterprises in the PRC will be foreign-invested enterprises. 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.
The entities that operate our pharmacies and clinics are controlled by us through contractual arrangements. The validity of such contractual
arrangements is uncertain. If the Chinese government determines that these contractual arrangements do not comply with applicable regulations,
we could be subject to severe penalties and our business could be adversely affected. In addition, changes in the relevant Chinese laws
and regulations may materially and adversely affect our business.
Current PRC regulations limit
foreign ownership of a pharmacy operator to forty nine percent (49%) if such operator owns interests in thirty (30) or more drugstores
in China that sell a variety of branded pharmaceutical products sourced from different suppliers. 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. 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. Since we do not have any actual equity interest
in Jiuzhou Clinic or Jiuzhou Service, but manage and operate these entities through contractual arrangements, we do not believe that such
PRC regulations are applicable to us or our structure.
There are, however, uncertainties
regarding the interpretation and application of PRC laws, rules and regulations, including but not limited to the laws, rules and regulations
governing the validity and enforcement of our contractual arrangements. Although the structures for operating our business in China (including
our corporate structure and contractual arrangements with Jiuzhou Pharmacy, Jiuzhou Clinic, Jiuzhou Service and the Key Personnel) comply
with all applicable PRC laws, rules and regulations, and do not violate, breach, contravene or otherwise conflict with any applicable
PRC laws, rules or regulations, we cannot provide assurance that a regulatory authority will not determine that our corporate structure
and contractual arrangements violate PRC laws, rules or regulations. If any such authority determines that our contractual arrangements
are in violation of applicable PRC laws, rules or regulations, our contractual arrangements may become invalid or unenforceable, and we
may not be able to consolidate the operations of HJ Group with our results of operations. In addition, new PRC laws, rules and regulations
may be introduced from time to time to impose additional requirements that may be applicable to our contractual arrangements. For example,
pursuant to the new Civil Code in China promulgated in May 2020, the pledge of any equity interests of a PRC private entity shall become
effective once it is duly registered with the local branches of the SAIC. The SAIC issued the
Administrative Measures for Registrations
of Share Pledge
on September 1, 2008, further amended to its current version on April 29, 2016, which has failed to provide detailed
procedural guidance for the local SAIC offices to handle the registrations of pledged shares. In accordance with the Foreign Investment
Law, the State Council promulgated and approved in 2021 a list of special administrative measures for market access of foreign investments,
or the Negative List. The Negative List contains no limits or restrictions on foreign investment holdings in the pharmaceutical or retail
industries. The Equity Pledge Agreement that forms a part of the contractual arrangements creates a legally binding obligation on the
parties upon the execution date; however, the pledge established under such agreement does not become effective until due registration
with the local SAIC office. On May 18, 2010, registration of the pledged equity interests in Jiuzhou Pharmacy was completed.
The Chinese government has
broad discretion in dealing with violations of laws and regulations, including levying fines, revoking business and other licenses, and
requiring actions necessary for compliance. In particular, licenses and permits issued or granted to us by the relevant governmental bodies
may be revoked at a later time by higher regulatory bodies. We cannot predict the effect of the interpretation of existing or new Chinese
laws or regulations on our businesses. We cannot provide assurance that our current ownership and operating structure will not be found
in violation of any current or future Chinese laws or regulations. As a result, we may be subject to sanctions, including fines, and could
be required to restructure our operations or cease the provision of certain services. Any of these or similar actions could significantly
disrupt our business operations or restrict us from conducting a substantial portion of our business operations, which could materially
and adversely affect our business, financial condition and results of operations.
If we are determined to be
in violation of any existing or future PRC laws, rules or regulations, or fail to obtain or maintain any of the required governmental
permits or approvals, the relevant PRC regulatory authorities would have broad discretion in dealing with such violations, including:
●
revoking the business and operating licenses of the HJ Group entities;
●
discontinuing or restricting the operations of the HJ Group entities;
●
imposing conditions or requirements with which we or the HJ Group entities may not be able to comply;
●
requiring us or the HJ Group entities to restructure the relevant ownership structure or operations; and/or
●
imposing fines.
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. Occurrence of any of these events could materially and adversely affect our business, financial condition and results of
operations and the market price of our ordinary shares. In addition, if the imposition of any of these penalties or requirement to restructure
our corporate structure causes us to lose the ability to direct the activities of the consolidated VIEs or to receive their economic benefits,
we would no longer be able to consolidate the financial results of such VIEs in our consolidated financial statements, which may cause
the value of our securities to materially decline. Moreover, if the PRC government determines that the contractual arrangements constituting
part of the VIE structure do not comply with PRC regulations, or if these regulations change or are interpreted differently in the future,
our securities may decline in value or become worthless.
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.
The VIE structure has been
adopted by many Chinese-based companies, including us, to obtain necessary licenses and permits in the industries that are currently subject
to foreign investment restrictions in China. On March 15, 2019, the National People's Congress, China's national legislative
body (the "NPC") approved the Foreign Investment Law, which took effect on January 1, 2020. On December 26, 2019, the
PRC State Council approved the Implementation Rules of the Foreign Investment Law, which came into effect on January 1, 2020. The interpretations
to these laws are still uncertain. The Foreign Investment Law does not explicitly classify whether variable interest entities that are
managed and operated through contractual arrangements by foreign investors would be deemed as foreign-invested enterprises. However,
it has a catch-all provision under definition of "foreign investment" that includes investments made by foreign investors
in China through other means as provided by laws, administrative regulations or the State Council. Therefore, it still leaves leeway for
future laws, administrative regulations or provisions of the State Council to provide for contractual arrangements being viewed as a form
of foreign investment. Therefore, there can be no assurance that our management and operation over the consolidated VIEs through contractual
arrangements will not be deemed as foreign investment in the future.
In accordance with the Foreign
Investment Law, the State Council promulgated and approved in 2021 a list of special administrative measures for market access of foreign
investments, or the Negative List. The Foreign Investment Law grants national treatment to foreign-invested entities, except for
those foreign-invested entities that operate in industries specified as either "restricted" or "prohibited"
from foreign investment in the Negative List. The Foreign Investment Law provides that foreign-invested entities operating in "restricted"
or "prohibited" industries will require market entry clearance and other approvals from relevant PRC government authorities.
Pursuant to the Negative List, the Company's four business segments ((1) retail drugstores, (2) online pharmacy, (3) wholesale of
products similar to those that the Company carries in its pharmacies, and (4) farming and selling herbs used for traditional Chinese medicine)
do not fall within the "prohibited" category. However, since the Negative List has been adjusted and updated from time to
time with little advance notice, we cannot assure you that the aforementioned business segments will continuously be beyond the "prohibited"
category. If the management and operations to the consolidated VIEs through contractual arrangements are deemed as foreign investment
in the future, and any business of the consolidated VIEs is "restricted" or "prohibited" from foreign investment
under the "Negative List" effective at the time, we may be deemed to be in violation of the Foreign Investment Law, the contractual
arrangements that allow us to manage and operate the consolidated VIEs may be deemed as invalid and illegal, and we may be required to
unwind such contractual arrangements and/or restructure our business operations, any of which may have a material adverse effect on our
business operation and the market price of our ordinary shares.
Furthermore, if future laws,
administrative regulations or provisions mandate further actions to be taken by companies with respect to existing contractual arrangements,
we may face substantial uncertainties as to whether we can complete such actions in a timely manner, or at all. 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.
We are a holding company and
rely principally on dividends paid by the consolidated PRC operating entities for cash requirements, including the funds required to service
any debt we may incur, which are passed on to us through Jiuxin Management. If any of the consolidated operating entities incurs debt
in its own name in the future, the instruments governing the debt may restrict dividends or other distributions on our equity interest
to us. In addition, the PRC tax authorities may require us to adjust our taxable income under the contractual arrangements in a manner
that would materially and adversely affect our ability to pay dividends and other distributions on our equity interest.
Furthermore, applicable PRC
laws, rules and regulations permit payment of dividends by our consolidated PRC entities only out of their retained earnings, if any,
determined in accordance with PRC accounting standards. Under PRC laws, rules and regulations, our consolidated PRC entities are required
to set aside at least ten percent (10%) of their after-tax profit each year, based on PRC accounting standards, into their statutory surplus
reserve funds until the accumulative amount of such reserves reaches fifty percent (50%) of their respective registered capital. 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). Our restricted reserves are not distributable as cash dividends.
Any limitation on the ability of our consolidated operating entities to pay dividends to us could materially and adversely limit our ability
to grow, make investments or acquisitions that could be beneficial to our businesses, pay dividends, or otherwise fund and 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.
Mr. Lei Liu, our Chief Executive
Officer and Chairman of our Board of Directors, is also the executive director of Jiuzhou Pharmacy, a general partner of Jiuzhou Clinic,
and the supervising director of Jiuzhou Service. In addition, Mr. Liu has also lent us money out of his personal funds to help facilitate
our payments of expenses in the U.S., as well as to purchase a land use right. Ms. Li Qi, a member of our Board of Directors, is the general
manager of each of Jiuzhou Pharmacy, Jiuzhou Clinic and Jiuzhou Service, and a general partner of Jiuzhou Clinic. Conflicts of interests
between their respective duties to our company and HJ Group may arise. As our directors and executive officers, they have a duty of loyalty
and care to us under U.S. and Hong Kong law when there are any potential conflicts of interests between our company and HJ Group. We cannot
provide assurance, however, that when any conflicts of interest arise, both of them will act completely in our interests or that conflicts
of interests will be resolved in our favor. For example, they may determine that it is in HJ Group's interests to sever the contractual
arrangements with Jiuxin Management, irrespective of the effect such action may have on us. In addition, either one of them could violate
his or her legal duties by diverting business opportunities from us to others, thereby affecting the amount of payment that HJ Group is
obligated to remit to us under the Consulting Services Agreement.
In the event that you believe
that your rights have been infringed under securities laws or otherwise as a result of any one of the circumstances described above, it
may be difficult or impossible for you to bring an action against HJ Group, or our officers or directors who are members of the management,
all of whom reside within China. 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.
Our business operations conducted
through our PRC operating entities may be adversely affected by the current and future political environment in the PRC. Recently, the
PRC government initiated a series of regulatory actions and statements to regulate business operations in China with little advance notice,
including cracking down on illegal activities in the securities market, enhancing supervision over China-based companies listed overseas
using variable interest entity structure, adopting new measures to extend the scope of cybersecurity reviews, and expanding the efforts
in anti-monopoly enforcement. The Chinese government exerts substantial influence and control over the manner in which we must conduct
our business activities. Our ability to operate in China may be adversely affected by changes in Chinese laws and regulations. Under the
current government leadership, the government of the PRC has been pursuing reform policies which have adversely affected China-based operating
companies whose securities are listed in the United States, with significant policies changes being made from time to time without notice.
There are substantial uncertainties regarding the interpretation and application of PRC laws and regulations, including, but not limited
to, the laws and regulations governing our business, or the enforcement and performance of our contractual arrangements. Only after 1979
did the Chinese government begin to promulgate a comprehensive system of laws that regulate economic affairs in general, deal with economic
matters such as foreign investment, corporate organization and governance, commerce, taxation and trade, as well as encourage foreign
investment in China. Although the influence of the law has been increasing, 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. Also, because these laws
and regulations are relatively new, and because of the limited volume of published cases and their lack of force as precedents, interpretation
and enforcement of these laws and regulations involve significant uncertainties. New laws and regulations that affect existing and proposed
future businesses may also be applied retroactively. In addition, there have been constant changes and amendments of laws and regulations
over the past 30 years in order to keep up with the rapidly changing society and economy in China. Because government agencies and courts
provide interpretations of laws and regulations and decide contractual disputes and issues, their inexperience in adjudicating new business
and new polices or regulations in certain less developed areas causes uncertainty and may affect our business. Consequently, we cannot
predict the future direction of Chinese legislative activities with respect to either businesses with foreign investment or the effectiveness
on enforcement of laws and regulations in China. The uncertainties, including new laws and regulations and changes of existing laws, as
well as judicial interpretation by inexperienced officials in the agencies and courts in certain areas, may cause possible problems to
foreign investors. Although the PRC government has been pursuing economic reform policies for more than two decades, the PRC government
continues to exercise significant control over economic growth in the PRC through the allocation of resources, controlling payments of
foreign currency, setting monetary policy and imposing policies that impact particular industries in different ways. We cannot assure
you that the PRC government will continue to pursue policies favoring a market oriented economy or that existing policies will not be
significantly altered, especially in the event of a change in leadership, social or political disruption, or other circumstances affecting
political, economic and social life in the PRC. The Chinese government may intervene or influence our operations at any time, or may exert
more control over offerings conducted overseas and/or foreign investment in China-based issuers, which could result in a material change
in our operations and/or the value of the securities being offered. Any adverse changes in Chinese laws and regulations and the Chinese
government's significant oversight and discretion over the conduct of our business could significantly limit or completely hinder
our ability to offer or continue to offer securities to investors and cause the value of our securities to significantly decline or be
worthless.
We may be adversely affected by complexity,
uncertainties and changes in Chinese regulation of drugstores and the practice of medicine.
The Chinese government regulates
drugstores and the practice of medicine, including foreign ownership and requirements for licenses and permits. These laws and regulations
are relatively new and evolving, and their interpretation and enforcement involve significant uncertainty. As a result, in certain circumstances
it may be difficult to determine what actions or omissions may be deemed to be a violation of applicable laws and regulations.
The interpretation and application
of existing Chinese laws, regulations and policies and possible new laws, regulations or policies have created substantial uncertainties
regarding the legality of existing and future foreign investments in, and the businesses and activities of, pharmaceutical businesses
in China, including our business. We currently only have contractual management power over the HJ Group entities, and do not own them
due to the restrictions on foreign ownership of such companies. However, changes to laws in the PRC may force us to restructure our ownership
structure or our operations, which would severely disrupt our ability to conduct business and have a material adverse effect on our financial
condition, results of operations and prospects.
Uncertainties relating to
the regulation of drugstores and medical practice in China also extend to evolving licensing practices, which means that permits, licenses
or operations at our company may be subject to challenge. This may disrupt our business or subject us to sanctions, requirements to increase
capital, or other conditions or enforcement. 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.
China has implemented or will
implement rules and is considering a number of additional proposals relating to data protection. China's new Data Security Law took
effect in September 2021. The Data Security Law provides that the data processing activities must be conducted based on "data classification
and hierarchical protection system" for the purpose of data protection and prohibits entities in China from transferring data stored
in China to foreign law enforcement agencies or judicial authorities without prior approval by the Chinese government.
Additionally, China's
Cyber Security Law requires companies to take certain organizational, technical and administrative measures and other necessary measures
to ensure the security of their networks and data stored on their networks. Specifically, the Cyber Security Law provides that China adopt
a multi-level protection scheme (MLPS), under which network operators are required to perform obligations of security protection to ensure
that the network is free from interference, disruption or unauthorized access, and prevent network data from being disclosed, stolen or
tampered. Under the MLPS, entities operating information systems must have a thorough assessment of the risks and the conditions of their
information and network systems to determine the level to which the entity's information and network systems belong-from the lowest
Level 1 to the highest Level 5 pursuant to a series of national standards on the grading and implementation of the classified
protection of cyber security. The grading result will determine the set of security protection obligations that entities must comply with.
Entities classified as Level 2 or above should report the grade to the relevant government authority for examination and approval.
Recently, the Cyberspace Administration
of China has taken action against several Chinese internet companies in connection with their initial public offerings on U.S. securities
exchanges, for alleged national security risks and improper collection and use of the personal information of Chinese data subjects. According
to the official announcement, the action was initiated based on the National Security Law, the Cyber Security Law and the Measures on
Cybersecurity Review, which are aimed at "preventing national data security risks, maintaining national security and safeguarding
public interests." On July 10, 2021, the Cyberspace Administration of China published a revised draft of the Measures on Cybersecurity
Review, expanding the cybersecurity review to data processing operators in possession of personal information of over 1 million users
if the operators intend to list their securities in a foreign country.
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.
16
Also, the Personal Information
Protection Law released by the National People's Congress became effective on November 1, 2021. The law creates a comprehensive
set of data privacy and protection requirements that apply to the processing of personal information and expands data protection compliance
obligations to cover the processing of personal information of persons by organizations and individuals in China, and the processing of
personal information of persons in China outside of China if such processing is for purposes of providing products and services to, or
analyzing and evaluating the behavior of, persons in China. The law also provides that critical information infrastructure operators and
personal information processing entities who process personal information meeting a volume threshold to-be-set by Chinese cyberspace regulators
are also required to store in China personal information generated or collected in China, and to pass a security assessment administered
by Chinese cyberspace regulators for any export of such personal information. Lastly, the draft contains proposals for significant fines
for serious violations of up to RMB 50 million or 5% of annual revenues from the prior year and may also be ordered to suspend any related
activity by competent authorities.
Interpretation, application
and enforcement of these laws, rules and regulations evolve from time to time and their scope may continually change, through new legislation,
amendments to existing legislation and changes in enforcement. Compliance with the Cyber Security Law and the Data Security Law could
significantly increase the cost to us of providing our service offerings, require significant changes to our operations or even prevent
us from providing certain service offerings in jurisdictions in which we currently operate or in which we may operate in the future. Despite
our efforts to comply with applicable laws, regulations and other obligations relating to privacy, data protection and information security,
it is possible that our practices, offerings or platform could fail to meet all of the requirements imposed on us by the Cyber Security
Law, the Data Security Law and/or related implementing regulations. Any failure on our part to comply with such law or regulations or
any other obligations relating to privacy, data protection or information security, or any compromise of security that results in unauthorized
access, use or release of personally identifiable information or other data, or the perception or allegation that any of the foregoing
types of failure or compromise has occurred, could damage our reputation, discourage new and existing counterparties from contracting
with us or result in investigations, fines, suspension or other penalties by Chinese government authorities and private claims or litigation,
any of which could materially adversely affect our business, financial condition and results of operations. Even if our practices are
not subject to legal challenge, the perception of privacy concerns, whether or not valid, may harm our reputation and brand and adversely
affect our business, financial condition and results of operations. 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.
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.
In addition, uncertainties with respect to the PRC legal system could adversely affect us.
We conduct substantially all of our business through the consolidated
VIEs in China. Our operations in China are governed by PRC laws and regulations. The consolidated VIEs are generally subject to laws and
regulations applicable to foreign investments in China and, in particular, laws and regulations applicable to wholly foreign-owned enterprises.
The PRC legal system is based on statutes. Prior court decisions may be cited for reference but have limited precedential value.
The recent regulatory developments
in China, in particular with respect to restrictions on China-based companies raising capital offshore, may lead to additional regulatory
review in China over our financing and capital raising activities in the United States. In addition, we may be subject to industry-wide
regulations that may be adopted by the relevant PRC authorities, which may have the effect of limiting our service offerings, restricting
the scope of our operations in China, or causing the suspension or termination of our business operations in China entirely, all of which
will materially and adversely affect our business, financial condition and results of operations. We may have to adjust, modify, or completely
change our business operations in response to adverse regulatory changes or policy developments, and we cannot assure you that any remedial
action adopted by us can be completed in a timely, cost-efficient, or liability-free manner or at all.
17
On July 30, 2021, in response to the recent regulatory developments
in China and actions adopted by the PRC government, the Chairman of the SEC issued a statement asking the SEC staff to seek additional
disclosures from offshore issuers associated with China-based operating companies before their registration statements will be declared
effective. On August 1, 2021, the China Securities Regulatory Commission (the "CSRC") stated in a statement that it had taken
note of the new disclosure requirements announced by the SEC regarding the listings of Chinese companies and the recent regulatory development
in China, and that both countries should strengthen communications on regulating China-related issuers. To the best knowledge of this
Company, as of the date of this annual report, current Chinese laws and regulations do not forbid us from issuing securities overseas.
On December 24, 2021, the CSRC published the Administration of Overseas Securities Offering and Listing by Domestic Companies (the "Draft
Administrative Provisions") and the Administration Measures for the Filing of Overseas Securities Offering and Listing by Domestic
Companies (the "Draft Filing Measures"). The Draft Administrative Provisions and the Draft Filing Measures lay out requirements
for filing and include unified regulation management, strengthening regulatory coordination, and cross-border regulatory cooperation.
On February 17, 2023, the CSRC promulgated the Trial Administrative Measures of Overseas Securities Offering and Listing by Domestic Companies
(the "Trial Measures"), which took effect on March 31, 2023. On the same date, the CSRC circulated Supporting Guidance Rules
No. 1 through No. 5, Notes on the Trial Measures, Notice on Administration Arrangements for the Filing of Overseas Listings by Domestic
Enterprises and relevant CSRC Answers to Reporter Questions, or collectively, the Guidance Rules and Notice, on CSRC's official
website. The Trial Measures, together with the Guidance Rules and Notice reiterate the basic principles of the Draft Administrative Provisions
and Draft Filing Measures and impose substantially the same requirements for the overseas securities offering and listing by domestic
enterprises, and clarified and emphasized several aspects, which include but are not limited to: (1) criteria to determine whether an
issuer will be required to go through the filing procedures under the Trial Measures; (2) exemptions from immediate filing requirements
for issuers including those that have already been listed in foreign securities markets, including U.S. markets, prior to the effective
date of the Trial Measures, but these issuers shall still be subject to filing procedures if they conduct refinancing or are involved
in other circumstances that require filing with the CSRC; (3) a negative list of types of issuers banned from listing or offering overseas,
such as issuers whose affiliates have been recently convicted of bribery and corruption; (4) issuers' compliance with web security,
data security, and other national security laws and regulations; (5) issuers' filing and reporting obligations, such as obligation
to file with the CSRC after it submits an application for initial public offering to overseas regulators, and obligation after offering
or listing overseas to file with the CSRC after it completes subsequent offerings and to report to the CSRC material events including
change of control or voluntary or forced delisting of the issuer; and (6) the CSRC's authority to fine both issuers and their relevant
shareholders for failure to comply with the Trial Measures, including failure to comply with filing obligations or committing fraud and
misrepresentation. Specifically, pursuant to the Trial Measures, our future securities offerings in the Nasdaq Capital Market where we
have currently offered and listed shall also be filed with the CSRC within 3 working days after the offering is completed. As the Trial
Measures are newly issued, there remain uncertainties regarding its interpretation and implementation. 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.
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. In particular, because these laws and regulations are relatively new, and because of the limited volume
of published decisions and their nonbinding nature, the interpretation and enforcement of these laws and regulations involve uncertainties.
In addition, the PRC legal system is based in part on government policies and internal rules (some of which are not published on a timely
basis or at all) that may have a retroactive effect. As a result, we may not be aware of our violation of these policies and rules until
some time after the violation. 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.
Shareholder claims or regulatory
investigation that are common in the United States generally are difficult to pursue as a matter of law or practicality in China. For
example, in China, there are significant legal and other obstacles to providing information needed for regulatory investigations or litigations
initiated outside China. Although the authorities in China may establish a regulatory cooperation mechanism with the securities regulatory
authorities of another country or region to implement cross-border supervision and administration, such cooperation with regulatory authorities
in the Unities States—including the SEC and the Department of Justice—may not be efficient in the absence of mutual and practical
cooperation mechanism. Furthermore, according to Article 177 of the PRC Securities Law, which became effective in March 2020, no overseas
securities regulator is allowed to directly conduct investigation or evidence collection activities within the PRC territory. While detailed
interpretation of or implementation rules under Article 177 have yet to be promulgated, the inability for an overseas securities regulator
to directly conduct investigation or evidence collection activities within China may further increase the difficulties you face in protecting
your interests.
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.
We are a holding company and
conduct our business through our subsidiaries and controlled companies in the PRC. In addition, all of our operating assets are located
in, and all of our other senior executive officers reside within, China. As a result, it may not be possible to effect service of process
within the United States or elsewhere outside China upon those of our senior executive officers and directors that do not reside in the
United States, including with respect to matters arising under U.S. federal securities laws or applicable state securities laws. Moreover,
our Chinese counsel has advised us that China does not have treaties with the United States or many other countries providing for the
reciprocal recognition and enforcement of judgment of courts. 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.
Under the auspices of the
Healthy China 2020 program (the "Program"), published by China's National Development and Reform Commission in October
2008, the central government has set in motion a series of policies in fairly rapid succession aimed to improve China's healthcare
system. Such policies include (1) discouraging hospitals from both prescribing and dispensing medication, (2) the unveiling in April 2009
of formal healthcare reform guidelines aimed at improving the availability of and subsidies for "essential" drugs, and (3)
the announcement in August 2009 of China's National Essential Drugs List ("NEDL"), initially listing approximately three
hundred (300) medicines to be sold at government-controlled prices. While an underlying goal of these policies is to make drugs more accessible
to China's poorer population, these policies also serve to create opportunities that in turn will intensify business competition
in the Chinese retail drugstore industry, as well as competition for skilled labor and retail spaces. 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.
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.
Our management will have broad
discretion to use the net proceeds from any offerings we may conduct from time to time, and the shareholders will be relying on the judgment
of our management regarding the application of these proceeds. Except as described in our offering books, the net proceeds received by
us from our offerings will be added to our general funds and will be used for general corporate purposes. Our management might not apply
the net proceeds from offerings of our securities in ways that increase the value of your investment and might not be able to yield a
significant return, if any, on any investment of such net proceeds. You may not have the opportunity to influence our decisions on how
to use such proceeds.
HJ Group is subject to restrictions on
making payments to us.
We rely substantially on our contractual arrangements with HJ Group
for our revenue. The Chinese government also imposes controls on the conversion of RMB into foreign currencies and the remittance of currencies
out of China. We may experience difficulties in completing the administrative procedures necessary to obtain and remit foreign currency.
Furthermore, if these companies incur debt on their own in the future, the instruments governing the debt may restrict their ability to
make payments. If we are unable to receive all of the revenues from our operations through these contractual arrangements, we may be unable
to pay dividends on our ordinary shares.
Dividends we receive from our subsidiaries
located in the PRC may be subject to PRC withholding tax.
The Enterprise Income Tax
Law ("EIT Law") provides that a maximum income tax rate of twenty percent (20%) is applicable to dividends payable to non-PRC
investors that are "non-resident enterprises," to the extent such dividends are derived from sources within the PRC. However,
the State Council has reduced such rate to ten percent (10%) through the implementation regulations. We are a Cayman Islands holding company
and substantially all of our income is derived from our subsidiaries and controlled companies located in the PRC. Therefore, dividends
paid to us from China may be subject to the ten percent (10%) income tax if we are considered a "non-resident enterprise" under
the EIT Law. 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.
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.
For example, epidemics threaten
people's lives and may adversely affect their livelihood as well as their living and consumption patterns. The occurrence of an
epidemic is beyond our control, and we cannot assure you that the outbreak of coronavirus (including COVID-19), severe acute respiratory
syndrome, the H5N1 strain of avian influenza, the H1N1 strain of swine flu, the Zika virus or any other epidemics or pandemics will not
happen. Any epidemic or pandemic occurring, such as the most recent outbreak of COVID-19, in the PRC, or even in areas outside of the
PRC, may severely affect and restrict the level of economic activity as the government may impose regulatory administrative measures quarantining
affected areas or other measures to control the outbreak of the disease, which in turn may adversely affect our business, financial condition
and results of operations. Acts of war and terrorism may cause damage or disruption to us or our employees, facilities, markets, suppliers
or customers, any of which may adversely impact our revenue, cost, financial condition and results of operations or the trading price
of our securities. 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.
We are required to comply
with the United States Foreign Corrupt Practices Act, which generally prohibits United States companies from engaging in bribery or other
prohibited payments to foreign officials for the purpose of obtaining or retaining business. Foreign companies, including some that may
compete with us, are not subject to these prohibitions, and therefore may have a competitive advantage over us. Corruption, extortion,
bribery, pay-offs, theft and other fraudulent practices may occur in the PRC. If our competitors engage in these practices, they may receive
preferential treatment in the PRC, giving them an advantage in securing business, which would put us at a disadvantage. We cannot provide
assurance that our employees or other agents will not engage in such conduct for which we might be held responsible. If our employees
or other agents are found to have engaged in such practices, we could suffer severe penalties and other consequences that may have a material
adverse effect on our business, financial condition and results of operations.
If relations between the United States and
China worsen, investors may be unwilling to hold or buy our stock and our stock price may decrease.
At various times in recent
years, the United States and China have had significant disagreements over political and economic issues. Controversies may arise in the
future between the two countries. Any political or trade controversies between the United States and China, whether or not directly related
to our business, could reduce the price of our ordinary shares.
Our auditor, YCM CPA Inc., is headquartered
in California, and is subject to inspection by the PCAOB on a regular basis. 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.
The Holding Foreign Companies
Accountable Act, or the HFCAA, was enacted on December 18, 2020. The HFCAA states if the SEC determines that we have filed audit reports
issued by a registered public accounting firm that has not been subject to inspection by the PCAOB for three consecutive years beginning
in 2021, the SEC shall prohibit our shares from being traded on a national securities exchange or in the over-the-counter trading market
in the United States.
Our independent registered
public accounting firm issued an audit opinion on the financial statements included in our annual reports filed with the SEC. Our independent
registered public accounting firm's audit documentation related to their audit reports included in our annual reports is located
in China, and audit procedures take place within China's borders. 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. We will be required to comply with these rules if the SEC identifies our auditors as having a "non-inspection"
year under a process to be subsequently established by the SEC.
On May 13, 2021, the PCAOB
proposed a new rule for implementing the HFCAA. Among other things, the proposed rule provides a framework for the PCAOB to use when determining,
under the HFCAA, whether it is unable to inspect or investigate completely registered public accounting firms located in a foreign jurisdiction
because of a position taken by one or more authorities in that jurisdiction. The proposed rule would also establish the manner of the
PCAOB's determinations; the factors the PCAOB will evaluate and the documents and information it will consider when assessing whether
a determination is warranted; the form, public availability, effective date, and duration of such determinations; and the process by which
the board of the PCAOB can modify or vacate its determinations. The proposed rule was adopted by the PCAOB on September 22, 2021 and approved
by the SEC on November 5, 2021.
On June 22, 2021, the U.S.
Senate passed a bill which, if passed by the U.S. House of Representatives and signed into law, would reduce the number of consecutive
non-inspection years required for triggering the prohibitions under the HFCAA from three years to two, thus reducing the time period before
the securities of such foreign companies may be prohibited from trading or delisted. On December 29, 2022, the Accelerating Holding Foreign
Companies Accountable Act was signed into law, which officially reduce the number of years that the auditor is not subject to inspection
to two consecutive years.
The SEC is assessing how to
implement other requirements of the HFCAA, including the listing and trading prohibition requirements described above. The SEC may propose
additional rules or guidance that could impact us if our auditor is not subject to the PCAOB inspection. For example, on August 6, 2020,
the President's Working Group on Financial Markets, or the PWG, issued the Report on Protecting United States Investors from Significant
Risks from Chinese Companies to the then President of the United States. This report recommended the SEC implement five recommendations
to address companies from jurisdictions that do not provide the PCAOB with sufficient access to fulfill its statutory mandate. Some of
the concepts of these recommendations were implemented with the enactment of the HFCAA. However, some of the recommendations were more
stringent than the HFCAA. For example, if a company was not subject to the PCAOB inspection, the report recommended that the transition
period before a company would be delisted would end on January 1, 2022.
On December 2, 2021, the SEC
issued amendments to finalize the interim final rules previously adopted in March 2021, and established procedures to identify issuers
and prohibit the trading of the securities of certain registrants as required by the HFCAA.
On August 26, 2022, the PCAOB
signed a Statement of Protocol with the CSRC and the Ministry of Finance of the PRC (the "Statement of Protocol"), which is
intended to enable the PCAOB to inspect and investigate completely registered public accounting firms in mainland China and Hong Kong.
According to a statement released by the PCAOB, the Statement of Protocol (i) provides the PCAOB with sole discretion to select the firms,
audit engagements and potential violations it inspects and investigates without consultation with, nor input from, Chinese authorities,
(ii) puts procedures in place for PCAOB inspectors and investigators to view complete audit work papers with all information included
and for the PCAOB to retain information as needed and (iii) provides the PCAOB with direct access to interview and take testimony from
all personnel associated with the audits the PCAOB inspects or investigates. While the Chairs of both the PCAOB and the SEC made statements
supporting the Statement of Protocol, both emphasized that this is only the first step in the process. As such, uncertainties remain regarding
how the Statement of Protocol will be implemented and how it will impact China-based issuers and there is no assurance that the PCAOB
will be able to execute, in a timely manner, its future inspections and investigations in a manner that satisfies the Statement of Protocol.
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. The December 15, 2022 Determination Report cautions,
however, that authorities in the PRC might take positions at any time that would prevent the PCAOB from continuing to inspect or investigate
completely. As required by the HFCAA, if in the future the PCAOB determines it no longer can inspect or investigate completely because
of a position taken by an authority in the PRC, the PCAOB will act expeditiously to consider whether it should issue a new determination.
While the HFCAA is not currently
applicable to the Company because the Company's current auditors are subject to PCAOB review, if this changes in the future for
any reason, the Company may be subject to the HFCAA. The implications of this regulation if the Company were to become subject to it are
uncertain. Such uncertainty could cause the market price of our ordinary shares to be materially and adversely affected, and our securities
could be delisted or prohibited from being traded on Nasdaq earlier than would be required by the HFCAA. If our ordinary shares is unable
to be listed on another securities exchange by then, such a delisting would substantially impair your ability to sell or purchase the
ordinary shares when you wish to do so, and the risk and uncertainty associated with a potential delisting would have a negative impact
on the price of our ordinary shares.
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 is headquartered in
Irvine, California and has been inspected by the PCAOB in March 2023. In the event that, in the future, either there is any regulatory
change or step taken by PRC regulators that does not permit YCM CPA Inc. to provide audit documentations located in China or Hong Kong
to the PCAOB for inspection or investigation, or the PCAOB expands the scope of the determinations so that our PRC operating entities
will be subject to the HFCAA, as the same may be amended, you may be deprived of the benefits of such inspection which could result in
limitation or restriction to our access to the U.S. capital markets and trading of our securities, including "over-the-counter"
trading, may be prohibited, under the HFCAA. The recent developments would add uncertainties to our listing and we cannot assure you whether
Nasdaq Capital Market or regulatory authorities would apply additional and more stringent criteria to us after considering the effectiveness
of our auditor's audit procedures and quality control procedures, adequacy of personnel and training, or sufficiency of resources,
geographic reach, or experience as it relates to our audit.
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.
We do not anticipate paying
cash dividends on our ordinary shares in the foreseeable future and we may not have sufficient funds legally available to pay dividends.
Even if the funds are legally available for distribution, we may nevertheless decide not to pay any dividends. We intend to retain all
earnings for our operations.
Nasdaq may delist our ordinary shares from
trading on the Nasdaq Capital Market for failing to maintain a minimum bid price of $1.00, which could limit investors' ability
to effect transactions in our ordinary shares and subject us to additional trading restrictions.
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). 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. Effective April 7, 2022,
the Company effected a 1-for-12 reverse stock split.
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. Nasdaq stated that accordingly, Jo-Jo Drugstores has regained compliance with Nasdaq Marketplace Rule 5550(a)(2).
We cannot provide assurance
that we will remain compliant with the Bid Price Rule in the future. If Nasdaq delists our ordinary shares from trading on its exchange
due to incompliance, we could face significant material adverse consequences including:
●
a limited availability of market quotations for our ordinary shares;
●
a limited amount of news and analyst coverage for our company; and
●
a decreased ability to issue additional securities or obtain additional financing in the future.
Although publicly traded, the trading market
in our ordinary shares may be substantially less liquid than the average stock quoted on the Nasdaq Capital Market, and such low trading
volume may adversely affect the price of our ordinary shares.
Although our securities has
been listed on the Nasdaq Capital Market since April 22, 2010, the historical trading volume of our securities has generally been low.
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.
The market price for our stock
may be volatile and, when compared to seasoned issuers, subject to wide fluctuations in response to various factors, many of which are
beyond our control, including the following:
●
actual or anticipated fluctuations in our quarterly operating results;
●
changes in financial estimates by securities research analysts;
●
conditions in the retail pharmacy markets;
●
changes in the economic performance or market valuations of other retail pharmacy operators;
●
announcements by us or our competitors of new products, acquisitions, strategic partnerships, joint ventures or capital commitments;
●
addition or departure of key personnel;
●
fluctuations of exchange rates between RMB and the U.S. dollar;
●
intellectual property litigation; and
●
general economic or political conditions in China.
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. In addition, the securities market has from time to time experienced significant price and volume fluctuations
that are not related to the operating performance of particular companies. These market fluctuations may also materially and adversely
affect the market price of our stock.
In the past, plaintiffs have
often initiated securities class action litigation against a company following periods of volatility in the market price of its securities.
We may, in the future, be the target of similar litigation. Securities litigation could result in substantial costs and liabilities and
could divert management's attention and resources.
Techniques employed by manipulative short
sellers in Chinese small-cap stocks may drive down the market price of our ordinary shares.
Short selling is the practice
of selling securities that the seller does not own but rather has borrowed from a third party with the intention of buying identical securities
back at a later date to return to the lender. The short seller hopes to profit from the difference in the sale price of the borrowed securities
and the purchase price of the replacement shares. As it is therefore in the short seller's best interests for the price of the stock
to decline, there have been incidents of short sellers publishing, or arranging to publish negative opinions in order to create negative
market momentum. While traditionally these disclosed shorts have been limited in their ability to access mainstream business media or
to otherwise create negative market rumors, the rise of the Internet and technological advancements regarding document creation, videotaping
and publication by weblog ("blogging") have allowed many disclosed shorts to publicly attack a company's credibility,
strategy and veracity by means of so-called research reports that mimic the type of investment analysis performed by large Wall Street
firms and independent research analysts. 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.
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. In light of the limited risks involved in publishing such information,
and the enormous profit that can be made from running just one successful short attack, unless the short sellers become subject to significant
penalties, it is more likely than not that disclosed shorts will continue to issue such reports.
While we intend to strongly
defend our public filings against any such short seller attacks, oftentimes we are constrained, either by principles of freedom of speech,
applicable state law (often called Anti-SLAPP statutes), or issues of commercial confidentiality, in the manner in which we can proceed
against the relevant short seller. 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.
Other General Risk Factors
Changes in economic conditions and consumer
confidence in China may influence the drugstore industry, consumer preferences and spending patterns.
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. In particular, as we focus on our expansion
of pharmacies in metropolitan markets, where living standards and consumer purchasing power are relatively high, we are especially susceptible
to changes in economic conditions, consumer confidence and customer preferences of the urban Chinese population. External factors beyond
our control that affect consumer confidence include unemployment rates, levels of personal disposable income, national, regional or local
economic conditions, and acts of war or terrorism. Changes in economic conditions and consumer confidence could adversely affect consumer
preferences, purchasing power and spending patterns. A decrease in overall consumer spending as a result of changes in economic conditions
could adversely affect our front-end and pharmacy sales and negatively impact our profitability. In addition, acts of war or terrorism
may cause damage to our facilities, disrupt the supply of the products and services we offer in our stores, or adversely impact consumer
demand. 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.
The pharmaceutical industry
in China is rapidly evolving and is subject to rapidly changing customer preferences that are difficult to predict. Our success depends
on our ability to anticipate and identify customer preferences, and adapt our product selection to meet these preferences. In particular,
we must optimize our product selection and inventory positions based on sales trends. We cannot provide assurance that our product selection,
especially our selection of nutritional supplements and food products, will accurately reflect customer preferences at any given time.
If we fail to accurately anticipate either the market for our products or customers' purchasing habits or fail to respond to customers'
changing preferences promptly and effectively, we may not be able to adapt our product selection to customer preferences or make appropriate
adjustments to our inventory positions, which could significantly reduce our revenue and have a material adverse effect on our business,
financial condition and results of operations.
Our success depends on our ability to establish
effective advertising, marketing and promotional programs.
Our success depends on our
ability to establish effective advertising, marketing and promotional programs, including pricing strategies implemented in response to
competitive pressures and/or to drive demand for our products. Our advertisements are designed to promote our brand, our corporate image
and the prices of products available for sale in our stores. Our pricing strategies and value propositions must be appropriate for our
target customers. If we are not able to maintain and increase the awareness of our pharmacy's brand and the products and services
we provide, we may not be able to attract and retain customers and our reputation may also suffer. We expect to incur substantial expenses
in our marketing and promotional efforts to both attract and retain customers. However, our marketing and promotional activities may be
less successful than we anticipate, and may not be effective at building our brand awareness and customer base. In addition, the government
may impose restrictions on how marketing and promotional activities can be conducted. We cannot provide assurance that our current and
proposed budget for marketing activities will be adequate to support our future growth. Failure to successfully execute our advertising,
marketing and promotional programs may result in material decreases in our revenue and profitability.
Failure to maintain optimal inventory levels
could increase our inventory holding costs or cause us to lose sales, either of which could have a material adverse effect on our business,
financial condition and results of operations.
We need to maintain sufficient
inventory levels to operate both of our retail and wholesale businesses successfully as well as meet customer expectations. However, we
must also guard against the risk of accumulating excess inventory. We are exposed to inventory risks as a result of rapid changes in product
life cycles, changing consumer preferences, uncertainty of the success of product launches, seasonality, and manufacturer backorders and
other vendor-related problems. We cannot provide assurance that we can accurately predict these trends and events and avoid over-stocking
or under-stocking products. In addition, demand for products could change significantly between the time product inventory is ordered
and the time it is available for sale.
When we begin selling a new
product, it is particularly difficult to accurately forecast product demand. The purchase of certain types of inventory may require significant
lead-time. As we carry a broad selection of products and maintain significant inventory levels for a substantial portion of our merchandise,
we may be unable to sell such inventory in sufficient quantities or during the relevant selling seasons. 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.
We believe that the aggregate
amount of our current cash, anticipated cash flow from operations, available borrowings under our existing bank facilities, and personal
loans from our principal shareholders should be sufficient to meet our anticipated cash needs for the near future. We may, however, require
additional cash resources due to changed business conditions or other future developments. If our resources are insufficient to satisfy
our cash requirements, we may seek to sell additional equity or debt securities or obtain credit facilities. The sale of additional equity
securities could result in the dilution of our existing shareholders. We cannot guarantee that we will be able to obtain any additional
financing on terms that are acceptable to us, or at all. Even if we are able to obtain any requisite financing, the incurrence of additional
indebtedness would result in increased debt service obligations, and could result in further operating and financing covenants that would
restrict our freedom to operate our business, such as conditions that:
●
limit our ability to pay dividends or require us to seek consent for the payment of dividends;
●
increase our vulnerability to general adverse economic and industry conditions;
●
require us to dedicate a portion of our cash flow from operations to payments on our debt, thereby reducing the availability of our cash flow to fund capital expenditures, working capital and other general corporate purposes; and
●
limit our flexibility in planning for, or reacting to, changes in our business and our industry.
Our brand names, trade secrets and other
intellectual property are valuable assets. If we are unable to protect them from infringement, our business and prospects may be harmed.
We consider our pharmacy brand
names to be valuable assets. We may be unable to prevent third parties from using such brand names without authorization, which may adversely
affect our business and reputation, including the perceived quality and reliability of our products and services. We have five registered
trademarks. We also own three domain names that we actively use in our business.
We rely on trade secrets to
protect our know-how and other proprietary information, including pricing, purchasing, promotional strategies, customer lists and/or suppliers
lists. As a result, our employees are required to sign employment agreements that contain confidentiality provisions as a condition of
their employment with us. However, trade secrets are difficult to protect. While we believe we use reasonable efforts to protect our trade
secrets, our employees, consultants, contractors or advisors may unintentionally or willfully disclose our information to competitors.
In addition, confidentiality agreements executed by the aforementioned individuals may not be enforceable or provide meaningful protection
for our trade secrets or other proprietary information in the event of unauthorized use or disclosure.
If we were to enforce a claim
that a third party had illegally obtained and was using our trade secrets, such efforts could be expensive and time-consuming, and the
outcome unpredictable. Additionally, if our competitors independently develop information that is equivalent to our trade secrets or other
proprietary information, we have little recourse to enforce our rights, and our business and prospects could be harmed.
Litigation may be necessary
in the future to enforce our intellectual property rights or to determine the validity and scope of the intellectual property rights of
others. However, since the validity, enforceability and scope of protection of intellectual property rights in the PRC are uncertain and
still evolving, we may not be successful in prosecuting these cases. In addition, any litigation, proceeding or other efforts to protect
our intellectual property rights could result in substantial costs and diversion of our resources, and could seriously harm our business
and operating results. Furthermore, the degree of future protection of our proprietary rights is uncertain and may not adequately protect
our rights or permit us to gain or keep our competitive advantage. 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.
Our success depends, in large
part, on our ability to use our proprietary information and know-how without infringing third party intellectual property rights. As litigation
becomes more common in China, we face a higher risk of being the subject of claims for intellectual property infringement, invalidity
or indemnification relating to other parties' proprietary rights. Our current or potential competitors, many of whom have substantial
resources, may have or may obtain intellectual property protection that will prevent, limit or interfere with our ability to conduct our
business in China. Moreover, the defense of intellectual property suits, including trademark infringement suits and related legal and
administrative proceedings, can be both costly and time consuming and may significantly divert the efforts and resources of our management
personnel. Furthermore, an adverse determination in any such litigation or proceeding to which we may become a party could cause us to:
●
pay damage awards;
●
seek licenses from third parties;
●
pay ongoing royalties;
●
redesign our product offerings; or
●
be restricted by injunctions,
Each of which could effectively
prevent us from pursuing some or all of our business and result in our customers or potential customers deferring or limiting their purchase
from our stores, which could have a material adverse effect on our financial condition and results of operations.
We face competition that could adversely
affect our results of operations.
Our clinics compete with
a large number and variety of healthcare facilities in their respective markets. There are numerous government-run and private hospitals
and clinics available to the general populace. There can be no assurance that these or other clinics, hospitals or other facilities will
not commence or expand such operations, which would increase their competitive position. 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. Our inability to obtain such approvals will have a material adverse effect on our business and growth.
According to the
Measures
on the Administration of Foreign Investment in the Commercial Sector
(the "Measures") promulgated by China's
Ministry of Commerce (the "MOC"), which became effective on June 1, 2004, a company that is directly owned by a foreign invested
enterprise needs to obtain relevant governmental approvals before it opens new retail stores. However, there are no specific laws, rules
or regulations with respect to whether such approvals are necessary for a company that is contractually controlled by a foreign invested
enterprise. In addition, the Measures state that the MOC will promulgate a detailed implementation regulation to govern foreign invested
enterprises engaging in drug sale. However, such implementation regulation has not yet been promulgated. Therefore, we cannot provide
assurance that the MOC will not require such approvals to be obtained, or as to when any regulation of such requirements may be implemented.
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.
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"). 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. In
addition, the law requires the payment of a statutory severance pay upon the termination of an employment contract in most cases, including
the case of the expiration of a fixed-term employment contract. Further, the LC Law requires an employer to conclude an "employment
contract without a fixed-term" with any employee who either has worked for the same employer for ten (10) consecutive years or more
or has had two (2) consecutive fixed-term contracts with the same employer. An "employment contract without a fixed term"
can no longer be terminated on the ground of the expiration of the contract, although it can still be terminated pursuant to the standards
and procedures set forth under the new law. Because of the lack of implementing rules for the LC Law and the precedents for the enforcement
of such a law, the standards and procedures set forth under the LC Law in relation to the termination of an employment contract have raised
concerns among foreign investment enterprises in the PRC that such "employment contract without a fixed term" might in fact
become a "lifetime, permanent employment contract." Finally, under the LC Law, downsizing of either more than twenty (20)
people or more than ten percent (10%) of the workforce may occur only under specified circumstances, such as a restructuring undertaken
pursuant to the PRC's Enterprise Bankruptcy Law, or where a company suffers serious difficulties in production and/or business operations,
or where there has been a material change in the objective economic circumstances relied upon by the parties at the time of the conclusion
of the employment contract, thereby making the performance of such employment contract impossible. To date, there has been very little
guidance and precedent as to how such specified circumstances for downsizing will be interpreted and enforced by the relevant PRC authorities.
All of our employees working for us exclusively within the PRC are covered by the LC Law and thus, our ability to adjust the size of our
operations when necessary in periods of recession or less severe economic downturns may be curtailed. Accordingly, if we face future periods
of decline in business activity generally or adverse economic periods specific to our business, the LC Law can be expected to exacerbate
the adverse effect of the economic environment on our results of operations and financial condition.
We cannot be certain that the Chinese regulatory
authorities will not impose more stringent restrictions on the convertibility of the Renminbi, especially with respect to foreign exchange
transactions.
Fluctuations in the value
of the Renminbi may have a material and adverse effect on your investment. The change in value of the Renminbi against the U.S. dollar
is affected by, among other things, changes in PRC's political and economic conditions. We receive substantially all of our revenues
in RMB. Under our current structure, our income is primarily derived from payments from the three (3) HJ Group companies. Shortages in
the availability of foreign currency may restrict the ability of our subsidiaries and our PRC affiliated entities to remit sufficient
foreign currency to pay dividends or other payments to us, or otherwise satisfy their foreign currency denominated obligations. Under
existing Chinese foreign exchange regulations, payments of current account items, including profit distributions, interest payments and
expenditures from trade-related transactions, can be made in foreign currencies without prior approval from SAFE by complying with certain
procedural requirements. However, approval from appropriate government authorities is required where RMB is to be converted into foreign
currency and remitted out of China to pay capital expenses, such as the repayment of bank loans denominated in foreign currencies. The
Chinese government may also, at its discretion, restrict access in the future to foreign currencies for current account transactions.
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. On July 21, 2005, the PRC government changed this policy and began allowing modest appreciation of the Renminbi versus
the U.S. dollar. Under the new policy, the Renminbi was permitted to fluctuate within a narrow and managed band against a basket of certain
foreign currencies. This change in policy caused the Renminbi to appreciate approximately 21.5% against the U.S. dollar over the following
three years. As a consequence, the Renminbi has fluctuated sharply since July 2008 against other freely traded currencies, in tandem with
the U.S. dollar. It is difficult to predict how long the current situation may last and when and how it may change again. There remains
significant international pressure on the PRC government to adopt a substantial liberalization of its currency policy, which could result
in a further and more significant appreciation in the value of the Renminbi against the U.S. dollar. Significant revaluation of the Renminbi
may have a material and adverse effect on your investment. For example, to the extent that we need to convert U.S. dollars we receive
from securities offering into Renminbi for our operations, appreciation of the Renminbi against the U.S. dollar would have an adverse
effect on the Renminbi amount we would receive from the conversion. Conversely, if we decide to convert our Renminbi into U.S. dollars
for the purpose of making payments for dividends on our ordinary shares or for other business purposes, appreciation of the U.S. dollar
against the Renminbi would have a negative effect on the U.S. dollar amount available to us. In August 2015, the PRC Government devalued
its currency by approximately 3%, represented the largest yuan depreciation for 20 years. Concerns remain that China's slowing economy,
and in particular its exports, will need a stimulus that can only come from further cuts in the exchange rate.
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. Accordingly, this
may result in gains or losses from currency translation on our financial statements. 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. For example, an appreciation
of RMB against the U.S. dollar would, to the extent that we need to convert U.S. dollars into RMB for such purposes, make any new RMB
denominated investments or expenditures more costly to us. An appreciation of RMB against the U.S. dollar would result in foreign currency
translation gains for financial reporting purposes when we translate our RMB denominated financial assets into U.S. dollars, as the U.S.
dollar is our reporting currency.
In addition, appreciation
or depreciation in the value of the Renminbi relative to the U.S. dollar would affect our financial results reported in U.S. dollars without
giving effect to any underlying change in our business or results of operations. The income statements of our operations are translated
into U.S. dollars at the average exchange rates in each applicable period. To the extent the U.S. dollar strengthens against foreign currencies,
the translation of these foreign currencies denominated transactions results in reduced revenue, operating expenses and net income for
our international operations. Similarly, to the extent the U.S. dollar weakens against foreign currencies, the translation of these foreign
currency denominated transactions results in increased revenue, operating expenses and net income for our international operations. We
are also exposed to foreign exchange rate fluctuations as we convert the financial statements of our foreign subsidiaries into U.S. dollars
in consolidation. If there is a change in foreign currency exchange rates, the conversion of the foreign subsidiaries' financial
statements into U.S. dollars will lead to a translation gain or loss, which is recorded as a component of other comprehensive income.
Very limited hedging transactions are available in China to reduce our exposure to exchange rate fluctuations. To date, we have not entered
into any hedging transactions. While we may enter into hedging transactions in the future, the availability and effectiveness of these
transactions may be limited, and we may not be able to successfully hedge our exposure at all.
The economy of China had experienced unprecedented
growth. This growth has slowed in the recent years, and if the growth of the economy continues to slow or if the economy contracts, our
financial condition may be materially and adversely affected.
The rapid growth of the Chinese
economy had historically resulted in widespread growth opportunities for industries across China. This growth has slowed in the recent
years. As a result of the global financial crisis due to COVID-19, and Ukraine War, and the inability of enterprises to gain comparable
access to the same amounts of capital available in past years, there may be an adverse effect on the business climate and growth of private
enterprises in China. An economic slowdown could have an adverse effect on our sales and may increase our costs. Further, if economic
growth continues to slow, and if, in conjunction, inflation continues unchecked, our costs would be likely to increase, and there can
be no assurance that we would be able to increase our prices to an extent that would offset the increase in our expenses.
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
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. ("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. 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. As China has been successfully controlling the spread of COVID-19,
and the recurrences of the pandemic have not materially affected our business, the negative impacts are limited.
We currently operate in four
business segments in China: (1) retail drugstores, (2) online pharmacy, (3) wholesale business selling products similar to those we carry
in our pharmacies, and (4) farming and selling herbs used for traditional Chinese medicine ("TCM"). All of the above business
are performed in China with no international sales.
Our stores provide customers
with a wide variety of pharmaceutical products, including prescription and over-the-counter ("OTC") drugs, nutritional supplements,
TCM, personal and family care products, and medical devices, as well as convenience products, including consumable, seasonal, and promotional
items. Additionally, we have doctors licensed in both western medicine and TCM on site for consultation, examination and treatment of
common ailments at scheduled hours. Four (4) stores have adjacent medical clinics offering urgent care (to provide treatment for minor
ailments such as sprains, minor lacerations, and dizziness that can be treated on an outpatient basis), TCM (including acupuncture, therapeutic
massage, and cupping) and minor outpatient surgical treatments (such as suturing). Our stores vary in size, but presently average close
to 200 square meters per store. We attempt to tailor each store's product offerings, physician access, and operating hours to suit
the community where the store is located.
We operate our pharmacies (including the medical clinics) through the
following companies in China that we manage through contractual arrangements (refer to "
Contractual Arrangements with HJ Group
and the Key Personnel" below in this report regarding the details of contractual arrangements
:
●
Hangzhou Jiuzhou Grand Pharmacy Chain Co., Ltd. ("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 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. 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.
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, 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. During the fiscal year ended March 31, 2023, our herb farming
business generated approximately 0% of our retail revenue.
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. 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.
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. 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.
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 favor retail locations
in well-established residential communities with relatively concentrated consumer purchasing power or are located in close proximity to
local hospitals, and evaluate potential store sites to assess consumer traffic, visibility and convenience. Depending on its size, each
drugstore has between two (2) to twenty-five (25) pharmacists on staff, all of whom are properly licensed. We only accept prescriptions
from licensed health care providers, and verify the validity, accuracy, and completeness of all prescriptions. We also ask all prescription
customers to disclose their drug allergies, current medical conditions, and current medications. Most pharmacies also maintain a TCM counter
staffed by licensed herbalists.
After opening, a location
without SHI (Social Health Insurance) coverage may take up to one year to achieve our projected revenue goals for that particular location.
Various factors influence individual store revenue including, but not limited to: location, nearby competition, local population demographics,
square footage, and government insurance coverage.
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. 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. 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. In-store consultations and examinations by our physicians are provided
free-of-charge to ensure that customers are being prescribed and taking the appropriate medication for their ailments, and to afford customers
convenience.
We view our medical services
as more consumer-driven than other health care specialties, because consumers requiring the types of medical services that we provide
often seek treatment on their own accord. We have developed our medical services to respond to the public need for convenient access to
medical consultations and/or care and the significant savings that we can provide as compared to a more traditional medical setting such
as a hospital. Many of our patients often need immediate access to medical services, do not have a regular physician, or may lack suitable
alternatives. Patient flow is derived from the physical presence of our drugstores, not from pre-existing doctor-patient relationships
or referrals from other healthcare providers.
We generate limited revenue
directly from our clinics. However, our clinic brings patients into our stores, where they then purchase medical products.
Online Sales
Since May 2010, we have been
retailing OTC drugs and nutritional supplements on the Internet at www.dada360.com. Before November 2015, our subsidiary Quannuo Technology
operated and maintained the website pursuant to the Internet Pharmaceutical Transaction Service Qualification Certificate issued by the
National Medical Products Administration (the "NMPA") of Zhejiang Province, which allows us to engage in online retail pharmaceutical
sales throughout China. 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. 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. Online sales accounted for approximately 16.8% of our total revenue, for
the fiscal year ended March 31, 2021.
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 revenue increased
primarily as a result of our ability to resell certain products, which our retail stores made large orders on, to other vendors. As our
retail drugstores achieved large quantity sales of certain brand name merchandise, we were able to negotiate for lower purchase prices
than the market level on such merchandise. As a result, certain vendors who were unable to obtain better prices than ours, will turn to
us for such merchandise, leading the wholesale volume to grow. On the other side, we have been trying to act as a local agent for well-known
health products in Zhejiang Province. For example, we kept a strategic cooperation agreement with Dong'a Gelatin (DEEJ) and act
as its local sale agent in Zhejiang Province. 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.
Herb Farming
From 2010 to the third quarter
of fiscal 2013, we had been cultivating and harvested ten (10) types of herbs, such as fructusrubi (used in TCM to promote blood circulation),
white atractylodes rhizome (used in TCM to treat physical and mental fatigue), atractylodesmacrocephala (used in TCM to control sweating),
ginkgo seeds (used in TCM to treat asthma), and ginkgo trees used for TCM on approximately forty eight (48) acres of leased land in Lin'an,
approximately thirty (30) miles from Hangzhou.
A ginkgo tree may have a growth
period of up to twenty years before it is mature enough to harvest. Typically, the longer the plant grows, the more valuable it becomes.
We plan to continue cultivating the trees in order to maximize their market value in the future. We may continue growing trees and cultivating
other herbs in the future.
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. We periodically conduct qualitative customer
surveys to help us build a stronger understanding of our market position and our customers' purchasing habits.
Pharmacy customers pay by
cash, debit or credit cards, mobile devices or medical insurance cards under Hangzhou and Zhejiang's medical insurance programs.
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. Our integrated information management system records the details of each sale, which we control from our
headquarters. Depending on each location's sales activities, cash may be deposited daily or several times per week in designated
bank accounts.
For sales made to eligible
participants in the national medical insurance program, we generally obtain payments from the relevant government social security bureaus
on a monthly basis. See "
Relevant PRC Regulations - Reimbursement under the National Medical Insurance Program.
" According
to relevant regulations, a drugstore usually needs to operate for at least one (1) year before it can apply to be licensed to accept Hangzhou's
medical insurance cards. 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.
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.
Wholesale Customers
Our wholesale customers are
primarily third-party trading companies that purchase from us to resell to pharmacies throughout China. We also supply some hospitals
and pharmacies, although they collectively make up less than 10.0% of our wholesale customers currently.
Herb Farming Customers
Our farming customers primarily
include local herb vendors. For the fiscal year ended March, 31, 2023, we had not harvested or sold any herbs.
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.
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. 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, 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.
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. 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. 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. We provide extensive training for newly recruited employees in the first three months of their employment. The training is
designed to encompass a number of areas, such as knowledge of our products and effective customer service. In addition, we regularly carry
out training programs on medicinal information, nutritional information, and selling skills for our store staff and in-store pharmacists.
We believe these programs have played an important role in strengthening the capabilities of our employees.
Various drug manufacturers
also pay us to have their representatives in our drugstores, and accordingly, we train them under our store policies and procedures.
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".
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. 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.
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. PROPERTY, PLANTS AND EQUIPMENT
We are headquartered in Hangzhou,
China. We own three properties. 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. See Note 11, "Long Term Deposits". The leases do not contain any material escalating lease payments or contingent rental payment terms. We must negotiate with the landlords for an extension of the current leases or enter into new leases upon their termination, upon which our landlords may request a rent increase. Under applicable PRC law, we have priority over other potential lessees with respect to the leased store space on the same terms. We also do not expect any significant difficulties in renewing the existing leases upon their expiration, where desired. Our community stores are normally relatively small in size and the fixtures inside such stores are easily movable. As a result, we do not expect our drugstore operations to be materially and adversely affected by any failure to renew current leases or enter into new leases.
(2)
We lease the land from the People's Government of Qianhong Village under a 30-year lease entered in February 2010. The rent for the land was prepaid in full in May 2010. See Note 12, "Other Noncurrent Assets," and Note 14, "Intangible Assets," to the Financial Statements.
ITEM 4A. UNRESOLVED STAFF COMMENTS
None.
ITEM 5. OPERATING AND FINANCIAL REVIEW
AND PROSPECTS
A
.
OPERATING RESULTS.
The following discussion
and analysis of our results of operations and financial condition for the fiscal years ended March 31, 2023, 2022 and 2021 should be read
in conjunction with our financial statements and the notes to those financial statements that are included elsewhere in this report. Our
discussion includes forward-looking statements based upon current expectations that involve risks and uncertainties, such as our plans,
objectives, expectations and intentions. Actual results and the timing of events could differ materially from those anticipated in these
forward-looking statements as a result of a number of factors, including those set forth under the "Risk Factors," "Cautionary
Notice Regarding Forward-Looking Statements" and "Description of Business" sections and elsewhere in this report. We
use words such as "anticipate," "estimate," "plan," "project," "continuing,"
"ongoing," "expect," "believe," "intend," "may," "will," "should,"
"could," "predict" and similar expressions to identify forward-looking statements. Although we believe the expectations
expressed in these forward-looking statements are based on reasonable assumptions within the bound of our knowledge of our business, our
actual results could differ materially from those discussed in these statements. Factors that could contribute to such differences include,
but are not limited to, those discussed in the "Risk Factors" section of this report. We undertake no obligation to update
publicly any forward-looking statements for any reason even if new information becomes available or other events occur in the future other
than in compliance with the SEC rules and regulations.
Our financial statements
are prepared in U.S. Dollars and in accordance with accounting principles generally accepted in the United States. See "Exchange
Rates" at the end of this section for information concerning the exchanges rates at which Renminbi ("RMB") were translated
into U.S. Dollars ("USD" or "$") at various pertinent dates and for pertinent periods.
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. 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 $. 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. Our online pharmacy sells through
several third-party platforms such as Alibaba's Tmall, JD.com and Amazon.com, and the Company's own platform all over China.
In fiscal year 2020, in order to keep competitive in certain third-party platforms such as Tmall, we have spent reasonable resources on
marketing our products through these third-party platforms. Our sales through our own platform are primarily generated by customers who
use their private commercial medical insurances package.
We operate a wholesale business
through Jiuxin Medicine distributing third-party pharmaceutical products (similar to those carried by our pharmacies) primarily to trading
companies and other local drugstores in China. 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. 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. 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.
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.
Critical Accounting Policies and Estimates
In preparing our audited consolidated
financial statements in accordance with accounting principles generally accepted in the United States of America, we are required to make
judgments, estimates and assumptions that affect: (i) the reported amounts of our assets and liabilities; (ii) the disclosure of our contingent
assets and liabilities at the end of each reporting period; and (iii) the reported amounts of revenue and expenses during each reporting
period. We continually evaluate these estimates based on our own historical experience, knowledge and assessment of current business and
other conditions, our expectations regarding the future based on available information and reasonable assumptions, which together form
our basis for making judgments about matters that are not readily apparent from other sources. Since the use of estimates is an integral
component of the financial reporting process, our actual results could differ materially from those estimates.
We believe that any reasonable
deviation from those judgments and estimates would not have a material impact on our financial condition or results of operations. To
the extent that the estimates used differ from actual results, however, adjustments to the statement of operations and corresponding balance
sheet accounts would be necessary. These adjustments would be made in future financial statements.
When reading our financial
statements, you should consider: (i) our critical accounting policies; (ii) the judgment and other uncertainties affecting the application
of such policies; and (iii) the sensitivity of reported results to changes in conditions and assumptions. The critical accounting
policies and related judgments and estimates used to prepare our financial statements are identified in Note 2 to our audited consolidated
financial statements accompanying in this report.
Revenue recognition
In May 2014, the FASB issued
ASU No. 2014-09, which creates Topic 606, Revenue from Contracts with Customers. The new guidance outlines a single comprehensive model
for entities to use in accounting for revenue arising from contracts with customers. The core principle of the guidance is that an entity
should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration
to which the entity expects to be entitled in exchange for those goods and services. Additionally, the guidance requires improved disclosure
to help users of financial statements better understand the nature, amount, timing, and uncertainty of revenue that is recognized. The
new guidance supersedes most current revenue recognition guidance, including industry-specific guidance. The standard is effective for
annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period, and permits early
adoption on a limited basis. The update permits the use of either the retrospective or cumulative effect transition method. On April 1,
2018, we adopted the guidance in ASC 606 and all the related amendments and applied the new revenue standard to all contracts using the
modified retrospective method. Based on the new standard our revenue recognition policies related to membership rewards programs has changed.
Membership rewards, usually membership points, are accumulated by customers based on their historical spending levels. The Company has
determined that there is an additional performance obligation to those customers at the time of the initial transaction. The customers
can then redeem these points against the prices of merchandises they purchase in the future. At the end of each period, unredeemed membership
rewards are reflected as a contract liability. 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. These long-lived assets are grouped and evaluated for impairment at the lowest level at which individual
cash flows can be identified. When evaluating these long-lived assets for potential impairment, the Company first compares the carrying
amount of the asset group to the asset group's estimated future cash flows (undiscounted and without interest charges). If the estimated
future cash flows are less than that carrying amount of the asset group, an impairment loss calculation is prepared. The impairment loss
calculation compares the carrying amount of the asset group to the asset group's estimated future cash flows (discounted and with
interest charges). If required, an impairment loss is recorded for the portion of the asset group's carrying value that exceeds
the asset group's estimated future cash flows (discounted and with interest charges).
The long-lived asset impairment
loss calculation contains uncertainty since management must use judgment to estimate each asset group's future sales, profitability
and cash flows. When preparing these estimates, the Company considers historical results and current operating trends and consolidated
sales, profitability and cash flow results and forecasts. These estimates can be affected by a number of factors including, but not limited
to, general economic and regulatory conditions, efforts of third party organizations to reduce their prescription drug costs and/or increased
member co-payments, the continued efforts of competitors to gain market share and consumer spending patterns.
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. Based on the evaluation of the forest land use rights, the Company recorded an impairment of $0
and $148,795.
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. Same-store sales decreased by approximately $1,569,549, or 1.9%, while new stores contributed approximately
$692,824 in revenue in the year ended March 31, 2023.However, after removing the impact of exchange rate fluctuation, the actual retail
drugstores sales increased 5.6%.
The actual increase in our
retail drugstore sales is primarily due to continuous efforts in promoting non-NHSA covered products, close cooperation with major suppliers,
and contribution from the new store sales.
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. 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 major
player in local retail pharmaceutical market, our stores are densely located in major communities in Hangzhou City. As a prime local sales
network, we were able to attract large pharmaceutical manufacturers to support us in performing a series of sale campaigns, in which large
manufacturers provide ads, prices cutback and specialist support. As a result, our sales were able to increase slightly although NHSA
tightened its budget.
Our new stores have also contributed
additional sales. Our store count is 111 at March 31, 2022 and 114 at March 31, 2023.
Our online pharmacy sales increased by approximately $2,165,725, or
7.2% for the year ended March 31, 2023, as compared to the year ended March 31, 2022. The increase was primarily caused by an increase
in sales via e-commerce platforms such as Tmall. We maintained a membership care program targeted at chronic disease customers. We have
closely interacted with our members via WeChat by providing healthcare knowledge and reminding our customers to refill medicine. By implementing
a personalized customer care program, we were able to promote our sales. Additionally, we increasingly cooperate with certain manufacturers
to promote their products such as Dendrobium Candidum. 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. As a result, the sale of prescription drugs was $10,606,244 in the year ended March 31, 2023 as compared to $10,331,652
in the year ended March 31, 2022.
Wholesale revenue decreased
by $16,869,580 or 33.8%. Hospitals are still the dominant drug distributors in China. Local hospitals usually have strong ties with their
existing suppliers and we have not been able to make significant progress in becoming a major supplier to local hospitals. As a relatively
small wholesale distributor in pharmaceutical products, our sales are subject to significant variance. Wholesale business usually carries
low gross profit margin. However, we incurred labor, logistic and tax cost for our wholesale business. As a result, to keep reasonable
profitability, we abandoned certain wholesales at low gross profit margin in the year ended March 31, 2023. As a result, the wholesale
revenue declined.
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. Usually, the longer it
grows the more valuable it becomes. We plan to continue cultivating the trees in order to maximize their market value in the future.
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. 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.
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.
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 . 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.
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. 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.
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. 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. 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. 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%. 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. 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. A ginkgo tree may have a growth period of up to twenty years before it is mature enough for harvest. Usually, the longer it
grows the more valuable it becomes. We plan to continue cultivating the trees in order to maximize their market value in the future.
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. At the same time, gross margin increased from 22.2% to 23.0% due to higher retail drugstores
profit margins.
Retail gross margins increased
slightly primarily reflecting our stable and balanced operation. As described in detail below, in order to increase the gross margin of
our store sales, we have introduced certain popular products with high profit margin and lowered the sale percentile of DTC (Direct-to-Customer)
products. However, extremely high profit margin products may hinder certain customers. As a matter of fact, certain popular brand products
usually do not carry high profit margin but are crucial to retain customers. In other words, extremely high profit margin may have negative
effect on overall sales volume. As a result, we try to balance our sales profit margin and sales volume.
Gross margin of online pharmacy
sales increased only slightly primarily due to the competitive market. 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.
Wholesale gross margin decreased
primarily due to various products with different profit margin we carried and sold to certain pharmaceutical vendors. Although we have
attempted to market our products to major local hospitals and other pharmacies, we have not been able to make significant progress. 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. 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. 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. 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. . We expect to keep our profit margin
at a stable level in the future.
Gross margin of online pharmacy
sales increased primarily due to selection of high-profit margin products. We conduct our business either through certain e-commerce platforms
such as Tmall and JD.com or via our own official online pharmacy website, www.dada360.com. 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.
Although we have attempted to market our products to major local hospitals and other pharmacies, we have not been able to make significant
progress. 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.
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. Because the COVID 19 National Control continued to impose restrictions in 2022 and impeded the local business
significantly, we made significant efforts in renegotiating our rental agreements. As a result, the rent expense decreased by approximately
$3.39 million. 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.
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. 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. 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. 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.
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.  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 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.
Impairment of Long-lived Assets
We recorded an impairment of
long-lived assets of $0, $148,795 and $228,506 for the year ended March 31, 2023, 2021 and 2020. In the year ended March 31, 2023, we
evaluated the forest land use rights and did not record an impairment. 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.
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.
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, 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.
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. We continuously monitor collections and payments from our customers (our
distributors) and maintain a provision for estimated credit losses. To prepare for potential loss in such accounts, we made corresponding
reserves.
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. 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.
As we continue to expand our business with commercial insurance company, our receivables from them increased. Additionally, certain receivables
are from third-party platforms such as JD.com where we sell products. Usually the third-party platforms will collect from customers ordering
on their platforms and then reimburse us at a later date, such reimbursement periods times ranging from several days to a month after
orders are placed.
Accounts receivable from our
drug wholesale business consist of receivables from our customers such as pharmaceutical distributors and local drugstores primarily in
Zhejiang Province. In fiscal 2023, we accelerated collection of certain aged accounts from customers which we no longer or rarely sold
products to. By doing so, we are able to take better use of our cash. As a result, the overall reserve on wholesale accounts receivables
decreased.
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.
Advances to suppliers
Advances to suppliers are mainly
prepayments to secure certain products or services at favorable pricing. The aging of our advances to suppliers is as follows for
the periods described below:
From date of cash prepayment to suppliers
Retail
drugstores
Online
Pharmacy
Drug
wholesale
Herb
farming
Total
amount
1- 3 months
$
35,054
$
-
$
71,529
$
-
$
106,583
4- 6 months
-
-
12,467
-
12,467
7- 12 months
-
-
41,760
-
41,760
Over one year
88,139
-
113,098
-
201,237
Allowance for advances to supplier
(88,489
)
-
(131,141
)
-
(219,630
)
Total advances to suppliers
$
34,704
$
-
$
107,713
$
-
$
142,417
Since the acquisition of Jiuxin
Medicine, we have gradually transferred almost all logistics services of our retail drugstores to Jiuxin Medicine. Jiuzhou Pharmacy only
purchases certain non-medical products such as sundry. As a result, our retail chain made few advances to suppliers as of March 31, 2023.
At the end of 2023 we had outstanding advances to suppliers with which we have ceased doing business. These advances have been fully reserved.
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. We continuously monitor delivery from
and payments to our vendors while maintaining a provision for estimated credit losses based upon past experience and any supplier-specific
issues such as the discontinuation of inventory supply that have been identified. If we are having difficulty receiving products
from a vendor, we take the following steps: cease purchasing products from the vendor, ask for return of our prepayment promptly, and
if necessary, take legal action. If all of these steps are unsuccessful, management then determines whether or not the prepayments
should be reserved or written off. 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.
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. We have not entered into any derivative
contracts that are indexed to our shares and classified as stockholder's equity or that are not reflected in our consolidated financial
statements. Furthermore, we do not have any retained or contingent interest in assets transferred to an unconsolidated entity that serves
as credit, liquidity or market risk support to such entity. We do not have any variable interest in any unconsolidated entity that provides
financing, liquidity, market risk or credit support to us or engages in leasing, hedging or research and development services with us.
Exchange Rates
Our subsidiaries, the VIEs and affiliated companies in the PRC maintain
their books and records in RMB, the lawful currency of the PRC. In general, for consolidation purposes, we translate their assets and liabilities
into USD using the applicable exchange rates prevailing at the balance sheet date, and the statement of income is translated at average
exchange rates during the reporting period. Adjustments resulting from the translation of their financial statements are recorded
as accumulated other comprehensive income.
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.
B. 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. The change is primarily attributable
to a decrease in cash provided by inventories and biological assets of $2,045,648, a decrease in cash provided by customer deposits of
$1,714,057, a decrease in cash provided by net loss of $17,940,411 offset by an increase of $10,360,000 in stock compensation, an increase
in cash provided by accounts payable of $5,323,538.
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. 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.
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,
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 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,
2022, net cash provided by financing activities amounted to $4,836,898, as compared to $3,079,853 a year ago. The change is primarily
due to repayment of notes payable and proceeds from equity and debt financing.
As of March 31, 2023, we had
cash of approximately $31,570,644. Our total current assets as of March 31, 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.
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. The preparation of these audited consolidated financial
statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses.
We evaluate our estimates on an ongoing basis, including those related to revenue recognition and income taxes. We base our estimates
on our historical experience and on various other assumptions that we believe to be reasonable under the circumstances, the results of
which form the basis for making the judgments we make about the carrying values of our assets and liabilities that are not readily apparent
from other sources. Because these estimates can vary depending on the situation, actual results may differ from the estimates.
The critical accounting policies
summarized in this section are discussed in further detail in the notes to the audited consolidated financial statements appearing elsewhere
in this annual report. 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.
Please refer to the table under
Contractual Obligations
on page 51 of this report.
ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND
EMPLOYEES.
A. DIRECTORS AND SENIOR MANAGEMENT.
The following table identifies
our current executive officers and directors as of the date of this report, their respective offices and positions, and their respective
dates of election or appointment:
Name
Age(1)
Position
Date of
Appointment
Lei Liu
58
Chief Executive Officer and Chairman of the Board of Directors
September 17, 2009
Ming Zhao
47
Chief Financial Officer
August 1, 2011
Li Qi
51
Director
October 23, 2009
Caroline Wang (2) (3) (4)
36
Director
March 29, 2017
Jiangliang He (2) (3) (4)
60
Director
September 4, 2018
Genghua Gu (2) (3) (4)
72
Director
March 28, 2014
Pingfan Wu (4)
58
Director
October 26, 2018
(1)
As of the date of this report.
(2)
Member of the Audit Committee.
(3)
Member of the Compensation Committee.
(4)
Member of the Nominating Committee.
Biographical Information of Our Current Directors
and Executive Officers
Lei Liu
has served as
our Chief Executive Officer and Chairman of our Board of Directors since September 17, 2009. Mr. Liu is one of the three founders of Hangzhou
Jiuzhou Grand Pharmacy Chain Co., Ltd. ("Jiuzhou Pharmacy"), Hangzhou Jiuzhou Clinic of Integrated Traditional and Western
Medicine (General Partnership) ("Jiuzhou Clinic") and Hangzhou Jiuzhou Service & Public Health Service Co., Ltd. ("Jiuzhou
Service") (Jiuzhou Pharmacy, Jiuzhou Clinic and Jiuzhou Service, as well as the subsidiaries of Jiuzhou Pharmacy, collectively as
"HJ Group"), and has been the executive director of Jiuzhou Pharmacy since September 2003 and the supervising director of Jiuzhou
Service since November 2005. From December 1997 to August 2003, Mr. Liu worked in Tai He Drugstore as a general manager. From September
1992 to November 1997, Mr. Liu was an administration official of Hangzhou Medical Junior College, his alma mater, where he was also a
researcher and an anatomy instructor from September 1983 to July 1992. Mr. Liu has been a licensed researcher in the PRC since September
1988. 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. Zhao was a senior manager at CFO Oncall, Inc.,
a financial consulting firm providing CFO services to U.S.-listed, China-based publicly traded companies. From December 2006 through August
2010, Mr. Zhao was a senior auditor at Sherb & Co., LLP. From January through June 2003, Mr. Zhao worked as a financial analyst at
Microsoft Corporation. Mr. 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. Qi had served as our secretary since October 23, 2009 to September 4, 2018, and is currently the general
manager of both Jiuzhou Pharmacy and Jiuzhou Service. From January 2000 to June 2003, Ms. Qi worked in Zhejiang Yikang Drugstore as a
general manager. From October 1991 to January 2000, Ms. 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 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. 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 was an audit department
assistant manager with KPMG Huazhen LLP Hangzhou Branch, conducting financial report audits and internal control audits for listing
companies and also providing audit services to pre-IPO companies. None of these companies are related to or affiliated with the
registrant. Ms. Wang holds a master's degree in public administration from the London School of Economics and Political
Science, and a bachelor's degree in finance from Beijing Language and Culture University. The Board has determined that Ms.
Wang has the qualification to serve as a member of the Board given her extensive financial, accounting and auditing experience, as
well as her English and Chinese bilingual capabilities to facilitate the Board's supervision of the management.
Jiangliang He
, has extensive
experience as a professional attorney. He has served as a partner in Dentons China, a large law firm with a presence in approximately
45 cities in China, since August 2008. From July 1997 to July 2008, he was a partner in the Zhejiang Jiuyao law firm. From July 1984 to
June 1997, he was a professor at Hangzhou School of Law. Mr. He received his bachelor's degree in law from Beijing University.
Genghua Gu
is a retired
physician, professor and published scientific researcher in the field of stomatology. From 2003 to 2013, Dr. Gu was a member of the Standing
Committee of Zhejiang Province Political Consultative Conference. From 2000 to 2009, Dr. Gu was the Vice President of the Women's
Hospital of Zhejiang University's School of Medicine (the "School of Medicine"), where, in addition to being a chief
physician, professor and researcher, he was also in charge of logistics and financial control as part of the hospital's management.
From 1998 to 2000, Dr. Gu was the Vice President of the Second Affiliate Hospital of the School of Medicine (the "Affiliate Hospital"),
where, in addition to his medical, teaching and research duties, he was also in charge of the hospital's logistics. From 1995 to
1998, Dr. Gu served as the Deputy Magistrate with the Shuichang County Government in Zhejiang Province, in charge of the county's
culture, education and hygiene programs. From 1988 to 1995, Dr. Gu was the Head of the Medical Department at the Affiliate Hospital and
was involved in planning and management of the medical department. Dr. Gu served as an oral surgeon from 1977 to 1988 at the Affiliate
Hospital. Dr. Gu graduated from Shanghai Jiaotong University's School of Medicine, Department of Stomatology in 1977. The Board
has determined that Dr. Gu should serve as a director given his extensive medical and scientific research experience, as well as his government
and hospital management and logistics experience.
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. 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").
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.
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. 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. 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. 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 $100,000 during
the fiscal year ended March 31, 2023.
Summary Compensation Table
Name and Principal Position
Fiscal Year
ended
March 31,
Salary ($)
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.
(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.
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.
Agreement with Ming Zhao
We entered into an employment
agreement with Mr. 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. 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
$88,000 starting from October 2015. During his employment, Mr. Zhao is subject to certain restrictive covenants, including (i) prohibition
against engaging in any work that competes with us and our business and soliciting our customers, potential customers and employees, and
(ii) requirement to maintain our confidential information.
Mr. Zhao's employment
agreement terminates upon his death or disability. If Mr. Zhao is unable to perform his duties for 60 days during any 12 month period,
we may terminate the employment agreement upon 30-day written notice. We may also terminate the employment agreement for cause, upon notice
if at any time Mr. Zhao commits (a) fraudulent, unlawful or grossly negligent conduct in connection with his employment duties; (b) willful
misconduct; (c) willful and continued failure to perform his duties; (d) any felony or any crime involving moral turpitude; (e) any violation
of any of our material policies; or (f) any material breach of any written agreement with us. Mr. Zhao may terminate his employment agreement
immediately upon written notice if we breach our agreement with him.
55
Outstanding Equity Awards at Fiscal Year Ended
March 31, 2023
Option Awards
Stock Awards
Name
Number of
securities
underlying
unexercised
options
exercisable
Equity
incentive plan
awards:
number of
securities
underlying
unexercised
options
unexercisable
Equity
incentive
plan awards: number of
securities
underlying
unexercised
unearned
options
Option
exercise
price
($)
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.
On September 21, 2010, our
Board of Directors approved a stock incentive plan for officers, directors, employees, and consultants entitled "China Jo-Jo Drugstores,
Inc. 2010 Equity Incentive Plan" (the "Plan"). The maximum number of shares that may be issued under the Plan is 168,750
shares of our ordinary shares. The Plan was approved by our shareholders at our annual meeting held on November 2, 2010. On February 24,
2015, our Board of Directors adopted and approved Amendment No. 1 to the Plan to increase the number of shares of the Company's
ordinary shares available for issuance thereunder from 168,750 share limit to 360,417 shares. Amendment No. 1 was approved by the stockholders
at the annual shareholders meeting on March 23, 2015. On January 27, 2016, our Board of Directors adopted and approved Amendment No. 2
to the Plan to increase the number of shares of the Company's ordinary shares available for issuance thereunder from 360,417 share
limit to 597,917 shares. Amendment No. 2 was approved by the stockholders at the annual shareholders meeting on March 23, 2016. Under
the Plan, the Company may issue ordinary shares and/or options to purchase ordinary shares to our officers, directors, employees and consultants.
The Plan is administered either by our Board of Directors or a committee that it designates comprising of at least two (2) "non-employee"
directors. The board (or the committee, if one is designated) has full and complete authority, in its discretion, but subject to the express
provisions of the Plan, to grant awards, to determine the number of awards to be granted and the time or times at which awards shall be
granted; to establish the terms and conditions upon which awards may be exercised; to remove or adjust any restrictions and conditions
upon awards; to specify, at the time of grant, provisions relating to exercisability of awards and to accelerate or otherwise modify the
exercisability of any awards; and to adopt such rules and regulations and to make all other determinations deemed necessary or desirable
for the administration of the Plan. On February 14, 2017, our Board of Directors adopted and approved Amendment No. 3 to the Plan to increase
the number of shares of the Company's ordinary shares available for issuance thereunder from 597,917 share limit to 808,039 shares.
Amendment No. 3 was approved by the stockholders at the annual shareholders meeting on March 29, 2017. On March 26, 2018, the shareholders
of the Company approved the Amendment No. 4 to the Plan which increased the total shares of ordinary shares available for issuance thereunder
to 1,016,372. On June 30, 2018, the Compensation Committee of the Board approved the Amendment No. 5 to the Plan as The Tax Cuts and Jobs
Act of 2017 removed the 162(m) qualified performance based compensation exemption to the $1 million cap on deductions for compensation
to covered executives. Section 1.3.2 was in the Plan to permit grants under the Plan to fit within that exemption. As that exemption no
longer applies for grants made in 2018 or thereafter, the Plan had been amended to remove the provisions intended to comply with that
exemption, including the one in Section 1.3.2. of the Plan. On March 5, 2020, the shareholders of the Company approved the Amended and
Restated 2010 Equity Incentive Plan, which in addition to the incorporation of the Amendment No. 4 and Amendment No. 5 to the Plan, clarified
the term of the Plan in order to render the Plan being available for incentive stock options grants in the future and approved the proposal
of adding a ten-year term to the Plan. The Plan, effective since November 2, 2010, shall terminate automatically on January 14, 2030 (the
tenth anniversary of the Board's approval of this Plan), unless terminated earlier by the Board, except with respect to Awards then
outstanding. The Plan, as amended and restated, has authorized, with the stockholders' approval previously obtained, to reserve
a total of 1,016,372 shares of our ordinary shares for issuance under the Plan. As of March 31, 2023, there were 58,379 shares of our
ordinary shares available for future issuance under the Plan.
57
Director Compensation
The following table provides
compensation information for our directors during the fiscal year ended March 31, 2023:
Director Compensation Table
Name
Fiscal
Year
ended
March 31,
Fees Earned
or Paid
in
Cash
($)
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.
(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. We intend to develop such a policy in the near future.
Agreement with Genghua Gu
On December 9, 2013, we entered
into an agreement with Dr. Gu in the form of a director offer letter, pursuant to which we have agreed to compensate him $6,000 annually
for his services, payable in monthly installments on the last day of each month. 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, 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 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.
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. We also seek directors
who possess the qualities of integrity and candor, who have strong analytical skills, and who are willing to engage with the management
and each other in a constructive and collaborative fashion. We also seek directors who have the ability and commitment to devote significant
time and energy to service on the board and its committees. We believe that all of our directors meet the foregoing qualifications.
Based on the information submitted by Ms. Caroline Wang, Mr. Jiangliang
He, Ms. Ping fan Wu, and Dr. Genghua Gu, our Board of Directors has determined that each of them is independent under Rule 5605(a)(2)
of The Nasdaq Listing Rules.
Our Board of Directors has
three (3) committees. 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. Our Board of Directors has determined,
based on information furnished by Ms. Caroline Wang and other available information, that she meets the requirements of an "audit
committee financial expert" as that term is defined in the rules promulgated under the Securities Act and the Exchange Act, and
has accordingly designated her as such. Our Board of Directors has also appointed her chairperson of the committee.
The responsibilities of our
Audit Committee include:
●
meeting with our management periodically to consider the adequacy of our internal control over financial reporting and the objectivity of our financial reporting;
●
appointing the independent registered public accounting firm, determining the compensation of the independent registered public accounting firm, and pre-approving the engagement of the independent registered public accounting firm for audit and non-audit services;
●
overseeing the independent registered public accounting firm, including reviewing its independence and quality control procedures, as well as the experience and qualifications of the audit personnel that are providing audit services to us;
59
●
meeting with the independent registered public accounting firm and reviewing the scope and significant findings of the audits performed by them, and meeting with management and internal financial personnel regarding these matters; and
●
reviewing our financing plans, the adequacy and sufficiency of our financial and accounting controls, practices and procedures, the activities and recommendations of the auditors and our reporting policies and practices, and reporting recommendations to our full Board of Directors for approval.
Compensation Committee
Our Compensation 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 made up of our three (3) independent directors. Jiangliang He is chairperson of
the committee. Our Compensation Committee oversees and, as appropriate, makes recommendations to the Board of Directors regarding the
annual salaries and other compensation of our executive officers and our employees, and other employee policies; it also provides assistance
and recommendations with respect to our compensation policies and practices.
Nominating Committee
Our Nominating 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 made up of our four (4) independent directors. Genghua Gu is chairperson of the
committee. Our Nominating Committee assists in the selection of director nominees, approves director nominations to be presented for stockholder
approval at our annual general meeting, fills any vacancies on our Board of Directors, considers any nominations of director candidates
validly made by shareholders, and reviews and considers developments in corporate governance practices.
Code of Ethics
The Company's Code of
Ethics, which applies to all officers, directors and employees, was adopted by the Board on March 15, 2010. The Code of Ethics was filed
as Exhibit 14 to the Company's Current Report on
Form 8-K
filed with the SEC on March 23, 2010, a copy of which is available
on our website at http://www.jiuzhou360.com under the tabs "Investor"–"Corporate Governance"–"Documents".
D. EMPLOYEES.
As of March 31, 2023, we had
938 employees combined in our retail and wholesale operations, consisting of 885 full-time and 53 part-time employees. The number of employees
for each area of operations, and such employees as a percentage of our total workforce, are as follows:
As of March 31, 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. SHARE OWNERSHIP.
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. To the best of our knowledge, subject to community and
marital property laws, all persons named have sole voting and investment power with respect to such shares, except as otherwise noted.
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%.
(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.
(2)
Under Rule 13d-3, a beneficial owner of a security includes any person who, directly or indirectly, through any contract, arrangement, understanding, relationship, or otherwise has or shares: (i) voting power, which includes the power to vote, or to direct the voting of shares; and (ii) investment power, which includes the power to dispose or direct the disposition of shares. Certain shares may be deemed to be beneficially owned by more than one person (if, for example, persons share the power to vote or the power to dispose of the shares). In addition, shares are deemed to be beneficially owned by a person if the person has the right to acquire the shares (for example, upon exercise of an option) within 60 days of the date as of which the information is provided. In computing the percentage ownership of any person, the amount of shares outstanding is deemed to include the amount of shares beneficially owned by such person (and only such person) by reason of these acquisition rights. As a result, the percentage of outstanding shares of any person as shown in this table does not necessarily reflect the person's actual ownership or voting power with respect to the number of shares of ordinary shares actually outstanding.
(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%). They are also its directors. As such, they are deemed to have or share investment control over Super Marvel's portfolio. According to Rule 13d-5, when two or more persons agree to act together for the purpose of acquiring, holding, voting or disposing of equity securities of an issuer, the group formed thereby shall be deemed to have acquired beneficial ownership, for purposes of sections 13(d) and (g) of the Exchange Act, as of the date of such agreement, of all equity securities of that issuer beneficially owned by any such persons. 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. 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
ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY
TRANSACTIONS.
A. MAJOR SHAREHOLDERS
Please refer to Item 6.E "Directors,
Senior Management and Employees — Share Ownership."
To our knowledge, (A) we
are not directly or indirectly owned or controlled by (i) another corporation or (ii) any foreign government and (B) there
are no arrangements (including any announced or expected takeover bid), the operation of which may at a subsequent date result in a change
in our control.
The voting rights of our major
shareholders do not differ from the voting rights of other holders of the same class of shares.
B. RELATED PARTY TRANSACTIONS. BUSINESS
RELATIONSHIPS.
Our Officers and Directors' Relationship
with Us, Our Subsidiaries and VIE
As described in "
Business
- Our Corporate History and Structure
" above, we control HJ Group through contractual arrangements between Jiuxin Management,
our wholly-owned subsidiary, and each of Jiuzhou Pharmacy, Jiuzhou Service and Jiuzhou Clinic. HJ Group is owned by Mr. Lei Liu and Mr.
Li Qi (the "Key Personnel"), whom also hold positions as our executive officers and/or directors. Because the Key Personnel
also collectively own a substantial amount of our issued and outstanding ordinary shares, we believe that our interests are aligned with
those of HJ Group and the Key Personnel. 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. 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). 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
ITEM 8. FINANCIAL INFORMATION.
A. CONSOLIDATED STATEMENTS
AND OTHER FINANCIAL INFORMATION.
See "Item 18. Financial
Statements."
Legal Proceedings
From time to time, we may be
subject to legal proceedings, investigations and claims during the ordinary course of our business. We know of no material, existing or
pending legal proceedings against us, nor are we involved as a plaintiff in any material proceeding or pending litigation. There are no
proceedings in which any of our directors, officers or affiliates, or any registered or beneficial stockholder holding more than five
percent of our ordinary shares, is an adverse party or has a material interest adverse to our company.
Dividend Policy
While there are no restrictions
that limit our ability to pay dividends, we have not paid, and do not currently intend to pay cash dividends on our ordinary shares in
the foreseeable future. Our policy is to retain all earnings, if any, to provide funds for the operation and expansion of our business.
The declaration of dividends, if any, will be subject to the discretion of our Board of Directors, who may consider such factors as our
results of operations, financial condition, capital needs and acquisition strategy, among others, in making its determination.
Our ability to receive dividends
from our subsidiaries may limit our ability to pay dividends on our ordinary shares. See Risk Factors – Risks Related
to Doing Business in China – Our holding company structure may limit the payment of dividends" and "Item 10.
Additional Information – D. Exchange Controls – Dividend Distribution".
B. SIGNIFICANT CHANGES.
N/A
ITEM 9. THE OFFER AND LISTING
A. OFFER AND LISTING DETAILS.
Not Applicable.
B. PLAN OF DISTRIBUTION.
Not Applicable.
C. MARKETS.
Our ordinary shares trade on
the Nasdaq Capital Market under the symbol "CJJD".
Based on the records of our
transfer agent, we had 23,697,210 shares of ordinary shares issued and outstanding as of June 15, 2023.
D. SELLING SHAREHOLDERS.
Not applicable.
E. DILUTION.
Not applicable.
F. EXPENSES OF THE ISSUE.
Not applicable.
63
ITEM 10. ADDITIONAL INFORMATION.
A. SHARE CAPITAL
Not applicable.
B. MEMORANDUM AND ARTICLES
OF ASSOCIATION
We are an exempted company
incorporated with limited liability under the laws of the Cayman Islands and our affairs are governed by our Memorandum and Articles of
Association, the Companies Law (as amended) of the Caymans Islands, which is referred to as the Companies Law below, and common law of
the Cayman Islands. Our authorized share capital is US$6,010,000 divided into (i) 500,000,000 Ordinary Shares of a par value of US$0.012
each, and (ii) 10,000,000 preferred shares of a par value of US$0.001 each.
We have included summaries
of material provisions of our amended and restated memorandum and articles of association insofar as they relate to the material terms
of our share capital. The summaries do not purport to be complete and are qualified in their entirety by reference to our amended and
restated memorandum and articles of association, which is filed as Exhibit 1.1 to this annual report.
Ordinary Shares
All of our outstanding ordinary
shares are fully paid and non-assessable.
Issuance of Shares and Changes to Capital
Our board of directors with
the power for the Company, insofar as is permitted by law, is able to redeem or purchase any of its shares and to increase or reduce the
said share capital subject to the provisions of the Companies Act (Revised) and the Articles of Association of the Company and to issue
any part of its capital, whether original, redeemed or increased, with or without any preference, priority or special privilege or subject
to any postponement of rights or to any conditions or restrictions; and so that, unless the conditions of issue shall otherwise expressly
declare, every issue of shares, whether declared to be preference or otherwise, shall be subject to the power otherwise regulated in our
Second Amend and Restated Memorandum and Articles of the Association.
Subject to the Law, these Articles
and, where applicable, the rules of the Designated Stock Exchange and without prejudice to any special rights or restrictions for the
time being attached to any shares or any class of shares, the unissued shares of the Company (whether forming part of the original or
any increased capital) shall be at the disposal of the Board, which may offer, allot, grant options over or otherwise dispose of them
to such persons, at such times and for such consideration and upon such terms and conditions as the Board may in its absolute discretion
determine but so that no shares shall be issued at a discount, except in accordance with the provisions of Law. In particular and without
prejudice to the generality of the foregoing, the Board is hereby empowered to authorize by resolution or resolutions from time to time
the issuance of one or more classes or series of preferred shares and to fix the designations, powers, preferences and relative, participating,
optional and other rights, if any, and the qualifications, limitations and restrictions thereof, if any, including, without limitation,
the number of shares constituting each such class or series, dividend rights, conversion rights, redemption privileges, voting powers,
full or limited or no voting powers, and liquidation preferences, and to increase or decrease the size of any such class or series (but
not below the number of shares of any class or series of preferred shares then outstanding) to the extent permitted by Law. Without limiting
the generality of the foregoing, the resolution or resolutions providing for the establishment of any class or series of preferred shares
may, to the extent permitted by law, provide that such class or series shall be superior to, rank equally with or be junior to the preferred
shares of any other class or series. Neither the Company nor the Board shall be obliged, when making or granting any allotment of, offer
of, option over or disposal of shares, to make, or make available, any such allotment, offer, option or shares to Members or others with
registered addresses in any particular territory or territories being a territory or territories where, in the absence of a registration
statement or other special formalities, this would or might, in the opinion of the Board, be unlawful or impracticable. Members affected
as a result of the foregoing sentence shall not be, or be deemed to be, a separate class of members for any purpose whatsoever. The Board
may issue options, warrants or convertible securities or securities of similar nature conferring the right upon the holders thereof to
subscribe for, purchase or receive any class of shares or securities in the capital of the Company on such terms as it may from time to
time determine.
64
The Company may in connection
with the issue of any shares exercise all powers of paying commission and brokerage conferred or permitted by the Law. Subject to the
Law, the commission may be satisfied by the payment of cash or by the allotment of fully or partly paid shares or partly in one and partly
in the other.
Except as required by law,
no person shall be recognized by the Company as holding any share upon any trust and the Company shall not be bound by or required in
any way to recognize (even when having notice thereof) any equitable, contingent, future or partial interest in any share or any fractional
part of a share or (except only as otherwise provided by these Articles or by law) any other rights in respect of any share except an
absolute right to the entirety thereof in the registered holder.
Subject to the Law and these
Articles, the Board may at any time after the allotment of shares but before any person has been entered in the Register as the holder,
recognize a renunciation thereof by the allottee in favor of some other person and may accord to any allottee of a share a right to effect
such renunciation upon and subject to such terms and conditions as the Board considers fit to impose.
Dividends
Subject to the Companies Law,
our shareholders may, by resolution passed by a simple majority of the voting rights entitled to vote at the general meeting, declare
dividends (including interim dividends) to be paid to our shareholders but no dividend shall be declared in excess of the amount recommended
by our board of directors. Dividends may be declared and paid out of funds lawfully available to us. Except as otherwise provided by the
rights attached to shares, all dividends shall be declared and paid according to the amounts paid up on the shares on which the dividend
is paid. All dividends shall be paid in proportion to the number of ordinary shares a shareholder holds during any portion or portions
of the period in respect of which the dividend is paid; but, if any share is issued on terms providing that it shall rank for dividend
as from a particular date, that share shall rank for dividend accordingly. Our board of directors may also declare and pay dividends out
of the share premium account or any other fund or account which can be authorized for this purpose in accordance with the Companies Law.
Whenever the Board or the Company
in general meeting has resolved that a dividend be paid or declared, the Board may further resolve that such dividend be satisfied wholly
or in part by the distribution of specific assets of any kind and in particular of paid up shares, debentures or warrants to subscribe
securities of the Company or any other company, or in any one or more of such ways, and where any difficulty arises in regard to the distribution
the Board may settle the same as it thinks expedient, and in particular may issue certificates in respect of fractions of shares, disregard
fractional entitlements or round the same up or down, and may fix the value for distribution of such specific assets, or any part thereof,
and may determine that cash payments shall be made to any Members upon the footing of the value so fixed in order to adjust the rights
of all parties, and may vest any such specific assets in trustees as may seem expedient to the Board and may appoint any person to sign
any requisite instruments of transfer and other documents on behalf of the persons entitled to the dividend, and such appointment shall
be effective and binding on the Members. The Board may resolve that no such assets shall be made available to Members with registered
addresses in any particular territory or territories where, in the absence of a registration statement or other special formalities, such
distribution of assets would or might, in the opinion of the Board, be unlawful or impracticable and in such event the only entitlement
of the Members aforesaid shall be to receive cash payments as aforesaid. Members affected as a result of the foregoing sentence shall
not be or be deemed to be a separate class of Members for any purpose whatsoever.
Voting and Meetings
As a condition of admission
to a shareholders' meeting, a shareholder must be duly registered as our shareholder at the applicable record date for that meeting
and all calls or installments then payable by such shareholder to us in respect of our ordinary shares must have been paid. Subject to
any special rights or restrictions as to voting then attached to any shares, at any general meeting every shareholder who is present in
person or by proxy (or, in the case of a shareholder being a corporation, by its duly authorized representative not being himself or herself
a shareholder entitled to vote) shall have one vote per share.
65
As a Cayman Islands exempted company, we are not obliged by the Companies
Law to call annual general meetings; however, our Second Amended And Restated Memorandum and Articles of Association provide that in each
year we will hold an annual general meeting of shareholders at a time determined by our board of directors. Also, we may, but are not
required to (unless required by the Law), in each year hold any other extraordinary general meeting.
The Companies Law of the Cayman
Islands provides shareholders with only limited rights to requisition a general meeting, and does not provide shareholders with any right
to put any proposal before a general meeting. However, these rights may be provided in a company's articles of association. Our
Second Amended and Restated Memorandum And Articles of Association provide that upon the requisition of shareholders representing not
less than two-thirds of the voting rights entitled to vote at general meetings, our board will convene an extraordinary general meeting
and put the resolutions so requisitioned to a vote at such meeting. However, shareholders may propose only ordinary resolutions to be
put to a vote at such meeting and shall have no right to propose resolutions with respect to the election, appointment or removal of directors
or with respect to the size of the board. Our amended and restated memorandum and articles of association provide no other right to put
any proposals before annual general meetings or extraordinary general meetings. Subject to regulatory requirements, our annual general
meeting and any extraordinary general meetings must be called by not less than ten (10) clear days' notice prior to the relevant
shareholders meeting and convened by a notice discussed below. Alternatively, upon the prior consent of all holders entitled to attend
and vote (with regards to an annual general meeting), and the holders of 95% in par value of the shares entitled to attend and vote (with
regard to an extraordinary general meeting), that meeting may be convened by a shorter notice and in a manner deemed appropriate by those
holders.
We will give notice of each
general meeting of shareholders by publication on our website and in any other manner that we may be required to follow in order to comply
with Cayman Islands law, Nasdaq and SEC requirements. The holders of registered shares may be convened for a shareholders' meeting
by means of letters sent to the addresses of those shareholders as registered in our shareholders' register, or, subject to certain
statutory requirements, by electronic means. We will observe the statutory minimum convening notice period for a general meeting of shareholders.
A quorum for a general meeting
consists of any one or more persons holding or representing by proxy not less than one-third of our issued voting shares entitled to vote
upon the business to be transacted.
A resolution put to the vote
of the meeting shall be decided on a poll. An ordinary resolution to be passed by the shareholders requires the affirmative vote of a
simple majority of the votes cast by, or on behalf of, the shareholders entitled to vote present in person or by proxy and voting at the
meeting. A special resolution requires the affirmative vote of no less than two-thirds of the votes cast by the shareholders entitled
to vote who are present in person or by proxy at a general meeting (except for certain matters described below which require an affirmative
vote of two-thirds). Both ordinary resolutions and special resolutions may also be passed by a unanimous written resolution signed by
all the shareholders of our company, as permitted by the Companies Law and our amended and restated memorandum and articles of association.
Our Second Amended and Restated
Memorandum and Articles of Association provide that the affirmative vote of no less than two-thirds of votes cast by the shareholders
entitled to vote who are present in person or by proxy at a general meeting shall be required to approve a) to reduce its share capital
or any capital redemption reserve or other undistributable reserve; b) the necessary quorum (whether at a separate general meeting or
at its adjourned meeting) shall be a person or persons or (in the case of a Member being a corporation) its duly authorized representative
together holding or representing by proxy not less than one-third in nominal value of the issued voting shares of that class; c) every
holder of shares of the class shall be entitled on a poll to one vote for every such share held by him; and d) any holder of shares of
the class present in person or by proxy or authorized representative may demand a poll.
66
Transfers of Shares
Subject to these Articles and
the requirements of the Designated Stock Exchange, any Member may transfer all or any of his shares by an instrument of transfer in the
usual or common form or in a form prescribed by the Designated Stock Exchange or in any other form approved by the Board and may be under
hand or, if the transferor or transferee is a clearing house or a central depository house or its nominee(s), by hand or by machine imprinted
signature or by Electronic Signature or by such other manner of execution as the Board may approve from time to time. The Board may, in
its absolute discretion, and without giving any reason therefor, refuse to register a transfer of any share made in accordance with Article
46 but only where such share is not a fully paid up share (and being transferred to a person of whom it does not approve), or any share
issued under any share incentive scheme for employees or pursuant to any other agreement, contract or other such arrangement, upon which
a restriction on transfer imposed thereby still subsists, and it may also, without prejudice to the foregoing generality, refuse to register
a transfer of any share to more than four joint holders.
The Board in so far as permitted
by any applicable law may, in its absolute discretion, at any time and from time to time transfer any share upon the Register to any branch
register or any share on any branch register to the Register or any other branch register. In the event of any such transfer, the shareholder
requesting such transfer shall bear the cost of effecting the transfer unless the Board otherwise determines.
Unless the Board otherwise
agrees (which agreement may be on such terms and subject to such conditions as the Board in its absolute discretion may from time to time
determine, and which agreement the Board shall, without giving any reason therefore, be entitled in its absolute discretion to give or
withhold), no shares upon the Register shall be transferred to any branch register nor shall shares on any branch register be transferred
to the Register or any other branch register and all transfers and other documents of title shall be lodged for registration, and registered,
in the case of any shares on a branch register, at the relevant Registration Office, and, in the case of any shares on the Register, at
the Office or such other place at which the Register is kept in accordance with the Law.
Liquidation
Subject to any special rights,
privileges or restrictions as to the distribution of available surplus assets on liquidation for the time being attached to any class
or classes of shares (i) if the Company shall be wound up and the assets available for distribution amongst the Members of the Company
shall be more than sufficient to repay the whole of the capital paid up at the commencement of the winding up, the excess shall be distributed
pari
passu
amongst such members in proportion to the amount paid up on the shares held by them respectively and (ii) if the Company
shall be wound up and the assets available for distribution amongst the Members as such shall be insufficient to repay the whole of the
paid-up capital such assets shall be distributed so that, a nearly as may be, the losses shall be borne by the Members in proportion to
the capital paid up, or which ought to have been paid up, at the commencement of the winding up on the shares held by them respectively.
If the Company shall be wound
up (whether the liquidation is voluntary or by the court) the liquidator may, with the authority of a special resolution and any other
sanction required by the Law, divide among the Members in specie or kind the whole or any part of the assets of the Company and whether
or not the assets shall consist of properties of one kind or shall consist of properties to be divided as aforesaid of different kinds,
and may for such purpose set such value as he deems fair upon any one or more class or classes of property and may determine how such
division shall be carried out as between the Members or different classes of Members. The liquidator may, with the like authority, vest
any part of the assets in trustees upon such trusts for the benefit of the Members as the liquidator with the like authority shall think
fit, and the liquidation of the Company may be closed and the Company dissolved, but so that no contributory shall be compelled to accept
any shares or other property in respect of which there is a liability.
Anti-Takeover Provisions
Some provisions of our Second
Amended And Restated Memorandum and Articles Of Association may discourage, delay or prevent a change of control of our company or management
that shareholders may consider favorable, including provisions that authorize our board of directors to issue preferred shares in one
or more series and to designate the price, rights, preferences, privileges and restrictions of such preferred shares without any further
vote or action by our shareholders.
67
Inspection of Books and Records
Holders of ordinary shares
will have no general right under Cayman Islands law to inspect or obtain copies of our list of shareholders or our corporate records.
No Member (other than a Director) shall have any right of inspecting any accounting record or book or document of the Company except as
conferred by law or authorized by the Board or the Company in general meeting. Notwithstanding the above, our Second Amended and Restated
Memorandum and Articles of Association provide our shareholders with the right to receive annual audited financial statements. Such right
to receive annual audited financial statements may be satisfied by filing such annual reports as we are required to file with the SEC.
Register of Shareholders
Under Cayman Islands law, we
must keep a register of shareholders that includes: the names and addresses of the shareholders, a statement of the shares held by each
member, and of the amount paid or agreed to be considered as paid, on the shares of each member; the date on which the name of any person
was entered on the register as a member; and the date on which any person ceased to be a member.
Exempted Company
We are an exempted company
with limited liability under the Companies Law. The Companies Law distinguishes between ordinary resident companies and exempted companies.
Any company that is registered in the Cayman Islands but conducts business mainly outside of the Cayman Islands may apply to be registered
as an exempted company. An exempted company:
●
does not have to file an annual return of its shareholders with the Registrar of Companies;
●
is not required to open its register of members for inspection;
●
does not have to hold an annual general meeting;
●
may issue shares with no par value;
●
may obtain an undertaking against the imposition of any future taxation;
●
may register by way of continuation in another jurisdiction and be deregistered in the Cayman Islands;
●
may register as a limited duration company; and
●
may register as a segregated portfolio company.
"Limited liability"
means that the liability of each shareholder is limited to the amount unpaid by the shareholder on the shares of the Company (except in
exceptional circumstances, such as involving fraud, the establishment of an agency relationship or an illegal or improper purpose or other
circumstances in which a court may be prepared to pierce or lift the corporate veil).
Preferred Shares
Our board of directors is empowered
to designate and issue from time to time one or more classes or series of preferred shares and to fix and determine the relative rights,
preferences, designations, qualifications, privileges, options, conversion rights, limitations and other special or relative rights of
each such class or series so authorized. Such action could adversely affect the voting power and other rights of the holders of our ordinary
shares or could have the effect of discouraging any attempt by a person or group to obtain control of us.
68
C. MATERIAL CONTRACTS
None.
D. EXCHANGE CONTROLS.
This section sets forth a summary
of the most significant regulations or requirements that affect our business activities in China or our shareholders' right to receive
dividends and other distributions from us.
Regulation of Foreign Exchange in Certain Onshore
and Offshore Transactions
In October 2005, the SAFE issued
the Notice on Issues Relating to the Administration of Foreign Exchange in Fund-raising and Return Investment Activities of Domestic Residents
Conducted via Offshore Special Purpose Companies, or SAFE Notice 75, which became effective as of November 1, 2005, and was further supplemented
by two implementation notices issued by the SAFE on November 24, 2005 and May 29, 2007, respectively. Under Circular 75, prior registration
with the local SAFE branch is required for PRC residents to establish or to control an offshore company for the purposes of financing
that offshore company with assets or equity interests in an onshore enterprise located in the PRC. An amendment to the registration or
filing with the local SAFE branch by such PRC resident is also required for the injection of equity interests or assets of an onshore
enterprise in the offshore company or overseas funds raised by such offshore company, or any other material change with respect to the
offshore company in connection with any increase or decrease of capital, transfer of shares, merger, division, equity investment, debt
investment, or creation of any security interest over any assets located in the PRC.
Under SAFE Notice 75, PRC residents
are further required to repatriate into the PRC all of their dividends, profits or capital gains obtained from their shareholdings in
the offshore entity within 180 days of their receipt of such dividends, profits or capital gains. The registration and filing procedures
under SAFE Notice 75 are prerequisites for other approval and registration procedures necessary for capital inflow from the offshore entity,
such as inbound investments or shareholders loans, or capital outflow to the offshore entity, such as the payment of profits or dividends,
liquidating distributions, equity sale proceeds, or the return of funds upon a capital reduction. Therefore, failure to comply with such
registration may subject us to certain restrictions on, including but not limited to, the increase of the registered capital of our PRC
subsidiary, making loans to our PRC subsidiary, and making distributions to us from our on-shore companies.
Dividend Distribution
Under current applicable laws
and regulations, each of our consolidated PRC entities, including WFOEs and domestic companies, may pay dividends only out of their accumulated
profits, if any, determined in accordance with PRC accounting standards and regulations. In addition, each of our consolidated PRC entities
is required to deposit at least ten percent (10%) of its after-tax profit based on PRC accounting standards each year into its statutory
surplus reserve fund until the accumulative amount of such reserve reaches fifty percent (50%) of its registered capital. These reserves
are not distributable as cash dividends. 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 $36.04 million.
Interim Regulations on Administration of
Sino-Foreign Joint Venture and Cooperative Medical Institutions
As per China's commitments
to the World Trade Organization, "Foreign service suppliers are permitted to establish joint venture hospitals or clinics with local
Chinese partners with quantitative limitations in line with China's needs. Foreign majority ownership is permitted." In accordance
with the
Interim Regulations on Administration of Sino-Foreign Joint Venture and Cooperative Medical Institutions
issued jointly
by the Ministry of Health ("MOH") and the Ministry of Commerce ("MOFCOM") in 2000, the Chinese party of Sino-foreign
joint ventures and cooperative medical institutions shall hold no less than thirty percent (30%) of shares and legal rights or interest,
which also mean foreign investors are allowed to hold a maximum stake of seventy percent (70%). Such regulations also specify that the
establishment of Sino-foreign joint venture and cooperative medical institutions should be approved respectively by MOH and MOFCOM. In
other words, foreigners are allowed to run hospitals or clinics in the form of equity or co-operative joint ventures with an equity interest
of up to seventy percent (70%) lasting up to twenty (20) years.
69
E. TAXATION
The current PRC Enterprise
Income Tax Law (the "EIT Law"), and the implementation regulations for the EIT Law issued by China's State Council, became
effective as of January 1, 2008. Under the EIT Law, enterprises are classified as either resident or non-resident enterprises. An enterprise
established outside of China with its "de facto management bodies" located within China is considered a "resident enterprise,"
meaning that it can be treated in a manner similar to a Chinese enterprise for enterprise income tax purposes. The implementing rules
of the EIT Law defines a "de facto management body" as a managing body that in practice exercises "substantial and overall
management and control over the production and operations, personnel, accounting, and properties" of the enterprise; however, it
remains unclear whether the PRC tax authorities would deem our managing body as being located within China. Due to the relatively short
history of the EIT Law and lack of applicable legal precedents, the PRC tax authorities determine the PRC tax resident treatment of entities
organized under the laws of foreign jurisdictions on a case-by-case basis.
If the PRC tax authorities
determine that we are a resident enterprise for PRC enterprise income tax purposes, a number of PRC tax consequences could follow. First,
we may be subject to enterprise income tax at a rate of twenty five percent (25%) on our respective worldwide taxable income, as well
as PRC enterprise income tax reporting obligations. Second, although the EIT Law provides that "dividends, bonuses and other equity
investment proceeds between qualified resident enterprises" is exempted income, and the implementing rules of the EIT Law refer
to "dividends, bonuses and other equity investment proceeds between qualified resident enterprises" as the investment proceeds
obtained by a resident enterprise from its direct investment in another resident enterprise, it is still unclear whether the dividends
we receive from Jiuxin Management would be classified as "dividends between qualified resident enterprises" and therefore qualify
for tax exemption.
If we are treated as a non-resident
enterprise under the EIT Law, any dividends that we receive from Jiuxin Management (assuming such dividends are deemed to be sourced from
within the PRC) (i) may be subject to a five percent (5%) PRC withholding tax, provided that we own more than twenty five percent (25%)
of the registered capital of Jiuxin Management incessantly within twelve (12) months immediately prior to obtaining such dividends from
Jiuxin Management, and if the
Arrangement between the Mainland of China and the Hong Kong Special Administrative Region for the Avoidance
of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income
(the "Arrangement") is applicable,
or (ii) if the Arrangement does not apply (i.e. the PRC tax authorities may deem us to be a conduit not entitled to treaty benefits),
may be subject to a ten percent (10%) PRC withholding tax. Similarly, if we are treated as a non-resident enterprise, and Renovation is
treated as a resident enterprise, then any dividends that we receive from Renovation (assuming such dividends were considered sourced
within the PRC) may be subject to a ten percent (10%) PRC withholding tax. Any such taxes on dividends could materially reduce the amount
of dividends, if any, that we could pay to our shareholders.
Finally, the new "resident
enterprise" classification could result in a situation in which a ten percent (10%) PRC tax is imposed on dividends we pay to our
investors that are non-resident enterprises so long as such non-resident enterprise investors do not have an establishment or place of
business in China or, despite the existence of such establishment of place of business in China, the relevant income is not effectively
connected with such establishment or place of business in China, to the extent that such dividends have their sources within the PRC.
Similarly, any gain realized on the transfer of our shares by such investors is also subject to a ten percent (10%) PRC income tax if
such gain is regarded as income derived from sources within China. In such event, we may be required to withhold a ten percent (10%) PRC
tax on any dividends paid to our investors that are non-resident enterprises. Our investors that are non-resident enterprises also may
be responsible for paying PRC tax at a rate of ten percent (10%) on any gain realized from the sale or transfer of our common shares in
certain circumstances. We would not, however, have an obligation to withhold PRC tax with respect to such gain.
Moreover, the State Administration
of Taxation issued the
Notice on Strengthening the Administration of Enterprise Income Tax on Share Transfer Income of Non-Resident
Enterprises No. 698
("Circular 698") on December 10, 2009, which reinforces taxation on transfer of non-listed shares by
non-resident enterprises through overseas holding vehicles. Circular 698 applies retroactively and was deemed to be effective as of January
2008. Pursuant to Circular 698, where (i) a foreign investor who indirectly holds equity interest in a PRC resident enterprise through
an offshore holding company indirectly transfers equity interests in a PRC resident enterprise by selling the shares of the offshore holding
company, and (ii) the offshore holding company is located in a jurisdiction where the effective tax rate is lower than twelve and a half
percent (12.5%) or where the offshore income of its residents is not taxable, the foreign investor is required to provide the tax authority
in charge of that PRC resident enterprise with certain relevant information within thirty (30) days of the transfer. The tax authorities
in charge will evaluate the offshore transaction for tax purposes. In the event that the tax authorities determine that such transfer
is abusing forms of business organization and there is no reasonable commercial purpose other than avoidance of PRC enterprise income
tax, the tax authorities will have the power to conduct a substance-over-form re-assessment of the nature of the equity transfer. A reasonable
commercial purpose may be established when the overall offshore structure is set up to comply with the requirements of supervising authorities
of international capital markets. If the State Administration of Taxation's challenge of a transfer is successful, they will deny
the existence of the offshore holding company that is used for tax planning purposes. Since Circular 698 has a brief history, there is
uncertainty as to its application.
70
F. DIVIDENDS AND PAYING
AGENTS.
Not applicable.
G. STATEMENT BY EXPERTS.
None.
H. DOCUMENTS ON DISPLAY.
We are subject to certain of
the information reporting requirements of the Securities and Exchange Act of 1934, as amended. As a foreign private issuer we are
exempt from the rules and regulations under the Securities Exchange Act prescribing the furnishing and content of proxy statements,
and our officers, directors and principal shareholders are exempt from the reporting and "short-swing" profit recovery provisions
contained in Section 16 of the Securities Exchange Act, with respect to their purchase and sale of our shares. In addition, we are not
required to file reports and financial statements with the SEC as frequently or as promptly as U.S. companies whose securities are registered
under the Securities Exchange Act. Nasdaq rules generally require that companies send an annual report to shareholders prior to the
annual general meeting, however we rely upon an exception under the Nasdaq rules. Specifically, we file annual reports on Form 20-F, which
contain financial statements audited by an independent accounting firm, electronically with the SEC and post a copy on our website.
The SEC maintains a website
that contains reports, proxy and information statements and other information regarding registrants that file electronically with the
SEC, and our SEC reports can be viewed or downloaded there. The address of this web site is http://www.sec.gov. In addition, information
that we furnish or file with the SEC, including annual reports on Form 20-F, current reports on Form 6-K, proxy and information statements
and any amendments to, or exhibits included in, those reports are available to be viewed or download, free of charge, on our website at
www.jiuzhou360.com as soon as reasonably practicable after such materials are filed or furnished with the SEC. Information contained,
or that can be accessed through, our website does not constitute a part of this annual report and is not incorporated by reference herein,
and we have included our website address in this annual report solely for informational purposes.
I. SUBSIDIARY INFORMATION
For a listing of our subsidiaries,
see "Item 4. Information on the Company – C. Organizational Structure."
ITEM 11. QUANTITATIVE AND QUALITATIVE
DISCLOSURES ABOUT MARKET RISK.
Exchange Rate Risk
While our reporting currency
is the U.S. dollar, the majority of our revenues and costs are denominated in RMB and a significant portion of our assets and liabilities
are denominated in RMB. As a result, we are exposed to foreign exchange risk because our revenues and results of operations may be affected
by fluctuations in the exchange rate between the U.S. dollar and the RMB. To the extent that the Company needs to convert the U.S. dollar
into RMB for capital expenditures and working capital and other business purposes, appreciation of RMB against the U.S. dollar would have
an adverse effect on the RMB amount the Company would receive from the conversion. Conversely, if the Company decides to convert RMB into
the U.S. dollar for the purpose of making payments for dividends on ordinary shares, strategic acquisitions or investments or other business
purposes, appreciation of the U.S. dollar against RMB would have a negative effect on the U.S. dollar amount available to the Company.
In addition, a significant depreciation of the RMB against the U.S. dollar may significantly reduce the U.S. dollar equivalent of the
Company's earnings or losses. Since 2005, China reformed its exchange rate regime and the RMB is no longer pegged to the U.S. dollar.
In 2010, the People's Bank of China decided to move to further reform the RMB exchange rate regime to enhance the flexibility of
the RMB exchange rate. For RMB against U.S. dollar, there was depreciation of approximately 5.2% and appreciation of approximately
6.8% during the years ended March 31, 2022 and 2023, respectively. It is difficult to predict how market forces or PRC or U.S. government
policy may impact the exchange rate between the RMB and the U.S. dollar in the future, but the RMB may appreciate or depreciate more significantly
in value against the U.S. dollar or other foreign currencies, depending on the market supply and demand with reference to a basket of
currencies.
71
While the Chinese RMB is freely
convertible under the current account, it remains strictly regulated in the capital account. Chinese authorities have expressed their
willingness to allow the RMB to be fully convertible in the near future.
To date, we have not entered
into any hedging transactions in an effort to reduce our exposure to foreign currency exchange risk. While we may decide to enter into
hedging transactions in the future, the effectiveness of these hedges may be limited and we may not be able to successfully hedge our
exposure. Accordingly, we may incur economic losses in the future due to foreign exchange rate fluctuations, which could have a negative
impact on our financial condition and results of operations.
Interest Rate Risk
We had cash, cash equivalents,
restricted cash and certificate of deposit totaling $31.57 million and notes receivable of $0.02 million as of March 31, 2023. Cash and
cash equivalents are held for working capital purposes. We do not enter into investments for trading or speculative purposes. As of March
31, 2023, we had $0 million of short-term bank loans and $0 million of long-term loans outstanding. Our exposure to interest rate risk
primarily relates to the interest income generated from cash held in bank deposits and notes receivable, and interest expenses generated
from short-term bank loans. We believe that we do not have any material exposure to changes in fair value as a result of changes in interest
rates due to the short term nature of our cash equivalents. We have not been exposed nor do we anticipate being exposed to material risks
due to changes in interest rates.
Inflation Rate Risk
According to the Consumer Price
Index (CPI) released by National Bureau of Statistics of China, in 2022, the average annual inflation rate in China ranged at around 2
percent compared to the previous year. Projections by the IMF published in April 2021 expect the average annual inflation rate to reach
about 2.1 percent in the year of 2023. In March 2023, the monthly inflation rate in China ranged at 0.7 percent compared to the same month
in the previous year, up from 1.5 percent in the previous month.
Economic and Political Risks
Our operations in China are
subject to special considerations and significant risks not typically associated with companies in North America and Western Europe. These
include risks associated with, among others, the political, economic and legal environment in China and foreign currency exchange. Our
performance may be adversely affected by changes in the political and social conditions in China, and by changes in governmental policies
with respect to laws and regulations, anti-inflationary measures, currency conversion, remittances abroad, and rates and methods of taxation,
among other things.
Credit Risk
Credit risk is one of the most
significant risks for the Company's business.
72
Financial instruments that
potentially subject the Company to significant concentrations of credit risk consist primarily of cash and accounts receivable. Cash held
at major financial institutions located in the PRC are not insured by the government. While we believe that these financial institutions
are of high credit quality, it also continually monitors their credit worthiness.
Accounts receivable are typically
unsecured and derived from revenue earned from customers, thereby exposed to credit risk. Credit risk is controlled by the application
of credit approvals, limits and monitoring procedures. The Company manages credit risk through in-house research and analysis of the Chinese
economy and the underlying obligors and transaction structures. To minimize credit risk, the Company normally require prepayment from
the customers prior to begin production or delivery products. The Company identifies credit risk collectively based on industry, geography
and customer type. This information is monitored regularly by management.
ITEM 12. DESCRIPTION OF SECURITIES OTHER
THAN EQUITY SECURITIES.
A. DEBT SECURITIES.
Not applicable.
B. WARRANTS AND RIGHTS.
Not applicable.
C. OTHER SECURITIES.
Not applicable.
D. AMERICAN DEPOSITARY SHARES.
Not applicable.
73
PART II
ITEM 13. DEFAULTS, DIVIDEND ARREARAGES
AND DELINQUENCIES.
None.
ITEM 14. MATERIAL MODIFICATIONS TO THE
RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS.
Not applicable.
ITEM 15. CONTROLS AND PROCEDURES.
Disclosure Controls and Procedures
We maintain disclosure controls
and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the "Exchange
Act")), that are designed to ensure that information required to be disclosed in our Exchange Act reports is recorded, processed,
summarized and reported within the time periods specified in the SEC's rules and forms, and that such information is accumulated
and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely
decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognizes that
any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired
control objectives, and management necessarily is required to apply its judgment in evaluating the cost-benefit relationship of possible
controls and procedures.
As of March 31, 2023, the end
of the fiscal year covered by this report, our management, under the supervision and with the participation of our Chief Executive Officer
and Chief Financial Officer, performed an evaluation of the effectiveness of our disclosure controls and procedures.
Based on the evaluation, our
Chief Executive Officer and Chief Financial Officer concluded that, as of March 31, 2023, our disclosure controls and procedures were
ineffective. They reached this conclusion due to the presence of material weaknesses in internal controls over financial reporting as
described below. Management anticipates that our disclosure controls and procedures will remain ineffective until such material weaknesses
are remediated.
Management's Report on Internal Control
over Financial Reporting
We assessed the effectiveness
of the Company's internal control over financial reporting as of March 31, 2023. In making this assessment, we used the criteria
set forth by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (COSO) in the Internal Control-Integrated
Framework. We are responsible for establishing and maintaining adequate internal control over financial reporting. Based on our evaluation,
management concluded that our internal control over financial reporting was ineffective as of March 31, 2023 due to the following material
weaknesses:
Accounting and Finance Personnel Weaknesses
Management concluded that in
light of the inexperience of our accounting staff with respect to the requirements of U.S. GAAP-based reporting and SEC rules and regulations,
we did not maintain effective controls and did not implement adequate and proper supervisory review to ensure that significant internal
control deficiencies can be detected or prevented.
74
Management's
assessment of the control deficiency over accounting and finance personnel as of March 31, 2023 considered the same factors, including:
●
the
    number of adjustments proposed by our independent auditors during our quarterly review and annual audit processes;
●
how
    adequately we complied with U.S. GAAP on transactions; and
●
how
    accurately we prepared supporting information to provide to our independent auditors on a quarterly and annual basis.
Based on the above factors,
management concluded that the lack of timely reconciliation of booking and recording from China GAAP to US GAAP, lack of accounting staff
with sufficient US GAAP experience, and lack of timely reconciliation of revenue and accounts receivable collectability are material weaknesses
as of March 31, 2023.
Remediation
of Material Weakness for the year ended March 31, 2023
Subsequent to the identification
of the material weakness, we have enhanced existing controls and design and implemented new controls. We have devoted significant time
and attention to remediate the above material weaknesses. For example, we redesigned our system to retrieve data faster, so we are able
to identify and reconcile the GAAP difference more efficiently. In addition, we trained our accounting staff with US GAAP knowledge, so
they can meet the requirement from our auditors more efficiently. Additionally, we plan to more closely monitor the collection of our
accounts receivables. We will check more often about the collectability of their receivables. If we determine that the accounts are uncollectible,
we will quickly seek the potential recovery and recognize any potential loss soon. These improvements to our internal control infrastructure
were implemented, and were in place in connection with the preparation of our financial statements for the year ended March 31, 2023.
As such, we believe that the remediation initiative outlined above will be sufficient to remediate as the changes become operational for
future years the material weakness in internal control over financial reporting as discussed.
Changes
in Internal Control over Financial Reporting
In
the year ended March 31, 2023, we linked our SAP system, a leading ERP system from Germany that was installed in 2017 with a series of
local banks, so it can provide a view of overall and instant cash information. In addition, we hired specialized managers who are able
to program and develop improved procedure in the system. Furthermore, we have been training our staff in implementing the management
system continually. We expect to continually improve our internal control system. There have been no other changes in our internal controls
over financial reporting identified in connection with the evaluation required by paragraph (d) of Exchange Act Rule 13a-15 or Rule 15d-15
that occurred during the year ended March 31, 2023, that have materially affected, or are reasonably likely to materially affect, our
internal control over financial reporting.
Limitations
on Controls
Management
does not expect that our disclosure controls and procedures or internal control over financial reporting will prevent or detect all errors
and fraud. Any control system, no matter how well designed and operated, is based upon certain assumptions and can provide only reasonable,
not absolute, assurance that its objectives will be met. Further, no evaluation of controls can provide absolute assurance that misstatements
due to error or fraud will not occur or that all control issues and instances of fraud, if any, within the Company have been detected.
Item 16. [Reserved]
ITEM 16A.
AUDIT COMMITTEE FINANCIAL EXPERT.
Our
Board of Directors has determined, based on information furnished by Ms. Caroline Wang and other available information, that she meets
the requirements of an "audit committee financial expert" as that term is defined in the rules promulgated under the Securities
Act and the Exchange Act, and has accordingly designated her as such. Our Board of Directors has also appointed her chairperson of the
committee.
ITEM 16B.
CODE OF ETHICS.
The
Company's Code of Ethics, which applies to all officers, directors and employees, was adopted by the Board on March 15, 2010. The
Code of Ethics was filed as Exhibit 14 to the Company's Current Report on
Form 8-K
filed with the SEC on March 23, 2010,
a copy of which is available on our website at http://www.jiuzhou360.com under the tabs "Investor"–"Corporate Governance"–"Documents".
75
ITEM 16C.
PRINCIPAL ACCOUNTANT FEES AND SERVICES.
Our
current principal independent auditor is YCM CPA Inc. ("YCM") whom we engaged on May 31, 2022. The following table shows the
fees for audit and other services provided by YCM in relation to our 2023 and 2022 fiscal years:
For the Fiscal Years ended
March 31,
2023
2022
Audit Fees (1)
$
180,000
$
175,000
Audit-Related Fees (2)
-
-
Tax Fees (3)
-
-
All Other Fees (4)
40,721
-
Total
$
220,721
$
175,000
(1)
Audit
Fees: This category includes the audit of our annual financial statements, review of financial statements included in our interim semi-annual
report on Form 6-K, and services that are normally provided by independent auditors in connection with statutory and regulatory filings
or the engagement for fiscal years. This category also includes advice on audit and accounting matters that arose during, or as a result
of, the audit or the review of interim financial statements.
(2)
Audit-Related
    Fees: This category consists of assurance and related services by our independent auditors that are reasonably related to the performance
    of the audit or review of our financial statements and are not reported above under "Audit Fees."
(3)
Tax
    Fees: This category consists of professional services rendered by our independent auditors for tax compliance and tax advice. The
    services for the fees disclosed under this category include tax return preparation and technical tax advice.
(4)
All
    Other Fees: This category consists of fees for other miscellaneous items.
Pre-Approval
Policies and Procedures of the Audit Committee
The
Audit Committee approves the engagement of our independent auditors and is also required to pre-approve all audit and non-audit expenses.
Prior to engaging its accountants to perform particular services, the Audit Committee obtains an estimate for the service to be performed.
All of the services described above were approved by the Audit Committee in accordance with its procedure.
ITEM 16D.
EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES.
Not
applicable.
76
ITEM 16E.
PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS.
Not
applicable.
ITEM 16F.
CHANGE IN REGISTRANT'S CERTIFYING ACCOUNTANT.
Not
applicable.
ITEM 16G.
CORPORATE GOVERNANCE.
Our ordinary shares are listed
on Nasdaq. In order to list on Nasdaq, we are required to comply with certain of the Nasdaq Rules. As a foreign private issuer, we may
follow our home country's corporate governance practices in lieu of certain of the Nasdaq Rules. Nevertheless, there are no significant
ways in which our corporate governance practices differ from those followed by domestic companies under the listing standards of Nasdaq
other than disclosed below.
NASDAQ
Listing Rule 5620(a) requires each issuer to hold an annual meeting of shareholders no later than one year after the end of the issuer's
fiscal year end. However, NASDAQ Listing Rule 5615(a)(3) permits a foreign private issuer like us to follow home country practices in
lieu of certain requirements of Listing Rule 5600, provided that such foreign private issuer discloses in its annual report filed with
the SEC each requirement of Rule 5600 that it does not follow and describes the home country practice followed in lieu of such requirement.
We follow home country practice with respect to annual meetings and may forgo annual shareholder meetings from time to time.
NASDAQ
Listing Rule 5635 generally provides that shareholder approval is required of U.S. domestic companies listed on the NASDAQ Capital
Market prior to issuance (or potential issuance) of securities (i) equaling 20% or more of the company's ordinary shares or
voting power for less than the greater of market or book value (ii) resulting in a change of control of the company; and (iii) which
is being issued pursuant to a stock option or purchase plan to be established or materially amended or other equity compensation
arrangement made or materially amended. Notwithstanding this general requirement, NASDAQ Listing Rule 5615(a)(3)(A) permits foreign
private issuers to follow their home country practice rather than these shareholder approval requirements. The Cayman Islands do not
require shareholder approval prior to any of the foregoing types of issuances. The Company, therefore, is not required to obtain
such shareholder approval prior to entering into a transaction with the potential to issue securities as described above. The Board
of Directors of the Company has elected to follow the Company's home country rules as to such issuances and will not be
required to seek shareholder approval prior to entering into such a transaction.
ITEM
16H. MINE SAFETY DISCLOSURE.
Not
applicable.
ITEM
16I. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS.
Not
applicable.
77
ITEM 16J. INSIDER TRADING POLICIES.
We have considered and adopted several insider
trading policies under the Company's Code of Ethics.
The following procedure is an excerpt to the requirements
to the confidentiality of the material non-public information and shall be followed by the Company's employees, officers and directors:
"Employees, officers, and directors who have
access to confidential information are not permitted to use or share that information for stock trading purposes or for any other purpose
except the conduct of our business."
"Employees should take
all appropriate measures to avoid inadvertent disclosure of confidential information. Materials that contain or might contain confidential
information such as presentations, memoranda, working papers, data storage devices or disks, and laptop computers should be stored and
maintained in a secure location. Unauthorized release or posting of information concerning our business via internet is prohibited, including
discussions (anonymous or not) about the Company's business in "web logs" (also known as "blogs") and "chat
rooms." All Company-related correspondence, e-mail, voicemail, and electronic communications are presumed to be confidential and
should not be disseminated outside of the Company, except for legitimate business purposes."
The following procedure is an excerpt to the requirements
to the communications with third parties that are related to insider trading:
"INSIDER TRADING; COMMUNICATIONS WITH THIRD
PARTIES
Employees, officers, and directors who have access
to confidential information are not permitted to use or share that information for stock trading purposes or for any other purpose except
the conduct of our business."
Insider Trading
"Inside information
is material information about a publicly traded company that is not known by the public. Information is deemed "material"
if it could affect the market price of a security or if a reasonable investor would attach importance to the information in deciding whether
to buy, sell, or hold a security. Inside information typically relates to financial conditions, such as progress toward achieving revenue
and earnings targets or projections of future earnings or losses of the Company. Inside information also includes changes in strategy
regarding a proposed merger, acquisition or tender offer, new products or services, contract awards, and other similar information. Inside
information is not limited to information about the Company. It also includes material non-public information about others, including
the Company's customers, suppliers, and competitors.
Insider trading is prohibited
by law. It occurs when an individual with material, non-public information trades securities or communicates such information to others
who trade. The person who trades or "tips" information violates the law if he or she has a duty or relationship of trust and
confidence not to use the information.
Trading or helping others
trade while aware of inside information has serious legal consequences, even if the insider does not receive any personal financial benefit.
Insiders may also have an obligation to take appropriate steps to prevent insider trading by others."
78
PART
III
ITEM 17.
FINANCIAL STATEMENTS.
We
have elected to provide financial statements and related information specified in Item 18.
ITEM 18.
FINANCIAL STATEMENTS.
See
"Index to Consolidated Financial Statements" for a list of all financial statements filed as part of this annual report. The
Financial Statements begin on page F-1.
ITEM 19.
EXHIBITS.
See
the Exhibit Index following the signature page of this report, which is incorporated herein by reference.
79
SIGNATURES
The
registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized
the undersigned to sign this annual report on its behalf.
CHINA
    JO-JO DRUGSTORES, INC.
By:
/s/
    Lei Liu
Lei
    Liu
Chief
                                            Executive Officer
(Principal
    Executive Officer)
June
15, 2023
80
INDEX
The
following documents are filed as part of this annual report on Form 20-F.
Exhibit
Number
Description
1.1
The Second Amended and Restated Memorandum and Articles of Association (24)
2
.1
Share Exchange Agreement among Kerrisdale Mining Corporation, certain of its stockholders, Renovation Investment (Hong Kong) Co., Ltd. and its shareholders dated September 17, 2009 (3)
2.2
Description of Securities*
4.1
Specimen of Ordinary shares Certificate (1)
4.2
Amended and Restated 2010 Equity Incentive Plan (20)
4.3
Form of Warrant to the investors in July 2015 (17)
4.4
Form of Warrant to the investors in April 2019 (14)
4.5
Form of Warrant to the investors in June 2020 (8)
4.6
Form of Warrant to the placement agent in June 2020 (8)
8.1
List of Subsidiaries*
10.1
Consulting Services Agreement between Zhejiang Jiuxin Investment Management Co., Ltd. ("Jiuxin Management") and Hangzhou Jiuzhou Grand Pharmacy Chain Co., Ltd. ("Jiuzhou Pharmacy") dated August 1, 2009 (3)
10.2
Operating Agreement among Jiuxin Management, Jiuzhou Pharmacy and its owners dated August 1, 2009 (3
)
10.3
Equity Pledge Agreement among Jiuxin Management, Jiuzhou Pharmacy and its owners dated August 1, 2009 (3)
10.4
Option Agreement among Jiuxin Management, Jiuzhou Pharmacy and its owners dated August 1, 2009 (3)
10.5
Voting Rights Proxy Agreement among Jiuxin Management, Jiuzhou Pharmacy and its owners dated August 1, 2009 (3)
10.6
Consulting Services Agreement between Jiuxin Management and Hangzhou Jiuzhou Clinic of Integrated Traditional and Western Medicine (General Partnership) ("Jiuzhou Clinic") dated August 1, 2009 (3)
10.7
Operating Agreement among Jiuxin Management, Jiuzhou Clinic and its owners dated August 1, 2009 (3)
10.8
Equity Pledge Agreement among Jiuxin Management, Jiuzhou Clinic and its owners dated August 1, 2009 (3)
10.9
Option Agreement among Jiuxin Management, Jiuzhou Clinic and its owners dated August 1, 2009 (3)
10.10
Voting Rights Proxy Agreement among Jiuxin Management, Jiuzhou Clinic and its owners dated August 1, 2009 (3)
10.11
Consulting Services Agreement between Jiuxin Management and Hangzhou Jiuzhou Medical & Public Health Service Co., Ltd. ("Jiuzhou Service") dated August 1, 2009 (3)
10.12
Operating Agreement among Jiuxin Management, Jiuzhou Service and its owners dated August 1, 2009 (3)
10.13
Equity Pledge Agreement among Jiuxin Management, Jiuzhou Service and its owners dated August 1, 2009 (3)
10.14
Option Agreement among Jiuxin Management, Jiuzhou Service and its owners dated August 1, 2009 (3)
10.15
Voting Rights Proxy Agreement among Jiuxin Management, Jiuzhou Service and its owners dated August 1, 2009 (3)
10.16
Amendment to Consulting Services Agreement between Jiuxin Management and Jiuzhou Pharmacy dated October 27, 2009 (4)
10.17
Amendment to Operating Agreement between Jiuxin Management and Jiuzhou Pharmacy dated October 27, 2009 (4)
10.18
Amendment to Option Agreement between Jiuxin Management and Jiuzhou Pharmacy dated October 27, 2009 (4)
81
10.19
Amendment to Voting Rights Proxy Agreement between Jiuxin Management and Jiuzhou Pharmacy dated October 27, 2009 (4)
10.20
Amendment to Consulting Services Agreement between Jiuxin Management and Jiuzhou Clinic dated October 27, 2009 (4)
10.21
Amendment to Operating Agreement between Jiuxin Management and Jiuzhou Clinic dated October 27, 2009 (4)
10.22
Amendment to Option Agreement between Jiuxin Management and Jiuzhou Clinic dated October 27, 2009 (4)
10.23
Amendment to Voting Rights Proxy Agreement between Jiuxin Management and Jiuzhou Clinic dated October 27, 2009 (4)
10.24
Amendment to Consulting Services Agreement between Jiuxin Management and Jiuzhou Service dated October 27, 2009 (4)
10.25
Amendment to Operating Agreement between Jiuxin Management and Jiuzhou Service dated October 27, 2009 (4)
10.26
Amendment to Option Agreement between Jiuxin Management and Jiuzhou Service dated October 27, 2009 (4)
10.27
Amendment to Voting Rights Proxy Agreement between Jiuxin Management and Jiuzhou Service dated October 27, 2009 (4)
10.28
Consulting Services Agreement between Jiuxin Management and Zhejiang Jiuying Grand Pharmacy Co., Ltd. ("Jiuying Pharmacy") dated May 15, 2012 (10)
10.29
Operating Agreement between Jiuxin Management and Jiuying Pharmacy dated May 15, 2012 (10)
10.30
Voting Rights Proxy Agreement between Jiuxin Management and Jiuying Pharmacy dated May 15, 2012 (10)
10.31
Equity Pledge Agreement between Jiuxin Management and Jiuying Pharmacy dated May 15, 2012 (10)
10.32
Option Agreement between Jiuxin Management and Jiuying Pharmacy dated May 15, 2012 (10)
10.33
Director Offer Letter with Caroline Wang dated as of March 29, 2017 (21)
10.34
Director Offer Letter with Genghua Gu dated December 9, 2013 (13)
10.35
Form of the Non-statutory Stock Option Agreement (16)
10.36
Securities Purchase Agreement between the Company and an Investor dated July 19, 2015 (17)
10.37
Engagement Letter between the Company and H.C. Wainwright & Co., LLC dated July 19, 2015 (17)
10.38
Form of the Restricted Stock Award Agreement for the issuance on November 27, 2015 (18)
10.39
Securities Purchase Agreement by and between the Company and CareRetail Holdings Limited dated January 3, 2017 (19)
10.40
Investor Rights Agreement by and among the Company, Jiuzhou Pharmacy, Mr. Lei Liu, Ms. Li Qi and CareRetail Holdings Limited dated January 3, 2017 (19)
10.41
Offer Letter to Mr. Jiangliang He dated September 4, 2018 (22)
10.42
Offer Letter to Mr. Yan Liu dated September 4, 2018 (22)
10.41
Director Offer Letter with Ms. Pingfan Wu, dated October 26, 2018 (15)
10.42
Form of Securities Purchase Agreement dated April 11, 2019 (14)
10.43
Engagement Agreement with H.C. Wainwright & Co. dated April 10, 2019 (14)
10.44
Form of Securities Purchase Agreement dated June 1, 2020 (8)
10.45
Engagement Agreement with H.C. Wainwright & Co. dated May 31, 2020 (8)
10.46
Agreement and Plan of Merger by and between China Jo-Jo Drugstores, Inc. and China Jo-Jo Drugstores Holdings, Inc., dated May 14, 2021 (23)
12.1
Section 302 Certification by the Corporation's Chief Executive Officer *
12.2
Section 302 Certification by the Corporation's Chief Financial Officer *
13.1
Section 906 Certification by the Corporation's Chief Executive Officer and Chief Financial Officer *
14.1
Code of Business Conduct and Ethics (5)
15.1
Consent of Company's previous Independent Publicly Registered Accounting Firm, BDO China Shu Lun Pan Certified Public Accountants LLP *
15.2
Consent of Company's current Independent Publicly Registered Accounting Firm, YCM CPA, Inc.*
99.1
Project Agreement between The People's Government of Qianhong Village, Lin'an, Zhejiang Province (the "Qianhong Local Government") and Jiuzhou Pharmacy dated February 27, 2010 (7)
99.2
Security Deposit Agreement between the Qianhong Local Government and Jiuzhou Pharmacy dated February 27, 2010 (7)
82
101.INS
Inline
    XBRL Instance Document
101.SCH
Inline
    XBRL Taxonomy Extension Scheme Document
101.CAL
Inline
    XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF
Inline
    XBRL Taxonomy Extension Definition Linkbase Document
101.LAB
Inline
    XBRL Taxonomy Extension Label Linkbase Document
101.PRE
Inline
    XBRL Taxonomy Extension Presentation Linkbase Document
*
Filed herewith
(1)
Incorporated by reference from the predecessor of the registrant's Registration Statement on Form SB-2 filed on November 28, 2007
(2)
Incorporated by reference from the predecessor of the registrant's Current Report on Form 8-K filed on July 15, 2008
(3)
Incorporated by reference from the predecessor of the registrant's Current Report on Form 8-K filed on September 24, 2009
(4)
Incorporated by reference from the predecessor of the registrant's Current Report on Form 8-K filed on October 30, 2009
(5)
Incorporated by reference from the predecessor of the registrant's Current Report on Form 8-K filed on March 16, 2010
(6)
Incorporated by reference from the predecessor of the registrant's Current Report on Form 8-K filed on April 14, 2010
(7)
Incorporated by reference from the predecessor of the registrant's Annual Report on Form 10-K filed on June 29, 2010
(8)
Incorporated by reference from the predecessor of the registrant's Current Report on Form 8-K filed on June 2, 2020
(9)
Incorporated by reference from the predecessor of the registrant's Quarterly Report on Form 10-Q filed on February 14, 2011
(10)
Incorporated by reference from the predecessor of the registrant's Current Report on Form 8-K filed on May 17, 2012
(11)
Incorporated by reference from the predecessor of the registrant's Current Report on Form 8-K filed on November 30, 2012
(12)
Incorporated by reference from the predecessor of the registrant's Current Report on Form 8-K filed on January 4, 2013
(13)
Incorporated by reference from the predecessor of the registrant's Current Report on Form 8-K filed on December 12, 2013
(14)
Incorporated by reference from the predecessor of the registrant's Current Report on Form 8-K filed on April 11, 2019
(15)
Incorporated by reference from the predecessor of the registrant's Current Report on Form 8-K filed on October 26, 2018
(16)
Incorporated by reference from the predecessor of the registrant's Current Report on Form 8-K filed on November 24, 2014
(17)
Incorporated by reference from the predecessor of the registrant's Current Report on Form 8-K filed on July 21, 2015
(18)
Incorporated by reference from the predecessor of the registrant's Current Report on Form 8-K filed on December 2, 2015
(19)
Incorporated by reference from the predecessor of the registrant's Current Report on Form 8-K filed on January 4, 2017
(20)
Incorporated by reference from the predecessor of the registrant's Exhibit A to the proxy statement on Schedule 14A filed on January 21, 2020
(21)
Incorporated by reference from Exhibit 10.33 of the predecessor of the registrant's Annual Report on Form 10-K filed on June 29, 2017
(22)
Incorporated by reference from the predecessor of the registrant's Current Report on Form 8-K filed on September 6, 2018
(23)
Incorporated by reference from the predecessor of the registrant's Current Report on Form 8-K filed on May 14, 2021
(24)
Incorporated by reference to Exhibit 99.2 on Form 6-K filed with the Securities and Exchange Commission on March 1, 2022
83
China
Jo-Jo Drugstores, Inc. and Subsidiaries
CONSOLIDATED
FINANCIAL STATEMENTS
TABLE
OF CONTENTS
Reports
    of Independent Registered Public Accounting Firms
F-2
Consolidated
    Balance Sheets as of March 31, 2023 and 2022
F-5
Consolidated
    Statements of Operations and Comprehensive Loss for the Years Ended March 31, 2023, 2022 and 2021
F-6
Consolidated
    Statements of Changes in Shareholders' Equity for the Years Ended March 31, 2023, 2022 and 2021
F-7
Consolidated
    Statements of Cash Flows for the Years Ended March 31, 2023, 2022 and 2021
F-8
Notes
    to Consolidated Financial Statements
F-9
F-
1
REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To
the Board of Directors and
Shareholders
of China Jo-Jo Drugstores, Inc.
Opinion
on the Financial Statements
We
have audited the accompanying consolidated balance sheets of China Jo-Jo Drugstores, Inc. and subsidiaries (collectively, the "Company")
as of March 31, 2023 and 2022, and the related consolidated statements of operations and comprehensive income (loss), changes in shareholders'
equity, and cash flows for the years ended March 31, 2023 and 2022, and the related notes (collectively referred to as the "financial
statements"). In our opinion, the financial statements referred to above present fairly, in all material respects, the financial
position of the Company as of March 31, 2023 and 2022, and the results of its operations and its cash flows for years ended March 31,
2023 and 2022, in conformity with accounting principles generally accepted in the United States of America.
Basis
for Opinion
These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to express an opinion on the Company's consolidated financial
statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United
States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal securities
laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the
standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged
to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding
of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company's
internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to
assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures
that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the
consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made
by management, as well as evaluating the overall presentation of the financial statement. We believe that our audits provide a reasonable
basis for our opinion.
Critical
Audit Matters
The critical audit matters communicated below are matters arising from
the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee
and that: (1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially
challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the
consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate
opinions on the critical audit matters or on the accounts or disclosures to which they relate.
F-
2
Allowance
for Credit Losses
Description of the
Matter
As described in Note
2 to the consolidated financial statements, management exercises significant accounting judgments, estimates, and assumptions in relation
to the allowance for credit losses. The Company recognized $7.64 million in allowances for credit losses on its consolidated balance sheet
using a current expected credit loss model (CECL). The CECL is an unbiased and probability-weighted estimate of credit losses expected
to occur in the future, which is based on the combination of aging as a risk characteristic, migration rate, historical default rate,
and forward looking default rate relating to the underlying financial asset. The CECL is determined by evaluating a range of possible
outcomes incorporating the unbiased and probability weighted amount, time value of money if applicable, and reasonable and supportable
information about past events, current conditions, and future economic forecasts. CECL allowances are measured at amounts equal to either
(i) 12-month CECL; or (ii) lifetime CECL for those financial instruments that have experienced a significant increase in credit risk since
initial recognition or when there is objective evidence of impairment.
Auditing the allowance for credit losses was
complex and required the application of significant judgment because of the forward-looking nature of the key assumptions and the inherent
interrelationship of the critical variables used in measuring the CECL. Key areas of judgment include evaluating: (i) the models and
methodologies used for measuring both the 12-month and lifetime expected credit losses; (ii) the assumptions used in the CECL scenarios
including forward-looking information and assigning probability weighting, and (iii) the assessment of the qualitative component applied
to the modelled CECL based on management's judgment. Management has applied a significant level of judgment in the areas noted
above in determining the impact on the allowance for credit losses.
How We Addressed the Matter in Our Audit
To test the allowance for credit losses, our audit
procedures included, amongst others, assessing whether the methodology and assumptions used in significant models that estimate the CECL
are consistent with the requirements of U.S. GAAP and industry standards. We evaluated the process used by management to develop historical
default rate and determine the CECL scenario probability weights. We recalculated the CECL to test the mathematical accuracy of management's
models. We tested the completeness and accuracy of data used in measuring the CECL and evaluated management's accounts receivable
and other receivable aging policies. We also assessed the adequacy of disclosures related to the allowance for credit losses.
/s/
YCM CPA, Inc.
We have served as the Company's
auditor since 2022.
PCAOB ID
6781
Irvine, California
June 15, 2023
F-
3
REPORT
OF INDEPENDENT REGISTERED ACCOUNTING FIRM
Board
of Directors
China
Jo-Jo Drugstores, Inc.
Carson
City, Nevada
Opinion
on the Consolidated Financial Statements
We have audited the accompanying consolidated
statements of operations and comprehensive loss, stockholders' equity, and cash flows for the year ended March 31, 2021 and the
related notes (collectively referred to as the "consolidated financial statements"). In our opinion, the consolidated financial
statements for the year ended March 31, 2021 present fairly, in all material respects, the results of its operations and its cash flows
for the year then ended, in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to express an opinion on the Company's consolidated financial
statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States)
("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws
and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the
standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated
financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we
engaged to perform, an audit of its internal control over financial reporting. As part of our audit we are required to obtain an understanding
of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's
internal control over financial reporting. Accordingly, we express no such opinion.
Our audit included performing procedures to assess the risks of material
misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those
risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial
statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as
evaluating the overall presentation of the consolidated financial statements. We believe that our audit provides a reasonable basis for
our opinion.
/s/
BDO China Shu Lun Pan Certified Accountants LLP (PCAOB ID 1818)
We
served as the Company's auditor from year 2015 to year 2021.
Shanghai,
People's Republic of China
June
28, 2021
F-
4
CHINA
JO-JO DRUGSTORES, INC. AND SUBSIDIARIES
CONSOLIDATED
BALANCE SHEETS
March 31,
March 31,
2023
2022
ASSETS
CURRENT ASSETS
Cash and cash equivalents
$
18,807,936
$
18,458,575
Restricted cash
12,762,708
16,881,002
Trade accounts receivable
14,119,606
16,736,495
Inventories
15,309,100
16,020,140
Other receivables, net
2,725,015
5,764,660
Advances to suppliers
142,417
571,577
Other current assets
616,008
924,797
Total current assets
64,482,790
75,357,246
OTHER ASSETS
Property and equipment, net
5,100,264
5,922,179
Long-term investment
1,772,072
4,511,539
Farmland assets
666,721
722,283
Long-term deposits
1,038,125
1,761,945
Other noncurrent assets
790,056
822,950
Operating lease right-of-use assets
13,924,826
13,738,081
Intangible assets, net
3,195,748
3,547,986
Total other assets
26,487,812
31,026,963
Total assets
$
90,970,602
$
106,384,209
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable
$
26,990,250
$
27,331,381
Notes payable
29,255,776
34,189,022
Other payables
1,314,919
2,268,967
Other payables - related parties
683,560
1,561,244
Customer deposits
695,931
1,873,062
Taxes payable
1,706,909
1,381,108
Accrued liabilities
756,516
556,037
Loan payable - current portion
-
1,957,956
Current portion of operating lease liabilities
5,131,373
3,329,619
Total current liabilities
66,535,234
74,448,396
Long-term operating lease liabilities
7,768,216
9,197,027
Total liabilities
74,303,450
83,645,423
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY
Ordinary shares; $
0.012
par value;
500,000,000
shares authorized;
23,697,210
and
3,479,316
shares issued and outstanding as of March 31, 2023 and 2022, respectively
284,367
41,752
Preferred shares; $
0.001
par value;
10,000,000
shares authorized;
nil
issued and outstanding as of March 31, 2023 and 2022
-
-
Additional paid-in capital
83,958,418
66,516,033
Statutory reserves
1,309,109
1,309,109
Accumulated deficit
(
69,273,018
)
(
48,134,493
)
Accumulated other comprehensive income
1,735,135
4,352,992
Total shareholders' equity attributed to China Jo-Jo
18,014,011
24,085,393
Noncontrolling interests
(
1,346,859
)
(
1,346,607
)
Total shareholders' equity
16,667,152
22,738,786
Total liabilities and shareholders' equity
$
90,970,602
$
106,384,209
The
accompanying notes are an integral part of these consolidated financial statements.
F-
5
CHINA
JO-JO DRUGSTORES, INC. AND SUBSIDIARIES
CONSOLIDATED
STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
For the years ended
March 31,
2023
2022
2021
REVENUES, NET
$
148,811,976
$
164,392,555
$
133,134,633
COST OF GOODS SOLD
114,531,512
127,873,515
103,890,824
GROSS PROFIT
34,280,464
36,519,040
29,243,809
SELLING EXPENSES
29,177,163
30,876,959
26,954,914
GENERAL AND ADMINISTRATIVE EXPENSES
15,668,684
8,187,176
6,956,029
STOCK BASED COMPENSATION
10,360,000
-
3,941,600
IMPAIRMENT OF LONG-LIVED ASSETS
-
148,795
228,506
TOTAL OPERATING EXPENSES
55,205,847
39,212,930
38,081,049
LOSS FROM OPERATIONS
(
20,925,383
)
(
2,693,890
)
(
8,837,240
)
OTHER INCOME (EXPENSES):
INTEREST INCOME
883,908
401,921
707,878
INTEREST EXPENSE
(
65,854
)
(
262,218
)
(
455,187
)
INVESTMENT LOSS
(
2,316,994
)
-
-
OTHER INCOME (EXPENSES)
1,680,087
455,547
176,519
CHANGE IN FAIR VALUE OF PURCHASE OPTION AND WARRANTS LIABILITY
-
-
64,090
LOSS BEFORE INCOME TAXES
(
20,744,236
)
(
2,098,640
)
(
8,343,940
)
PROVISION FOR INCOME TAXES
394,541
1,099,726
31,638
NET LOSS
(
21,138,777
)
(
3,198,366
)
(
8,375,578
)
LESS: NET LOSS ATTRIBUTABLE TO NONCONTROLLING INTEREST
(
252
)
(
6,247
)
(
255,716
)
NET LOSS ATTRIBUTABLE TO CHINA JO-JO DRUGSTORES, INC.
(
21,138,525
)
(
3,192,119
)
(
8,119,862
)
OTHER COMPREHENSIVE LOSS
FOREIGN CURRENCY TRANSLATION ADJUSTMENTS
(
2,617,857
)
1,534,807
1,377,761
COMPREHENSIVE LOSS
(
23,756,634
)
(
1,663,559
)
(
6,997,817
)
WEIGHTED AVERAGE NUMBER OF SHARES:
Basic
10,196,552
3,479,316
3,398,397
Diluted
10,196,552
3,479,316
3,398,397
LOSS PER SHARE:
Basic
$
(
2.07
)
$
(
0.92
)
$
(
2.39
)
Diluted
$
(
2.07
)
$
(
0.92
)
$
(
2.39
)
The
accompanying notes are an integral part of these consolidated financial statements.
F-
6
CHINA
JO-JO DRUGSTORES, INC. AND SUBSIDIARIES
CONSOLIDATED
STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
Accumulated
Ordinary Shares
Additional
other
Non-
Total
Number of
paid-in
Statutory
Accumulated
comprehensive
controlling
Shareholders'
shares
Amount
capital
reserves
deficit
income/(loss)
interest
Equity
BALANCE, March 31, 2020
2,744,732
32,937
54,209,301
1,309,109
(
36,400,837
)
1,440,424
(
1,812,805
)
18,778,129
ECL
-
-
-
-
(
421,675
)
-
-
(
421,675
)
BALANCE, April 1, 2020
2,744,732
32,937
54,209,301
1,309,109
(
36,822,512
)
1,440,424
(
1,812,805
)
18,356,454
Exercise of warrants
2,083
25
77,475
-
-
-
-
77,500
Sale of stock and warrants
416,668
5,000
9,282,100
-
-
-
-
9,287,100
Issuance of incentive ordinary shares award
315,833
3,790
3,937,810
-
-
-
-
3,941,600
Acquisition of
10
% of Jiuxin Medicine
-
-
(
990,653
)
-
-
-
728,161
(
262,492
)
Net loss
-
-
-
-
(
8,119,862
)
-
(
255,716
)
(
8,375,578
)
Foreign currency translation loss
-
-
-
-
-
1,377,761
-
1,377,761
BALANCE, March 31, 2021
3,479,316
41,752
66,516,033
1,309,109
(
44,942,374
)
2,818,185
(
1,340,360
)
24,402,345
Net loss
-
-
-
-
(
3,192,119
)
-
(
6,247
)
(
3,198,366
)
Foreign currency translation loss
-
-
-
-
-
1,534,807
-
1,534,807
BALANCE, March 31, 2022
3,479,316
41,752
66,516,033
1,309,109
(
48,134,493
)
4,352,992
(
1,346,607
)
22,738,786
Fractional shares issued for reverse stock split
8044
97
(
97
)
-
-
-
-
-
Issuance of shares and warrants in private placements
5,950,000
71,400
7,253,600
-
-
-
-
7,325,000
Share-based compensation
3,000,000
36,000
10,324,000
-
-
-
-
10,360,000
Cashless exercise of warrants
11,259,850
135,118
(
135,118
)
-
-
-
-
-
Net loss
-
-
-
-
(
21,138,525
)
-
(
252
)
(
21,138,777
)
Foreign currency translation loss
-
-
-
-
-
(
2,617,857
)
-
(
2,617,857
)
BALANCE, March 31, 2023
23,697,210
284,367
83,958,418
1,309,109
(
69,273,018
)
1,735,135
(
1,346,859
)
16,667,152
The
accompanying notes are an integral part of these consolidated financial statements.
F-
7
CHINA
JO-JO DRUGSTORES, INC. AND SUBSIDIARIES
CONSOLIDATED
STATEMENTS OF CASH FLOWS
For the years ended
March 31,
2023
2022
2021
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss
$
(
21,138,777
)
$
(
3,198,366
)
$
(
8,375,578
)
Adjustments to reconcile net loss to net cash used in operating activities:
Bad debt direct write-off and provision
7,579,886
939,720
(
706,862
)
Depreciation and amortization
718,002
1,256,491
1,750,890
Impairment of long lived assets
-
148,795
228,506
Share-based compensation
10,360,000
-
3,941,600
Investment loss
2,316,994
-
-
Change in fair value of purchase option derivative liability
-
-
(
64,090
)
Change in operating assets and liabilities:
Accounts receivable, trade
(
2,531,755
)
(
2,657,283
)
(
3,307,946
)
Notes receivable
(
20,861
)
40,260
21,539
Inventories and biological assets
(
522,550
)
1,523,098
(
3,615,017
)
Other receivables
(
958,671
)
(
1,927,692
)
468,967
Advances to suppliers
201,984
(
171,783
)
1,893,857
Long term deposit
589,653
(
159,508
)
26,910
Other current assets
331,426
376,134
1,004,448
Other noncurrent assets
(
30,483
)
62,394
38,142
Accounts payable, trade
1,765,488
(
3,558,050
)
6,380,115
Other payables and accrued liabilities
(
1,341,447
)
99,132
(
183,111
)
Customer deposits
(
1,035,456
)
678,601
368,690
Taxes payable
433,054
1,162,084
66,648
Net cash used in operating activities
(
3,283,513
)
(
5,385,973
)
(
62,292
)
CASH FLOWS FROM INVESTING ACTIVITIES:
Disposal of financial assets available for sale
-
-
75,973
Acquisition of equipment and building
(
118,272
)
(
89,960
)
(
126,766
)
Investment in a joint venture
(
4,379
)
-
(
1,470,119
)
Purchases of intangible assets
(
12,774
)
(
7,012
)
(
97,802
)
Additions to leasehold improvements
(
180,672
)
(
209,166
)
(
379,611
)
Net cash used in investing activities
(
316,097
)
(
306,138
)
(
1,998,325
)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from short-term bank loan
-
-
738,315
Repayment of short-term bank loan
-
(
779,059
)
(
1,476,630
)
Proceeds from third parties loan
-
-
-
Repayment of third parties loan
(
1,811,558
)
(
2,613,965
)
(
2,395,629
)
Proceeds from notes payable
57,965,013
65,370,181
48,292,231
Repayment of notes payable
(
60,273,598
)
(
57,829,269
)
(
51,295,776
)
Increase in financial liability
-
-
(
73,832
)
Exercise of warrants
-
-
77,500
Proceeds from issuance of shares and warrants in private placements
7,325,000
-
9,287,100
Proceeds from other payable-related parties
43,785
689,010
-
Repayment of other payable-related parties
(
882,486
)
(
73,426
)
Net cash provided by financing activities
2,366,156
4,836,898
3,079,853
EFFECT OF EXCHANGE RATE ON CASH
(
2,535,479
)
1,522,146
2,670,802
INCREASE IN CASH AND CASH EQUIVALENTS AND RESTRICTED CASH
(
3,768,933
)
666,933
3,690,038
CASH AND CASH EQUIVALENTS AND RESTRICTED CASH, beginning of year
35,339,577
34,672,644
30,982,606
CASH AND CASH EQUIVALENTS AND RESTRICTED CASH, end of year
$
31,570,644
$
35,339,577
$
34,672,644
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for income taxes
$
63,668
$
3,955
$
37,738
Cash paid for interest
64,943
262,218
455,187
NON-CASH ACTIVITIES：
Cashless exercise of warrants
$
135,118
$
-
$
-
The
accompanying notes are an integral part of these consolidated financial statements.
F-
8
Note
1 – DESCRIPTION OF BUSINESS AND ORGANIZATION
China
Jo-Jo Drugstores, Inc. ("Jo-Jo Drugstores" or the "Company"), was incorporated in Nevada on December 19, 2006,
originally under the name "Kerrisdale Mining Corporation". On September 24, 2009, the Company changed its name to "China
Jo-Jo Drugstores, Inc." in connection with a share exchange transaction as described below.
On
September 17, 2009, the Company completed a share exchange transaction with Renovation Investment (Hong Kong) Co., Ltd. ("Renovation"),
whereby
7,900,000
shares of ordinary shares were issued to the stockholders of Renovation in exchange for
100
% of the capital stock of
Renovation. The completion of the share exchange transaction resulted in a change of control. The share exchange transaction was accounted
for as a reverse acquisition and recapitalization and, as a result, the consolidated financial statements of the Company (the legal acquirer)
are, in substance, those of Renovation (the accounting acquirer), with the assets and liabilities, and revenues and expenses, of the
Company being included effective from the date of the share exchange transaction. Renovation has no substantive operations of its own
except for its holdings of Zhejiang Jiuxin Investment Management Co., Ltd. ("Jiuxin Management"), Zhejiang Shouantang Medical
Technology Co., Ltd. ("Shouantang Technology") and Hangzhou Jiutong Medical Technology Co., Ltd ("Jiutong Medical"),
Hangzhou Jiuyi Medical Technology Co. Ltd. ("Jiuyi Technology"), its wholly-owned subsidiaries.
The
Company is an online and offline retailer and wholesale distributor of pharmaceutical and other healthcare products in the People's
Republic of China ("China" or the "PRC"). The Company's offline retail business is comprised primarily of
pharmacies, which are operated by Hangzhou Jiuzhou Grand Pharmacy Chain Co., Ltd. ("Jiuzhou Pharmacy"), a company that the
Company controls through contractual arrangements.
The
Company's offline retail business also includes four medical clinics through Hangzhou Jiuzhou Clinic of Integrated Traditional
and Western Medicine ("Jiuzhou Clinic") and Hangzhou Jiuzhou Medical and Public Health Service Co., Ltd. ("Jiuzhou Service"),
both of which are also controlled by the Company through contractual arrangements. In May 2014, Shouantang Technology established Hangzhou
Shouantang Bio-technology Co., Ltd. ("Shouantang Bio"). In May 2016, Shouantang Bio set up and held
49
% of Hangzhou Kahamadi
Bio-technology Co., Ltd. ("Kahamadi Bio"), a joint venture specializing in brand name development for nutritional supplements.
In 2018, Jiuzhou Pharmacy invested a total of $
741,540
(RMB
5,100,000
) in and held
51
% of Zhejiang Jiuzhou Linjia Medical Investment and
Management Co. Ltd ("Linjia Medical"), which has ceased its operation as of March 31, 2021.
The
Company currently conducts its online retail pharmacy business through Jiuzhou Pharmacy, which holds the Company's online
pharmacy license. On September 10, 2015, Renovation set up Jiuyi Technology to provide additional technical support such as webpage
development to our online pharmacy business. In November 2015, the technical support function was transferred back to Jiuzhou
Pharmacy, which hosts our online pharmacy.
F-
9
The
Company's wholesale business is primarily conducted through Zhejiang Jiuxin Medicine Co., Ltd. ("Jiuxin Medicine"),
which is licensed to distribute prescription and non-prescription pharmaceutical products throughout China. Jiuzhou Pharmacy acquired
Jiuxin Medicine on August 25, 2011. On April 20, 2018,
10
% of Jiuxin Medicine shares were sold to Hangzhou Kangzhou Biotech Co. Ltd.
for a total proceeds of $
79,625
(RMB
507,760
). On January 29, 2021, The Company bought back the
10
% of Jiuxin Medicine for a total price
of $
77,410
(RMB
507, 760
).
The
Company's herb farming business is conducted by Hangzhou Qianhong Agriculture Development Co., Ltd. ("Qianhong Agriculture"),
a wholly-owned subsidiary of Jiuxin Management. Due to the complexity of the cultivation business, Qianhong Agriculture has not grown
herbs in fiscal 2022.
On
July 30, 2021, China Jo-Jo Drugstores, Inc., a Nevada corporation ("CJJD"), completed a corporate reorganization (the "Reorganization"
or "Redomicile Merger"), resulting in China Jo-Jo Drugstores Holdings, Inc., a company incorporated under the laws of the
Cayman Islands ("CJJD Cayman"), becoming the publicly held parent company of CJJD, with CJJD merged with and into CJJD Cayman,
pursuant to the Agreement and Plan of Merger, dated as of May 14, 2021, by and between CJJD and CJJD Cayman (the "Merger Agreement").
Prior to the Reorganization, shares of CJJD's ordinary shares were registered pursuant to Section 12(b) of the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), and listed on the NASDAQ Capital Market under the symbol "CJJD."
As a result of the Reorganization, each issued and outstanding share of CJJD's ordinary shares was converted into the right to
receive one CJJD Cayman ordinary share, which shares were issued by CJJD Cayman as part of the Reorganization.
On
April 7, 2022，the Company effected a 1-for-12 reverse stock split on its ordinary shares. Upon the effectiveness of the reverse
stock split, every
12
shares of the Company's issued and outstanding ordinary shares were automatically be converted into one issued
and outstanding ordinary share. No fractional shares were issued as a result of the reverse stock split. Instead, any fractional shares
that would have resulted from the split were rounded up to the next whole number. The reverse stock split affects all shareholders uniformly
and will not alter any shareholder's percentage interest in the Company's outstanding ordinary shares, except for adjustments
that may result from the treatment of fractional shares.
The
accompanying consolidated financial statements reflect the activities of the Company and each of the following entities:
Entity Name
Background
Ownership
Renovation
●     Incorporated in Hong Kong SAR on September 2, 2008
100%
Jiuxin Management
●     Established in the PRC on October 14, 2008
●     Deemed a wholly foreign owned enterprise ("WFOE") under PRC law
●     Registered capital of $14.5 million fully paid
100%
Shouantang Technology
●     Established in the PRC on July 16, 2010 by Renovation with registered capital of $20 million
●     Registered capital requirement reduced by the SAIC to $11 million in July 2012 and is fully paid
●     Deemed a WFOE under PRC law
●     Invests and finances the working capital of Quannuo Technology
100%
Qianhong Agriculture
●     Established in the PRC on August 10, 2010 by Jiuxin Management
●     Registered capital of RMB 10 million fully paid
●     Carries out herb farming business
100%
Jiuzhou Pharmacy (1)
●     Established in the PRC on September 9, 2003
●     Registered capital of RMB 5 million fully paid
●     Operates the "Jiuzhou Grand Pharmacy" stores in Hangzhou
VIE by contractual arrangements
(2)
Jiuzhou Clinic (1)
●     Established in the PRC as a general partnership on October 10, 2003
VIE by contractual arrangements
(2)
●     Operates a medical clinic adjacent to one of Jiuzhou Pharmacy's stores
Jiuzhou Service (1)
●     Established in the PRC on November 2, 2005
●     Registered capital of RMB 500,000 fully paid
●     Operates a medical clinic adjacent to one of Jiuzhou Pharmacy's stores
VIE by contractual arrangements
(2)
F-
10
Entity Name
Background
Ownership
Jiuxin Medicine
●     Established
    in PRC on December 31, 2003
●     Acquired
    by Jiuzhou Pharmacy in August 2011
●     Registered
    capital of RMB 10 million fully paid
●     Carries
    out pharmaceutical distribution services
VIE by contractual arrangements as a wholly-owned subsidiary of Jiuzhou Pharmacy (2)
Jiutong Medical
●     Established in the PRC on December 20, 2011 by Renovation
●     Registered capital of $2.6 million fully paid
●     Currently has no operation
100%
Shouantang Bio
●     Established in the PRC in October, 2014 by Shouantang Technology
●     100% held by Shouantang Technology
●     Registered capital of RMB 1,000,000 fully paid
●     Sells nutritional supplements under its own brand name
100%
Jiuyi Technology
●     Established in the PRC on September 10, 2015
●     100% held by Renovation
●     Technical support to online pharmacy
100%
Kahamadi Bio
●     Established in the PRC in May 2016
●     49% held by Shouantang Bio
●     Registered capital of RMB 10 million
●     Develop brand name for nutritional supplements
49%
Linjia Medical
●     Established in the PRC in September 27, 2017
●     51% held by Jiuzhou Pharmacy
●     Registered capital of RMB 20 million
●     Operates local clinics
VIE by contractual arrangements as a controlled subsidiary of Jiuzhou Pharmacy
(2)
Shouantang Clinic
●     Established in the PRC in September 2, 2022
●     100% held by Jiuzhou Pharmacy
●     Registered capital of RMB 0.1 million
●     Operates local clinics
VIE by contractual arrangements as a controlled subsidiary of Jiuzhou Pharmacy
(2)
F-
11
Jiuzhen Health
●     Established in the PRC in November 11, 2022
●     100% held by Jiuzhou Pharmacy
●     Registered capital of RMB 0.1 million
VIE by contractual arrangements as a controlled subsidiary of Jiuzhou Pharmacy
(2)
Hongtong Service
●     Health care delivery
●     Established in the PRC in May 12, 2022
●     100% held by Jiuzhou Pharmacy
●     Registered capital of RMB 0.1 million
●     Daily service
VIE by contractual arrangements as a controlled subsidiary of Jiuzhou Pharmacy
(2)
(1)
Jiuzhou Pharmacy, Jiuzhou Clinic and Jiuzhou Service had been under the common control of Mr. Lei Liu and Ms. Li Qi, the three shareholders (the "Owners") since their respective establishment dates, pursuant to agreements among the Owners to vote their interests in concert as memorialized in a voting rights agreement. Based on such voting agreement, the Company has determined that common control exists among these three companies. The Owners have operated these three companies in conjunction with one another since each company's respective establishment date. Jiuxin Medicine is also deemed under the common control of the Owners as a subsidiary of Jiuzhou Pharmacy.
(2)
To comply with certain foreign ownership restrictions of pharmacy and medical clinic operators, Jiuxin Management entered into a series of contractual arrangements with Jiuzhou Pharmacy, Jiuzhou Clinic and Jiuzhou Service on August 1, 2009. These contractual arrangements are comprised of five agreements: a consulting services agreement, an operating agreement, an equity pledge agreement, a voting rights agreement and an option agreement. Because such agreements obligate Jiuxin Management to absorb all of the risks of loss from the activities of Jiuzhou Pharmacy, Jiuzhou Clinic and Jiuzhou Service, and enable the Company (through Jiuxin Management) to receive all of their expected residual returns, the Company accounts for each of the three companies (as well as subsidiaries of Jiuzhou Pharmacy) as a variable interest entity ("VIE") under the accounting standards of the Financial Accounting Standards Board ("FASB"). Accordingly, the financial statements of Jiuzhou Pharmacy, Jiuzhou Clinic and Jiuzhou Service, as well as the subsidiaries under the control of Jiuzhou Pharmacy, Jiuxin Medicine and Shouantang Bio are consolidated into the financial statements of the Company.
F-
12
Note
2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis
of presentation and consolidation
The
accompanying consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United
States of America ("US GAAP"). The consolidated financial statements include the financial statements of the Company, its
wholly-owned subsidiaries and VIEs. All significant inter-company transactions and balances between the Company, its subsidiaries and
VIEs are eliminated upon consolidation.
Consolidation
of variable interest entities
In
accordance with accounting standards regarding consolidation of variable interest entities, VIEs are generally entities that lack sufficient
equity to finance their activities without additional financial support from other parties or whose equity holders lack adequate decision
making ability. All VIEs with which the Company is involved must be evaluated to determine the primary beneficiary of the risks and rewards
of the VIE. The primary beneficiary is required to consolidate the VIE for financial reporting purposes.
The
Company has concluded, based on the contractual arrangements, that Jiuzhou Pharmacy (including its subsidiaries and controlled entities),
Jiuzhou Clinic and Jiuzhou Service are each a VIE and that the Company's wholly-owned subsidiary, Jiuxin Management, absorbs a
majority of the risk of loss from the activities of these companies, thereby enabling the Company, through Jiuxin Management, to receive
a majority of their respective expected residual returns.
Control
and common control are defined under the accounting standards as "an individual, enterprise, or immediate family members who hold
more than
50
percent of the voting ownership interest of each entity." Because the Owners collectively own
100
% of Jiuzhou Pharmacy,
Jiuzhou Clinic and Jiuzhou Service, and have agreed to vote their interests in concert since the establishment of each of these three
companies as memorialized in the voting rights agreement, the Company believes that the Owners collectively have control and common control
of the three companies. Accordingly, the Company believes that Jiuzhou Pharmacy, Jiuzhou Clinic and Jiuzhou Service were constructively
held under common control by Jiuxin Management as of the time the Contractual Agreements were entered into, establishing Jiuxin Management
as their primary beneficiary. Jiuxin Management, in turn, is owned by Renovation, which is owned by the Company.
Liquidity
and capital resources
As of March 31, 2023, we had cash of approximately $
31.6
million and
a working capital deficit of $
2.1
million. During the year ended March 31, 2023, we had a net loss of approximately $
21.1
million and
net cash used in operating activities were $
3.3
million. These factors raise substantial doubt about our ability to continue as a going
concern. However, non-cash expenses such as stock-based compensation, bad debt direct write-off and provision, and investment loss accounts
for approximately $
10.4
million, $
7.6
million and $
2.3
million, respectively. Excluding these non-cash expenses, the net loss is approximately
$
0.8
million.
The Company's accounts have been prepared in accordance with
the accounting principles generally accepted in the United States of America ("U.S. GAAP") on a going concern basis. The going
concern basis assumes that assets are realized and liabilities are extinguished in the ordinary course of business at amounts disclosed
in the financial statements. The Company's ability to continue as a going concern depends upon aligning its sources of funding (debt
and equity) with its expenditure requirements and repayment of the short-term debts as and when they become due.
In
order to meet its capital demand, the Company strived to raise funds in the capital market, increase its credit line from the local banks,
and improve its store performance in the near future.
In August and October 2022 the Company raised
capital by issuing ordinary shares to private investors for a total proceeds of $
4.7
million. In January, 2023, the Company closed a registered
direct offering with gross proceeds of $
2.6
million from its effective shelf registration statement.
The
Company has a credit line agreement from a local bank as described in detail in Note 16. As of March 31, 2023, approximately $
0.29
million
of the aforementioned bank credit line was available for further borrowing. As the economy growth slows down, the national interest continues
to decrease. local banks are encouraged to provide low interest rate loans to local enterprises.
The
Company has also obtained additional government insurance reimbursement certificates for its stores opened in the last two years. In
a mature store, nearly half of the revenue are generated by customers utilizing the government insurance program. With these certificates,
mature stores are able to attract more customers who are eligible for the insurance program, and its sales may significantly increase
in the next 12 months.
Based
on the above factors, the Company believes it can support its operations for at least the next 12 months.
F-
13
Use
of estimates
The preparation of consolidated financial statements in conformity
with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities,
disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses
during the reporting period. The significant estimates made in the preparation of the accompanying consolidated financial statements relate
to the assessment of the carrying values of accounts receivable, related allowance for doubtful accounts, losses. Because of the use of
estimates inherent in the financial reporting process, actual results could materially differ from those estimates.
Fair
value measurements
The
Company establishes a three-level valuation hierarchy of valuation techniques based on observable and unobservable inputs, which may
be used to measure fair value and include the following:
Level
1 – Quoted prices in active markets for identical assets or liabilities.
Level
2 – Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities;
quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for
substantially the full term of the assets or liabilities.
Level
3 – Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets
or liabilities.
Classification
within the hierarchy is determined based on the lowest level of input that is significant to the fair value measurement.
Unless
otherwise disclosed, the fair value of the Company's financial instruments including cash, restricted cash, accounts receivable,
advances to suppliers, other current assets, accounts payable, due to related parties, other current liabilities, short-term bank loans
and bank acceptance notes payable approximate their recorded values due to their short-term maturities. The fair value of longer term
long-term bank loan and operating lease liabilities approximate their recorded values as their stated interest rates approximate the
rates currently available.
F-
14
Revenue
recognition
Effective
March 31, 2018, the Company began recognizing revenue under Accounting Standards Codification ("ASC") Topic 606, Revenue from
Contracts with Customers ("ASC 606"), using the modified retrospective transition method. The impact of adopting the new revenue
standard was not material to the Company's consolidated financial statements. The core principle of this new revenue standard is
that a company should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects
the consideration to which the Company expects to be entitled in exchange for those goods or services. The following five steps are applied
to achieve that core principle:
●
Step
    1: Identify the contract with the customer
●
Step
    2: Identify the performance obligations in the contract
●
Step
    3: Determine the transaction price
●
Step
    4: Allocate the transaction price to the performance obligations in the contract
●
Step
    5: Recognize revenue when the company satisfies a performance obligation
In
order to identify the performance obligations in a contract with a customer, a company must assess the promised goods or services in
the contract and identify each promised good or service that is distinct. A performance obligation meets ASC 606's definition
of a "distinct" good or service (or bundle of goods or services) if both of the following criteria are met:
●
The
    customer can benefit from the good or service either on its own or together with other resources that are readily available to the
    customer (i.e., the good or service is capable of being distinct).
●
The
    entity's promise to transfer the good or service to the customer is separately identifiable from other promises in the contract
    (i.e., the promise to transfer the good or service is distinct within the context of the contract).
If
a good or service is not distinct, the good or service is combined with other promised goods or services until a bundle of goods or services
is identified that is distinct.
The
transaction price is the amount of consideration to which an entity expects to be entitled in exchange for transferring promised goods
or services to a customer, excluding amounts collected on behalf of third parties (for example, some sales taxes). The consideration
promised in a contract with a customer may include fixed amounts, variable amounts, or both. Variable consideration is included in the
transaction price only to the extent that it is probable that a significant reversal in the amount of cumulative revenue recognized will
not occur when the uncertainty associated with the variable consideration is subsequently resolved.
The
transaction price is allocated to each performance obligation on a relative standalone selling price basis. The transaction price allocated
to each performance obligation is recognized when that performance obligation is satisfied, at a point in time or over time as appropriate.
The
Company's revenue is net of value added tax ("VAT") collected on behalf of the PRC tax authorities with respect to the
sales of merchandise. VAT collected from customers, net of VAT paid for purchases, is recorded as a liability in the accompanying consolidated
balance sheets until it is paid to the relevant PRC tax authorities.
Certain
contract liabilities primarily represent the Company's obligation to transfer additional goods or services to a customer for which
the Company has received consideration, for example, membership points. The consideration received remains a contract liability until
goods or services have been provided to the retail customer. The estimated amount based on accrued membership points was deducted from
sales revenue.
F-
15
The
following is a discussion of the Company's revenue recognition policies by segment under the new revenue recognition accounting
standard:
Pharmacy
retail sales
The
physical pharmacies sell prescription drugs, over-the-counter ("OTC") drugs, traditional Chinese medicine, nutritional
supplements, medical devices and sundry products. Revenue from sales of prescription medicine at drugstores is recognized when the
prescription is filled and the customer picks up and pays for the prescription. Revenue from sales of other merchandise at
drugstores is recognized at the point of sale, which is when a customer pays for and receives the merchandise. Usually the majority
merchandise, such as prescription and OTC drugs, are not refundable after the customers leave the counter. Returns of other
products, such as sundry products, are minimal. Sales of drugs reimbursed by the local government medical insurance agency and
receivables from the agency are recognized when a customer pays for the drugs at a store. The Company based on historical
experience, a reserve for potential losses from denial of reimbursement on certain unqualified drugs is made to the receivables from
the government agency. Additionally, several onsite clinics adjacent to pharmacies provide limited medical services. Revenue from
medical services is recognized after the service has been rendered to a customer. As revenue from medical services is minimal
compared to pharmacy retail sales, it is included as part of the pharmacy retail sales.
The
Company deduct the membership rewards directly from the retail revenue, and present such amounts in net sales as opposed to the current
reduction of operation expense classification. Membership rewards, usually membership points, are accumulated by customers based on their
historical spending levels. The Company has determined that there is an additional performance obligation to those customers at the time
of the initial transaction. The customers can then redeem these points against the prices of merchandises they purchase in the future.
At the end of each period, unredeemed membership rewards are reflected as a contract liability.
Online
pharmacy sales
Revenue
from online pharmacy sales is recognized when merchandise is shipped to customers. While most deliveries take one day, certain deliveries
may take longer depending on a customer's location. Any loss caused in a shipment will be reimbursed by the Company's courier
company. The Company's sales policy allows for the return of certain merchandises without reason within seven days after a customer's
receipt of the applicable merchandise. Historically, sales returns seven days after merchandise receipts have been minimal.
Wholesale
Jiuxin
Medicine purchases medicine in quantity and distributes products primarily to local pharmacies and medical products dealers. Revenue
from sales of merchandise to non-retail customers is recognized when the merchandise is transferred to customers. Historically, sales
returns have been minimal.
The
Company's revenue is net of VAT collected on behalf of PRC tax authorities in respect to the sales of merchandise. VAT collected
from customers, net of VAT paid for purchases, is recorded as a liability in the accompanying consolidated balance sheets until it is
paid to the relevant PRC tax authorities.
F-
16
Disaggregation
of Revenue
The
following table disaggregates the Company's revenue by major source in each segment for the years ended March 31, 2023, 2022 and
2021:
2023
2022
2021
For the year ended March 31,
Retail drugstores
Prescription drugs
$
27,212,994
$
28,503,283
$
27,162,968
OTC drugs
32,358,339
35,658,864
30,524,057
Nutritional supplements
8,737,519
9,664,071
6,863,559
TCM
9,719,653
5,353,900
4,560,968
Sundry products
1,082,168
1,544,639
1,379,917
Medical devices
4,241,095
3,503,735
5,607,506
Total retail revenue
$
83,351,768
$
84,228,492
$
76,098,975
Online pharmacy
Prescription drugs
$
10,606,244
$
10,331,652
$
8,243,099
OTC drugs
13,870,953
11,473,177
7,559,585
Nutritional supplements
2,740,253
2,014,011
956,013
TCM
434,920
315,231
295,410
Sundry products
1,129,701
2,271,009
1,967,174
Medical devices
3,603,018
3,814,284
3,464,638
Total online revenue
$
32,385,089
$
30,219,364
$
22,485,919
Drug wholesale
Prescription drugs
$
21,617,636
$
41,116,991
$
27,477,087
OTC drugs
10,289,987
7,903,824
6,242,630
Nutritional supplements
310,909
424,210
151,657
TCM
458,502
241,828
218,758
Sundry products
64,422
93,338
28,377
Medical devices
333,663
164,508
431,230
Total wholesale revenue
$
33,075,119
$
49,944,699
$
34,549,739
Total revenue
$
148,811,976
$
164,392,555
$
133,134,633
F-
17
Restricted
cash
The
Company's restricted cash consists of cash and long-term deposits in a bank as security for its notes payable. The Company has
notes payable outstanding with the bank and is required to keep certain amounts on deposit that are subject to withdrawal restrictions.
The notes payable are generally short term in nature due to their short maturity period of six to nine months; thus, restricted cash
is classified as a current asset.
The
following represents a reconciliation of cash and cash equivalents in the consolidated balance sheets to total cash, cash equivalents
and restricted cash in the consolidated statements of cash flows as of March 31, 2023 and 2022:
March
                                            31,
2023
March
                                            31,
2022
Cash
    and cash equivalents
$
18,807,936
$
18,458,575
Restricted
    cash
12,762,708
16,881,002
Cash,
    cash equivalents and restricted cash
$
31,570,644
$
35,339,577
Accounts
receivable
Accounts
receivable represents the following: (1) amounts due from banks relating to retail sales that are paid or settled by the customers'
debit or credit cards, (2) amounts due from government social security bureaus and commercial health insurance programs relating to retail
sales of drugs, prescription medicine, and medical services that are paid or settled by the customers' medical insurance cards,
(3) amounts due from non-bank third party payment instruments such as Alipay and certain e-commerce platforms and (4) amounts due from
non-retail customers for sales of merchandise.
Accounts
receivable are recorded at net realizable value consisting of the carrying amount less an allowance for uncollectible accounts, as necessary.
In the Company's retail business, accounts receivable mainly consist of reimbursements due from the government insurance bureaus
and commercial health insurance programs and are usually collected within two or three months. The Company directly writes off delinquent
account balances, which it determines to be uncollectible after confirming with the appropriate bureau or program each month. Additionally,
the Company also makes estimated reserves on related outstanding accounts receivable based on expected credit loss.
In
the Company's online pharmacy business, accounts receivable primarily consist of amounts due from non-bank third party payment
instruments such as Alipay and certain e-commerce platforms. To purchase pharmaceutical products from an e-commerce platforms such as
Tmall, customers are required to submit payment to certain non-bank third party payment instruments, such as Alipay, which, in turn,
reimburse the Company within seven days to a month. Except for customer returns of sold products, the receivables from these payments
instruments are rarely uncollectible.
In
its wholesale business, the Company uses the expected credit loss method to estimate the allowance for anticipated uncollectible receivable
balances. At each reporting period, the allowance balance is adjusted to reflect the amount computed as a result of the expected credit
loss method. When facts subsequently become available to indicate that the allowance provided requires an adjustment, a corresponding
adjustment is made to the allowance account as a change in estimate.
Credit
loss roll forward
With
the adoption of the current expected credit loss standard in 2020, the company estimates future expected losses on accounts receivable
and other receivables over the remaining collection period of the instrument. The roll forward for the allowance for credit losses for
the year end March 31, 2023, is as follows:
For the year end March 31, 2023
Account
receivable
Other
receivables
Total
Allowance for credit losses as of March 31, 2022
$
2,478,648
1,924,887
$
4,403,535
Credit loss expense
(
165,342
)
3,404,553
3,239,211
Ending allowance for credit losses
$
2,313,306
5,329,440
$
7,642,746
F-
18
Inventories
Inventories
are stated at the lower of cost or net realizable value. Cost is determined using the first in first out (FIFO) method. The Company carries
out physical inventory counts on a monthly basis at each store and warehouse location. Herbs that the Company farms are recorded at their
cost, which includes direct costs such as seed selection, fertilizer, labor costs that are spent in growing herbs on the leased farmland,
and indirect costs such as amortization of farmland development cost. All costs are accumulated until the time of harvest and then allocated
to harvested herbs costs when the herbs are sold. The Company periodically reviews its inventory and records write-downs to inventories
for shrinkage losses and damaged merchandise that are identified. The Company provides a reserve for estimated inventory obsolescence
or excess quantities on hand equal to the difference, if any, between the cost of the inventory and its estimated realizable value.
Farmland
assets
Herbs
that the Company farms are recorded at their cost, which includes direct costs such as seed selection, fertilizer, and labor costs that
are spent in growing herbs on the leased farmland, and indirect costs such as amortization of farmland development costs. Since April
2014, amortization of farmland development costs has been expensed instead of allocated into inventory due to unpredictable future market
value of planted gingko trees.
All
related costs described in the above are accumulated until the time of harvest and then allocated to harvested herbs when they are sold.
Property
and equipment
Property
and equipment are stated at cost, net of accumulated depreciation or amortization. Depreciation is calculated on the straight-line method
over the estimated useful lives of the assets, taking into consideration the assets' estimated residual value. Leasehold improvements
are amortized over the shorter of lease term or remaining lease period of the underlying assets. Following are the estimated useful lives
of the Company's property and equipment:
Estimated
Useful Life
Leasehold
    improvements
3
-
10
years
Motor
    vehicles
3
-
5
years
Office
    equipment & furniture
3
-
5
years
Buildings
35
years
Maintenance,
repairs and minor renewals are charged to expenses as incurred. Major additions and betterment to property and equipment are capitalized.
Intangible
assets
Intangible
assets are acquired individually or as part of a group of assets, and are initially recorded at their fair value. The cost of a group
of assets acquired in a transaction is allocated to the individual assets based on their relative fair values.
F-
19
The
estimated useful lives of the Company's intangible assets are as follows:
Estimated
Useful
    Life
Land
    use rights
50
years
Software
3
years
license
Infinite
The
Company evaluates intangible assets for impairment whenever events or changes in circumstances indicate that the assets might be impaired.
Impairment
of long-lived assets
The
Company evaluates long lived tangible and intangible assets for impairment, whenever events or changes in circumstances indicate that
the carrying value may not be recoverable from its estimated future cash flows. Recoverability is measured by comparing the assets'
net book value to the related projected undiscounted cash flows from these assets, considering a number of factors including past operating
results, budgets, economic projections, market trends and product development cycles. If the net book value of the asset exceeds the
related undiscounted cash flows, the asset is considered impaired, and a second test is performed to measure the amount of impairment
loss. In the year ended March 31, 2021, 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. Based on the evaluation of the
forest land use rights, the Company recorded an impairment of $
228,506
. In the year ended March 31, 2022, we evaluated the use rights
of the forest land, which is currently used to cultivate Ginkgo trees. Based on the evaluation of the forest land use rights, the Company
recorded an impairment of $
148,795
. In the year ended March 31, 2023, we evaluated the use rights of the forest land, which is currently
used to cultivate Ginkgo trees. Based on the evaluation of the forest land use rights, the Company did not record an impairment.
Notes
payable
During
the normal course of business, the Company regularly issues bank acceptance bills as a payment method to settle outstanding accounts
payables with various material suppliers. The Company records such bank acceptance bills as notes payable. Such notes payable are generally
short term in nature due to their short maturity period of six to nine months.
Income
taxes
The
Company follows FASB ASC Topic 740, "Income Taxes," which requires the recognition of deferred tax assets and liabilities
for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method,
deferred income taxes are recognized for the tax consequences in future years of differences between the tax bases of assets and liabilities
and their financial reporting amounts at each period end based on enacted tax laws and statutory tax rates, applicable to the periods
in which the differences are expected to affect taxable income. Valuation allowances are established, when necessary, to reduce deferred
tax assets to the amount expected to be realized.
The
accounting standards clarify the accounting and disclosure requirements for uncertain tax positions and prescribe a recognition threshold
and measurement attribute for recognition and measurement of a tax position taken or expected to be taken in a tax return. The accounting
standards also provide guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosures,
and transition. No significant penalties, uncertain tax provisions or interest relating to income taxes were incurred during the
periods ended March 31, 2023 and 2022.
Value
added tax
Sales
revenue represents the invoiced value of goods, net of VAT. All of the Company's products are sold in the PRC and are subject to
a VAT on the gross sales price. The VAT rates range up to
17
%, depending on the type of products sold. The VAT may be offset by
VAT paid by the Company on raw materials and other materials included in the cost of producing or acquiring its finished products. The
Company recorded a VAT payable net of payments in the accompanying financial statements.
F-
20
Share-based compensation
The Company complies with the accounting and
disclosure requirement of ASC Topic 718, "Compensation – Stock Compensation." Share-based compensation to
employees and non-employees is recognized over the requisite service period based on the estimated grant-date fair value of the
awards. Share-based awards with graded-vesting schedules are recognized on a straight-line basis over the requisite service period
for each separately vesting portion of the award. The Company recognizes the expense for share-based compensation awards subject to
performance-based milestone vesting over the remaining service period when management determines that achievement of the milestone
is probable. Management evaluates when the achievement of a performance-based milestone is probable based on the expected
satisfaction of the performance conditions at each reporting date. Share-based compensation will be recognized in general and
administrative expense in the consolidated statements of operations.
Advertising and promotion costs
Advertising and promotion costs are expensed as
incurred and amounted to $
491,684
, $
355,078
and $
309,446
for the year ended March 31, 2023, 2022 and 2021, respectively. Such costs
consist primarily of print and promotional materials such as flyers to local communities.
Foreign currency translation
The Company uses the United States dollar ("U.S.
dollars" or "USD") for financial reporting purposes. The Company's subsidiaries and VIEs maintain their books and
records in their functional currency the Renminbi ("RMB"), the currency of the PRC.
In general, for consolidation purposes, the Company
translates the assets and liabilities of its subsidiaries and VIEs into U.S. dollars using the applicable exchange rates prevailing at
the balance sheet date, and the statements of income and cash flows are translated at average exchange rates during the reporting period.
As a result, amounts related to assets and liabilities reported on the statement of cash flows will not necessarily agree with changes
in the corresponding balances on the balance sheet. Equity accounts are translated at historical rates. Adjustments resulting from the
translation of the financial statements of the subsidiaries and VIEs are recorded as accumulated other comprehensive income.
The balance sheet amounts, with the exception
of equity, at March 31, 2023 and 2022 were translated at 1 USD to 6.8676 RMB and at 1 USD to 6.3393 RMB, respectively. The average translation
rates applied to income and cash flow statement amounts for years ended March 31, 2023 and 2022 were at 1 USD to 6.8516 RMB and at 1 USD
to 6.4180 RMB, respectively.
Recent Accounting Pronouncements
The Company's management does not believe
that any recently issued, but not yet effective, accounting standards updates, if currently adopted, would have a material effect on the
accompanying consolidated financial statements.
F-
21
NOTE 3 – COMMITMENTS AND CONTINGENCIES
Risks and Uncertainties
The operations of the Company are located in the
PRC. Accordingly, the Company's business, financial condition, and results of operations may be influenced by political, economic,
and legal environments in the PRC, as well as by the general state of the PRC economy. The Company's operations in the PRC are subject
to special considerations and significant risks not typically associated with companies in North America and Western Europe. These include
risks associated with, among others, the political, economic and legal environment and foreign currency exchange. The Company's
results may be adversely affected by changes in the political, regulatory and social conditions in the PRC. Although the Company has not
experienced losses from these situations and believes that it is in compliance with existing laws and regulations including its organization
and structure disclosed in Note 1, this may not be indicative of future results.
The Company has significant cash deposits with
suppliers in order to obtain and maintain inventory. The Company's ability to obtain products and maintain inventory at existing
and new locations is dependent upon its ability to post and maintain significant cash deposits with its suppliers. In the PRC, many vendors
are unwilling to extend credit terms for product sales that require cash deposits to be made. The Company does not generally receive interest
on any of its supplier deposits, and such deposits are subject to loss as a result of the creditworthiness or bankruptcy of the party
who holds such funds, as well as the risk from illegal acts such as conversion, fraud, theft or dishonesty associated with the third party.
If these circumstances were to arise, the Company would 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 its suppliers.
Members of the current management team own controlling
interests in the Company and are also the Owners of the VIEs in the PRC. The Company only controls the VIEs through contractual arrangements
which obligate it to absorb the risk of loss and to receive the residual expected returns. As such, the controlling shareholders of the
Company and the VIEs could cancel these agreements or permit them to expire at the end of the agreement terms, as a result of which the
Company would not retain control of the VIEs.
Concentrations and Credit Risk
Certain financial instruments, which subject the
Company to concentration of credit risk, consist of cash and restricted cash. The Company has cash balances at financial institutions
located in Hong Kong and PRC. Balances at financial institutions in Hong Kong may, from time to time, exceed Hong Kong Deposit Protection
Board's insured limits. Since March 31, 2015, balances at financial institutions and state-owned banks within the PRC are covered
by insurance up to RMB
500,000
(USD
79,600
) per bank. As of March 31, 2023 and March 31, 2022, the Company had deposits totaling $
31,558,338
and $
35,283,936
that were covered by such limited insurance, respectively. Any balance over RMB
500,000
(USD79,
600
) per bank in PRC will
not be covered. To date, the Company has not experienced any losses in such accounts.
For the fiscal year ended March 31, 2023,
four
vendors collectively accounted for
51.8
% of the Company's total purchases and
four
suppliers accounted for more than
10
% of total
advances to suppliers. For the fiscal year ended March 31, 2022,
two
vendors collectively accounted for
40.2
% of the Company's
total purchases and
two
suppliers accounted for more than
10
% of total advances to suppliers.
For the fiscal year ended March 31, 2023,
one
customer accounted for more than
10
% of the Company's total sales but
no
customer accounted for more than
10
% of total accounts
receivable. For the fiscal year ended March 31, 2022,
no
customer accounted for more than
10
% of the Company's total sales or more
than
10
% of total accounts receivable.
F-
22
NOTE 4 – TRADE RECEIVABLES
Trade receivables consisted of the following:
March 31,
2023
March 31,
2022
Accounts receivable
$
16,412,099
$
19,215,143
Less: allowance for doubtful accounts
(
2,313,306
)
(
2,478,648
)
Accounts receivable, net
14,098,793
16,736,495
Note receivable
20,813
-
Trade receivables
$
14,119,606
$
16,736,495
For the years ended March 31, 2023 and 2022, $
50,275
and $
341,102
in accounts receivable were directly written off, respectively. As of March 31, 2023, $
0
were pledged as collateral for borrowings
from financial institutions. As of March 31, 2022, $
505,348
were pledged as collateral for borrowings from financial institutions.
Note 5 – OTHER CURRENT ASSETS
Other current assets consisted of the following:
March 31,
2023
March 31,
2022
Prepaid rental expenses
(1)
$
530,611
$
847,682
Prepaid and other current assets
85,397
77,115
Total
$
616,008
$
924,797
(1)
The balance as of March 31, 2023 and March 31, 2022 includes short-term refundable rental security deposits.
Note 6 – PROPERTY AND EQUIPMENT
Property and equipment consisted of the following:
March 31,
2023
March 31,
2022
Building
$
6,072,388
$
6,578,445
Leasehold improvements
3,134,716
10,140,662
Farmland development cost
1,741,422
1,886,548
Office equipment and furniture
5,811,887
6,293,034
Motor vehicles
358,542
390,195
Total
17,118,955
25,288,884
Less: Accumulated depreciation
(
10,265,513
)
(
16,888,971
)
Impairment*
(
1,752,178
)
(
2,477,734
)
Property and equipment, net
$
5,100,264
$
5,922,179
*
The variance of impairment from March 31, 2022 to March 31, 2023 is
solely caused by exchange rate variance.
Total
depreciation expense for property and equipment was $
625,739
and $
1,148,198
for the year ended March 31, 2023 and 2022, respectively.
There were no fixed assets impaired in the years ended March 31, 2023 and March 31, 2022.
F-
23
Note 7 – LONG-TERM INVESTMENT
Long-term investment consists of the following:
March 31,
2023
March 31,
2022
Kahamadi Bio
(1)
$
-
$
-
Zhuoli Life
(2)
1,680,337
4,416,891
Songlu Pharmaceutical
(3)
87,367
94,648
Jiuzhou Digital
(4)
4,368
-
Long-term investment
$
1,772,072
$
4,515,539
(1)
It represents
49
% investment in Kahamadi Bio. The investment is recorded using the equity method. Kahamadi Bio suffered loss of $
0
and $
0
in the year ended March 31, 2023 and 2022.
(2)
It represents
39
% investment in Zhejiang Zhuoli Life Service Co., LTD ("Zhuoli Service"), formerly known as Zhejiang Zhetong Medical Co., Ltd. Zhuoli Service was established in March 2020 to target potential acquisitions or to cooperate with local pharmacies. By attracting more funds from local investors, the Company expects to continue growing its local network in the future. In the year ended March 31, 2021, Jiuzhou Pharmacy injected funds of approximately $
1,443,752
into Zhuoli Service. The investment is recorded using the equity method. Zhuoli Service suffered loss of $
2,402,376
in the year ended March 31, 2023.
(3)
It represents
0.37
% investment in Inner Mongolia Songlu Pharmaceutical
Co. ("Songlu Pharmaceutical"). As of March 31, 2023, the amount of the investment reclassified  to Long-term investment
from financial assets available for sale. The investment is recorded based on cost method.
(4)
It represents
25.92
% investment in Zhejiang Jiuzhou Digital Medicine Technology Co., LTD. In the year ended March 31, 2023, Jiuzhou Pharmacy injected funds of approximately $
4,379
into Jiuzhou Digital. The investment is recorded based on equity method.
Note 8 – ADVANCES TO SUPPLIERS
Advances to suppliers consist of deposits, with
or advances to, outside vendors for future inventory purchases. Most of the Company's suppliers require a certain amount of money
to be deposited with them as a guarantee that the Company will receive its purchase on a timely basis. This amount is refundable and bears
no interest. As of March 31, 2023 and March 31, 2022, advance to suppliers consist of the following:
March 31,
2023
March 31,
2022
Advance to suppliers
$
362,047
$
610,526
Less: reserve for vendor non-performance on advances
(
219,630
)
(
38,949
)
Advance to suppliers, net
$
142,417
$
571,577
F-
24
Note 9 – INVENTORY
Inventory consisted of finished goods, valued
at $
15,309,100
and $
16,020,140
as of March 31, 2023 and March 31, 2022, respectively. The Company constantly monitors its potential obsolete
products and is allowed to return products close to their expiration date to its suppliers. Any loss on damaged items is immaterial and
will be recognized immediately. As a result,
no
reserves were made for inventory as of March 31, 2023 and March 31, 2022.
Note 10 – FARMLAND ASSETS
Farmland assets consist of ginkgo trees planted
in 2012 and expected to be harvested and sold in several years. As of March 31, 2023 and March 31, 2022, farmland assets are valued as
follows:
March 31,
March 31,
2023
2022
Farmland assets
$
2,287,836
$
2,478,498
Less: Impairment*
(
1,621,115
)
(
1,756,214
)
Farmland assets, net
$
666,721
$
722,283
*
In the year ended March 31, 2023, we evaluated the use rights of the forest land, which is currently used to cultivate Ginkgo trees. Based on the evaluation of the forest land use rights, the Company did not record an impairment. In the year ended March 31, 2022, based on the evaluation of the forest land use rights, the Company recorded an impairment of $
148,795
.
Note 11 – LONG TERM DEPOSITS
As of March 31, 2023 and March 31, 2022, long
term deposits amounted to $
1,038,125
and $
1,761,945
, respectively. Long term deposits are sums deposited with, or advanced to, landlords
for the purpose of securing retail store leases that the Company does not anticipate applying or being returned within the next twelve
months. Most of the Company's landlords require a minimum payment of nine months' rent, paid up front, plus additional deposits.
Note 12 – OTHER NONCURRENT ASSETS
Other noncurrent assets consisted of the following:
March 31,
2023
March 31,
2022
Forest land use rights*
$
691,537
$
770,057
Others
98,519
52,893
Total
$
790,056
$
822,950
*
The prepayment for lease of forest land use rights is made to a local government in connection with an operating land lease agreement. The land 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 amortization of the prepayment for the lease
of land use right was approximately $
19,328
and $
54,947
for the years ended March 31, 2023 and 2022, respectively.
The Company's amortizations of the prepayment
for lease of land use right for the next
five years
and thereafter are as follows:
Years ending March 31,
Amount
2023
$
19,328
2024
19,328
2025
19,328
2026
19,328
2027
19,328
Thereafter
594,897
F-
25
Note 13 – Leases
The Company leases most of its retail stores and
corporate offices under operating leases, typically with initial terms of
3
to
10
years. Usually within one to three months prior to the
expiration date of a lease, the Company is required to notify the lessor and has a priority to continue renting the lease property if
a lessor intends to lease property. The lease itself does not have restriction or covenants. If both parties agree to continue, a new
lease contract with new lease terms has to been signed by both parties. Usually the rent may increase year by year based on the lease
contract. Sublease is typically not allowed. Any damage, if made by the lessee, to the property and equipment within the property has
to been fixed or reimbursed by the lessee. The Company does not have any leases entered into but which have not yet commenced. The net
lease cost for the year ended March 31, 2023 is $
8,075,465
. The Company does not have finance lease according to the definition of ASU
2016-02,
Leases
(Topic 842). Supplemental cash flow information related to leases for the year ended March 31, 2023 is as follows:
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows paid for operating leases
$
8,075,465
Right-of-use assets obtained in exchange for lease obligations:
Operating leases
-
Supplemental balance sheet information related
to leases as of March 31, 2023 is as follows:
Operating leases:
Operating lease right-of-use assets
$
13,924,826
Current portion of operating lease liabilities
$
5,131,373
Long-term operating lease liabilities
7,768,216
Total operating lease liabilities
$
12,899,589
Weighted average remaining lease term
Operating leases
2.2
The following table summarizes the maturity of
lease liabilities under operating leases as of March 31, 2023:
Operating
For the year ending March 31,
Leases
2024
$
5,644,435
2025
4,363,688
2026
2,554,956
2027
1,143,259
2028
560,213
Thereafter
819,920
Total lease payments
15,086,471
Less: imputed interest
(
2,186,882
)
Total lease liabilities
$
12,899,589
F-
26
Note 14 – INTANGIBLE ASSETS
Net intangible assets consisted of the following
at:
March 31,
2023
March 31,
2022
License
(1)
$
2,354,534
$
2,550,755
Software
(2)
1,172,465
1,256,369
Land use rights
(3)
1,419,936
1,538,269
Total intangible assets
4,946,935
5,345,393
Less: accumulated amortization
(
1,114,028
)
(
1,107,149
)
Less: impairment
(4)
(
637,159
)
(
690,258
)
Intangible assets, net
$
3,195,748
$
3,547,986
Amortization expense of intangibles amounted to
$
92,263
and $
108,293
for the years ended March 31, 2023 and 2022, respectively.
(1)
This represents the fair value of the licenses of insurance applicable drugstores acquired from a variety of drugstores such as Sanhao Pharmacy and several local stores. The licenses allow patients to pay by using insurance cards at stores. The stores are reimbursed from the Human Resource and Social Security Department of Hangzhou City. In 2014, the Company acquired Sanhao Pharmacy, a drugstore chain. In September 2017, the Company acquired several new stores for the purpose of the Municipal Social Medical Reimbursement Qualification Certificates. On January 9, 2020, the Company acquired a local drugstore chain. The acquired drugstores ceased their stores' business and liquidate all of the stores' accounts after Jiuzhou Pharmacy acquired them. In March 2020, the drugstore chain has dissolved and its certificates were transferred to new stores opened at the same time. In the year ended March 31, 2021, the Company acquired four single drugstores which have been liquidated after the acquisition. Jiuzhou Pharmacy then opened four new stores with the four licenses of local government medical insurance reimbursement program.
(2)
They are primarily the SAP ERP system, the Internet Clinic Diagnosis Terminal system and the Chronic Disease Management system. In 2017, we have installed a leading ERP system, SAP from Germany. SAP is a well-known management system used by many fortune 500 companies. It is being amortized over three years since its installation. In 2020, we have installed an internet Clinic Diagnosis System used to strengthen our ability to perform online diagnosis which may increase more customer spending and a Chronic Disease Management System used to better manage and monitor our members' health.
(3)
In July 2013, the Company purchased the land use rights of a plot of land in Lin'an, Hangzhou, intended for the establishment of an herb processing plant in the future. However, as the Company's farming business in Lin'an has not grown, the Company does not expect completion of the plant in the near future.
(4)
In the year ended March 31, 2020, the Company evaluated the licenses of insurance applicable drugstores acquired in the past based on the discounted positive cash value. Due to the stricter government insurance policy in the fourth quarter of fiscal year 2020, the value of these licenses has declined. As a result, the Company recorded an impairment in the fourth quarter of fiscal 2020.
F-
27
Note 15 – NOTES PAYABLE
The Company has credit facilities with Hangzhou
United Bank ("HUB"), Bank of Hangzhou ("BOH"), and China Merchant Bank ("CMB") that provided working
capital in the form of the following bank acceptance notes. Usually, the Company applies to issue a note, which is guaranteed by the bank,
to its supplier to pay off its debt in a future date. Before the payment date, the bank will ask the Company to inject cash into the bank.
On the payment date, the bank will pay the amount to whoever legally holds the note. As of at March 31, 2023 and March 31, 2022, the balances
of notes payable are as follow:
Origination
Maturity
March 31,
March 31,
Beneficiary
(1)
Endorser
date
date
2023
2022
Jiuzhou Pharmacy
HUB
10/18/21
04/18/22
$
-
$
2,879,656
Jiuzhou Pharmacy
HUB
11/12/21
05/12/22
-
5,891,074
Jiuzhou Pharmacy
HUB
11/23/21
05/23/22
-
378,591
Jiuzhou Pharmacy
HUB
11/29/21
05/29/22
-
901,519
Jiuzhou Pharmacy
HUB
12/14/21
06/14/22
-
865,098
Jiuzhou Pharmacy
HUB
12/24/21
06/24/22
-
1,954,002
Jiuzhou Pharmacy
HUB
12/29/21
06/30/22
-
3,692,661
Jiuzhou Pharmacy
HUB
02/16/22
08/17/22
-
4,141,923
Jiuzhou Pharmacy
HUB
03/17/22
09/17/22
-
5,299,449
Jiuzhou Pharmacy
BOH
03/23/22
09/23/22
-
297,747
Jiuxin Medicine
HUB
10/18/21
04/18/22
-
550,534
Jiuxin Medicine
HUB
12/14/21
06/14/22
-
2,497,906
Jiuxin Medicine
HUB
12/29/21
06/30/22
-
3,050,179
Jiuxin Medicine
HUB
03/17/22
09/17/22
-
1,788,683
Jiuzhou Pharmacy
HUB
10/19/22
04/19/23
3,289,434
-
Jiuzhou Pharmacy
HUB
10/20/22
04/19/23
36,403
-
Jiuzhou Pharmacy
HUB
11/17/22
05/17/23
5,576,213
Jiuzhou Pharmacy
HUB
12/16/22
06/16/23
1,207,565
-
Jiuzhou Pharmacy
HUB
12/26/22
06/27/23
659,883
-
Jiuzhou Pharmacy
HUB
12/28/22
06/29/23
2,654,696
-
Jiuzhou Pharmacy
HUB
01/16/23
07/16/23
346,545
-
Jiuzhou Pharmacy
HUB
02/27/23
08/27/23
3,242,559
-
Jiuzhou Pharmacy
HUB
03/20/23
09/20/23
4,573,664
-
Jiuzhou Pharmacy
HUB
03/23/23
09/23/23
440,391
-
Jiuxin Medicine
HUB
11/17/22
05/17/23
1,303,221
-
Jiuxin Medicine
HUB
12/16/22
06/16/23
3,704,790
-
Jiuxin Medicine
HUB
12/21/22
06/21/23
200,741
-
Jiuxin Medicine
HUB
12/29/22
06/29/23
1,215,854
-
Jiuxin Medicine
HUB
03/20/23
09/20/23
803,817
-
Total
$
29,255,776
$
34,189,022
(1)
As of March 31, 2023, the Company had $
29,255,776
(RMB
200,916,968
) of notes payable from HUB. The Company is required to hold restricted cash in the amount of $
12,217,616
(RMB
83,905,700
) with HUB as collateral against these bank notes. Included in the restricted cash is a total of $
4,732,366
three
-year deposit (RMB
32,500,000
) deposited into HUB as a collateral for current and future notes payable from HUB. As of March 31, 2022, the Company had $
34,189,022
(RMB
216,734,469
) of notes payable from HUB and BOH. The Company is required to hold restricted cash in the amount of $
16,786,296
(RMB
106,413,368
) with HUB and BOH as collateral against these bank notes. Included in the restricted cash is a total of $
9,070,402
three-year deposit (RMB
57,500,000
) deposited into HUB as a collateral for current and future notes payable from HUB.
As of March 31, 2023, the Company had a credit
line of approximately $
17.33
million in the aggregate from HUB. By putting up a three-year deposit of $
4.73
million and the restricted
cash of $
7.49
million deposited in the banks, the total credit line was $
29.55
million. As of March 31, 2023, the Company had approximately
$
29.26
million of bank notes payable and approximately $
0.29
million bank credit line was still available for further borrowing. The bank
notes are secured by three shops of Jiuzhou Pharmacy and guaranteed by the Company's major shareholders.
F-
28
Note 16 – LOAN PAYABLE
On August 2, 2019 and December 11, 2019, the Company
borrowed $
717,810
and $
6,460,290
from Haihui Commercial Factoring (Tianjin) Co. Ltd. ("Haihui Commercial"), respectively. After
deducting processing fee and deposits which are refundable at the end of loan period, the Company received $
617,317
and $
5,878,864
respectively.
The Company is required to pledge accounts receivable of three drugstores to Haihui Commercial. The Company has an option to pay off the
debts earlier than the repayment schedule upon approval from Haihui Commercial. As of March 31, 2023, the full amount has been repaid
to Haihui Commercial.
Note 17 – TAXES
Income tax
Income tax expense includes a provision for federal,
state and foreign taxes based on the annual estimated effective tax rate applicable to the Company and its subsidiaries, adjusted for
items which are considered discrete to the period.
The effective tax rates on income before income
taxes for the year ended March 31, 2023 was (
1.9
)%. The (
1.9
)% rate adjustments for the year ended March 31, 2023 represent expenses that
primarily include stock option expenses and legal, accounting and other expenses incurred by the Company that are not deductible for PRC
income tax. The effective tax rate is based on forecasted annual results and these amounts may fluctuate significantly through the rest
of the year as a result of the unpredictable impact of COVID-19 on the Company's operating activities.
The effective tax rates on income before income
taxes for the year ended March 31, 2022 was (
52.4
)%. The (
52.4
)% rate adjustments for the year ended March 31, 2022 represent expenses
that primarily include stock option expenses and legal, accounting and other expenses incurred by the Company that are not deductible
for PRC income tax. The effective tax rate is based on forecasted annual results and these amounts may fluctuate significantly through
the rest of the year as a result of the unpredictable impact of COVID-19 on the Company's operating activities.
The effective tax rate on income before income
taxes for the year ended March 31, 2021 was (
0.4
)%. The (
0.4
)% rate adjustments for the year ended March 31, 2021 represent expenses that
primarily include stock option expenses and legal, accounting and other expenses incurred by the Company that are not deductible for PRC
income tax. The effective tax rate is based on forecasted annual results and these amounts may fluctuate significantly through the rest
of the year as a result of the unpredictable impact of COVID-19 on the Company's operating activities.
A reconciliation of the income tax provision at
the federal statutory rate and the effective rate is as follows:
For the year ended
March 31
2023
2022
2021
U.S. Statutory rates
21.0
%
21.0
%
21.0
%
Foreign income not recognized in the U.S.
(
21.0
)
(
21.0
)
(
21.0
)
China income taxes
25.0
25.0
25.0
Change in valuation allowance
(
25.0
)
(
25.0
)
(
25.0
)
Non-deductible expenses-permanent difference
(
1.9
)
(
52.4
)
(
0.4
)
Effective tax rate
(
1.9
)%
(
52.4
)%
(
0.4
)%
The Company has recorded $
0
unrecognized benefit
as of March 31, 2023. On the information currently available, the Company does not anticipate a significant increase or decrease to its
unrecognized benefit within the next 12 months.
Note 18 – POSTRETIREMENT BENEFITS
Regulations in the PRC require the Company to
contribute to a defined contribution retirement plan for all permanent employees. The contribution for each employee is based on a percentage
of the employee's current compensation as required by the local government. The Company contributed $
1,284,218
, $
1,301,315
and $
1,076,811
in employment benefits and pension for the years ended March 31, 2023, 2022 and 2021, respectively.
F-
29
Note 19 – RELATED PARTY TRANSACTIONS
AND ARRANGEMENTS
Amounts payable to related parties are summarized
as follows:
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. 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 expires in September 2025. Rent expenses totaled $
112,681
and $
28,850
for the twelve months ended March 31, 2023 and
2022, respectively. The amounts owed under the lease for the twelve months ended March 31, 2023 were paid to Mr. Liu as of March
31, 2023.
Note 20 – SHAREHOLDER'S EQUITY
Ordinary shares
On April 7, 2022, the Company effected a 1-for-12 reverse
stock split on its ordinary shares. Upon the effectiveness of the reverse stock split, every 12 shares of the Company's issued and
outstanding ordinary shares were automatically be converted into one issued and outstanding ordinary share. No fractional shares were
issued as a result of the reverse stock split. Instead, any fractional shares that would have resulted from the split were rounded up
to the next whole number. The reverse stock split affects all shareholders uniformly and will not alter any shareholder's percentage
interest in the Company's outstanding ordinary shares, except for adjustments that may result from the treatment of fractional shares.
On August 3, 2022, the Company closed a private
placement of
1,000,000
shares of ordinary shares at $
1.50
per share with gross proceeds of $
1,500,000
.
On October 11, 2022, the Company closed a private
placement of
3,200,000
shares of ordinary shares at $
1.00
per share with gross proceeds of $
3,200,000
.
On January 20, 2023, the Company closed a registered
direct offering of
1,750,000
shares of ordinary shares at $
1.50
per share with gross proceeds of $
2,625,000
from its effective shelf registration
statement.
Warrants
Concurrent with the registered direct offering
of common stock that closed on April 15, 2019, the Company issued to several investors in a private placement warrants to purchase up
to
250,001
shares of common stock. In connection with the offering, the Company also issued a warrant to its placement agent of this offering,
pursuant to which the agent may purchase up to
6
% of the aggregate number of shares of common stock sold in the offering, i.e.
20,000
shares at an exercise price of $
37.5
per share. The warrant became exercisable on October 11, 2019 and will expire on April 11, 2024.
Concurrent with the registered direct offering
of common stock that closed on June 3, 2020, the Company issued to several investors in a private placement warrants to purchase up to
312,500
shares of common stock. In connection with the offering, the Company also issued warrants to its placement agent of this offering,
pursuant to which the agent may purchase up to
6.5
% of the aggregate number of shares of common stock sold in the offering, i.e.
25,000
shares at an exercise price of $
30.84
per share. The warrant becomes exercisable on December 2, 2020 and will expire on June 2, 2025.
Concurrent with the private placement of ordinary shares that closed
on August 3, 2022, the Company issued to several investors in a private placement warrants to purchase up to
1,000,000
shares of ordinary
shares at an exercise price of $
1.50
. The warrant became exercisable on August 3, 2022 and valid for thirty-six months. As the Comany
completed another private placement on October 11, 2022 at a share purchase price of $
1.00
as described below, the warrant exercise price
was adjusted to $
1.00
based on the anti-dilutive term in the Warrants Form. On December 12, 2022, the investors chose to cashless exercise
all their warrants for a total of
842,272
ordinary shares
F-
30
Concurrent with the private placement of ordinary
shares that closed on October 11, 2022, the Company issued to several investors in a private placement warrants to purchase up to
9,600,000
shares of ordinary shares at an exercise price of $
1.66
. The warrant became exercisable on October 11, 2022 and and valid for thirty-six
months. On December 12, 2022, the investors chose to cashless exercise all the warrants for a total of
7,086,432
ordinary shares..
Concurrent with the registered direct offering
of ordinary shares that closed on January 20, 2023, the Company issued to several investors warrants to purchase up to
5,250,000
shares
of ordinary shares at an exercise price of $
2.50
. The warrant became exercisable on January 20, 2023 and valid for thirty-six months.
On February 13, 2023. the investors chose to cashless exercise all the warrants for a total of
3,331,146
ordinary shares.
Share-based compensation
The Company accounts for share-based payment awards
granted to employees and directors by recording compensation expense based on estimated fair values. The Company estimates the fair value
of share-based payment awards on the date of grant. The value of the portion of the award that is ultimately expected to vest is recognized
as an expense over the requisite service periods in the Company's consolidated statements of operations. Share-based awards are
attributed to expenses using the straight-line method over the vesting period. The Company determines the value of each option award that
contains a market condition using a Monte Carlo Simulation valuation model, while all other option awards are valued using the Black-Scholes
valuation model as permitted under FASB ASC 718 "Compensation - Stock Compensation." The assumptions used in calculating the
fair value of share-based payment awards represent the Company's best estimates. The Company's estimates of the fair values
of stock options granted and the resulting amounts of share-based compensation recognized may be impacted by certain variables including
stock price volatility, employee stock option exercise behaviors, additional stock option modifications, estimates of forfeitures, and
the related income tax impact.
On April 28, 2022, the Company granted a total
of
850,000
shares of restricted ordinary shares to its key employees in its retail drugstores and online pharmacy under the Company's
2010 Equity Incentive Plan, as amended (the "Plan"). The stock awards vested on the grant date. Each stock is valued at $
2.02
per share, the adjusted closing price of April 28, 2022. All $
1,717,000
of such expense has been recorded as a service compensation expense
in the year ended March 31, 2023.
On December 19, 2022, the Company granted a total
of
2,150,000
shares of restricted ordinary shares to its key employees in its retail drugstores and online pharmacy under the Company's
2010 Equity Incentive Plan, as amended (the "Plan"). The stock awards vested on the grant date. Each stock is valued at $
4.02
per share, the adjusted closing price of December 19, 2022. All $8,643,000 of such expense has been recorded as a service compensation
expense in the year ended March 31, 2023.
F-
31
Statutory reserves
Statutory reserves represent restricted retained
earnings. Based on their legal formation, the Company is required to set aside
10
% of its net income as reported in their statutory accounts
on an annual basis to the Statutory Surplus Reserve Fund (the "Reserve Fund"). Once the total amount set aside in the Reserve
Fund reaches
50
% of the entity's registered capital, further appropriations become discretionary. The Reserve Fund can be used to
increase the entity's registered capital upon approval by relevant government authorities or eliminate its future losses under PRC
GAAP upon a resolution by its board of directors. The Reserve Fund is not distributable to shareholders, as cash dividends or otherwise,
except in the event of liquidation.
Appropriations to the Reserve Fund are accounted
for as a transfer from unrestricted earnings to statutory reserves. During the years ended March 31, 2023 and 2022, the Company did not
make appropriations to statutory reserves.
There are no legal requirements in the PRC to
fund the Reserve Fund by transfer of cash to any restricted accounts, and the Company does not do so.
Note 21 – NET LOSS PER SHARE
The Company reports earnings per share in accordance
with the provisions of the FASB's related accounting standard. This standard requires presentation of basic and diluted earnings
per share in conjunction with the disclosure of the methodology used in computing such earnings per share. Basic earnings per share excludes
dilution, but includes vested restricted stocks and is computed by dividing income available to ordinary sharesholders by the weighted
average common shares outstanding during the period. Diluted earnings per share takes into account the potential dilution that could occur
if securities or other contracts to issue ordinary shares were exercised and converted into ordinary shares.
The following is a reconciliation of the basic
and diluted earnings per share computation:
For the Years Ended March 31,
2023
2022
2021
Net loss attributable to controlling interest
$
(
21,138,525
)
$
(
3,192,119
)
$
(
8,119,862
)
Weighted average shares used in basic computation
10,196,552
3,479,316
3,398,397
Diluted effect of stock options and warrants
Weighted average shares used in diluted computation
10,196,552
3,479,316
3,398,397
Loss per share – Basic:
Net loss before noncontrolling interest
$
(
2.07
)
$
(
0.92
)
$
(
2.39
)
Add: Net loss attributable to noncontrolling interest
$
-
$
-
$
-
Net loss attributable to controlling interest
$
(
2.07
)
$
(
0.92
)
$
(
2.39
)
Loss per share – Diluted:
Net income before noncontrolling interest
$
(
2.07
)
$
(
2.39
)
$
(
2.16
)
Add: Net loss attributable to noncontrolling interest
$
-
$
-
$
-
Net loss attributable to controlling interest
$
(
2.07
)
$
(
2.39
)
$
(
2.16
)
For the year ended March 31, 2023,
562,501
shares
underlying outstanding purchase warrants to several investors, and
45,000
shares underlying outstanding purchase warrrants to an investment
placement agent were excluded from the calculation of diluted loss per share as the options were anti-dilutive.
F-
32
Note 22 – SEGMENTS
The Company operates within four main reportable
segments: retail drugstores, online pharmacy, drug wholesale and herb farming. The retail drugstores segment sells prescription and over-the-counter
("OTC") medicines, TCM, dietary supplements, medical devices, and sundry items to retail customers. The online pharmacy
sells OTC drugs, dietary supplements, medical devices and sundry items to customers through several third-party platforms such as Alibaba's
Tmall, JD.com and Amazon.com, and the Company's own platform all over China. The drug wholesale segment includes supplying the Company's
own retail drugstores with prescription and OTC medicines, TCM, dietary supplement, medical devices and sundry items (which sales
have been eliminated as intercompany transactions), and also selling them to other drug vendors and hospitals. The Company's herb
farming segment cultivates selected herbs for sales to other drug vendors. The Company is also involved in online sales and clinic services
that do not meet the quantitative thresholds for reportable segments and are included in the retail drugstores segment. The segments'
accounting policies are the same as those described in the summary of significant accounting policies. The Company evaluates performance
based on profit or loss from operations before interest and income taxes not including nonrecurring gains and losses.
The Company's reportable business segments
are strategic business units that offer different products and services. Each segment is managed separately because they require different
operations and markets to distinct classes of customers.
The following table presents summarized information
by segment of the continuing operations for the year ended March 31, 2023:
Retail
drugstores
Online
Pharmacy
Drug
wholesale
Herb
farming
Total
Revenue
$
83,351,768
$
32,385,089
$
33,075,119
$
-
$
148,811,976
Cost of goods
56,551,607
28,506,228
29,473,677
-
114,531,512
Gross profit
$
26,800,161
$
3,878,861
$
3,601,442
$
-
$
34,280,464
Selling expenses
23,644,339
4,266,799
1,266,025
-
29,177,163
General and administrative expenses
13,800,110
439,667
1,425,852
3,055
15,668,684
Stock based compensation
10,360,000
-
-
-
10,360,000
Loss from operations
$
(
21,004,288
)
$
(
827,605
)
$
909,565
$
(
3,055
)
$
(
20,925,383
)
Depreciation and amortization
$
686,777
$
-
$
31,225
$
-
$
718,002
Total capital expenditures
$
303,312
$
-
$
704
$
-
$
304,016
The following table presents summarized information
by segment of the continuing operations for the year ended March 31, 2022:
Retail
drugstores
Online
Pharmacy
Drug
wholesale
Herb
farming
Total
Revenue
$
84,228,492
$
30,219,364
$
49,944,699
$
-
$
164,392,555
Cost of goods
57,290,850
26,621,314
43,961,351
-
127,873,515
Gross profit
$
26,937,642
$
3,598,050
$
5,983,348
$
-
$
36,519,040
Selling expenses
25,186,258
3,972,465
1,718,236
-
30,876,959
General and administrative expenses
6,736,566
285,062
1,136,092
29,456
8,187,176
Impairment of long-lived assets
-
-
-
148,795
148,795
Loss from operations
$
(
4,985,182
)
$
(
659,477
)
$
3,129,020
$
(
178,251
)
$
(
2,693,890
)
Depreciation and amortization
$
1,234,419
$
-
$
22,072
$
-
$
1,256,491
Total capital expenditures
$
296,562
$
-
$
2,911
$
-
$
299,473
F-
33
The following table presents summarized information
by segment of the continuing operations for the year ended March 31, 2021:
Retail
drugstores
Online
Pharmacy
Drug
wholesale
Herb
farming
Total
Revenue
$
76,098,975
$
22,485,919
$
34,549,739
$
-
$
133,134,633
Cost of goods
53,093,226
20,146,730
30,650,868
-
103,890,824
Gross profit
$
23,005,749
$
2,339,189
$
3,898,871
$
-
$
29,243,809
Selling expenses
21,975,048
2,770,997
2,208,869
-
26,954,914
General and administrative expenses
9,088,152
288,890
1,487,303
33,284
10,897,629
Impairment of long-lived assets
-
-
-
228,506
228,506
Loss from operations
$
(
8,057,451
)
$
(
720,698
)
$
202,699
$
(
261,790
)
$
(
8,837,240
)
Depreciation and amortization
$
1,709,049
$
-
$
41,841
$
-
$
1,750,890
Total capital expenditures
$
392,788
$
-
$
-
$
-
$
392,788
The Company does not have long-lived assets located
outside the PRC. In accordance with the enterprise-wide disclosure requirements of FASB's accounting standard, the Company's
net revenue from external customers through its retail drugstores by main product category for the years ended March 31, 2023, 2022 and
2021 were as follows:
For the years ended
March 31,
2023
2022
2021
Prescription drugs
$
27,212,994
$
28,503,283
$
27,162,968
OTC drugs
32,358,339
35,658,864
30,524,057
Nutritional supplements
8,737,519
9,664,071
6,863,559
TCM
9,719,653
5,353,900
4,560,968
Sundry products
1,082,168
1,544,639
1,379,917
Medical devices
4,241,095
3,503,735
5,607,506
Total
$
83,351,768
$
84,228,492
$
76,098,975
The Company's net revenue from external
customers through online pharmacy by main product category is as follows:
For the years ended
March 31,
2023
2022
2021
Prescription drugs
$
10,606,244
$
10,331,652
$
8,243,099
OTC drugs
13,870,953
11,473,177
7,559,585
Nutritional supplements
2,740,253
2,014,011
956,013
TCM
434,920
315,231
295,410
Sundry products
1,129,701
2,271,009
1,967,174
Medical devices
3,603,018
3,814,284
3,464,638
Total
$
32,385,089
$
30,219,364
$
22,485,919
The Company's net revenue from external
customers through wholesale by main product category is as follows:
For the years ended
March 31,
2023
2022
2021
Prescription drugs
$
21,617,636
$
41,116,991
$
27,477,087
OTC drugs
10,289,987
7,903,824
6,242,630
Nutritional supplements
310,909
424,210
151,657
TCM
458,502
241,828
218,758
Sundry products
64,422
93,338
28,377
Medical devices
333,663
164,508
431,230
Total
$
33,075,119
$
49,944,691
$
34,549,739
Note 23 – SUBSEQUENT EVENTS
On April 18, 2023, the Company entered into a definitive agreement
with an institutional investor (the "Investor") providing for the issuance of
2,258,888
ordinary shares, at a purchase price
of $
3.10
per share, in a registered direct offering for aggregate gross proceeds of approximately $
7
million. The offering was terminated
on April 19, 2023.
F-34