10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

þ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2019

or

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _______________ to ___________________

Commission File Number: 001-34711

CHINA JO-JO DRUGSTORES, INC.

(Exact name of registrant as specified in its charter)

Nevada	98-0557852
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
Hai Wai Hai Tongxin Mansion Floor 6 Gong Shu District, Hangzhou City Zhejiang Province P. R. China	310008
(Address of principal executive offices)	(Zip Code)

+86 (571) 88077078

(Registrant’s telephone number, including area code)

N/A

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common stock, $0.001 par value	CJJD	NASDAQ Capital Market

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 þ No ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every, Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (Sec.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 þ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check One):

Large Accelerated Filer	☐	Accelerated Filer	☐
Non-accelerated filer	þ	Smaller reporting company	þ
		Emerging growth company	☐

If an emerging growth company, 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 is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No þ

As of August 13, 2019, the registrant had 32,936,786 shares of common stock outstanding.

TABLE OF CONTENTS

TO QUARTERLY REPORT ON FORM 10-Q

FOR THE QUARTER ENDED JUNE 30, 2019

		Page
PART I	FINANCIAL INFORMATION
Item 1.	Financial Statements	1
	Unaudited condensed consolidated balance sheets as of June 30, 2019 and March 31, 2019	1
	Unaudited condensed consolidated statements of operations and comprehensive income (loss) for the three months ended June 30, 2019 and 2018	2
	Unaudited condensed consolidated statements of changes in stockholders’ equity for the three months ended June 30, 2019 and 2018	3
	Unaudited condensed consolidated statements of cash flows for the three months ended June 30, 2019 and 2018	4
	Notes to unaudited condensed consolidated financial statements	5
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	32
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	40
Item 4.	Controls and Procedures	41
PART II	OTHER INFORMATION
Item 6.	Exhibits	42
Signatures		43

i

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION

All statements contained in this Quarterly Report on Form 10-Q (“Form 10-Q”) for the registrant, other than statements of historical facts, that address future activities, events or developments are forward-looking statements, including, but not limited to, statements containing the words “believe,” “anticipate,” “expect” and words of similar import. These statements are based on certain assumptions and analyses made by us in light of our experience and our assessment of historical trends, current conditions and expected future developments as well as other factors we believe are appropriate under the circumstances. However, whether actual results will conform to the expectations and predictions of management is subject to a number of risks and uncertainties that may cause actual results to differ materially.

Such risks include, among others, the following: national and local general economic and market conditions: our ability to sustain, manage or forecast our growth; raw material costs and availability; new product development and introduction; existing government regulations and changes in, or the failure to comply with, government regulations; adverse publicity; competition; the loss of significant customers or suppliers; fluctuations and difficulty in forecasting operating results; changes in business strategy or development plans; business disruptions; the ability to attract and retain qualified personnel; the ability to protect technology; and other factors referenced in this and previous filings.

Consequently, all of the forward-looking statements made in this Form 10-Q are qualified by these cautionary statements and there can be no assurance that the actual results anticipated by management will be realized or, even if substantially realized, that they will have the expected consequences to or effects on our business operations.

ii

PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

CHINA JO-JO DRUGSTORES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

	June 30,			March 31,
	2019			2019
ASSETS
CURRENT ASSETS
Cash	$	8,341,167		$	9,322,463
Restricted cash		14,808,986			15,422,739
Financial assets available for sale		162,273			180,928
Notes receivable		92,480			177,278
Trade accounts receivable		8,590,075			8,692,514
Inventories		10,806,698			13,955,202
Other receivables, net		4,253,802			4,438,230
Advances to suppliers		1,544,132			1,950,252
Other current assets		1,557,156			2,063,375
Total current assets		50,156,769			56,202,981
PROPERTY AND EQUIPMENT, net		8,620,758			8,727,358
OTHER ASSETS
Long-term investment		16,318			24,243
Farmland assets		742,974			825,259
Long term deposits		2,050,219			2,157,275
Other noncurrent assets		1,177,703			1,196,197
Operating lease right-of-use assets		13,564,115			-
Intangible assets, net		3,888,848			3,597,323
Total other assets		21,440,177			7,800,297
Total assets	$	80,217,704		$	72,730,636
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES
Accounts payable, trade		13,674,741			23,106,230
Notes payable		24,574,955			25,951,673
Other payables		3,267,074			3,197,221
Other payables - related parties		326,778			795,179
Customer deposits		870,100			771,942
Taxes payable		217,704			125,859
Accrued liabilities		990,032			1,264,182
Current portion of operating lease liabilities		4,738,632			-
Total current liabilities		48,660,016			55,212,286
Long term operating lease  liabilities		7,918,900			-
Purchase option and warrants liability		61,693			465,248
Financial liability		80,081			81,935
Total liabilities		56,720,690			55,759,469
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS’ EQUITY
Common stock; $0.001 par value; 250,000,000 shares authorized; 32,936,786 and 28,936,778 shares issued and outstanding as of June 30, 2019 and March 31, 2019		32,937			28,937
Preferred stock; $0.001 par value; 10,000,000 shares authorized; nil issued and outstanding as of June 30, 2019 and March 31, 2019		-			-
Additional paid-in capital		54,209,301			44,905,664
Statutory reserves		1,309,109			1,309,109
Accumulated deficit		(32,722,416	)		(30,587,468	)
Accumulated other comprehensive income		2,103,726			2,508,964
Total stockholders’ equity		24,932,657			18,165,206
Noncontrolling interests		(1,435,643	)		(1,194,039	)
Total equity		23,497,014			16,971,167
Total liabilities and stockholders’ equity	$	80,217,704		$	72,730,636

The accompanying notes are an integral part of these condensed consolidated financial statements.

1

CHINA JO-JO DRUGSTORES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(UNAUDITED)

	For the three months ended June 30,
	2019			2018
REVENUES, NET	$	25,280,784		$	22,772,566
COST OF GOODS SOLD		19,219,346			17,155,763
GROSS PROFIT		6,061,438			5,616,803
SELLING EXPENSES		5,968,551			4,626,978
GENERAL AND ADMINISTRATIVE EXPENSES		2,851,612			1,554,528
TOTAL OPERATING EXPENSES		8,820,163			6,181,506
LOSS FROM OPERATIONS		(2,758,725	)		(564,703	)
INTEREST INCOME		47,873			47,172
OTHER (EXPENSE), NET		(62,485	)		(114,941	)
CHANGE IN FAIR VALUE OF WARRANTS LIABILITY		403,555			(6,974	)
LOSS BEFORE INCOME TAXES		(2,369,782	)		(639,446	)
PROVISION FOR INCOME TAXES		8,388			57,169
NET LOSS		(2,378,170	)		(696,615	)
ADD: NET LOSS ATTRIBUTABLE TO NONCONTROLLING INTEREST		243,219			50,763
NET LOSS ATTRIBUTABLE TO CHINA JO-JO DRUGSTORES, INC.		(2,134,951	)		(645,852	)
FOREIGN CURRENCY TRANSLATION ADJUSTMENTS		(405,238	)		621,634
COMPREHENSIVE LOSS		(2,783,408	)		(74,981	)
WEIGHTED AVERAGE NUMBER OF SHARES:
Basic		32,453,269			28,936,778
Diluted		32,453,269			28,936,778
LOSS PER SHARES:
Basic	$	(0.07	)	$	(0.02	)
Diluted	$	(0.07	)	$	(0.02	)

The accompanying notes are an integral part of these condensed consolidated financial statements.

2

CHINA JO-JO DRUGSTORES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

(UNAUDITED)

												Accumulated
	Common Stock						Retained Earnings					other			Non-
	Number of				Paid-in		Statutory					comprehensive			controlling
	shares		Amount		capital		reserves		Unrestricted			income/(loss)			interest			Total
BALANCE, March 31, 2018.		28,936,778		28,937		43,599,089		1,309,109		(29,661,190	)		3,586,460			-			18,862,405
Stock based compensation		-		-		49,140		-		-			-			-			49,140
Sale of 10% of Jiuxin Medicine		-		-		-		-		-			-			(617,743	)		(617,643	)
Net loss		-		-		-		-		(645,852	)		-			(50,763	)		(696,615	)
Foreign currency translation loss		-		-		-		-		-			621,634			-			621,634
BALANCE, June 30, 2018.		28,936,778		28,937		43,648,229		1,309,109		(30,307,042	)		4,208,094			(668,506	)		18,218,821
BALANCE, March 31, 2019.		28,936,778		28,937		44,905,664		1,309,109		(30,587,468	)		2,508,964			(1,194,039	)		16,971,167
Stock based compensation		4,000,008		4,000		34,560		-		-			-			-			38,560
Financing of subsidiary		-		-		9,269,077		-		-			-			-			9,269,077
Net loss		-		-		-		-		(2,134,949	)		-			(241,604	)		(2,376,553	)
Foreign currency translation loss		-		-		-		-		-			(405,238	)					(405,238	)
BALANCE, June 30, 2019.		32,936,786		32,937		54,209,301		1,309,109		(32,722,416	)		2,103,726			(1,435,643	)		23,497,014

The accompanying notes are an integral part of these condensed consolidated financial statements.

3

CHINA JO-JO DRUGSTORES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

	For the three months ended June 30,
	2019			2018
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(2,378,170	)	$	(696,615	)
Adjustments to reconcile net income to net cash provided by operating activities:
Bad debt direct write-off and provision		758,231			259,279
Depreciation and amortization		499,175			293,095
Stock based compensation		34,560			49,140
Change in fair value of purchase option derivative liability		(403,555	)		6,974
Accounts receivable, trade		(959,680	)		1,077,419
Notes receivable		81,326			(114,944	)
Inventories and biological assets		2,851,652			(458,803	)
Other receivables		371,054			(401,204	)
Advances to suppliers		242,652			(775,014	)
Other current assets		(450,042	)		554,048
Long term deposit		58,630			(5,415	)
Other noncurrent assets		(8,631	)		(97,341	)
Accounts payable, trade		(8,968,168	)		(2,369,206	)
Other payables and accrued liabilities		(105,522	)		357,335
Customer deposits		116,398			20,290
Taxes payable		95,326			(281,235	)
Net cash (used in) operating activities		(8,164,764	)		(2,582,197	)
CASH FLOWS FROM INVESTING ACTIVITIES:
Disposal of financial assets available for sale		14,658			-
Acquisition of equipment		(210,356	)		(32,753	)
Increase in intangible assets		(433,111	)		-
Investment in a joint venture		-			(109,142	)
Additions to leasehold improvements		(542,734	)		(116,002	)
Net cash used in investing activities		(1,171,543	)		(257,897	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from notes payable		15,372,260			10,376,504
Repayment of notes payable		(16,167,012	)		(15,512,104	)
Proceeds from equity financing		9,273,077			7,629
Repayment of other payables-related parties		(460,000	)		(84,014	)
Net cash provided by (used in) financing activities		8,018,325			(5,211,985	)
EFFECT OF EXCHANGE RATE ON CASH		(277,067	)		(457,638	)
DECREASE IN CASH AND CASH EQUIVALENTS AND RESTRICTED CASH		(1,595,049	)		(8,509,717	)
CASH AND CASH EQUIVALENTS AND RESTRICTED CASH, beginning of period		24,745,202			31,452,191
CASH AND CASH EQUIVALENTS AND RESTRICTED CASH, end of period	$	23,150,153		$	22,942,474
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for income taxes	$	29,176		$	27,832

The accompanying notes are an integral part of these condensed consolidated financial statements.

4

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 common stock 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”), Hangzhou Jiutong Medical Technology Co., Ltd (“Jiutong Medical”), and 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. On March 31, 2017, Jiuxin Management established a subsidiary, Lin’An Jiuzhou Pharmacy Co., Ltd (“Lin’An Jiuzhou”) to operates drugstores in Lin’an City. As of June 30, 2019, Jiuzhou Pharmacy has established the following companies, each of which operates a drugstore in Hangzhou City:

Entity Name	Date Established
Hangzhou Jiuli Pharmacy Co., Ltd (“Jiuli Pharmacy”)	May 22, 2017
Hangzhou Jiuxiang Pharmacy Co., Ltd (“Jiuxiang Pharmacy”)	May 26, 2017
Hangzhou Jiuyi Pharmacy Co., Ltd (“Jiuyi Pharmacy”)	June 8, 2017
Hangzhou Jiumu Pharmacy Co., Ltd (“Jiumu Pharmacy”)	July 21, 2017

During the three months ended June 30, 2019, the Company dissolved four independent pharmacies. Among the four dissolved pharmacies, two stores have merged into Jiuzhou Pharmacy and became Jiuzhou Pharmacy stores in Hangzhou. The other two stores’ licenses of government medical insurance, which qualify the stores for reimbursement from government, were transferred to two Jiuzhou Pharmacy stores in Hangzhou City.

The Company’s offline retail business also includes three 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 specialized in brand name development for nutritional supplements. In 2018, Jiuzhou Pharmacy invested a total of $741,540 (RMB5,100,000) in and held 51% of Zhejiang Jiuzhou Linjia Medical Investment and Management Co. Ltd (“Linjia Medical”), which is operating two new clinics in Hangzhou as of March 31, 2019. On March 29, 2019, Jiuzhou Pharmacy set up and currently holds 51% of the equity of Zhejiang AyiGe Medical Health Management Co., Ltd.(“Ayi Health”), which is intended to provide technical support such as IT and customer support to our health management business in the future.

The Company currently conducts its online retail pharmacy business through Jiuzhou Pharmacy, which holds the Company’s online pharmacy license. Prior to November 2015, the Company primarily conducted its online retail pharmacy business through Zhejiang Quannuo Internet Technology Co., Ltd. In May 2015, the Company established Zhejiang Jianshun Network Technology Co. Ltd, a joint venture with Shanghai Jianbao Technology Co., Ltd. (“Jianshun Network”), in order to develop its online pharmaceutical sales from large commercial medical insurance companies. However, Jianshun Network was dissolved as a result that the Company terminated the strategic cooperation with the Chinese pharmacy benefit management provider which used to help the Company earn customers through “Yikatong”, a pharmacy and health insurance benefit card in China. On September 10, 2015, Renovation set up a new entity, Jiuyi Technology, to provide additional technical support such as webpage development to our online pharmacy business. In November 2015, the Company sold all of the equity interests of Quannou Technology to six individuals for approximately $17,121 (RMB107,074). After the sale, its technical support function has been transferred back to Jiuzhou Pharmacy, which hosts our online pharmacy.

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 Medcine shares were sold to Hangzhou Kangzhou Biotech Co. Ltd. for a total proceeds of $79,625 (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 the three months ended June 30, 2019. 

5

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 ●     Operates a medical clinic adjacent to one of Jiuzhou Pharmacy’s  stores	VIE by contractual arrangements (2)
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)
Jiuxin Medicine	●     Established in PRC on December 31, 2003 ●     Acquired by Jiuzhou Pharmacy in August 2011 ●     10% of shares sold   ●     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)

6

Entity Name	Background	Ownership
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%
Jiuli Pharmacy	●      Established in the PRC on May 22, 2017 by Jiuzhou Pharmacy ●     Registered capital of $15,920 fully paid   ●     Operates a pharmacy in Hangzhou	VIE by contractual arrangements as a wholly-owned subsidiary of Jiuzhou Pharmacy (2)
Jiuxiang Pharmacy	●      Established in the PRC on May 26, 2017 by Jiuzhou Pharmacy ●     Registered capital of $15,920 fully paid   ●     Operates a pharmacy in Hangzhou	VIE by contractual arrangements as a wholly-owned subsidiary of Jiuzhou Pharmacy (2)
Jiuyi Pharmacy	●     Established in the PRC on June 8, 2017 by Jiuzhou Pharmacy ●     Registered capital of $15,920 fully paid   ●     Operates a pharmacy in Hangzhou	VIE by contractual arrangements as a wholly-owned subsidiary of Jiuzhou Pharmacy (2)
Jiumu Pharmacy	●     Established in the PRC on July 21, 2017 by Jiuzhou Pharmacy ●     Registered capital of $15,920 fully paid   ●     Operates a pharmacy in Hangzhou	VIE by contractual arrangements as a wholly-owned subsidiary of Jiuzhou Pharmacy (2)

7

Entity Name	Background	Ownership
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%
Lin’An Jiuzhou	●     Established in the PRC in March 31, 2017 ●     100% held by Jiuxin Management ●     Registered capital of RMB 5 million ●     Explore retail pharmacy market in Lin’An City	100%
Linjia Medical	●     Established in the PRC in September27, 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)
Ayi Health	●     Established in the PRC in March 29, 2019 ●     51% held by Jiuzhou Pharmacy ●     Registered capital of RMB 10 million ●     Provide technical Support for medial 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, Mr. Chong’an Jin 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, operating agreement, equity pledge agreement, voting rights agreement and 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 subsidiary under the control of Jiuzhou Pharmacy, Jiuxin Medicine and Shouantang Bio are consolidated into the financial statements of the Company.

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Note 2 – LIQUIDITY

Our accounts have been prepared in accordance with 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. Our ability to continue as a going concern depends upon aligning our sources of funding (debt and equity) with our expenditure requirements and repayment of the short-term debts as and when they become due.

The drug retail business is a highly competitive industry in PRC. Several large drugstore chains and a variety of single stores operate in Hangzhou City and Zhejiang Province. In order to increase our competition advantages and gain more local retail pharmacy market share, during fiscal year 2018, we opened as many as fifty-seven new stores in Hangzhou. As a result, we incurred significant incremental expense related to rental, labor hiring and training, and marketing activities. As the retail pharmaceutical market becomes more competitive in recent years, a new store usually cannot make profit in its operation until a year later. In fact, we incurred significant expense with limited incremental revenue in the period we opened new stores. At their openings, except for four stores, almost all of the new stores were without government insurance reimbursement certificates. In fact, it usually takes more than one year for a new store to apply for and obtain the local government insurance reimbursement certificate. As of June 2019, we have obtained thirty reimbursement certificates for stores opened in fiscal 2018 and later. Historically, sales reimbursed from the government insurance agency contributes more than half of total revenue in a mature store. We are active in the process of applying certificates for all of our new stores. In the future, as more and more stores obtain certificates, we expect our new store revenue to increase and eventually contribute positive operating cash flow.

The Company’s principal sources of liquidity consist of existing cash, equity financing, bank facilities from local banks as well as personal loans from its principal shareholders if necessary. On April 15, 2019, the Company closed a registered direct offering of 4,000,008 shares of common stock at $2.50 per share with gross proceeds of $10,000,020 from its effective shelf registration statement on Form S-3 pursuant to a Securities Purchase Agreement dated April 11, 2019 (the “2019 Securities Purchase Agreement”), by and among the Company and the investors named therein. The Company has a credit line agreement from a local bank as displayed in detail in Note 14. Approximately $3.01 million bank credit line was still available for further borrowing as of June 30, 2019. Additionally, Jiuzhou Pharmacy obtained a credit line of approximately $7,280,100 (RMB50,000,000) from Haihui Commercial Factoring (Tianjin) Co. Ltd for three years starting from July 26, 2019. Any borrowing therefrom is guaranteed by a third-party guarantor company, and secured by the Company’s assets pursuant to a collateral agreement, as well as the personal guarantees of some of its principal shareholders.

However, in the event the banks withdraw their credit lines with us, or our existing store performance suddenly deteriorates due to unexpected government policy change, or our operating license is canceled as a result of violation of industry regulation, the Company may or may not obtain alternative financing resources to support its continuing operation. At that time, the Company may not be able to continue to present itself on a going concern basis.

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Note 3 – 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.

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.

Use of estimates

The preparation of unaudited condensed consolidated financial statements in conformity with US 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 unaudited condensed consolidated financial statements relate to the assessment of the carrying values of accounts receivable, advances to suppliers and related allowance for doubtful accounts, useful lives of property and equipment, inventory reserve and fair value of its purchase option derivative liability. Because of the use of estimates inherent in the financial reporting process, actual results could materially differ from those estimates.

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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.

The Company’s financial assets and liabilities, which include financial instruments as defined by FASB ASC 820, include cash and cash equivalents, accounts receivable, accounts payable, long-term debt and derivatives. The carrying amounts of cash and cash equivalents, financial assets available for sales, accounts receivable, notes receivables, and accounts payable are a reasonable approximation of fair value due to the short maturities of these instruments (Level 1). The carrying amount of notes payable approximates fair value based on borrowing rates of similar bank loan currently available to the Company (Level 2) (See Note 14). The carrying amount of the Company’s derivative instruments is recorded at fair value and is determined based on observable inputs that are corroborated by market data (Level 2). The carrying amount of the Financial assets available for sale is recorded at fair value and is determined based on unobservable inputs (Level 3). As of June 30 2019, the fair values of our derivative instruments were carried at fair value (See Note 18). As of June 30 2019, the fair values of our Financial liability were carried at fair value (See Note 19)

	Active Market for Identical Assets (Level 1)		Observable Inputs (Level 2)		Unobservable Inputs (Level 3)		Total Carrying Value
Cash and cash equivalents and restricted cash		23,150,153		-	$	-		23,150,153
Financial assets available for sale						162,273		162,273
Notes payable		-		24,574,955		-		24,574,955
Financial liability						80,081		80,081
Warrants liability		-		61,693	$	-		61,693
Total		23,150,153		24,636,648	$	242,354		48,029,155

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).

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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 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.

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.

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, 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 of our merchandise, such as prescription and OTC drugs, are not allowed to be returned after the customers leave the counter. Return 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. Based on historical experience, a reserve for potential loss from denial of reimbursement on certain unqualified drugs is made to the receivables from the government agency. Revenue from medical services is recognized after the service has been rendered to a customer. As revenue from medical services are minimal compared to pharmacy retail sales, it is included as part of the pharmacy retail sales.

Online pharmacy sales

The online pharmacy sells various health products except for prescription drugs. 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. Our sales policy allows for the return of certain merchandises without reason within seven days after 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 value added tax (“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.

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Disaggregation of Revenue

The following table disaggregates the Company’s revenue by major source in each segment for the three months ended June 30, 2019:

For the three  months ended June 30	2019		2018
Retail drugstores
Prescription drugs	$	5,695,286	$	5,809,215
OTC drugs		7,240,228		6,964,828
Nutritional supplements		1,231,133		945,206
TCM		1,104,050		1,582,568
Sundry products		298,198		204,861
Medical devices		1,166,093		461,663
Total retail revenue	$	16,734,988	$	15,968,341
Online pharmacy
Prescription drugs	$	-	$	-
OTC drugs		1,024,602		775,993
Nutritional supplements		107,194		143,096
TCM		13,681		4,929
Sundry products		438,736		1,037,166
Medical devices		859,392		60,685
Total online revenue	$	2,443,605	$	2,021,869
Drug wholesale
Prescription drugs	$	4,880,491	$	3,419,536
OTC drugs		1,074,261		1,274,919
Nutritional supplements		21,691		25,381
TCM		98,828		21,851
Sundry products		5,682		4,755
Medical devices		21,238		35,914
Total wholesale revenue	$	6,102,191	$	4,782,356
Total revenue	$	25,280,784	$	22,772,566

Contract Balances

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 following table provides information about receivables and contract liabilities from contracts with customers:

	June 30, 2019		March 31, 2019
Trade receivable(included in accounts receivable, net)	$	8,590,075	$	8,692,514
Contract liabilities (included in accrued expenses)		1,494,018		1,689,099

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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 Condensed Balance Sheets to total cash, cash equivalents and restricted cash in the Consolidated Condensed Statements of Cash Flows as of June 30, 2019 and March 31, 2019:

	June 30, 2019		March 31, 2019
Cash and cash equivalents	$	8,341,167	$	9,322,463
Restricted cash		14,808,986		15,422,739
Cash, cash equivalents and restricted cash	$	23,150,153	$	24,745,202

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 historical trends.

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 aging method to estimate the allowance for anticipated uncollectible receivable balances. Under the aging method, bad debt percentages are determined by management, based on historical experience and the current economic climate, are applied to customers’ balances categorized by the number of months the underlying invoices have remained outstanding. At each reporting period, the allowance balance is adjusted to reflect the amount computed as a result of the aging 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.

Advances to suppliers

Advances to suppliers consist of prepayments to our vendors, such as pharmaceutical manufacturers and other distributors. Since the acquisition of Jiuxin Medicine, we have transferred almost all logistics services of our retail drugstores to Jiuxin Medicine. Jiuzhou Pharmacy only directly purchases certain non-medical products, such as certain nutritional supplements. As a result, almost all advances to suppliers are made by Jiuxin Medicine.

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 historical experience and any specific supplier issues, such as discontinuing of inventory supply, that have been identified. If we have difficulty receiving products from a vendor, we take the following steps: cease purchasing products from such 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 the prepayments should be reserved or written off.

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Inventories

Inventories are stated at the lower of cost or market value. Cost is determined using the first in first out (FIFO) method. Market value is the lower of replacement cost or net realizable value. 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.

The estimated useful lives of the Company’s intangible assets are as follows:

	Estimated Useful Life
Land use rights	50 years
Software	3 years

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. There were no fixed assets and farmland assets impaired for the three months ended June 30, 2019.

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.

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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 June 30, 2019 and 2018.

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.

Stock based compensation

The Company follows the provisions of FASB ASC 718, “Compensation — Stock Compensation,” which establishes accounting standards for non-employee and employee stock-based awards. Under the provisions of FASB ASC 718, the fair value of stock issued is used to measure the fair value of services received as the Company believes such approach is a more reliable method of measuring the fair value of the services. For non-employee stock-based awards, fair value is measured based on the value of the Company’s common stock on the date that the commitment for performance by the counterparty has been reached or the counterparty’s performance is complete. The fair value of the equity instrument is calculated and then recognized as compensation expense over the requisite performance period. For employee stock-based awards, share-based compensation cost is measured at the grant date based on the fair value of the award and is recognized as expense with graded vesting on a straight–line basis over the requisite service period for the entire award.

Advertising and promotion costs

Advertising and promotion costs are expensed as incurred and amounted to $80,049 and $191,054 for the three months ended June 30, 2019 and 2018, respectively. Such costs consist primarily of print and promotional materials such as flyers to local communities.

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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 June 30, 2019 and at March 31, 2019 were translated at 1 RMB to 0.1456 USD and at 1 RMB to 0.1490 USD, respectively. The average translation rates applied to income and cash flow statement amounts for the three months ended June 30, 2019 and 2018 were at 1 RMB to 0.1466 USD and at 1 RMB to 0.1511 USD, respectively.

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 72,800) per bank. As of June 30, 2019 and March 31, 2019, the Company had deposits totaling $23,061,379 and $24,730,736 that were covered by such limited insurance, respectively. Any balance over RMB 500,000 (USD 72,800) per bank in PRC will not be covered. To date, the Company has not experienced any losses in such accounts.

For the three months ended June 30, 2019, two vendors accounted for 49.2% of the Company’s total purchases and two vendors accounted for more than 10% of total advances to suppliers. For the three months ended June 30, 2018, two vendors collectively accounted for 46.2% of the Company’s total purchases and two suppliers accounted for more than 10% of total advances to suppliers.

For the three months ended June 30, 2019, no customer accounted for more than 10% of the Company’s total sales and more than 10% of total accounts receivable. For the three months ended June 30, 2018, no customer accounted for more than 10% of the Company’s total sales or more than 10% of total accounts receivable.

Leases

In February 2016, the Financial Accounting Standards Board (the “FASB”) issued ASU 2016-02, Leases (Topic 842). Lessees are required to recognize a right-of-use asset and a lease liability for virtually all of their leases (other than leases that meet the definition of a short-term lease). The liability is equal to the present value of lease payments. The asset is based on the liability, subject to certain adjustments, such as for initial direct costs. For income statement purposes, a dual model was retained, requiring leases to be classified as either operating or finance leases. Operating leases result in straight-line expense (similar to operating leases under the prior accounting standard) while finance leases result in a front-loaded expense pattern (similar to capital leases under the prior accounting standard). Lessor accounting is similar to the prior model, but updated to align with certain changes to the lessee model (e.g., certain definitions, such as initial direct costs, have been updated) and the new revenue standard, ASU 2014-9.

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The Company adopted this new accounting standard on April 1, 2019 on a modified retrospective basis and applied the new standard to all leases through a cumulative-effect adjustment to beginning retained earnings. As a result, comparative financial information has not been restated and continues to be reported under the accounting standards in effect for those periods. The Company elected the package of practical expedients permitted under the transition guidance within the new standard, which includes, among other things, the ability to carry forward the existing lease classification. On April 1, 2019, the Company recorded an after-tax transition adjustment to increase retained earnings by approximately $422,354. The new standard had a material impact on the unaudited condensed consolidated balance sheet, but did not materially impact the Company’s consolidated operating results and had no impact on the Company’s cash flows. The following is a discussion of the Company’s lease policy under the new lease accounting standard:

The Company determines if an arrangement contains a lease at the inception of a contract. Right-of-use assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. Right-of-use assets and lease liabilities are recognized at the commencement date based on the present value of the remaining future minimum lease payments. As the interest rate implicit in the Company’s leases is not readily determinable, the Company utilizes its borrowing rates set by The Central Bank of the People's Republic of China, determined by class of underlying asset, to discount the lease payments. The operating lease right-of-use assets also include lease payments made before commencement and exclude lease incentives.

The Company leases premises for retail drugstores, and offices under non-cancellable operating leases. Operating lease payments are expensed over the term of lease. A majority of the Company’s retail drugstore leases have a 3 to 10 year term, and no lease terms include options to extend. The Company leases don’t include options to extend nor any restrictions or covenants. The Company does not have any leases entered into but which have not yet commenced. The Company has historically been able to renew a majority of its drugstores leases. Under the terms of the lease agreements, the Company has no legal or contractual asset retirement obligations at the end of the lease. See Note 13 ‘‘Leases’’ for additional information.

Impact of New Lease Standard on Balance Sheet Line Items

As a result of applying the new lease standard using a modified retrospective method, the following adjustments were made to accounts on the condensed consolidated balance sheet as of April 1, 2019:

	Impact of Change in Accounting Policy
	As Reported						Adjusted
	March 31, 2019			Adjustments			April 1, 2019
Other current assets		2,063,375			(717,414	)		1,345,961
Total current assets		56,202,981			(717,414	)		55,485,567
Operating lease right-of-use assets		-			15,276,388			15,276,388
Total assets		72,730,636			14,558,974			87,289,610
								-
Current portion of operating lease liabilities		-			4,718,610			4,718,610
Total current liabilities		55,212,286			4,718,610			59,930,896
Long-term operating lease liabilities		-			9,418,011			9,418,011
Total liabilities		55,759,469			14,136,621			69,896,090
								-
Retained earnings		(30,587,468	)		422,354			(30,165,114	)
Total shareholders’ equity		18,165,206			422,354			18,587,560
Total  equity		16,971,167			422,354			17,393,521

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Recent Accounting Pronouncements

In June 2016, the FASB issued ASU 2016-13, “Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments,” providing financial statement users with more decision-useful information about the expected credit losses on financial instruments and other commitments to extend credit held by a reporting entity at each reporting date. For public business entities that are U.S. Securities and Exchange Commission (SEC) filers, the amendments in this Update are effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. All entities may adopt the amendments in this Update earlier as of the fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. We are currently evaluating the impact of the adoption of ASU 2016-13 on our consolidated financial statements.

In August 2016, the FASB issued ASU 2016-15, “Statement of Cash Flows (Topic 230):Classification of Certain Cash Receipts and Cash Payments,” addressing eight specific cash flow issues with the objective of reducing the existing diversity in practice. The amendments in this Update are effective for public business entities for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted, including adoption in an interim period. If an entity early adopts the amendments in an interim period, any adjustments should be reflected as of the beginning of the fiscal year that includes that interim period. An entity that elects early adoption must adopt all of the amendments in the same period. The amendments in this Update should be applied using a retrospective transition method to each period presented. If it is impracticable to apply the amendments retrospectively for some of the issues, the amendments for those issues would be applied prospectively as of the earliest date practicable. The impact of adoption on its Condensed Consolidated Financial Statements for any period presented is not material.

In July 2017, the FASB issued ASU No. 2017-11, “Earnings Per Share (Topic 260), Distinguishing Liabilities from Equity (Topic 480), Derivatives and Hedging (Topic 815): I. Accounting for Certain Financial Instruments with Down Round Features; II. Replacement of the Indefinite Deferral for Mandatorily Redeemable Financial Instruments of Certain Nonpublic Entities and Certain Mandatorily Redeemable Noncontrolling Interests with a Scope Exception”. Part I of this Update addresses the complexity of accounting for certain financial instruments with down round features. Part II of this Update addresses the difficulty of navigating Topic 480, Distinguishing Liabilities from Equity, because of the existence of extensive pending content in the FASB Accounting Standards Codification®. We are currently evaluating the impact of the adoption of ASU 2017-11 on our consolidated financial statements.

In January 2017, the FASB issued ASU No. 2017-04, “Intangibles—Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment” (“ASU 2017-04”), which removes Step 2 from the goodwill impairment test. An entity will apply a one-step quantitative test and record the amount of goodwill impairment as the excess of a reporting unit’s carrying amount over its fair value, not to exceed the total amount of goodwill allocated to the reporting unit. The new guidance does not amend the optional qualitative assessment of goodwill impairment. Public business entity that is a U.S. Securities and Exchange Commission filer should adopt the amendments in this ASU for its annual or any interim goodwill impairment test in fiscal years beginning after December 15, 2019. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. ASU 2017-4 has no impact on our consolidated financial statements.

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NOTE 4 – TRADE ACCOUNTS RECEIVABLE

Trade accounts receivable consisted of the following:

	June 30, 2019			March 31, 2019
Accounts receivable	$	12,395,705		$	11,939,364
Less: allowance for doubtful accounts		(3,805,630	)		(3,246,850	)
Trade accounts receivable, net	$	8,590,075		$	8,692,514

For the three months ended June 30, 2019 and 2018, $36,068 and $30,583 in accounts receivable were directly written off, respectively. As of June 30, 2019 and March 31, 2018 no trade accounts receivables were pledged as collateral for borrowings from financial institutions.

Note 5 – OTHER CURRENT ASSETS

Other current assets consisted of the following:

	June 30, 2019		March 31, 2019
Rental deposits (1)	$	1,466,714	$	1,979,852
Prepaid and other current assets		90,442		83,523
Total	$	1,557,156	$	2,063,375

(1) The balance as of June 30, 2019 includes short-term refundable rental security deposits only, while the balance as of March 31, 2019  includes security deposits of $1,444,026 and prepaid rental of $ 535,826.

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Note 6 – PROPERTY AND EQUIPMENT

Property and equipment consisted of the following:

	June 30, 2019			March 31, 2019
Building	$	6,072,001		$	6,436,297
Leasehold improvements		9,280,768			8,944,025
Farmland development cost		1,741,311			1,781,627
Office equipment and furniture		5,507,064			5,470,084
Motor vehicles		539,238			551,927
Total		23,140,382			23,183,960
Less: Accumulated depreciation		(12,227,499	)		(12,111,409	)
Impairment*		(2,292,125	)		(2,345,193	)
Property and equipment, net	$	8,620,758		$	8,727,358

* The variance of impairment from March 31, 2019 to June 30, 2019 is solely caused by exchange rate variance.

Depreciation expenses for property and equipment totaled $441,559 and $219,759 for the three months ended June 30, 2019 and 2018, respectively. There were no fixed assets impaired in the three months ended June 30, 2019 and June 30, 2018.

Note 7 – 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 June 30, 2019 and March 31, 2019, advance to suppliers consist of the following:

	June 30, 2019			March 31, 2019
Advance to suppliers*	$	2,180,129		$	2,477,226
Less: allowance for unrefundable advances		(635,997	)		(526,974	)
Advance to suppliers, net	$	1,544,132		$	1,950,252

For the three months ended June 30, 2019 and 2018, none of the advances to suppliers were written off against previous allowance for unrefundable advances, respectively.

Note 8 – INVENTORY

Inventory consisted of finished goods, valued at $10,806,698 and $13,955,202 as of June 30, 2019 and March 31, 2019, respectively. The Company constantly monitors its potential obsolete products and is allowed to return products close to their expiration dates 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 June 30, 2019 and March 31, 2019.

Note 9 – FARMLAND ASSETS

Farmland assets consist of ginkgo trees planted in 2012 and expected to be harvested and sold in several years. As of June 30, 2019 and March 31, 2019, farmland assets are valued as follows:

	June 30,			March 31,
	2019			2019
Farmland assets	$	2,224,942		$	2,341,537
Less: Impairment*		(1,481,968	)		(1,516,278	)
Farmland assets, net	$	742,974		$	825,259

* The variance of impairment is caused by exchange rate variance.

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Note 10 – LONG TERM REFUNDABLE DEPOSITS, LANDLORDS

As of June 30, 2019 and March 31, 2019, long term deposits amounted to $2,050,219 and $2,157,275, respectively. Long term deposits are money deposited with, or advanced to, landlords for the purpose of securing retail store leases that the Company does not anticipate being returned within the next twelve months. Most of the Company’s landlords require a minimum payment of nine months’ rent, paid upfront, plus additional deposits.

Note 11 – OTHER NONCURRENT ASSETS

Other noncurrent assets consisted of the following:

	June 30, 2019		March 31, 2019
Forest land use rights*	$	1,065,434	$	1,103,235
Others		112,269		92,962
Total	$	1,177,703	$	1,196,197

* The prepayment for lease of forest land use rights is a payment made to a local government in connection with entering into 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 forest land use right was approximately $6,885 and $7,096 for the three months ended June 30, 2019 and 2018, respectively.

The Company’s amortizations of the prepayment for lease of land use right for the next five years and thereafter are as follows:

For the year ending June 30,	Amount
2020	$	27,541
2021		27,541
2022		27,541
2023		27,541
2024		27,541
Thereafter		796,935

Note 12 – Leases

The Company leases most of its retail stores corporate offices under operating leases, typically with initial terms of  3 to 10 years, and no lease terms include options to extend. The Company leases don’t include options to extend nor any restrictions or covenants. The Company does not have any leases entered into but which have not yet commenced. The net lease cost for the three months ended June 30, 2019 is $1,294,591. Supplemental cash flow information related to leases for the three months ended June 30, 2019 is as follows:

Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows paid for operating leases	$	1,115,138
Right-of-use assets obtained in exchange for lease obligations:
Operating leases		-

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Supplemental balance sheet information related to leases as of June 30, 2019 is as follows:

Operating leases:
Operating lease right-of-use assets	$	13,564,115
Current portion of operating lease liabilities	$	4,738,632
Long-term operating lease liabilities		7,918,900
Total operating lease liabilities	$	12,657,532
Weighted average remaining lease term
Operating leases		4.5
Weighted average discount rate
Operating leases		2.10	%

The following table summarizes the maturity of lease liabilities under operating leases as of June 30, 2019:

	Operating
For the year ending June 30,	Leases
2020	$	4,739,995
2021		3,691,865
2022		2,879,742
2023		1,961,837
2024		1,398,480
Thereafter		1,444,296
Total lease payments (2)		16,116,215
Less: imputed interest		(3,458,683	)
Total lease liabilities	$	12,657,532

Note 13 – INTANGIBLE ASSETS

Net intangible assets consisted of the following at:

	June 30, 2019			March 31, 2019
License (1)	$	1,866,487		$	1,909,700
Software(2)		1,091,268			676,336
Land use rights (3)		1,419,845			1,452,718
Total intangible assets		4,377,600			4,038,754
Less: accumulated amortization		(488,752	)		(441,431	)
Intangible assets, net	$	3,888,848		$	3,597,323

Amortization expense of intangibles amounted to $58,466 and $73,336 for the three months ended June 30, 2019 and 2018, respectively.

(1)	This represents the fair value of the licenses of insurance applicable drugstores acquired from Sanhao Pharmacy, a drugstore chain Jiuzhou Pharmacy acquired in 2014. 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 September 2017, the Company acquired several new stores for the purpose of the Municipal Social Medical Reimbursement Qualification Certificates. The owners of these acquired drugstores agreed to cease their stores’ business and liquidate all of the stores’ accounts before Jiuzhou Pharmacy acquired them. As a result, Jiuzhou Pharmacy has not obtained any assets or liabilities from the stores, but was able to transfer the certificates to our new stores opened at the same time.
(2)	They are 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. As of June 30, 2019, the SAP system has a total value of $345,906(RMB2,375,697). The internet Clinic Diagnosis System costs approximately $ (RMB 2,688,709). The system is used to strengthen our ability to perform online diagnosis which may increase more customer spending.  Chronic Disease costs approximately $ (RMB ) and is used to better manage and monitor our members’ health.
(3)	In July 2013, the Company purchased the land use rights of a plot of farmland in Lin’an, Hangzhou, intended for the establishment of an herb processing plant in the future. However, as our farming business in Lin’an has not grown, the Company does not expect completion of the plant in the near future.

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Note 14 – NOTES PAYABLE

The Company has credit facilities with Hangzhou United Bank (“HUB”) that provided working capital in the form of the following bank acceptance notes at June 30, 2019 and March 31, 2019:

		Origination	Maturity	June 30,		March 31,
Beneficiary	Endorser	date	date	2019		2019
Jiuzhou Pharmacy(1)	HUB	11/06/18	05/06/19				500,857
Jiuzhou Pharmacy(1)	HUB	12/12/18	06/12/19				2,236,559
Jiuzhou Pharmacy(1)	HUB	12/20/18	06/20/19				1,072,606
Jiuzhou Pharmacy(1)	HUB	12/29/18	06/29/19		324,592		5,504,943
Jiuzhou Pharmacy(1)	HUB	02/14/18	08/14/19		2,528,784		2,587,331
Jiuzhou Pharmacy(1)	HUB	03/06/18	09/06/19		6,451,364		6,600,727
Jiuxin Medicine(1)	HUB	10/11/18	04/11/19				4,461,531
Jiuxin Medicine(1)	HUB	11/06/18	05/06/19				2,987,119
Jiuzhou Pharmacy(1)	HUB	06/05/19	12/05/19		4,384,517
Jiuzhou Pharmacy(1)	HUB	06/28/19	12/28/19		3,844,927
Jiuxin Medicine(1)	HUB	04/10/19	10/10/19		4,112,456
Jiuxin Medicine(1)	HUB	04/15/19	10/15/19		145,602
Jiuxin Medicine(1)	HUB	05/10/19	11/10/19		2,782,713
Jiuzhou Pharmacy(1)	HUB				-		-
Total				$	24,574,955	$	25,951,673

(1) As of June 30, 2019, the Company had $24,574,955 (RMB 168,781,714) of notes payable from HUB. The Company is required to hold restricted cash in the amount of $14,626,921 (RMB 100,458,244) with HUB as collateral against these bank notes. Included in the restricted cash is a total of $10,209,998 three-year deposit (RMB 70,122,647) deposited into HUB as a collateral for current and future notes payable from HUB. As of March 31, 2019, the Company had $25,951,673 (RMB 174,203,868) of notes payable from HUB. The Company is required to hold restricted cash in the amount of $15,114,740 (RMB 101,459,590) with HUB as collateral against these bank notes. Included in the restricted cash is a total of $10,446,381 three-year deposit (RMB 70,122,647) deposited into HUB as a collateral for current and future notes payable from HUB.

As of June 30, 2019, the Company had a credit line of approximately $12.96 million in the aggregate from HUB, and BOH. By putting up three-year deposit of $10.21 million and the restricted cash of $4.42 million deposited in the banks, the total credit line was $27.59 million. As of June 30, 2019, the Company had approximately $24.57 million of bank notes payable and approximately $3.01 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.

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Note 15 – TAXES

Income tax

The Company accounts for income taxes under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis, operating losses and tax credit carryforwards. Deferred tax assets and liabilities are calculated using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the period that includes the enactment date. Valuation allowances are provided against deferred income tax assets for amounts which are not considered “more likely than not” to be realized.

The Company is subject to income taxes on an entity basis on income arising in or derived from the tax jurisdiction in which each entity is domiciled.

Entity	Income Tax Jurisdiction
Jo-Jo Drugstores	United States
Renovation	Hong Kong, PRC
All other entities	Mainland, PRC

For the three months ended June 30, 2019 and 2018, the components of income tax expense consist of the following:

	For the three months ended
	June 30,
	2019		2018
Current:
Federal	-		-
State	-		-
Foreign		8,388		57,169
		8,388		57,169
Deferred:
Federal		-		-
State		-		-
Foreign		-		-
		-		-
Provision for income taxes		8,388		57,169

The following table reconciles the U.S. statutory tax rates with the Company’s effective tax rate for the three months ended June 30, 2019 and 2018:

	For the three months ended
	June 30,
	2019			2018
U.S. Statutory rates		21.0	%		21.0	%
Foreign income not recognized in the U.S.		(21.0	)		(21.0	)
China income taxes		25.0			25.0
Change in valuation allowance(1)		(25.0	)		(25.0	)
Non-deductible expenses-permanent difference(2)		0.4			8.9
Effective tax rate		(0.4	)%		(8.9	)%

(1) Represents a non-taxable expense reversal due to overall decrease in allowance for accounts receivable and advances to suppliers.

(2) The (0.4)% and (8.9)% rate adjustments for the three months ended June 30, 2019 and 2018 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.

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The components of the Company’s net deferred tax assets are as follows:

	As of 6/30/2019			As of 3/31/2019
Allowance		1,152,638			986,665
Long-lived assets impairment		573,031			586,298
Depreciation and Amortization		-			-
Accrued expense		1,628,792			1,569,683
Net operating loss carry forward		1,438,560			1,164,735
Foreign Tax Credit Carryover		195,000			195,000
Total deferred tax assets (liabilities):		4,988,021			4,502,381
Valuation allowance		(4,988,021	)		(4,502,381	)
Net deferred tax assets (liabilities)		-			-

The Company regularly assesses the realizability of its deferred tax assets and establishes a valuation allowance if it is more-likely-than-not that some portion of the deferred tax assets will not be realized. We weigh all available positive and negative evidence, including earnings history and results of recent operations, scheduled reversals of deferred tax liabilities, projected future taxable income, and tax planning strategies. Assumptions used to forecast future taxable income often require significant judgment. More weight is given to objectively verifiable evidence. In the event we determine that we would not be able to realize all or part of our net deferred tax assets in the future, a valuation allowance will be established against deferred tax assets in the period in which we make such determination. The need to establish a valuation allowance against deferred tax assets may cause greater volatility in our effective tax rate.

As of June 30, 2019 and March 31, 2019, the estimated net operating loss carry forwards for U.S. income tax purposes amounted to $816,908, which may be available to reduce future years’ taxable income. These carry forwards will expire if not utilized by 2032. In addition, the Company carries a Foreign tax credit of $195,000. As of June 30, 2019 and March 31, 2019, the estimated net operating loss carry forwards for Hong Kong income tax purposes amounted to $1,993,833 and $1,960,933, which may be available to reduce future years’ taxable income. As of June 30, 2019 and March 31, 2019, the estimated net operating loss carry forwards for China income tax purposes amounted to $3,752,108 and $2,678,523, which may be available to reduce future years’ taxable income. These carry forwards will expire if not utilized in the next five years.

On December 22, 2017, the U.S. federal government enacted the 2017 Tax Act. The 2017 Tax Act includes a number of changes in existing tax law impacting businesses, including the transition tax, a one-time deemed repatriation of cumulative undistributed foreign earnings and a permanent reduction in the U.S. federal statutory rate from 35% to 21%, effective on January 1, 2018. ASC 740 requires companies to recognize the effect of tax law changes in the period of enactment, accordingly, the effects must be recognized on companies’ calendar year-end financial statements, even though the effective date for most provisions is January 1, 2018. As a result, we re-measured our net U.S. deferred tax assets at the 21% future tax rate. As of December 31, 2017, for estimating our foreign undistributed earnings according to the 2017 Tax Act, we estimated an aggregate deficit in “accumulated earnings and profits,” which is how foreign undistributed earnings are determined for the one-time transition tax and for U.S. income tax purposes. As a result, the one-time transition tax did not have a significant impact on the Company’s FY18 tax provision and there was no undistributed accumulated earnings and profits as of June 30, 2019.

The Company recorded net unrecognized tax benefits of $0.0 million as of June 30, 2019. It is our policy to classify accrued interest and penalties related to unrecognized tax benefits in the provision for income taxes.

Audit periods remain open for review until the statute of limitations has passed, which in the PRC is usually 5 years as the Company’s most significant tax jurisdiction. The completion of review or the expiration of the statute of limitations for a given audit period could result in an adjustment to the Company’s liability for income taxes. Any such adjustment could be material to the Company’s results of operations for any given quarterly or annual period based, in part, upon the results of operations for the given period.

Note 16 – 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 $341,024 and $363,784 in employment benefits and pension for the three months ended June 30, 2019 and 2018, respectively.

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Note 17 – RELATED PARTY TRANSACTIONS AND ARRANGEMENTS

Amounts payable to related parties are summarized as follows:

	June 30, 2019		March 31, 2019
Due to a director and CEO (1) :		326,778		795,179
Total	$	326,778	$	795,179

(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. In the three months ended June 30, 2019, the Company paid certain borrowings back to CEO.

The Company leases from Mr. Lei Liu a retail space; the lease expires in September 2020. Rent expenses totaled $6,785 and $4,532 for the three months ended June 30, 2019 and 2018, respectively. The amounts owed under the lease for the three months ended June 30, 2019 and 2018 were not paid to Mr. Liu as of June 30, 2019.

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). Mr. Lei Liu owns 51% of Hangzhou Kangzhou Biotech Co. Ltd.

Note 18 – WARRANTS

In connection with the registered direct offering closed on July 19, 2015, the Company issued to an investor a warrant to purchase up to 600,000 shares of common stock at an exercise price of $3.10 per share. The warrant became exercisable on January 19, 2016 and will expire on January 18, 2021. 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. 72,000 shares. Such warrant has the same terms as the warrant issued to investor in the offering.

The fair value of the warrants issued to purchase 672,000 shares as described above was estimated by using the binominal pricing model with the following assumptions:

	Common Stock Warrants			Common Stock Warrants
	June 30, 2019 (1)			March 31, 2019
Stock price	$	1.10		$	2.62
Exercise price	$	3.10		$	3.10
Annual dividend yield		0	%		0	%
Expected term (years)		1.56			1.80
Risk-free interest rate		1.75	%		2.27	%
Expected volatility		72.47	%		67.69	%

(1) As of June 30, 2019, the warrants had not been exercised.

Upon evaluation, the warrants meet the definition of a derivative under FASB ASC 815, as the Company cannot avoid a net cash settlement under certain circumstances. Accordingly, the fair value of the warrants was classified as a liability of $496,217 as of March 31, 2017. For the three months ended June 30, 2019 and June 30, 2018, the Company recognized a gain of $403,555 and a loss of $6,974 for the investor warrant and placement agent warrant, from the change in fair value of the warrant liability. As a result, the warrant liability is carried on the consolidated balance sheets at the fair value of $61,693 and $465,248 for the investor warrant and placement agent warrant, collectively, as of June 30, 2019 and March 31, 2019.

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Note 19 – Financial Liability

To encourage operating team, which consists of doctors and nurses, to devote their efforts to run clinics, Linjia Medical allows them to put deposits in the clinic where doctors and nurses work, and take shares in any profit of the clinic. The principal amounts of these deposits are refundable in the event the doctors and nurses leave the clinic. In order to properly reflect Linjia Medical’s liabilities, the Company reclassified the deposit of $80,081 (RMB550,000) as financial liability as of June 30, 2019.

Note 20 – STOCKHOLDER’S EQUITY

Common stock

On January 23, 2017, the Company closed a private offering with one institutional investor (the “Investor”) pursuant to which the Company sold to the Investor, and the Investor purchased from the Company, an aggregate of 4,840,000 shares of the common stock, par value $0.001 per share, of the Company, at a purchase price of $2.20 per share, for aggregate gross proceeds to the Company of $10,648,000 (the “Private Placement”)..

On April 15, 2019, we closed a registered direct offering of 4,000,008 shares of common stock at $2.50 per share with gross proceeds of $10,000,020 from our effective shelf registration statement. In a concurrent private placement we issued to the investors unregistered warrants to purchase up to an aggregate of 3,000,006 shares of common stock at an exercise price of $3.00 per share. The placement agent receives warrants to purchase up to 240,000 shares of the common stock with an exercise price of $3.125 per share.

Stock 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 3,000,006 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. 240,000 shares at an exercise price of $3.125 per share. The warrant became exercisable on October 11, 2019 and will expire on April 11, 2024.

Upon evaluation, the warrants issued in April 2019 meet the definition of an equity under FASB ASC 815. Accordingly, the fair value of the warrants recorded as a part of additional paid-in capital.

Stock-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 March 30, 2018, the Company granted a total of 3,947,100 shares of restricted common stock 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. On June 28, 2018, the compensation committee of the Company canceled 225,000 shares granted to the CEO in order to conform aggregate issuances to the 675,000 share limitation set forth in the Plan. 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 has been amended to remove the provisions intended to comply with that exemption, including the one in Section 1.3.2 of the Plan. All $5,328,585 of such expense has been recorded as a service compensation expense in the year ended March 31, 2018. 

Stock option

On November 18, 2014, the Company granted a total of 967,000 shares of stock options under the Plan to a group of a total of 46 grantees including directors, officers and employees. The exercise price of the stock option is $2.50. The option vests on November 18, 2017, provided that the grantees are still employed by the Company on such a date. The options will be exercisable for five years from the vesting date, or November 18, 2017 until November 17, 2022. For the three months ended June 30, 2019 and 2018, none was recorded as compensation expense. As of June 30, 2019, all compensation costs related to stock option compensation arrangements granted have been recognized.

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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 three months ended June 30, 2019 and 2018, 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 – (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 common stockholders 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 common stock were exercised and converted into common stock.

The following is a reconciliation of the basic and diluted (loss) earnings per share computation:

	The three months ended June 30,
	2019			2018
Net (loss) attributable to controlling interest	$	(2,134,951	)	$	(696,615	)
Weighted average shares used in basic computation		32,453,269			28,936,778
Diluted effect of stock options and warrants		-			-
Weighted average shares used in diluted computation		32,453,269			28,936,778
Loss per share – Basic:		-			-
Net (loss) attributable to controlling interest	$	(0.07	)	$	(0.02	)
Loss per share – Diluted:
Net (loss) attributable to controlling interest	$	(0.07	)	$	(0.02	)

For the three months ended June 30, 2019, 967,000 shares underlying employee stock options and 600,000 shares underlying outstanding purchase warrant to an investor, 72,000 shares underlying outstanding purchase warrant to an investment placement agent and a total of 3,240,006 warrants issued in S-3 financing in April 2019 were excluded from the calculation of diluted loss per share as the options were anti-dilutive.

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.

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The following table presents summarized information by segment of the continuing operations for the three months ended June 30, 2019.

	Retail drugstores			Online Pharmacy			Drug wholesale			Herb farming		Total
Revenue	$	16,734,988		$	2,443,605			6,102,191			-		25,280,784
Cost of goods		11,682,721			2,096,850			5,439,775			-		19,219,346
Gross profit	$	5,052,267		$	346,755			662,416			-		6,061,438
Selling expenses		4,835,666			473,380			659,505			-		5,968,551
General and administrative expenses		1,733,704			55,123			1,062,785			-		2,851,612	*
Loss from operations	$	(1,517,103	)	$	(181,748	)		(1,059,874	)		-		(2,758,725	)
Depreciation and amortization	$	504,463		$	-			8,486			-		512,949
Total capital expenditures	$	753,173		$	-						-		753,173

* Includes accounts receivable allowance reversal of $558,779 and additional advance to suppliers allowance of $109,023.

The following table presents summarized information by segment of the continuing operations for the three months ended June 30, 2018.

	Retail drugstores			Online Pharmacy			Drug wholesale			Herb farming		Total
Revenue	$	15,968,341		$	2,021,869			4,782,356			-		22,772,566
Cost of goods		11,163,223			1,740,904			4,251,636			-		17,155,763
Gross profit	$	4,805,118		$	280,965			530,720			-		5,616,803
Selling expenses		3,477,677			401,362			747,939			-		4,626,978
General and administrative expenses		1,301,468			187,224			65,836			-		1,554,528	*
Loss from operations	$	(25,973	)	$	(307,621	)		(283,055	)		-		(564,703	)
Depreciation and amortization	$	130,657		$	-			5,786			-		136,443
Total capital expenditures	$	157,272		$	-			1,117			-		158,389

* Includes accounts receivable allowance reversal of $112,386 and additional advance to suppliers allowance of $266,592.

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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 three months ended June 30, 2019 and 2018 were as follows:

	For the three months ended
	June 30,
	2019		2018
Prescription drugs	$	5,695,286		5,809,215
OTC drugs		7,240,228		6,964,828
Nutritional supplements		1,231,133		945,206
TCM		1,104,050		1,582,568
Sundry products		298,198		204,861
Medical devices		1,166,093		461,663
Total	$	16,734,988		15,968,341

The Company’s net revenue from external customers through online pharmacy by main product category is as follows:

	For the three months ended
	June 30,
	2019		2018
Prescription drugs	$	-		-
OTC drugs		1,024,602		775,993
Nutritional supplements		107,194		143,096
TCM		13,681		4,929
Sundry products		438,736		1,037,166
Medical devices		859,392		60,685
Total	$	2,443,605		2,021,869

The Company’s net revenue from external customers through wholesale by main product category is as follows:

	For the three months ended
	June 30,
	2019		2018
Prescription drugs	$	4,880,491		3,419,536
OTC drugs		1,074,261		1,274,919
Nutritional supplements		21,691		25,381
TCM		98,828		21,851
Sundry products		5,682		4,755
Medical devices		21,238		35,914
Total	$	6,102,191		4,782,356

Note 23 – Subsequent Events

On July 26, 2019, Jiuzhou Pharmacy obtained a credit line of approximately $7,280,100 (RMB50,000,000) from Haihui Commercial Factoring (Tianjin) Co. Ltd (“Haihui Factoring”) for three years. Certain Jiuzhou Pharmacy drugstores’ sales collectibles from Hangzhou Medical Insurance Administration and Service Bureau (“HMIASB”) will be held in pledge. However, only at circumstances when the Company materially breaches the contract, Haihui Factoring will have the right to ask HMIASB to pay the collectible directly to Haihui Factoring. On August 2, 2019, Jiuzhou Pharmacy borrowed a total of $728,010 (RMB 5,000,000), which is counted in the credit line.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

The following management’s discussion and analysis should be read in conjunction with our unaudited condensed consolidated financial statements and the notes thereto and the other financial information appearing elsewhere in this item. In addition to historical information, the following discussion contains certain forward-looking statements within the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. These statements relate to our future plans, objectives, expectations and intentions. These statements may be identified by the use of words such as "may," "will," "could," "expect," "anticipate," "intend," "believe," "estimate," "plan," "predict," and similar terms or terminology, or the negative of such terms or other comparable terminology. 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 our annual report on Form 10-K for the year ended March 31, 2019 and filed with the SEC on July 1, 2019. 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.

Our financial statements are prepared in U.S. Dollars and in accordance with accounting principles generally accepted in the United States. See "Exchange Rates" below 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”).

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. As of June 30, 2019, we had 115 pharmacies in Hangzhou city and its adjacent town Lin’an under the store brand of “Jiuzhou Grand Pharmacy” and 4 independent pharmacies controlled by Jiuzhou Pharmacy. During the three months ended June 30, 2019, we dissolved four independent pharmacies. Among the four dissolved pharmacies, two stores have merged into Jiuzhou Pharmacy and became Jiuzhou Pharmacy stores in Hangzhou. The other two stores’ licenses of government medical insurance, which qualify the stores for reimbursement from government, were transferred to two Jiuzhou Pharmacy stores in Hangzhou City.

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, Amazon.com and the Company’s own platform all over China. Our sales through our own platform are primarily generated by customers who use their private commercial medical insurances packages.

We operate a wholesale business through Jiuxin Medicine distributing third-party pharmaceutical products (similar to those carried by our pharmacies) primarily to trading companies throughout China. We also planted gingkgo trees but have not incurred sales in the three months ended June 30, 2019.

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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 will change. But the impact of the new revenue standard was not material and there was no adjustment required to the opening balance of retained earnings. We expect the impact of the adoption of the new revenue standard to be immaterial to our net income on an ongoing basis.

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. There were no material impairment losses for definite-lived intangible assets recognized in the three months ended June 30, 2019 and 2018.

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Results of Operations

Comparison of the three months ended June 30, 2019 and 2018

The following table summarizes our results of operations for the three months ended June 30, 2019 and 2018:

	Three months ended June 30,
	2019						2018
	Amount			Percentage of total revenue			Amount			Percentage of total revenue
Revenue	$	25,280,784			100.0	%	$	22,772,566			100.0	%
Gross profit	$	6,061,438			24.0	%	$	5,616,803			24.7	%
Selling expenses	$	5,968,551			23.6	%	$	4,626,978			20.3	%
General and administrative expenses	$	2,851,612			11.3	%	$	1,554,528			6.8	%
Loss from operations	$	(2,758,725	)		(10.9	)%	$	(564,703	)		(2.5	)%
Interest income	$	47,873			0.2	%	$	47,172			0.2	%
Interest expenses	$	-			0.0	%	$	-			0.0	%
Other income, net	$	(62,485	)		(0.2	)%	$	(114,941	)		(0.5	)%
Change in fair value of derivative liability	$	403,555			1.6	%	$	6,974			0.0	%
Income tax expense	$	8,388			0.0	%	$	57,169			0.3	%
Net loss	$	(2,378,170	)		(9.4	)%	$	(696,615	)		(3.1	)%

Revenue

Due to the growth in our retail drugstores business, online pharmacy and wholesale business, revenue increased by $2,508,218 or 11.0% for the three months ended June 30, 2019, as compared to the three months ended June 30, 2018. The following table breaks down the revenue for our four business segments for the three months ended June 30, 2019 and 2018:

Revenue by Segment

The following table breaks down the revenue of our four business segments for the three months ended June 30, 2019 and 2018:

	For the three months ended June 30,
	2019					2018
	Amount		% of total   revenue			Amount		% of total revenue			Variance by amount		% of change
Revenue from retail drugstores	$	16,734,988		66.2	%	$	15,968,341		70.1	%	$	766,647		4.8	%
Revenue from online sales		2,443,605		9.7	%		2,021,869		8.9	%		421,736		20.9	%
Revenue from wholesale business		6,102,191		24.1	%		4,782,356		21.0	%		1,319,835		27.6	%
Revenue from farming business		-		-	%		-		-	%		-		-	%
Total revenue	$	25,280,784		100.0	%	$	22,772,566		100.0	%	$	2,508,218		11.0	%

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Retail drugstores sales, which accounted for approximately 66.2% of total revenue for the three months ended June 30, 2019, increased by $766,647, or 4.8% compared to the three months ended June 30, 2018, to $15,968,341. Same-store sales increased by approximately $773,184, or 5.0%, while new stores contributed approximately $107,889 in revenue in the three months ended June 30, 2019.

The increase in our retail drugstore sales is primarily due to consumer-facing benefits such as emphasis on on-site medical care, chronic disease management services, incremental DTP (Direct-to-Patient) business caused by continuous hospital medical reform, and maturing of stores opened a year ago. Convenient on-site medical support at our pharmacies has been our hallmark from the beginning of our business. Suitable medical support from our doctors has proven to be critical to our superior store sales. Linking doctor care with drug sales has become our business guidance for the future. By adding more doctor-provided services at stores, we have been able to promote our store sales. In January 2019, we had a grand opening of another flagship store in south Hangzhou. The store hosts both our drugstore and clinic and is expected to expand our business model.

DTP drugs are usually new medicines not sold at hospitals with low profit margin. As part of the PRC’s recent medical reform package, local governments require the revenue percentage from drug sales at public hospitals to decline. In order to achieve lower drug sales percentage out of their total revenue, the public hospitals chose to abandon sales of low-profit-margin DTP products first. As the biggest drugstore network in Hangzhou City, Jiuzhou Pharmacy had quite a few of our stores located adjacent to local hospitals. Additionally, we have actively contacted local vendors of certain DTP products that we were previously not selling and were able to sell these DTP products in our stores. By setting special counters selling DTP products at our stores, sales in our drugstores have increased.

Furthermore, in fiscal years 2018 and 2019, we have accelerated our expansion of new stores, which is expected to generate more retail drugstore revenues. Among the new stores, thirty stores have become qualified for municipal government insurance reimbursement after operation of a year or more. Sales reimbursed from municipal government insurance program usually account for more than 50% of our total sales at maturing stores. As these stores gained such qualifications, their sales increased quickly as compared to the previous year. Our store count is 119 at June 30, 2019 and 122 at June 30, 2018.

Our online pharmacy sales increased by approximately $421,736, or 20.9% for the three months ended June 30, 2019, as compared to the three months ended June 30, 2018. The increase was primarily caused by an increase in sales via e-commerce platforms such as Tmall, offset slightly by the decline in sales via our official site. Popular products at reasonable prices are key to success in online business. In order to promote our sales, we focused on selection of medical equipment suitable to local customers. For example, sales of blood glucose meters and contact lens contributed significantly to our revenue in the three months ended June 30, 2019 as compared to the same period a year ago. Additionally, as more and more customers switch to online OTC drug shopping, our OTC drug sales grew too.

Wholesale revenue increased by $1,319,835 or 27.6% primarily as a result of our ability to resell certain products, which our retail stores made large order on, to other vendors. As our retail drugstores achieved large quantity sales of certain brand name products, we were able to bargain for lower purchase prices than the market level on these merchandises. As a result, vendors who were unable to obtain a better price than ours, turned to us for these products, causing the increase in the wholesale volume. 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 three months ended June 30, 2019 and 2018, we have not generated revenue from our farming business. We planted ginkgo and maidenhair trees during the year ended March 31, 2013, more than six years ago. A ginkgo tree may have a growth period of up to twenty-three months before it is mature enough for harvest. Usually, the longer a ginkgo tree grows the more valuable it becomes. Therefore, we have not yet harvested our ginkgo trees. We plan to continue cultivating the trees in order to maximize their market value in the future. We will continue to grow ginkgo trees in the future.

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Gross Profit

Gross profit increased by $444,635 or 7.9% period over period primarily as a result of an increase in gross profit provided by retail pharmacy business, which increased significantly in the three months ended June 30, 2019. At the same time, gross margin decreased slightly from 24.7% to 24.0% due to lower wholesale profit margins. The average gross margins for each of our four business segments are as follows:

	For the three months ended June 30,
	2019			2018
Average gross margin for retail drugstores		30.2	%		30.1	%
Average gross margin for online sales		14.2	%		13.9	%
Average gross margin for wholesale business		10.9	%		11.1	%
Average gross margin for farming business		N/A			N/A

Retail gross margins increased primarily because of introducing certain popular products with high profit margin, and renegotiating prices with our suppliers continuously. In order to promote our sales and profits, we specifically selected a series of popular products such as radix bupleuri, which we believe are suitable to local community. As a result, we were able to keep up with our sales profit margin. Additionally, we continuously renegotiate with our vendors and press price down to acceptable levels. For example, we explore more suppliers to search for lower prices. We also try to directly purchase from manufacturers instead of local vendors to cut off middle-man expenses. We expect to keep our profit margin at a reasonable level in the future.

Gross margin of online pharmacy sales slightly increased primarily due to profit margin increase in products we sold via third-party platforms, offset by slight decline in profit margin of sales via our official website, www.dada360.com. We focus on sales promotion at a reasonable profit margin instead of pursuing a high profit margin. The slight increase is primarily a payback as a result of our hard work in areas such as careful selection of suppliers, price negotiation with suppliers and more purchase rebate based on the increased sales volume. On the other side, although gross profit margin of sales via our official website decreased, the sales via our official website decreased too. As a result, the overall effect is slight. Consequently, our overall online sales profit margin increased in the three months ended June 30, 2019.

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.

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Selling and Marketing Expenses

Selling and marketing expenses increased by $1,341,573, or 29.0%, as compared to the same period of last fiscal year, primarily due to increase in labor and rent related to our store expansions and rising local living cost. We opened over 50 stores at the end of calendar year 2017 and early in calendar year 2018.Thirty stores have become qualified for municipal government insurance reimbursement after operation of a year or more. As a result, sales of these stores have increased. In order to keep up with the sales growth, we hired additional staff or increased bonus to current stores staff. Rental cost also increased as the local real estate market is booming. Overall, such expenses as a percentage of our revenue were 23.6% and 20.3% respectively, in the three months ended June 30, 2019 and 2018.

General and Administrative Expenses

General and administrative expenses increased by $1,297,084, or 83.4%, as compared to the same period of last year. Such expenses as a percentage of revenue increased to 11.3% from 6.8% for the same period of last year Our retail business incurred additional administrative expense related to our store expansion. Additionally, Linjia Medical incurred additional administrative labor cost. The bad debt expense related to our accounts receivable increased by approximately $0.5 million due to certain aged accounts.

Loss from Operations

As a result of the above, we had loss from operations of $2,758,725 in the quarter ended June 30, 2019, as compared to loss from operations of $564,703 a year ago. Our operating margin for the three months ended June 30, 2019 and 2018 was (10.9)% and (2.5)%, respectively.

Income Taxes

Our income tax expense decreased by $48,781 period over period due to an increase in overall profit.

Net Loss

As a result of the foregoing, net loss is $2,378,170 in the three months ended June 30, 2019 as compared to a net loss of $696,615 in the three months ended June 30, 2018.

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	$	5,399,360		$	20,447		$	414,762		$	-	$	5,834,569
4- 6 months		627,859			275,276			234,553			-		1,137,688
7- 12 months		331,006			38,569			2,559,924			-		2,929,499
Over one year		1,931,876			118,284			443,789					2,493,949
Allowance for doubtful accounts		(2,174,317	)		(147,680	)		(1,483,633	)				(3,805,630	)
Total accounts receivable	$	6,115,784		$	304,896		$	2,169,395		$	-	$	8,590,075

Accounts receivable from our retail business mainly consist of reimbursements from government health insurance bureaus and commercial health insurance programs. In the three months ended June 30, 2019, we wrote off an approximately $36,068 collectible from provincial and Hangzhou City government insurance, as such amount has been determined by the health insurance bureaus to be unqualified for reimbursement. In addition, as we gained experience in operating online pharmacy with good reputation, we have provided online operating and network technical support to an online business, which intends to run an online health products shop in Hong Kong in 2016. As a result, we recognized revenue and incurred accounts receivables. As the online business company was not able to make profit from its online shop, it has not paid off its account on time. As a result, we made additional reserve on these aged accounts.

37

Accounts receivable from our online pharmacy business mainly consists of collectibles from third-party platforms such as Tmall and JD.com where we sell products. Usually the third-party platforms will collect from customers ordering on their platforms and then reimburse us in times ranging from several days to a month after orders are placed.

Accounts receivable from our drug wholesale business and herb farming business consist of receivables from our customers such as pharmaceutical distributors. Our drug wholesale business transitioned away from focusing on sales volume beginning in the second half of fiscal 2013, and it tightened its customer credit policy and strengthened monitoring of uncollected receivables. Furthermore, the new management team expended significant efforts in clearing outstanding balances with certain customers and suppliers.

Subsequent to June 30, 2019 and through July 31, 2019, we collected approximately $2.9 million in receivables relating to our drugstore business, approximately $0.9 million in receivables relating to our online pharmacy business, approximately $1.5 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	$	178,653		$	-	$	111,762		$	-	$	290,415
4- 6 months		33,711			-		1,133,506			-		1,167,217
7- 12 months		18,597			-		261,632			-		280,229
Over one year		100,905			-		341,363			-		442,268
Allowance for doubtful accounts		(132,188	)		-		(503,809	)		-		(635,997	)
Total advances to suppliers	$	199,678		$	-	$	1,344,454		$	-	$	1,544,132

Since the acquisition of Jiuxin Medicine, we have gradually transferred almost all logistics services of our retail drugstores to Jiuxin Medicine. Jiuzhou Pharmacy only makes purchases of certain non-medical products. As a result, our retail chain had little advances to suppliers as of June 30, 2019.

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: ceasing purchasing products from the vendor, asking for return of our prepayment promptly, and if necessary, taking legal actions. If all of these steps are unsuccessful, management then determines whether or not the prepayments should be reserved or written off.  In fiscal 2019, 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. 

Liquidity and Capital Resources

Our cash flows for the periods indicated are as follows:

	For the three months ended June 30,
	2019			2018
Net cash provided by/used in operating activities	$	(8,164,764	)	$	(2,582,197	)
Net cash provided by/used in investing activities	$	(1,171,543	)	$	(257,897	)
Net cash provided by/used in financing activities	$	8,018,325		$	(5,211,985	)

38

For the three months ended June 30, 2019, cash used in operating activities amounted to $(8,164,764), as compared to $(2,582,197) for the same period a year ago. The change is primarily attributable to a decrease in cash provided by accounts payable of $6,598,962, a decrease in cash provided by accounts receivable of $2,037,099, a decrease in cash provided by other current assets of $1,004,090 offset by an increase of $3,310,455 in inventories and biological assets, and an increase in cash provided by advances to suppliers of $1,017,666.

For the three months ended June 30, 2019, net cash used in investing activities amounted to $(1,171,543), as compared to $(257,897) provided by investing activities for the same period a year ago. The change is attributable to an increase in additions to leasehold improvements and increased intangible assets such as the Internet Clinic Diagnosis System implementation in the three months ended June 30, 2019.

For the three months ended June 30, 2019, net cash provided by financing activities amounted to $8,018,325, as compared to $(5,211,985) net cash used in financing activities for the same period a year ago. The increase is primarily due to proceeds of notes payable and proceeds from equity financing. On April 15, 2019, we closed a registered direct offering of 4,000,008 shares of our common stock at a price of $2.50 per share with gross proceeds of $10,000,020 from our effective shelf registration statement on Form S-3.

As of June 30, 2019, we had cash of approximately $8,341,167. Our total current assets as of June 30, 2019, were $50,156,769 and total current liabilities were $48,660,016, which resulted in a working capital of $1,496,753.

Contractual Obligations and Off-Balance Sheet Arrangements

Contractual Obligations

The following table summarizes our contractual obligations:

Contractual obligations	Payments due by period
	Total		Less than 1 year		1-3 years		3-5 years		More than 5 years
Long-Term Debt Obligations	$	-		-		-		-		-
Capital Lease Obligations		-		-		-		-		-
Long term operating lease  liabilities		7,918,900				4,574,445		2,339,091		1,005,364
Purchase Obligations		-		-		-		-		-
Financial Liability		80,081		-		80,081		-		-
Other Long-Term Liabilities Reflected on the Registrant’s Balance Sheet under GAAP*		61,693		61,693		-		-		-
Total	$	8,060,674		61,693		4,654,526		2,339,091		1,005,364

* This refers to warrants to purchase shares of common stock issued to an institutional investor and a placement agent (See Note 18).

39

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 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:

	June 30, 2019	March 31, 2019
Balance sheet items, except for the registered and paid-up capital, as of end of period	USD1: RMB0.1456	USD1: RMB0.1490
Amounts included in the statement of Operations and statement of cash flows for the period ended	USD1: RMB0.1466	USD1: RMB0.1491

Inflation

We believe that inflation has not had a material effect on our operations to date.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

Not applicable.

40

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

As of June 30, 2019, we carried out an evaluation, under the supervision and with the participation of our management, including our chief executive officer and chief financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended. Based upon such evaluation, our chief executive officer and chief financial officer concluded that, as of the end of the period covered by this report, our disclosure controls and procedures were ineffective. Such conclusion is based on the presence of the following material weakness in internal control over financial reporting as described in our annual report on Form 10-K for the year ended March 31, 2019:

Accounting and Finance Personnel Weaknesses - As noted in Item 9A of our annual reports on Form 10-K for the preceding fiscal years, 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.

Management’s assessment of the control deficiency over accounting and finance personnel as of June 30, 2019 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 and lack of accounting staff with sufficient U.S. GAAP experiences are material weaknesses.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting (as defined in Rule 13a-15(f) of the Securities Exchange Act of 1934) during the period covered by this Quarterly Report on Form 10-Q that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting, other than the following:

Remediation of Material Weakness for the quarter ended June 30, 2019

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 weakness. 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 U.S. GAAP knowledge, so they can meet the requirement from our auditors more efficiently. These improvements to our internal control infrastructure were implemented, and were in place in connection with the preparation of our financial statements for the three months ended June 30, 2019. 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.

41

PART II – OTHER INFORMATION

ITEM 6. EXHIBITS.

EXHIBIT INDEX

Exhibit Number	Description
31.1	Section 302 Certification by the Corporation’s Chief Executive Officer
31.2	Section 302 Certification by the Corporation’s Chief Financial Officer
32.1	Section 906 Certification by the Corporation’s Chief Executive Officer and Chief Financial Officer
101.INS	XBRL Instance Document
101.SCH	XBRL Taxonomy Extension Schema Document
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document
101.LAB	XBRL Taxonomy Extension Label Linkbase Document
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document

42

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	CHINA JO-JO DRUGSTORES, INC.
	(Registrant)
Date: August 14, 2019	By:	/s/ Lei Liu
		Lei Liu Chief Executive Officer
Date: August 14, 2019	By:	/s/ Ming Zhao
		Ming Zhao
		Chief Financial Officer

43

EX-31.1

Exhibit 31.1

CERTIFICATION

I, Lei Liu, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of China Jo-Jo Drugstores, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a. All significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 14, 2019	By:	/s/ Lei Liu
		Lei Liu
		Chief Executive Officer
		(Principal Executive Officer)

EX-31.2

Exhibit 31.2

CERTIFICATION

I, Ming Zhao, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of China Jo-Jo Drugstores, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a. All significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls over financial reporting.

Date: August 14, 2019	By:	/s/ Ming Zhao
		Ming Zhao
		Chief Financial Officer (Principal Financial and Accounting Officer)

EX-32.1

Exhibit 32.1

CERTIFICATION

In connection with the periodic report of China Jo-Jo Drugstores, Inc. (the “Company”) on Form 10-Q for the quarter ending June 30, 2019, as filed with the Securities and Exchange Commission (the “Report”), we, Lei Liu, Chief Executive Officer (Principal Executive Officer), and Ming Zhao, Chief Financial Officer (Principal Financial and Accounting Officer) of the Company, hereby certify as of the date hereof, solely for purposes of Title 18, Chapter 63, Section 1350 of the United States Code, that to the best of our knowledge:

(1)	The Report fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934, and
(2)	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company at the dates and for the periods indicated.

Date: August 14, 2019	By:	/s/ Lei Liu
		Lei Liu
		Chief Executive Officer
		(Principal Executive Officer)

Date: August 14, 2019	By:	/s/ Ming Zhao
		Ming Zhao
		Chief Financial Officer
		(Principal Financial and Accounting Officer)

XML

Document and Entity Information - shares	3 Months Ended
	Jun. 30, 2019	Aug. 13, 2019
Document and Entity Information [Abstract]
Entity Registrant Name	CHINA JO-JO DRUGSTORES, INC.
Entity Central Index Key	0001413263
Amendment Flag	false
Current Fiscal Year End Date	--03-31
Document Type	10-Q
Document Period End Date	Jun. 30, 2019
Document Fiscal Period Focus	Q1
Document Fiscal Year Focus	2020
Entity Filer Category	Non-accelerated Filer
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Small Business	true
Entity Emerging Growth Company	false
Entity Ex Transition Period	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		32,936,786
Entity File Number	001-34711
Entity incorporate state country code	NV

XML

Condensed Consolidated Balance Sheets (Unaudited) - USD ($)	Jun. 30, 2019	Mar. 31, 2019
CURRENT ASSETS
Cash	$ 8,341,167	$ 9,322,463
Restricted cash	14,808,986	15,422,739
Financial assets available for sale	162,273	180,928
Notes receivable	92,480	177,278
Trade accounts receivable	8,590,075	8,692,514
Inventories	10,806,698	13,955,202
Other receivables, net	4,253,802	4,438,230
Advances to suppliers	1,544,132	1,950,252
Other current assets	1,557,156	2,063,375
Total current assets	50,156,769	56,202,981
PROPERTY AND EQUIPMENT, net	8,620,758	8,727,358
OTHER ASSETS
Long-term investment	16,318	24,243
Farmland assets	742,974	825,259
Long term deposits	2,050,219	2,157,275
Other noncurrent assets	1,177,703	1,196,197
Operating lease right-of-use assets	13,564,115
Intangible assets, net	3,888,848	3,597,323
Total other assets	21,440,177	7,800,297
Total assets	80,217,704	72,730,636
CURRENT LIABILITIES
Accounts payable, trade	13,674,741	23,106,230
Notes payable	24,574,955	25,951,673
Other payables	3,267,074	3,197,221
Other payables - related parties	326,778	795,179
Customer deposits	870,100	771,942
Taxes payable	217,704	125,859
Accrued liabilities	990,032	1,264,182
Current portion of operating lease liabilities	4,738,632
Total current liabilities	48,660,016	55,212,286
Long term operating lease liabilities	7,918,900
Purchase option and warrants liability	61,693	465,248
Financial Liability	80,081	81,935
Total liabilities	56,720,690	55,759,469
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS’ EQUITY
Common stock; $0.001 par value; 250,000,000 shares authorized; 32,936,786 and 28,936,778 shares issued and outstanding as of June 30, 2019 and March 31, 2019	32,937	28,937
Preferred stock; $0.001 par value; 10,000,000 shares authorized; nil issued and outstanding as of June 30, 2019 and March 31, 2019
Additional paid-in capital	54,209,301	44,905,664
Statutory reserves	1,309,109	1,309,109
Accumulated deficit	(32,722,416)	(30,587,468)
Accumulated other comprehensive income	2,103,726	2,508,964
Total stockholders' equity	24,932,657	18,165,206
Noncontrolling interests	(1,435,643)	(1,194,039)
Total equity	23,497,014	16,971,167
Total liabilities and stockholders' equity	$ 80,217,704	$ 72,730,636

XML

Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - $ / shares	Jun. 30, 2019	Mar. 31, 2019
Statement of Financial Position [Abstract]
Common stock, par value	$ 0.001	$ 0.001
Common stock, shares authorized	250,000,000	250,000,000
Common stock, shares issued	32,936,786	28,936,778
Common stock, shares outstanding	32,936,786	28,936,778
Preferred stock, par value	$ 0.001	$ 0.001
Preferred stock, shares authorized	10,000,000	10,000,000
Preferred stock, shares issued
Preferred stock, shares outstanding

XML

Condensed Consolidated Statements of Operations and Comprehensive Loss (Unaudited) - USD ($)	3 Months Ended
	Jun. 30, 2019	Jun. 30, 2018
Income Statement [Abstract]
REVENUES, NET	$ 25,280,784	$ 22,772,566
COST OF GOODS SOLD	19,219,346	17,155,763
GROSS PROFIT	6,061,438	5,616,803
SELLING EXPENSES	5,968,551	4,626,978
GENERAL AND ADMINISTRATIVE EXPENSES	2,851,612	1,554,528
TOTAL OPERATING EXPENSES	8,820,163	6,181,506
LOSS FROM OPERATIONS	(2,758,725)	(564,703)
INTEREST INCOME	47,873	47,172
OTHER (EXPENSE), NET	(62,485)	(114,941)
CHANGE IN FAIR VALUE OF WARRANTS LIABILITY	403,555	(6,974)
LOSS BEFORE INCOME TAXES	(2,369,782)	(639,446)
PROVISION FOR INCOME TAXES	8,388	57,169
NET LOSS	(2,378,170)	(696,615)
ADD: NET LOSS ATTRIBUTABLE TO NONCONTROLLING INTEREST	243,219	50,763
NET LOSS ATTRIBUTABLE TO CHINA JO-JO DRUGSTORES, INC.	(2,134,951)	(645,852)
FOREIGN CURRENCY TRANSLATION ADJUSTMENTS	(405,238)	621,634
COMPREHENSIVE LOSS	$ (2,783,408)	$ (74,981)
WEIGHTED AVERAGE NUMBER OF SHARES:
Basic	32,453,269	28,936,778
Diluted	32,453,269	28,936,778
LOSS PER SHARES:
Basic	$ (0.07)	$ (0.02)
Diluted	$ (0.07)	$ (0.02)

XML

Condensed Consolidated Statements of Changes in Stockholders' Equity (Unaudited) - USD ($)	Common Stock	Paid-in capital	Retained Earnings Statutory reserves	Retained Earnings Unrestricted	Accumulated other comprehensive income/(loss)	Non-controlling interest	Total
Balance at Mar. 31, 2018	$ 28,937	$ 43,599,089	$ 1,309,109	$ (29,661,190)	$ 3,586,460		$ 18,862,405
Balance, Share at Mar. 31, 2018	28,936,778
Stock based compensation		49,140					49,140
Sale of 10% of Jiuxin Medicine						$ (617,743)	(617,743)
Net loss				(645,852)		(50,763)	(696,615)
Foreign currency translation loss					621,634		621,634
Balance at Jun. 30, 2018	$ 28,937	43,648,229	1,309,109	(30,307,042)	4,208,094	(668,506)	18,218,821
Balance, Shares at Jun. 30, 2018	28,936,778
Balance at Mar. 31, 2019	$ 28,937	44,905,664	1,309,109	(30,587,468)	2,508,964	(1,194,039)	18,165,206
Balance, Share at Mar. 31, 2019	28,936,778
Stock based compensation	$ 4,000	34,560					38,560
Stock based compensation, Shares	4,000,008
Financing of subsidiary		9,269,077					9,269,077
Net loss							(2,378,170)
Foreign currency translation loss							(405,238)
Balance at Jun. 30, 2019	$ 32,937	$ 54,209,301	$ 1,309,109	$ (32,722,416)	$ 2,103,726	$ (1,435,643)	$ 24,932,657
Balance, Shares at Jun. 30, 2019	32,936,786

XML

Condensed Consolidated Statements of Changes in Stockholders' Equity (Parenthetical)	3 Months Ended
	Jun. 30, 2018
Statement of Stockholders' Equity [Abstract]
Sale of Jiuxin Medicine	10.00%

XML

Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($)	3 Months Ended
	Jun. 30, 2019	Jun. 30, 2018
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$ (2,378,170)	$ (696,615)
Adjustments to reconcile net income to net cash provided by operating activities:
Bad debt direct write-off and provision	758,231	259,279
Depreciation and amortization	499,175	293,095
Stock based compensation	34,560	49,140
Change in fair value of purchase option derivative liability	(403,555)	6,974
Accounts receivable, trade	(959,680)	1,077,419
Notes receivable	81,326	(114,944)
Inventories and biological assets	2,851,652	(458,803)
Other receivables	371,054	(401,204)
Advances to suppliers	242,652	(775,014)
Other current assets	(450,042)	554,048
Long term deposit	58,630	(5,415)
Other noncurrent assets	(8,631)	(97,341)
Accounts payable, trade	(8,968,168)	(2,369,206)
Other payables and accrued liabilities	(105,522)	357,335
Customer deposits	116,398	20,290
Taxes payable	95,326	(281,235)
Net cash (used in) operating activities	(8,164,764)	(2,582,197)
CASH FLOWS FROM INVESTING ACTIVITIES:
Disposal of financial assets available for sale	14,658
Acquisition of equipment	(210,356)	(32,753)
Increase in intangible assets	(433,111)
Investment in a joint venture		(109,142)
Additions to leasehold improvements	(542,734)	(116,002)
Net cash used in investing activities	(1,171,543)	(257,897)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from notes payable	15,372,260	10,376,504
Repayment of notes payable	(16,167,012)	(15,512,104)
Proceeds from equity financing	9,273,077	7,629
Repayment of other payables-related parties	(460,000)	(84,014)
Net cash provided by (used in) financing activities	8,018,325	(5,211,985)
EFFECT OF EXCHANGE RATE ON CASH	(277,067)	(457,638)
DECREASE IN CASH AND CASH EQUIVALENTS AND RESTRICTED CASH	(1,595,049)	(8,509,717)
CASH AND CASH EQUIVALENTS AND RESTRICTED CASH, beginning of period	24,745,202
CASH AND CASH EQUIVALENTS AND RESTRICTED CASH, end of period	23,150,153	22,942,474
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for income taxes	$ 29,176	$ 27,832

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Description of Business and Organization

3 Months Ended

Jun. 30, 2019

Organization, Consolidation and Presentation of Financial Statements [Abstract]

DESCRIPTION OF BUSINESS AND ORGANIZATION

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 common stock 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”), Hangzhou Jiutong Medical Technology Co., Ltd (“Jiutong Medical”), and 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. On March 31, 2017, Jiuxin Management established a subsidiary, Lin’An Jiuzhou Pharmacy Co., Ltd (“Lin’An Jiuzhou”) to operates drugstores in Lin’an City. As of June 30, 2019, Jiuzhou Pharmacy has established the following companies, each of which operates a drugstore in Hangzhou City:

Entity Name	Date Established
Hangzhou Jiuli Pharmacy Co., Ltd (“Jiuli Pharmacy”)	May 22, 2017
Hangzhou Jiuxiang Pharmacy Co., Ltd (“Jiuxiang Pharmacy”)	May 26, 2017
Hangzhou Jiuyi Pharmacy Co., Ltd (“Jiuyi Pharmacy”)	June 8, 2017
Hangzhou Jiumu Pharmacy Co., Ltd (“Jiumu Pharmacy”)	July 21, 2017

During the three months ended June 30, 2019, the Company dissolved four independent pharmacies. Among the four dissolved pharmacies, two stores have merged into Jiuzhou Pharmacy and became Jiuzhou Pharmacy stores in Hangzhou. The other two stores’ licenses of government medical insurance, which qualify the stores for reimbursement from government, were transferred to two Jiuzhou Pharmacy stores in Hangzhou City.

The Company’s offline retail business also includes three 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 specialized in brand name development for nutritional supplements. In 2018, Jiuzhou Pharmacy invested a total of $741,540 (RMB5,100,000) in and held 51% of Zhejiang Jiuzhou Linjia Medical Investment and Management Co. Ltd (“Linjia Medical”), which is operating two new clinics in Hangzhou as of March 31, 2019. On March 29, 2019, Jiuzhou Pharmacy set up and currently holds 51% of the equity of Zhejiang AyiGe Medical Health Management Co., Ltd.(“Ayi Health”), which is intended to provide technical support such as IT and customer support to our health management business in the future.

The Company currently conducts its online retail pharmacy business through Jiuzhou Pharmacy, which holds the Company’s online pharmacy license. Prior to November 2015, the Company primarily conducted its online retail pharmacy business through Zhejiang Quannuo Internet Technology Co., Ltd. In May 2015, the Company established Zhejiang Jianshun Network Technology Co. Ltd, a joint venture with Shanghai Jianbao Technology Co., Ltd. (“Jianshun Network”), in order to develop its online pharmaceutical sales from large commercial medical insurance companies. However, Jianshun Network was dissolved as a result that the Company terminated the strategic cooperation with the Chinese pharmacy benefit management provider which used to help the Company earn customers through “Yikatong”, a pharmacy and health insurance benefit card in China. On September 10, 2015, Renovation set up a new entity, Jiuyi Technology, to provide additional technical support such as webpage development to our online pharmacy business. In November 2015, the Company sold all of the equity interests of Quannou Technology to six individuals for approximately $17,121 (RMB107,074). After the sale, its technical support function has been transferred back to Jiuzhou Pharmacy, which hosts our online pharmacy.

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 Medcine shares were sold to Hangzhou Kangzhou Biotech Co. Ltd. for a total proceeds of $79,625 (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 the three months ended June 30, 2019. 

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 ●     Operates a medical clinic adjacent to one of Jiuzhou Pharmacy’s  stores	VIE by contractual arrangements (2)
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)
Jiuxin Medicine	●     Established in PRC on December 31, 2003 ●     Acquired by Jiuzhou Pharmacy in August 2011 ●     10% of shares sold   ●     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)

Entity Name	Background	Ownership
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%
Jiuli Pharmacy	●      Established in the PRC on May 22, 2017 by Jiuzhou Pharmacy ●     Registered capital of $15,920 fully paid   ●     Operates a pharmacy in Hangzhou	VIE by contractual arrangements as a wholly-owned subsidiary of Jiuzhou Pharmacy (2)
Jiuxiang Pharmacy	●      Established in the PRC on May 26, 2017 by Jiuzhou Pharmacy ●     Registered capital of $15,920 fully paid   ●     Operates a pharmacy in Hangzhou	VIE by contractual arrangements as a wholly-owned subsidiary of Jiuzhou Pharmacy (2)
Jiuyi Pharmacy	●     Established in the PRC on June 8, 2017 by Jiuzhou Pharmacy ●     Registered capital of $15,920 fully paid   ●     Operates a pharmacy in Hangzhou	VIE by contractual arrangements as a wholly-owned subsidiary of Jiuzhou Pharmacy (2)
Jiumu Pharmacy	●     Established in the PRC on July 21, 2017 by Jiuzhou Pharmacy ●     Registered capital of $15,920 fully paid   ●     Operates a pharmacy in Hangzhou	VIE by contractual arrangements as a wholly-owned subsidiary of Jiuzhou Pharmacy (2)

Entity Name	Background	Ownership
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%
Lin’An Jiuzhou	●     Established in the PRC in March 31, 2017 ●     100% held by Jiuxin Management ●     Registered capital of RMB 5 million ●     Explore retail pharmacy market in Lin’An City	100%
Linjia Medical	●     Established in the PRC in September27, 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)
Ayi Health	●     Established in the PRC in March 29, 2019 ●     51% held by Jiuzhou Pharmacy ●     Registered capital of RMB 10 million ●     Provide technical Support for medial 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, Mr. Chong’an Jin 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, operating agreement, equity pledge agreement, voting rights agreement and 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 subsidiary under the control of Jiuzhou Pharmacy, Jiuxin Medicine and Shouantang Bio are consolidated into the financial statements of the Company.

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Liquidity

3 Months Ended

Jun. 30, 2019

Liquidity [Abstract]

LIQUIDITY

Note 2 – LIQUIDITY

Our accounts have been prepared in accordance with 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. Our ability to continue as a going concern depends upon aligning our sources of funding (debt and equity) with our expenditure requirements and repayment of the short-term debts as and when they become due.

The drug retail business is a highly competitive industry in PRC. Several large drugstore chains and a variety of single stores operate in Hangzhou City and Zhejiang Province. In order to increase our competition advantages and gain more local retail pharmacy market share, during fiscal year 2018, we opened as many as fifty-seven new stores in Hangzhou. As a result, we incurred significant incremental expense related to rental, labor hiring and training, and marketing activities. As the retail pharmaceutical market becomes more competitive in recent years, a new store usually cannot make profit in its operation until a year later. In fact, we incurred significant expense with limited incremental revenue in the period we opened new stores. At their openings, except for four stores, almost all of the new stores were without government insurance reimbursement certificates. In fact, it usually takes more than one year for a new store to apply for and obtain the local government insurance reimbursement certificate. As of June 2019, we have obtained thirty reimbursement certificates for stores opened in fiscal 2018 and later. Historically, sales reimbursed from the government insurance agency contributes more than half of total revenue in a mature store. We are active in the process of applying certificates for all of our new stores. In the future, as more and more stores obtain certificates, we expect our new store revenue to increase and eventually contribute positive operating cash flow.

The Company’s principal sources of liquidity consist of existing cash, equity financing, bank facilities from local banks as well as personal loans from its principal shareholders if necessary. On April 15, 2019, the Company closed a registered direct offering of 4,000,008 shares of common stock at $2.50 per share with gross proceeds of $10,000,020 from its effective shelf registration statement on Form S-3 pursuant to a Securities Purchase Agreement dated April 11, 2019 (the “2019 Securities Purchase Agreement”), by and among the Company and the investors named therein. The Company has a credit line agreement from a local bank as displayed in detail in Note 14. Approximately $3.01 million bank credit line was still available for further borrowing as of June 30, 2019. Additionally, Jiuzhou Pharmacy obtained a credit line of approximately $7,280,100 (RMB50,000,000) from Haihui Commercial Factoring (Tianjin) Co. Ltd for three years starting from July 26, 2019. Any borrowing therefrom is guaranteed by a third-party guarantor company, and secured by the Company’s assets pursuant to a collateral agreement, as well as the personal guarantees of some of its principal shareholders.

However, in the event the banks withdraw their credit lines with us, or our existing store performance suddenly deteriorates due to unexpected government policy change, or our operating license is canceled as a result of violation of industry regulation, the Company may or may not obtain alternative financing resources to support its continuing operation. At that time, the Company may not be able to continue to present itself on a going concern basis.

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Summary of Significant Accounting Policies

3 Months Ended

Jun. 30, 2019

Accounting Policies [Abstract]

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Note 3 – 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.

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.

Use of estimates

The preparation of unaudited condensed consolidated financial statements in conformity with US 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 unaudited condensed consolidated financial statements relate to the assessment of the carrying values of accounts receivable, advances to suppliers and related allowance for doubtful accounts, useful lives of property and equipment, inventory reserve and fair value of its purchase option derivative liability. 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.

The Company's financial assets and liabilities, which include financial instruments as defined by FASB ASC 820, include cash and cash equivalents, accounts receivable, accounts payable, long-term debt and derivatives. The carrying amounts of cash and cash equivalents, financial assets available for sales, accounts receivable, notes receivables, and accounts payable are a reasonable approximation of fair value due to the short maturities of these instruments (Level 1). The carrying amount of notes payable approximates fair value based on borrowing rates of similar bank loan currently available to the Company (Level 2) (See Note 14). The carrying amount of the Company's derivative instruments is recorded at fair value and is determined based on observable inputs that are corroborated by market data (Level 2). The carrying amount of the Financial assets available for sale is recorded at fair value and is determined based on unobservable inputs (Level 3). As of June 30 2019, the fair values of our derivative instruments were carried at fair value (See Note 18). As of June 30 2019, the fair values of our Financial liability were carried at fair value (See Note 19)

	Active Market for Identical Assets (Level 1)		Observable Inputs (Level 2)		Unobservable Inputs (Level 3)		Total Carrying Value
Cash and cash equivalents and restricted cash		23,150,153		-	$	-		23,150,153
Financial assets available for sale						162,273		162,273
Notes payable		-		24,574,955		-		24,574,955
Financial liability						80,081		80,081
Warrants liability		-		61,693	$	-		61,693
Total		23,150,153		24,636,648	$	242,354		48,029,155

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 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.

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.

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, 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 of our merchandise, such as prescription and OTC drugs, are not allowed to be returned after the customers leave the counter. Return 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. Based on historical experience, a reserve for potential loss from denial of reimbursement on certain unqualified drugs is made to the receivables from the government agency. Revenue from medical services is recognized after the service has been rendered to a customer. As revenue from medical services are minimal compared to pharmacy retail sales, it is included as part of the pharmacy retail sales.

Online pharmacy sales

The online pharmacy sells various health products except for prescription drugs. 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. Our sales policy allows for the return of certain merchandises without reason within seven days after 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 value added tax ("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.

Disaggregation of Revenue

The following table disaggregates the Company's revenue by major source in each segment for the three months ended June 30, 2019:

For the three  months ended June 30	2019		2018
Retail drugstores
Prescription drugs	$	5,695,286	$	5,809,215
OTC drugs		7,240,228		6,964,828
Nutritional supplements		1,231,133		945,206
TCM		1,104,050		1,582,568
Sundry products		298,198		204,861
Medical devices		1,166,093		461,663
Total retail revenue	$	16,734,988	$	15,968,341
Online pharmacy
Prescription drugs	$	-	$	-
OTC drugs		1,024,602		775,993
Nutritional supplements		107,194		143,096
TCM		13,681		4,929
Sundry products		438,736		1,037,166
Medical devices		859,392		60,685
Total online revenue	$	2,443,605	$	2,021,869
Drug wholesale
Prescription drugs	$	4,880,491	$	3,419,536
OTC drugs		1,074,261		1,274,919
Nutritional supplements		21,691		25,381
TCM		98,828		21,851
Sundry products		5,682		4,755
Medical devices		21,238		35,914
Total wholesale revenue	$	6,102,191	$	4,782,356
Total revenue	$	25,280,784	$	22,772,566

Contract Balances

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 following table provides information about receivables and contract liabilities from contracts with customers:

	June 30, 2019		March 31, 2019
Trade receivable(included in accounts receivable, net)	$	8,590,075	$	8,692,514
Contract liabilities (included in accrued expenses)		1,494,018		1,689,099

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 Condensed Balance Sheets to total cash, cash equivalents and restricted cash in the Consolidated Condensed Statements of Cash Flows as of June 30, 2019 and March 31, 2019:

	June 30, 2019		March 31, 2019
Cash and cash equivalents	$	8,341,167	$	9,322,463
Restricted cash		14,808,986		15,422,739
Cash, cash equivalents and restricted cash	$	23,150,153	$	24,745,202

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 historical trends.

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 aging method to estimate the allowance for anticipated uncollectible receivable balances. Under the aging method, bad debt percentages are determined by management, based on historical experience and the current economic climate, are applied to customers' balances categorized by the number of months the underlying invoices have remained outstanding. At each reporting period, the allowance balance is adjusted to reflect the amount computed as a result of the aging 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.

Advances to suppliers

Advances to suppliers consist of prepayments to our vendors, such as pharmaceutical manufacturers and other distributors. Since the acquisition of Jiuxin Medicine, we have transferred almost all logistics services of our retail drugstores to Jiuxin Medicine. Jiuzhou Pharmacy only directly purchases certain non-medical products, such as certain nutritional supplements. As a result, almost all advances to suppliers are made by Jiuxin Medicine.

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 historical experience and any specific supplier issues, such as discontinuing of inventory supply, that have been identified. If we have difficulty receiving products from a vendor, we take the following steps: cease purchasing products from such 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 the prepayments should be reserved or written off.

Inventories

Inventories are stated at the lower of cost or market value. Cost is determined using the first in first out (FIFO) method. Market value is the lower of replacement cost or net realizable value. 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.

The estimated useful lives of the Company's intangible assets are as follows:

	Estimated Useful Life
Land use rights	50 years
Software	3 years

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. There were no fixed assets and farmland assets impaired for the three months ended June 30, 2019.

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 June 30, 2019 and 2018.

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.

Stock based compensation

The Company follows the provisions of FASB ASC 718, "Compensation — Stock Compensation," which establishes accounting standards for non-employee and employee stock-based awards. Under the provisions of FASB ASC 718, the fair value of stock issued is used to measure the fair value of services received as the Company believes such approach is a more reliable method of measuring the fair value of the services. For non-employee stock-based awards, fair value is measured based on the value of the Company's common stock on the date that the commitment for performance by the counterparty has been reached or the counterparty's performance is complete. The fair value of the equity instrument is calculated and then recognized as compensation expense over the requisite performance period. For employee stock-based awards, share-based compensation cost is measured at the grant date based on the fair value of the award and is recognized as expense with graded vesting on a straight–line basis over the requisite service period for the entire award.

Advertising and promotion costs

Advertising and promotion costs are expensed as incurred and amounted to $80,049 and $191,054 for the three months ended June 30, 2019 and 2018, 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 June 30, 2019 and at March 31, 2019 were translated at 1 RMB to 0.1456 USD and at 1 RMB to 0.1490 USD, respectively. The average translation rates applied to income and cash flow statement amounts for the three months ended June 30, 2019 and 2018 were at 1 RMB to 0.1466 USD and at 1 RMB to 0.1511 USD, respectively.

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 72,800) per bank. As of June 30, 2019 and March 31, 2019, the Company had deposits totaling $23,061,379 and $24,730,736 that were covered by such limited insurance, respectively. Any balance over RMB 500,000 (USD 72,800) per bank in PRC will not be covered. To date, the Company has not experienced any losses in such accounts.

For the three months ended June 30, 2019, two vendors accounted for 49.2% of the Company's total purchases and two vendors accounted for more than 10% of total advances to suppliers. For the three months ended June 30, 2018, two vendors collectively accounted for 46.2% of the Company's total purchases and two suppliers accounted for more than 10% of total advances to suppliers.

For the three months ended June 30, 2019, no customer accounted for more than 10% of the Company's total sales and more than 10% of total accounts receivable. For the three months ended June 30, 2018, no customer accounted for more than 10% of the Company's total sales or more than 10% of total accounts receivable.

Leases

In February 2016, the Financial Accounting Standards Board (the "FASB") issued ASU 2016-02, Leases (Topic 842). Lessees are required to recognize a right-of-use asset and a lease liability for virtually all of their leases (other than leases that meet the definition of a short-term lease). The liability is equal to the present value of lease payments. The asset is based on the liability, subject to certain adjustments, such as for initial direct costs. For income statement purposes, a dual model was retained, requiring leases to be classified as either operating or finance leases. Operating leases result in straight-line expense (similar to operating leases under the prior accounting standard) while finance leases result in a front-loaded expense pattern (similar to capital leases under the prior accounting standard). Lessor accounting is similar to the prior model, but updated to align with certain changes to the lessee model (e.g., certain definitions, such as initial direct costs, have been updated) and the new revenue standard, ASU 2014-9.

The Company adopted this new accounting standard on April 1, 2019 on a modified retrospective basis and applied the new standard to all leases through a cumulative-effect adjustment to beginning retained earnings. As a result, comparative financial information has not been restated and continues to be reported under the accounting standards in effect for those periods. The Company elected the package of practical expedients permitted under the transition guidance within the new standard, which includes, among other things, the ability to carry forward the existing lease classification. On April 1, 2019, the Company recorded an after-tax transition adjustment to increase retained earnings by approximately $422,354. The new standard had a material impact on the unaudited condensed consolidated balance sheet, but did not materially impact the Company's consolidated operating results and had no impact on the Company's cash flows. The following is a discussion of the Company's lease policy under the new lease accounting standard:

The Company determines if an arrangement contains a lease at the inception of a contract. Right-of-use assets represent the Company's right to use an underlying asset for the lease term and lease liabilities represent the Company's obligation to make lease payments arising from the lease. Right-of-use assets and lease liabilities are recognized at the commencement date based on the present value of the remaining future minimum lease payments. As the interest rate implicit in the Company's leases is not readily determinable, the Company utilizes its borrowing rates set by The Central Bank of the People's Republic of China, determined by class of underlying asset, to discount the lease payments. The operating lease right-of-use assets also include lease payments made before commencement and exclude lease incentives.

The Company leases premises for retail drugstores, and offices under non-cancellable operating leases. Operating lease payments are expensed over the term of lease. A majority of the Company's retail drugstore leases have a 3 to 10 year term, and no lease terms include options to extend. The Company leases don't include options to extend nor any restrictions or covenants. The Company does not have any leases entered into but which have not yet commenced. The Company has historically been able to renew a majority of its drugstores leases. Under the terms of the lease agreements, the Company has no legal or contractual asset retirement obligations at the end of the lease. See Note 13 ''Leases'' for additional information.

Impact of New Lease Standard on Balance Sheet Line Items

As a result of applying the new lease standard using a modified retrospective method, the following adjustments were made to accounts on the condensed consolidated balance sheet as of April 1, 2019:

	Impact of Change in Accounting Policy
	As Reported						Adjusted
	March 31, 2019			Adjustments			April 1, 2019
Other current assets		2,063,375			(717,414	)		1,345,961
Total current assets		56,202,981			(717,414	)		55,485,567
Operating lease right-of-use assets		-			15,276,388			15,276,388
Total assets		72,730,636			14,558,974			87,289,610
								-
Current portion of operating lease liabilities		-			4,718,610			4,718,610
Total current liabilities		55,212,286			4,718,610			59,930,896
Long-term operating lease liabilities		-			9,418,011			9,418,011
Total liabilities		55,759,469			14,136,621			69,896,090
								-
Retained earnings		(30,587,468	)		422,354			(30,165,114	)
Total shareholders' equity		18,165,206			422,354			18,587,560
Total  equity		16,971,167			422,354			17,393,521

Recent Accounting Pronouncements

In June 2016, the FASB issued ASU 2016-13, "Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments," providing financial statement users with more decision-useful information about the expected credit losses on financial instruments and other commitments to extend credit held by a reporting entity at each reporting date. For public business entities that are U.S. Securities and Exchange Commission (SEC) filers, the amendments in this Update are effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. All entities may adopt the amendments in this Update earlier as of the fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. We are currently evaluating the impact of the adoption of ASU 2016-13 on our consolidated financial statements.

In August 2016, the FASB issued ASU 2016-15, "Statement of Cash Flows (Topic 230):Classification of Certain Cash Receipts and Cash Payments," addressing eight specific cash flow issues with the objective of reducing the existing diversity in practice. The amendments in this Update are effective for public business entities for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted, including adoption in an interim period. If an entity early adopts the amendments in an interim period, any adjustments should be reflected as of the beginning of the fiscal year that includes that interim period. An entity that elects early adoption must adopt all of the amendments in the same period. The amendments in this Update should be applied using a retrospective transition method to each period presented. If it is impracticable to apply the amendments retrospectively for some of the issues, the amendments for those issues would be applied prospectively as of the earliest date practicable. The impact of adoption on its Condensed Consolidated Financial Statements for any period presented is not material.

In July 2017, the FASB issued ASU No. 2017-11, "Earnings Per Share (Topic 260), Distinguishing Liabilities from Equity (Topic 480), Derivatives and Hedging (Topic 815): I. Accounting for Certain Financial Instruments with Down Round Features; II. Replacement of the Indefinite Deferral for Mandatorily Redeemable Financial Instruments of Certain Nonpublic Entities and Certain Mandatorily Redeemable Noncontrolling Interests with a Scope Exception". Part I of this Update addresses the complexity of accounting for certain financial instruments with down round features. Part II of this Update addresses the difficulty of navigating Topic 480, Distinguishing Liabilities from Equity, because of the existence of extensive pending content in the FASB Accounting Standards Codification®. We are currently evaluating the impact of the adoption of ASU 2017-11 on our consolidated financial statements.

In January 2017, the FASB issued ASU No. 2017-04, "Intangibles—Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment" ("ASU 2017-04"), which removes Step 2 from the goodwill impairment test. An entity will apply a one-step quantitative test and record the amount of goodwill impairment as the excess of a reporting unit's carrying amount over its fair value, not to exceed the total amount of goodwill allocated to the reporting unit. The new guidance does not amend the optional qualitative assessment of goodwill impairment. Public business entity that is a U.S. Securities and Exchange Commission filer should adopt the amendments in this ASU for its annual or any interim goodwill impairment test in fiscal years beginning after December 15, 2019. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. ASU 2017-4 has no impact on our consolidated financial statements.

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Trade Accounts Receivable

3 Months Ended

Jun. 30, 2019

Receivables [Abstract]

TRADE ACCOUNTS RECEIVABLE

NOTE 4 – TRADE ACCOUNTS RECEIVABLE

Trade accounts receivable consisted of the following:

	June 30, 2019			March 31, 2019
Accounts receivable	$	12,395,705		$	11,939,364
Less: allowance for doubtful accounts		(3,805,630	)		(3,246,850	)
Trade accounts receivable, net	$	8,590,075		$	8,692,514

For the three months ended June 30, 2019 and 2018, $36,068 and $30,583 in accounts receivable were directly written off, respectively. As of June 30, 2019 and March 31, 2018 no trade accounts receivables were pledged as collateral for borrowings from financial institutions.

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Other Current Assets

3 Months Ended

Jun. 30, 2019

Prepaid Expense and Other Assets, Current [Abstract]

OTHER CURRENT ASSETS

Note 5 – OTHER CURRENT ASSETS

Other current assets consisted of the following:

	June 30, 2019		March 31, 2019
Rental deposits (1)	$	1,466,714	$	1,979,852
Prepaid and other current assets		90,442		83,523
Total	$	1,557,156	$	2,063,375

(1) The balance as of June 30, 2019 includes short-term refundable rental security deposits only, while the balance as of March 31, 2019  includes security deposits of $1,444,026 and prepaid rental of $ 535,826.

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Property and Equipment

3 Months Ended

Jun. 30, 2019

Property, Plant and Equipment [Abstract]

PROPERTY AND EQUIPMENT

Note 6 – PROPERTY AND EQUIPMENT

Property and equipment consisted of the following:

	June 30, 2019			March 31, 2019
Building	$	6,072,001		$	6,436,297
Leasehold improvements		9,280,768			8,944,025
Farmland development cost		1,741,311			1,781,627
Office equipment and furniture		5,507,064			5,470,084
Motor vehicles		539,238			551,927
Total		23,140,382			23,183,960
Less: Accumulated depreciation		(12,227,499	)		(12,111,409	)
Impairment*		(2,292,125	)		(2,345,193	)
Property and equipment, net	$	8,620,758		$	8,727,358

* The variance of impairment from March 31, 2019 to June 30, 2019 is solely caused by exchange rate variance.

Depreciation expenses for property and equipment totaled $441,559 and $219,759 for the three months ended June 30, 2019 and 2018, respectively. There were no fixed assets impaired in the three months ended June 30, 2019 and June 30, 2018.

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Advances to Suppliers

3 Months Ended

Jun. 30, 2019

Advances to Suppliers [Abstract]

ADVANCES TO SUPPLIERS

Note 7 – 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 June 30, 2019 and March 31, 2019, advance to suppliers consist of the following:

	June 30, 2019			March 31, 2019
Advance to suppliers*	$	2,180,129		$	2,477,226
Less: allowance for unrefundable advances		(635,997	)		(526,974	)
Advance to suppliers, net	$	1,544,132		$	1,950,252

For the three months ended June 30, 2019 and 2018, none of the advances to suppliers were written off against previous allowance for unrefundable advances, respectively.

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Inventory

3 Months Ended

Jun. 30, 2019

Inventory Disclosure [Abstract]

INVENTORY

Note 8 – INVENTORY

Inventory consisted of finished goods, valued at $10,806,698 and $13,955,202 as of June 30, 2019 and March 31, 2019, respectively. The Company constantly monitors its potential obsolete products and is allowed to return products close to their expiration dates 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 June 30, 2019 and March 31, 2019.

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Farmland Assets

3 Months Ended

Jun. 30, 2019

Farmland Assets [Abstract]

FARMLAND ASSETS

Note 9 – FARMLAND ASSETS

Farmland assets consist of ginkgo trees planted in 2012 and expected to be harvested and sold in several years. As of June 30, 2019 and March 31, 2019, farmland assets are valued as follows:

	June 30,			March 31,
	2019			2019
Farmland assets	$	2,224,942		$	2,341,537
Less: Impairment*		(1,481,968	)		(1,516,278	)
Farmland assets, net	$	742,974		$	825,259

* The variance of impairment is caused by exchange rate variance.

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Long Term Refundable Deposits, Landlords

3 Months Ended

Jun. 30, 2019

Long Term Deposits, Landlords [Abstract]

LONG TERM REFUNDABLE DEPOSITS, LANDLORDS

Note 10 – LONG TERM REFUNDABLE DEPOSITS, LANDLORDS

As of June 30, 2019 and March 31, 2019, long term deposits amounted to $2,050,219 and $2,157,275, respectively. Long term deposits are money deposited with, or advanced to, landlords for the purpose of securing retail store leases that the Company does not anticipate being returned within the next twelve months. Most of the Company’s landlords require a minimum payment of nine months’ rent, paid upfront, plus additional deposits.

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Other Noncurrent Assets

3 Months Ended

Jun. 30, 2019

Other Assets, Noncurrent Disclosure [Abstract]

OTHER NONCURRENT ASSETS

Note 11 – OTHER NONCURRENT ASSETS

Other noncurrent assets consisted of the following:

	June 30, 2019		March 31, 2019
Forest land use rights*	$	1,065,434	$	1,103,235
Others		112,269		92,962
Total	$	1,177,703	$	1,196,197

* The prepayment for lease of forest land use rights is a payment made to a local government in connection with entering into 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 forest land use right was approximately $6,885 and $7,096 for the three months ended June 30, 2019 and 2018, respectively.

The Company’s amortizations of the prepayment for lease of land use right for the next five years and thereafter are as follows:

For the year ending June 30,	Amount
2020	$	27,541
2021		27,541
2022		27,541
2023		27,541
2024		27,541
Thereafter		796,935

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Leases

3 Months Ended

Jun. 30, 2019

Leases [Abstract]

Leases

Note 12 – Leases

The Company leases most of its retail stores corporate offices under operating leases, typically with initial terms of  3 to 10 years, and no lease terms include options to extend. The Company leases don’t include options to extend nor any restrictions or covenants. The Company does not have any leases entered into but which have not yet commenced. The net lease cost for the three months ended June 30, 2019 is $1,294,591. Supplemental cash flow information related to leases for the three months ended June 30, 2019 is as follows:

Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows paid for operating leases	$	1,115,138
Right-of-use assets obtained in exchange for lease obligations:
Operating leases		-

Supplemental balance sheet information related to leases as of June 30, 2019 is as follows:

Operating leases:
Operating lease right-of-use assets	$	13,564,115
Current portion of operating lease liabilities	$	4,738,632
Long-term operating lease liabilities		7,918,900
Total operating lease liabilities	$	12,657,532
Weighted average remaining lease term
Operating leases		4.5
Weighted average discount rate
Operating leases		2.10	%

The following table summarizes the maturity of lease liabilities under operating leases as of June 30, 2019:

	Operating
For the year ending June 30,	Leases
2020	$	4,739,995
2021		3,691,865
2022		2,879,742
2023		1,961,837
2024		1,398,480
Thereafter		1,444,296
Total lease payments (2)		16,116,215
Less: imputed interest		(3,458,683	)
Total lease liabilities	$	12,657,532

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Intangible Assets

3 Months Ended

Jun. 30, 2019

Goodwill and Intangible Assets Disclosure [Abstract]

INTANGIBLE ASSETS

Note 13 – INTANGIBLE ASSETS

Net intangible assets consisted of the following at:

	June 30, 2019			March 31, 2019
License (1)	$	1,866,487		$	1,909,700
Software(2)		1,091,268			676,336
Land use rights (3)		1,419,845			1,452,718
Total intangible assets		4,377,600			4,038,754
Less: accumulated amortization		(488,752	)		(441,431	)
Intangible assets, net	$	3,888,848		$	3,597,323

Amortization expense of intangibles amounted to $58,466 and $73,336 for the three months ended June 30, 2019 and 2018, respectively.

(1)	This represents the fair value of the licenses of insurance applicable drugstores acquired from Sanhao Pharmacy, a drugstore chain Jiuzhou Pharmacy acquired in 2014. 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 September 2017, the Company acquired several new stores for the purpose of the Municipal Social Medical Reimbursement Qualification Certificates. The owners of these acquired drugstores agreed to cease their stores’ business and liquidate all of the stores’ accounts before Jiuzhou Pharmacy acquired them. As a result, Jiuzhou Pharmacy has not obtained any assets or liabilities from the stores, but was able to transfer the certificates to our new stores opened at the same time.
(2)	They are 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. As of June 30, 2019, the SAP system has a total value of $345,906(RMB2,375,697). The internet Clinic Diagnosis System costs approximately $ (RMB 2,688,709). The system is used to strengthen our ability to perform online diagnosis which may increase more customer spending.  Chronic Disease costs approximately $ (RMB ) and is used to better manage and monitor our members’ health.
(3)	In July 2013, the Company purchased the land use rights of a plot of farmland in Lin’an, Hangzhou, intended for the establishment of an herb processing plant in the future. However, as our farming business in Lin’an has not grown, the Company does not expect completion of the plant in the near future.

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Notes Payable

3 Months Ended

Jun. 30, 2019

Notes Payable [Abstract]

NOTES PAYABLE

Note 14 – NOTES PAYABLE

The Company has credit facilities with Hangzhou United Bank ("HUB") that provided working capital in the form of the following bank acceptance notes at June 30, 2019 and March 31, 2019:

		Origination	Maturity	June 30,		March 31,
Beneficiary	Endorser	date	date	2019		2019
Jiuzhou Pharmacy(1)	HUB	11/06/18	05/06/19				500,857
Jiuzhou Pharmacy(1)	HUB	12/12/18	06/12/19				2,236,559
Jiuzhou Pharmacy(1)	HUB	12/20/18	06/20/19				1,072,606
Jiuzhou Pharmacy(1)	HUB	12/29/18	06/29/19		324,592		5,504,943
Jiuzhou Pharmacy(1)	HUB	02/14/18	08/14/19		2,528,784		2,587,331
Jiuzhou Pharmacy(1)	HUB	03/06/18	09/06/19		6,451,364		6,600,727
Jiuxin Medicine(1)	HUB	10/11/18	04/11/19				4,461,531
Jiuxin Medicine(1)	HUB	11/06/18	05/06/19				2,987,119
Jiuzhou Pharmacy(1)	HUB	06/05/19	12/05/19		4,384,517
Jiuzhou Pharmacy(1)	HUB	06/28/19	12/28/19		3,844,927
Jiuxin Medicine(1)	HUB	04/10/19	10/10/19		4,112,456
Jiuxin Medicine(1)	HUB	04/15/19	10/15/19		145,602
Jiuxin Medicine(1)	HUB	05/10/19	11/10/19		2,782,713
Jiuzhou Pharmacy(1)	HUB				-		-
Total				$	24,574,955	$	25,951,673

(1) As of June 30, 2019, the Company had $24,574,955 (RMB 168,781,714) of notes payable from HUB. The Company is required to hold restricted cash in the amount of $14,626,921 (RMB 100,458,244) with HUB as collateral against these bank notes. Included in the restricted cash is a total of $10,209,998 three-year deposit (RMB 70,122,647) deposited into HUB as a collateral for current and future notes payable from HUB. As of March 31, 2019, the Company had $25,951,673 (RMB 174,203,868) of notes payable from HUB. The Company is required to hold restricted cash in the amount of $15,114,740 (RMB 101,459,590) with HUB as collateral against these bank notes. Included in the restricted cash is a total of $10,446,381 three-year deposit (RMB 70,122,647) deposited into HUB as a collateral for current and future notes payable from HUB.

As of June 30, 2019, the Company had a credit line of approximately $12.96 million in the aggregate from HUB, and BOH. By putting up three-year deposit of $10.21 million and the restricted cash of $4.42 million deposited in the banks, the total credit line was $27.59 million. As of June 30, 2019, the Company had approximately $24.57 million of bank notes payable and approximately $3.01 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.

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Taxes

3 Months Ended

Jun. 30, 2019

Income Tax Disclosure [Abstract]

TAXES

Note 15 – TAXES

Income tax

The Company accounts for income taxes under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis, operating losses and tax credit carryforwards. Deferred tax assets and liabilities are calculated using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the period that includes the enactment date. Valuation allowances are provided against deferred income tax assets for amounts which are not considered "more likely than not" to be realized.

The Company is subject to income taxes on an entity basis on income arising in or derived from the tax jurisdiction in which each entity is domiciled.

Entity	Income Tax Jurisdiction
Jo-Jo Drugstores	United States
Renovation	Hong Kong, PRC
All other entities	Mainland, PRC

For the three months ended June 30, 2019 and 2018, the components of income tax expense consist of the following:

	For the three months ended
	June 30,
	2019		2018
Current:
Federal	-		-
State	-		-
Foreign		8,388		57,169
		8,388		57,169
Deferred:
Federal		-		-
State		-		-
Foreign		-		-
		-		-
Provision for income taxes		8,388		57,169

The following table reconciles the U.S. statutory tax rates with the Company's effective tax rate for the three months ended June 30, 2019 and 2018:

	For the three months ended
	June 30,
	2019			2018
U.S. Statutory rates		21.0	%		21.0	%
Foreign income not recognized in the U.S.		(21.0	)		(21.0	)
China income taxes		25.0			25.0
Change in valuation allowance(1)		(25.0	)		(25.0	)
Non-deductible expenses-permanent difference(2)		0.4			8.9
Effective tax rate		(0.4	)%		(8.9	)%

(1) Represents a non-taxable expense reversal due to overall decrease in allowance for accounts receivable and advances to suppliers.

(2) The (0.4)% and (8.9)% rate adjustments for the three months ended June 30, 2019 and 2018 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 components of the Company's net deferred tax assets are as follows:

	As of 6/30/2019			As of 3/31/2019
Allowance		1,152,638			986,665
Long-lived assets impairment		573,031			586,298
Depreciation and Amortization		-			-
Accrued expense		1,628,792			1,569,683
Net operating loss carry forward		1,438,560			1,164,735
Foreign Tax Credit Carryover		195,000			195,000
Total deferred tax assets (liabilities):		4,988,021			4,502,381
Valuation allowance		(4,988,021	)		(4,502,381	)
Net deferred tax assets (liabilities)		-			-

The Company regularly assesses the realizability of its deferred tax assets and establishes a valuation allowance if it is more-likely-than-not that some portion of the deferred tax assets will not be realized. We weigh all available positive and negative evidence, including earnings history and results of recent operations, scheduled reversals of deferred tax liabilities, projected future taxable income, and tax planning strategies. Assumptions used to forecast future taxable income often require significant judgment. More weight is given to objectively verifiable evidence. In the event we determine that we would not be able to realize all or part of our net deferred tax assets in the future, a valuation allowance will be established against deferred tax assets in the period in which we make such determination. The need to establish a valuation allowance against deferred tax assets may cause greater volatility in our effective tax rate.

As of June 30, 2019 and March 31, 2019, the estimated net operating loss carry forwards for U.S. income tax purposes amounted to $816,908, which may be available to reduce future years' taxable income. These carry forwards will expire if not utilized by 2032. In addition, the Company carries a Foreign tax credit of $195,000. As of June 30, 2019 and March 31, 2019, the estimated net operating loss carry forwards for Hong Kong income tax purposes amounted to $1,993,833 and $1,960,933, which may be available to reduce future years' taxable income. As of June 30, 2019 and March 31, 2019, the estimated net operating loss carry forwards for China income tax purposes amounted to $3,752,108 and $2,678,523, which may be available to reduce future years' taxable income. These carry forwards will expire if not utilized in the next five years.

On December 22, 2017, the U.S. federal government enacted the 2017 Tax Act. The 2017 Tax Act includes a number of changes in existing tax law impacting businesses, including the transition tax, a one-time deemed repatriation of cumulative undistributed foreign earnings and a permanent reduction in the U.S. federal statutory rate from 35% to 21%, effective on January 1, 2018. ASC 740 requires companies to recognize the effect of tax law changes in the period of enactment, accordingly, the effects must be recognized on companies' calendar year-end financial statements, even though the effective date for most provisions is January 1, 2018. As a result, we re-measured our net U.S. deferred tax assets at the 21% future tax rate. As of December 31, 2017, for estimating our foreign undistributed earnings according to the 2017 Tax Act, we estimated an aggregate deficit in "accumulated earnings and profits," which is how foreign undistributed earnings are determined for the one-time transition tax and for U.S. income tax purposes. As a result, the one-time transition tax did not have a significant impact on the Company's FY18 tax provision and there was no undistributed accumulated earnings and profits as of June 30, 2019.

The Company recorded net unrecognized tax benefits of $0.0 million as of June 30, 2019. It is our policy to classify accrued interest and penalties related to unrecognized tax benefits in the provision for income taxes.

Audit periods remain open for review until the statute of limitations has passed, which in the PRC is usually 5 years as the Company's most significant tax jurisdiction. The completion of review or the expiration of the statute of limitations for a given audit period could result in an adjustment to the Company's liability for income taxes. Any such adjustment could be material to the Company's results of operations for any given quarterly or annual period based, in part, upon the results of operations for the given period.

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Postretirement Benefits

3 Months Ended

Jun. 30, 2019

Retirement Benefits [Abstract]

POSTRETIREMENT BENEFITS

Note 16 – 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 $341,024 and $363,784 in employment benefits and pension for the three months ended June 30, 2019 and 2018, respectively.

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Related Party Transactions and Arrangements

3 Months Ended

Jun. 30, 2019

Related Party Transactions [Abstract]

RELATED PARTY TRANSACTIONS AND ARRANGEMENTS

Note 17 – RELATED PARTY TRANSACTIONS AND ARRANGEMENTS

Amounts payable to related parties are summarized as follows:

	June 30, 2019		March 31, 2019
Due to a director and CEO (1) :		326,778		795,179
Total	$	326,778	$	795,179

(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. In the three months ended June 30, 2019, the Company paid certain borrowings back to CEO.

The Company leases from Mr. Lei Liu a retail space; the lease expires in September 2020. Rent expenses totaled $6,785 and $4,532 for the three months ended June 30, 2019 and 2018, respectively. The amounts owed under the lease for the three months ended June 30, 2019 and 2018 were not paid to Mr. Liu as of June 30, 2019.

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). Mr. Lei Liu owns 51% of Hangzhou Kangzhou Biotech Co. Ltd.

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Warrants

3 Months Ended

Jun. 30, 2019

Warrants [Abstract]

WARRANTS

Note 18 – WARRANTS

In connection with the registered direct offering closed on July 19, 2015, the Company issued to an investor a warrant to purchase up to 600,000 shares of common stock at an exercise price of $3.10 per share. The warrant became exercisable on January 19, 2016 and will expire on January 18, 2021. 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. 72,000 shares. Such warrant has the same terms as the warrant issued to investor in the offering.

The fair value of the warrants issued to purchase 672,000 shares as described above was estimated by using the binominal pricing model with the following assumptions:

	Common Stock Warrants			Common Stock Warrants
	June 30, 2019 (1)			March 31, 2019
Stock price	$	1.10		$	2.62
Exercise price	$	3.10		$	3.10
Annual dividend yield		0	%		0	%
Expected term (years)		1.56			1.80
Risk-free interest rate		1.75	%		2.27	%
Expected volatility		72.47	%		67.69	%

(1) As of June 30, 2019, the warrants had not been exercised.

Upon evaluation, the warrants meet the definition of a derivative under FASB ASC 815, as the Company cannot avoid a net cash settlement under certain circumstances. Accordingly, the fair value of the warrants was classified as a liability of $496,217 as of March 31, 2017. For the three months ended June 30, 2019 and June 30, 2018, the Company recognized a gain of $403,555 and a loss of $6,974 for the investor warrant and placement agent warrant, from the change in fair value of the warrant liability. As a result, the warrant liability is carried on the consolidated balance sheets at the fair value of $61,693 and $465,248 for the investor warrant and placement agent warrant, collectively, as of June 30, 2019 and March 31, 2019.

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Financial Liability

3 Months Ended

Jun. 30, 2019

Financial Liability [Abstract]

Financial Liability

Note 19 – Financial Liability

To encourage operating team, which consists of doctors and nurses, to devote their efforts to run clinics, Linjia Medical allows them to put deposits in the clinic where doctors and nurses work, and take shares in any profit of the clinic. The principal amounts of these deposits are refundable in the event the doctors and nurses leave the clinic. In order to properly reflect Linjia Medical's liabilities, the Company reclassified the deposit of $80,081 (RMB550,000) as financial liability as of June 30, 2019.

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Stockholder's Equity

3 Months Ended

Jun. 30, 2019

Stockholders' Equity Note [Abstract]

STOCKHOLDER'S EQUITY

Note 20 – STOCKHOLDER'S EQUITY

Common stock

On January 23, 2017, the Company closed a private offering with one institutional investor (the "Investor") pursuant to which the Company sold to the Investor, and the Investor purchased from the Company, an aggregate of 4,840,000 shares of the common stock, par value $0.001 per share, of the Company, at a purchase price of $2.20 per share, for aggregate gross proceeds to the Company of $10,648,000 (the "Private Placement")..

On April 15, 2019, we closed a registered direct offering of 4,000,008 shares of common stock at $2.50 per share with gross proceeds of $10,000,020 from our effective shelf registration statement. In a concurrent private placement we issued to the investors unregistered warrants to purchase up to an aggregate of 3,000,006 shares of common stock at an exercise price of $3.00 per share. The placement agent receives warrants to purchase up to 240,000 shares of the common stock with an exercise price of $3.125 per share.

Stock 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 3,000,006 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. 240,000 shares at an exercise price of $3.125 per share. The warrant became exercisable on October 11, 2019 and will expire on April 11, 2024.

Upon evaluation, the warrants issued in April 2019 meet the definition of an equity under FASB ASC 815. Accordingly, the fair value of the warrants recorded as a part of additional paid-in capital.

Stock-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 March 30, 2018, the Company granted a total of 3,947,100 shares of restricted common stock 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. On June 28, 2018, the compensation committee of the Company canceled 225,000 shares granted to the CEO in order to conform aggregate issuances to the 675,000 share limitation set forth in the Plan. 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 has been amended to remove the provisions intended to comply with that exemption, including the one in Section 1.3.2 of the Plan. All $5,328,585 of such expense has been recorded as a service compensation expense in the year ended March 31, 2018. 

Stock option

On November 18, 2014, the Company granted a total of 967,000 shares of stock options under the Plan to a group of a total of 46 grantees including directors, officers and employees. The exercise price of the stock option is $2.50. The option vests on November 18, 2017, provided that the grantees are still employed by the Company on such a date. The options will be exercisable for five years from the vesting date, or November 18, 2017 until November 17, 2022. For the three months ended June 30, 2019 and 2018, none was recorded as compensation expense. As of June 30, 2019, all compensation costs related to stock option compensation arrangements granted have been recognized.

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 three months ended June 30, 2019 and 2018, 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.

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(loss) Per Share

3 Months Ended

Jun. 30, 2019

Loss Per Share [Abstract]

LOSS PER SHARE

Note 21 – (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 common stockholders 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 common stock were exercised and converted into common stock.

The following is a reconciliation of the basic and diluted (loss) earnings per share computation:

	The three months ended June 30,
	2019			2018
Net (loss) attributable to controlling interest	$	(2,134,951	)	$	(696,615	)
Weighted average shares used in basic computation		32,453,269			28,936,778
Diluted effect of stock options and warrants		-			-
Weighted average shares used in diluted computation		32,453,269			28,936,778
Loss per share – Basic:		-			-
Net (loss) attributable to controlling interest	$	(0.07	)	$	(0.02	)
Loss per share – Diluted:
Net (loss) attributable to controlling interest	$	(0.07	)	$	(0.02	)

For the three months ended June 30, 2019, 967,000 shares underlying employee stock options and 600,000 shares underlying outstanding purchase warrant to an investor, 72,000 shares underlying outstanding purchase warrant to an investment placement agent and a total of 3,240,006 warrants issued in S-3 financing in April 2019 were excluded from the calculation of diluted loss per share as the options were anti-dilutive.

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Segments

3 Months Ended

Jun. 30, 2019

Segment Reporting [Abstract]

SEGMENTS

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 three months ended June 30, 2019.

	Retail drugstores			Online Pharmacy			Drug wholesale			Herb farming		Total
Revenue	$	16,734,988		$	2,443,605			6,102,191			-		25,280,784
Cost of goods		11,682,721			2,096,850			5,439,775			-		19,219,346
Gross profit	$	5,052,267		$	346,755			662,416			-		6,061,438
Selling expenses		4,835,666			473,380			659,505			-		5,968,551
General and administrative expenses		1,733,704			55,123			1,062,785			-		2,851,612	*
Loss from operations	$	(1,517,103	)	$	(181,748	)		(1,059,874	)		-		(2,758,725	)
Depreciation and amortization	$	504,463		$	-			8,486			-		512,949
Total capital expenditures	$	753,173		$	-						-		753,173

* Includes accounts receivable allowance reversal of $558,779 and additional advance to suppliers allowance of $109,023.

The following table presents summarized information by segment of the continuing operations for the three months ended June 30, 2018.

	Retail drugstores			Online Pharmacy			Drug wholesale			Herb farming		Total
Revenue	$	15,968,341		$	2,021,869			4,782,356			-		22,772,566
Cost of goods		11,163,223			1,740,904			4,251,636			-		17,155,763
Gross profit	$	4,805,118		$	280,965			530,720			-		5,616,803
Selling expenses		3,477,677			401,362			747,939			-		4,626,978
General and administrative expenses		1,301,468			187,224			65,836			-		1,554,528	*
Loss from operations	$	(25,973	)	$	(307,621	)		(283,055	)		-		(564,703	)
Depreciation and amortization	$	130,657		$	-			5,786			-		136,443
Total capital expenditures	$	157,272		$	-			1,117			-		158,389

* Includes accounts receivable allowance reversal of $112,386 and additional advance to suppliers allowance of $266,592.

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 three months ended June 30, 2019 and 2018 were as follows:

	For the three months ended
	June 30,
	2019		2018
Prescription drugs	$	5,695,286		5,809,215
OTC drugs		7,240,228		6,964,828
Nutritional supplements		1,231,133		945,206
TCM		1,104,050		1,582,568
Sundry products		298,198		204,861
Medical devices		1,166,093		461,663
Total	$	16,734,988		15,968,341

The Company's net revenue from external customers through online pharmacy by main product category is as follows:

	For the three months ended
	June 30,
	2019		2018
Prescription drugs	$	-		-
OTC drugs		1,024,602		775,993
Nutritional supplements		107,194		143,096
TCM		13,681		4,929
Sundry products		438,736		1,037,166
Medical devices		859,392		60,685
Total	$	2,443,605		2,021,869

The Company's net revenue from external customers through wholesale by main product category is as follows:

	For the three months ended
	June 30,
	2019		2018
Prescription drugs	$	4,880,491		3,419,536
OTC drugs		1,074,261		1,274,919
Nutritional supplements		21,691		25,381
TCM		98,828		21,851
Sundry products		5,682		4,755
Medical devices		21,238		35,914
Total	$	6,102,191		4,782,356

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Subsequent Events

3 Months Ended

Jun. 30, 2019

Subsequent Events [Abstract]

SUBSEQUENT EVENTS

Note 23 – Subsequent Events

On July 26, 2019, Jiuzhou Pharmacy obtained a credit line of approximately $7,280,100 (RMB50,000,000) from Haihui Commercial Factoring (Tianjin) Co. Ltd ("Haihui Factoring") for three years. Certain Jiuzhou Pharmacy drugstores' sales collectibles from Hangzhou Medical Insurance Administration and Service Bureau ("HMIASB") will be held in pledge. However, only at circumstances when the Company materially breaches the contract, Haihui Factoring will have the right to ask HMIASB to pay the collectible directly to Haihui Factoring. On August 2, 2019, Jiuzhou Pharmacy borrowed a total of $728,010 (RMB 5,000,000), which is counted in the credit line.

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Summary of Significant Accounting Policies (Policies)

3 Months Ended

Jun. 30, 2019

Accounting Policies [Abstract]

Basis of presentation and consolidation

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

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.

Risks and Uncertainties

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.

Use of estimates

Use of estimates

The preparation of unaudited condensed consolidated financial statements in conformity with US 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 unaudited condensed consolidated financial statements relate to the assessment of the carrying values of accounts receivable, advances to suppliers and related allowance for doubtful accounts, useful lives of property and equipment, inventory reserve and fair value of its purchase option derivative liability. Because of the use of estimates inherent in the financial reporting process, actual results could materially differ from those estimates.

Fair value measurements

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.

The Company's financial assets and liabilities, which include financial instruments as defined by FASB ASC 820, include cash and cash equivalents, accounts receivable, accounts payable, long-term debt and derivatives. The carrying amounts of cash and cash equivalents, financial assets available for sales, accounts receivable, notes receivables, and accounts payable are a reasonable approximation of fair value due to the short maturities of these instruments (Level 1). The carrying amount of notes payable approximates fair value based on borrowing rates of similar bank loan currently available to the Company (Level 2) (See Note 14). The carrying amount of the Company's derivative instruments is recorded at fair value and is determined based on observable inputs that are corroborated by market data (Level 2). The carrying amount of the Financial assets available for sale is recorded at fair value and is determined based on unobservable inputs (Level 3). As of June 30 2019, the fair values of our derivative instruments were carried at fair value (See Note 18). As of June 30 2019, the fair values of our Financial liability were carried at fair value (See Note 19)

	Active Market for Identical Assets (Level 1)		Observable Inputs (Level 2)		Unobservable Inputs (Level 3)		Total Carrying Value
Cash and cash equivalents and restricted cash		23,150,153		-	$	-		23,150,153
Financial assets available for sale						162,273		162,273
Notes payable		-		24,574,955		-		24,574,955
Financial liability						80,081		80,081
Warrants liability		-		61,693	$	-		61,693
Total		23,150,153		24,636,648	$	242,354		48,029,155

Revenue recognition

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 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.

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.

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, 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 of our merchandise, such as prescription and OTC drugs, are not allowed to be returned after the customers leave the counter. Return 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. Based on historical experience, a reserve for potential loss from denial of reimbursement on certain unqualified drugs is made to the receivables from the government agency. Revenue from medical services is recognized after the service has been rendered to a customer. As revenue from medical services are minimal compared to pharmacy retail sales, it is included as part of the pharmacy retail sales.

Online pharmacy sales

The online pharmacy sells various health products except for prescription drugs. 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. Our sales policy allows for the return of certain merchandises without reason within seven days after 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 value added tax ("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.

Disaggregation of Revenue

The following table disaggregates the Company's revenue by major source in each segment for the three months ended June 30, 2019:

For the three  months ended June 30	2019		2018
Retail drugstores
Prescription drugs	$	5,695,286	$	5,809,215
OTC drugs		7,240,228		6,964,828
Nutritional supplements		1,231,133		945,206
TCM		1,104,050		1,582,568
Sundry products		298,198		204,861
Medical devices		1,166,093		461,663
Total retail revenue	$	16,734,988	$	15,968,341
Online pharmacy
Prescription drugs	$	-	$	-
OTC drugs		1,024,602		775,993
Nutritional supplements		107,194		143,096
TCM		13,681		4,929
Sundry products		438,736		1,037,166
Medical devices		859,392		60,685
Total online revenue	$	2,443,605	$	2,021,869
Drug wholesale
Prescription drugs	$	4,880,491	$	3,419,536
OTC drugs		1,074,261		1,274,919
Nutritional supplements		21,691		25,381
TCM		98,828		21,851
Sundry products		5,682		4,755
Medical devices		21,238		35,914
Total wholesale revenue	$	6,102,191	$	4,782,356
Total revenue	$	25,280,784	$	22,772,566

Contract Balances

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 following table provides information about receivables and contract liabilities from contracts with customers:

	June 30, 2019		March 31, 2019
Trade receivable(included in accounts receivable, net)	$	8,590,075	$	8,692,514
Contract liabilities (included in accrued expenses)		1,494,018		1,689,099

Restricted cash

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 Condensed Balance Sheets to total cash, cash equivalents and restricted cash in the Consolidated Condensed Statements of Cash Flows as of June 30, 2019 and March 31, 2019:

	June 30, 2019		March 31, 2019
Cash and cash equivalents	$	8,341,167	$	9,322,463
Restricted cash		14,808,986		15,422,739
Cash, cash equivalents and restricted cash	$	23,150,153	$	24,745,202

Accounts receivable

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 historical trends.

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 aging method to estimate the allowance for anticipated uncollectible receivable balances. Under the aging method, bad debt percentages are determined by management, based on historical experience and the current economic climate, are applied to customers' balances categorized by the number of months the underlying invoices have remained outstanding. At each reporting period, the allowance balance is adjusted to reflect the amount computed as a result of the aging 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.

Advances to suppliers

Advances to suppliers

Advances to suppliers consist of prepayments to our vendors, such as pharmaceutical manufacturers and other distributors. Since the acquisition of Jiuxin Medicine, we have transferred almost all logistics services of our retail drugstores to Jiuxin Medicine. Jiuzhou Pharmacy only directly purchases certain non-medical products, such as certain nutritional supplements. As a result, almost all advances to suppliers are made by Jiuxin Medicine.

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 historical experience and any specific supplier issues, such as discontinuing of inventory supply, that have been identified. If we have difficulty receiving products from a vendor, we take the following steps: cease purchasing products from such 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 the prepayments should be reserved or written off.

Inventories

Inventories

Inventories are stated at the lower of cost or market value. Cost is determined using the first in first out (FIFO) method. Market value is the lower of replacement cost or net realizable value. 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

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

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

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.

The estimated useful lives of the Company's intangible assets are as follows:

	Estimated Useful Life
Land use rights	50 years
Software	3 years

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

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. There were no fixed assets and farmland assets impaired for the three months ended June 30, 2019.

Notes payable

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

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 June 30, 2019 and 2018.

Value added tax

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.

Stock based compensation

Stock based compensation

The Company follows the provisions of FASB ASC 718, "Compensation — Stock Compensation," which establishes accounting standards for non-employee and employee stock-based awards. Under the provisions of FASB ASC 718, the fair value of stock issued is used to measure the fair value of services received as the Company believes such approach is a more reliable method of measuring the fair value of the services. For non-employee stock-based awards, fair value is measured based on the value of the Company's common stock on the date that the commitment for performance by the counterparty has been reached or the counterparty's performance is complete. The fair value of the equity instrument is calculated and then recognized as compensation expense over the requisite performance period. For employee stock-based awards, share-based compensation cost is measured at the grant date based on the fair value of the award and is recognized as expense with graded vesting on a straight–line basis over the requisite service period for the entire award.

Advertising and promotion costs

Advertising and promotion costs

Advertising and promotion costs are expensed as incurred and amounted to $80,049 and $191,054 for the three months ended June 30, 2019 and 2018, respectively. Such costs consist primarily of print and promotional materials such as flyers to local communities.

Foreign currency translation

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 June 30, 2019 and at March 31, 2019 were translated at 1 RMB to 0.1456 USD and at 1 RMB to 0.1490 USD, respectively. The average translation rates applied to income and cash flow statement amounts for the three months ended June 30, 2019 and 2018 were at 1 RMB to 0.1466 USD and at 1 RMB to 0.1511 USD, respectively.

Concentrations and credit risk

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 72,800) per bank. As of June 30, 2019 and March 31, 2019, the Company had deposits totaling $23,061,379 and $24,730,736 that were covered by such limited insurance, respectively. Any balance over RMB 500,000 (USD 72,800) per bank in PRC will not be covered. To date, the Company has not experienced any losses in such accounts.

For the three months ended June 30, 2019, two vendors accounted for 49.2% of the Company's total purchases and two vendors accounted for more than 10% of total advances to suppliers. For the three months ended June 30, 2018, two vendors collectively accounted for 46.2% of the Company's total purchases and two suppliers accounted for more than 10% of total advances to suppliers.

For the three months ended June 30, 2019, no customer accounted for more than 10% of the Company's total sales and more than 10% of total accounts receivable. For the three months ended June 30, 2018, no customer accounted for more than 10% of the Company's total sales or more than 10% of total accounts receivable.

Leases

In February 2016, the Financial Accounting Standards Board (the "FASB") issued ASU 2016-02, Leases (Topic 842). Lessees are required to recognize a right-of-use asset and a lease liability for virtually all of their leases (other than leases that meet the definition of a short-term lease). The liability is equal to the present value of lease payments. The asset is based on the liability, subject to certain adjustments, such as for initial direct costs. For income statement purposes, a dual model was retained, requiring leases to be classified as either operating or finance leases. Operating leases result in straight-line expense (similar to operating leases under the prior accounting standard) while finance leases result in a front-loaded expense pattern (similar to capital leases under the prior accounting standard). Lessor accounting is similar to the prior model, but updated to align with certain changes to the lessee model (e.g., certain definitions, such as initial direct costs, have been updated) and the new revenue standard, ASU 2014-9.

The Company adopted this new accounting standard on April 1, 2019 on a modified retrospective basis and applied the new standard to all leases through a cumulative-effect adjustment to beginning retained earnings. As a result, comparative financial information has not been restated and continues to be reported under the accounting standards in effect for those periods. The Company elected the package of practical expedients permitted under the transition guidance within the new standard, which includes, among other things, the ability to carry forward the existing lease classification. On April 1, 2019, the Company recorded an after-tax transition adjustment to increase retained earnings by approximately $422,354. The new standard had a material impact on the unaudited condensed consolidated balance sheet, but did not materially impact the Company's consolidated operating results and had no impact on the Company's cash flows. The following is a discussion of the Company's lease policy under the new lease accounting standard:

The Company determines if an arrangement contains a lease at the inception of a contract. Right-of-use assets represent the Company's right to use an underlying asset for the lease term and lease liabilities represent the Company's obligation to make lease payments arising from the lease. Right-of-use assets and lease liabilities are recognized at the commencement date based on the present value of the remaining future minimum lease payments. As the interest rate implicit in the Company's leases is not readily determinable, the Company utilizes its borrowing rates set by The Central Bank of the People's Republic of China, determined by class of underlying asset, to discount the lease payments. The operating lease right-of-use assets also include lease payments made before commencement and exclude lease incentives.

The Company leases premises for retail drugstores, and offices under non-cancellable operating leases. Operating lease payments are expensed over the term of lease. A majority of the Company's retail drugstore leases have a 3 to 10 year term, and no lease terms include options to extend. The Company leases don't include options to extend nor any restrictions or covenants. The Company does not have any leases entered into but which have not yet commenced. The Company has historically been able to renew a majority of its drugstores leases. Under the terms of the lease agreements, the Company has no legal or contractual asset retirement obligations at the end of the lease. See Note 13 ''Leases'' for additional information.

Impact of New Lease Standard on Balance Sheet Line Items

As a result of applying the new lease standard using a modified retrospective method, the following adjustments were made to accounts on the condensed consolidated balance sheet as of April 1, 2019:

	Impact of Change in Accounting Policy
	As Reported						Adjusted
	March 31, 2019			Adjustments			April 1, 2019
Other current assets		2,063,375			(717,414	)		1,345,961
Total current assets		56,202,981			(717,414	)		55,485,567
Operating lease right-of-use assets		-			15,276,388			15,276,388
Total assets		72,730,636			14,558,974			87,289,610
								-
Current portion of operating lease liabilities		-			4,718,610			4,718,610
Total current liabilities		55,212,286			4,718,610			59,930,896
Long-term operating lease liabilities		-			9,418,011			9,418,011
Total liabilities		55,759,469			14,136,621			69,896,090
								-
Retained earnings		(30,587,468	)		422,354			(30,165,114	)
Total shareholders' equity		18,165,206			422,354			18,587,560
Total  equity		16,971,167			422,354			17,393,521

Recent Accounting Pronouncements

Recent Accounting Pronouncements

In June 2016, the FASB issued ASU 2016-13, "Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments," providing financial statement users with more decision-useful information about the expected credit losses on financial instruments and other commitments to extend credit held by a reporting entity at each reporting date. For public business entities that are U.S. Securities and Exchange Commission (SEC) filers, the amendments in this Update are effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. All entities may adopt the amendments in this Update earlier as of the fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. We are currently evaluating the impact of the adoption of ASU 2016-13 on our consolidated financial statements.

In August 2016, the FASB issued ASU 2016-15, "Statement of Cash Flows (Topic 230):Classification of Certain Cash Receipts and Cash Payments," addressing eight specific cash flow issues with the objective of reducing the existing diversity in practice. The amendments in this Update are effective for public business entities for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted, including adoption in an interim period. If an entity early adopts the amendments in an interim period, any adjustments should be reflected as of the beginning of the fiscal year that includes that interim period. An entity that elects early adoption must adopt all of the amendments in the same period. The amendments in this Update should be applied using a retrospective transition method to each period presented. If it is impracticable to apply the amendments retrospectively for some of the issues, the amendments for those issues would be applied prospectively as of the earliest date practicable. The impact of adoption on its Condensed Consolidated Financial Statements for any period presented is not material.

In July 2017, the FASB issued ASU No. 2017-11, "Earnings Per Share (Topic 260), Distinguishing Liabilities from Equity (Topic 480), Derivatives and Hedging (Topic 815): I. Accounting for Certain Financial Instruments with Down Round Features; II. Replacement of the Indefinite Deferral for Mandatorily Redeemable Financial Instruments of Certain Nonpublic Entities and Certain Mandatorily Redeemable Noncontrolling Interests with a Scope Exception". Part I of this Update addresses the complexity of accounting for certain financial instruments with down round features. Part II of this Update addresses the difficulty of navigating Topic 480, Distinguishing Liabilities from Equity, because of the existence of extensive pending content in the FASB Accounting Standards Codification®. We are currently evaluating the impact of the adoption of ASU 2017-11 on our consolidated financial statements.

In January 2017, the FASB issued ASU No. 2017-04, "Intangibles—Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment" ("ASU 2017-04"), which removes Step 2 from the goodwill impairment test. An entity will apply a one-step quantitative test and record the amount of goodwill impairment as the excess of a reporting unit's carrying amount over its fair value, not to exceed the total amount of goodwill allocated to the reporting unit. The new guidance does not amend the optional qualitative assessment of goodwill impairment. Public business entity that is a U.S. Securities and Exchange Commission filer should adopt the amendments in this ASU for its annual or any interim goodwill impairment test in fiscal years beginning after December 15, 2019. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. ASU 2017-4 has no impact on our consolidated financial statements.

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Description of Business and Organization (Tables)

3 Months Ended

Jun. 30, 2019

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Schedule of subsidiaries

Entity Name	Date Established
Hangzhou Jiuli Pharmacy Co., Ltd ("Jiuli Pharmacy")	May 22, 2017
Hangzhou Jiuxiang Pharmacy Co., Ltd ("Jiuxiang Pharmacy")	May 26, 2017
Hangzhou Jiuyi Pharmacy Co., Ltd ("Jiuyi Pharmacy")	June 8, 2017
Hangzhou Jiumu Pharmacy Co., Ltd ("Jiumu Pharmacy")	July 21, 2017

Schedule of consolidated financial statements activities

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 ●     Operates a medical clinic adjacent to one of Jiuzhou Pharmacy's  stores	VIE by contractual arrangements (2)
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)
Jiuxin Medicine	●     Established in PRC on December 31, 2003 ●     Acquired by Jiuzhou Pharmacy in August 2011 ●     10% of shares sold   ●     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)

Entity Name	Background	Ownership
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%
Jiuli Pharmacy	●      Established in the PRC on May 22, 2017 by Jiuzhou Pharmacy ●     Registered capital of $15,920 fully paid   ●     Operates a pharmacy in Hangzhou	VIE by contractual arrangements as a wholly-owned subsidiary of Jiuzhou Pharmacy (2)
Jiuxiang Pharmacy	●      Established in the PRC on May 26, 2017 by Jiuzhou Pharmacy ●     Registered capital of $15,920 fully paid   ●     Operates a pharmacy in Hangzhou	VIE by contractual arrangements as a wholly-owned subsidiary of Jiuzhou Pharmacy (2)
Jiuyi Pharmacy	●     Established in the PRC on June 8, 2017 by Jiuzhou Pharmacy ●     Registered capital of $15,920 fully paid   ●     Operates a pharmacy in Hangzhou	VIE by contractual arrangements as a wholly-owned subsidiary of Jiuzhou Pharmacy (2)
Jiumu Pharmacy	●     Established in the PRC on July 21, 2017 by Jiuzhou Pharmacy ●     Registered capital of $15,920 fully paid   ●     Operates a pharmacy in Hangzhou	VIE by contractual arrangements as a wholly-owned subsidiary of Jiuzhou Pharmacy (2)

Entity Name	Background	Ownership
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%
Lin'An Jiuzhou	●     Established in the PRC in March 31, 2017 ●     100% held by Jiuxin Management ●     Registered capital of RMB 5 million ●     Explore retail pharmacy market in Lin'An City	100%
Linjia Medical	●     Established in the PRC in September27, 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)
Ayi Health	●     Established in the PRC in March 29, 2019 ●     51% held by Jiuzhou Pharmacy ●     Registered capital of RMB 10 million ●     Provide technical Support for medial 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, Mr. Chong'an Jin 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, operating agreement, equity pledge agreement, voting rights agreement and 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 subsidiary under the control of Jiuzhou Pharmacy, Jiuxin Medicine and Shouantang Bio are consolidated into the financial statements of the Company.

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Summary of Significant Accounting Policies (Tables)

3 Months Ended

Jun. 30, 2019

Accounting Policies [Abstract]

Schedule of fair values of derivative instruments

	Active Market for Identical Assets (Level 1)		Observable Inputs (Level 2)		Unobservable Inputs (Level 3)		Total Carrying Value
Cash and cash equivalents and restricted cash		23,150,153		-	$	-		23,150,153
Financial assets available for sale						162,273		162,273
Notes payable		-		24,574,955		-		24,574,955
Financial liability						80,081		80,081
Warrants liability		-		61,693	$	-		61,693
Total		23,150,153		24,636,648	$	242,354		48,029,155

Schedule of revenue by major source in each segment

For the three  months ended June 30	2019		2018
Retail drugstores
Prescription drugs	$	5,695,286	$	5,809,215
OTC drugs		7,240,228		6,964,828
Nutritional supplements		1,231,133		945,206
TCM		1,104,050		1,582,568
Sundry products		298,198		204,861
Medical devices		1,166,093		461,663
Total retail revenue	$	16,734,988	$	15,968,341
Online pharmacy
Prescription drugs	$	-	$	-
OTC drugs		1,024,602		775,993
Nutritional supplements		107,194		143,096
TCM		13,681		4,929
Sundry products		438,736		1,037,166
Medical devices		859,392		60,685
Total online revenue	$	2,443,605	$	2,021,869
Drug wholesale
Prescription drugs	$	4,880,491	$	3,419,536
OTC drugs		1,074,261		1,274,919
Nutritional supplements		21,691		25,381
TCM		98,828		21,851
Sundry products		5,682		4,755
Medical devices		21,238		35,914
Total wholesale revenue	$	6,102,191	$	4,782,356
Total revenue	$	25,280,784	$	22,772,566

Schedule of receivables and contract liabilities from contracts with customers

	June 30, 2019		March 31, 2019
Trade receivable(included in accounts receivable, net)	$	8,590,075	$	8,692,514
Contract liabilities (included in accrued expenses)		1,494,018		1,689,099

Schedule of cash equivalents and restricted cash

	June 30, 2019		March 31, 2019
Cash and cash equivalents	$	8,341,167	$	9,322,463
Restricted cash		14,808,986		15,422,739
Cash, cash equivalents and restricted cash	$	23,150,153	$	24,745,202

Schedule of estimated useful lives of 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

Schedule of estimated useful lives of intangible assets

	Estimated Useful Life
Land use rights	50 years
Software	3 years

Schedule of condensed consolidated balance sheet

	Impact of Change in Accounting Policy
	As Reported						Adjusted
	March 31, 2019			Adjustments			April 1, 2019
Other current assets		2,063,375			(717,414	)		1,345,961
Total current assets		56,202,981			(717,414	)		55,485,567
Operating lease right-of-use assets		-			15,276,388			15,276,388
Total assets		72,730,636			14,558,974			87,289,610
								-
Current portion of operating lease liabilities		-			4,718,610			4,718,610
Total current liabilities		55,212,286			4,718,610			59,930,896
Long-term operating lease liabilities		-			9,418,011			9,418,011
Total liabilities		55,759,469			14,136,621			69,896,090
								-
Retained earnings		(30,587,468	)		422,354			(30,165,114	)
Total shareholders' equity		18,165,206			422,354			18,587,560
Total  equity		16,971,167			422,354			17,393,521

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Trade Accounts Receivable (Tables)

3 Months Ended

Jun. 30, 2019

Receivables [Abstract]

Schedule of trade accounts receivable

	June 30, 2019			March 31, 2019
Accounts receivable	$	12,395,705		$	11,939,364
Less: allowance for doubtful accounts		(3,805,630	)		(3,246,850	)
Trade accounts receivable, net	$	8,590,075		$	8,692,514

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Other Current Assets (Tables)

3 Months Ended

Jun. 30, 2019

Prepaid Expense and Other Assets, Current [Abstract]

Schedule of other current assets

	June 30, 2019		March 31, 2019
Rental deposits (1)	$	1,466,714	$	1,979,852
Prepaid and other current assets		90,442		83,523
Total	$	1,557,156	$	2,063,375

(1) The balance as of June 30, 2019 includes short-term refundable rental security deposits only, while the balance as of March 31, 2019  includes security deposits of $1,444,026 and prepaid rental of $ 535,826.

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Property and Equipment (Tables)

3 Months Ended

Jun. 30, 2019

Property, Plant and Equipment [Abstract]

Schedule of property and equipment

	June 30, 2019			March 31, 2019
Building	$	6,072,001		$	6,436,297
Leasehold improvements		9,280,768			8,944,025
Farmland development cost		1,741,311			1,781,627
Office equipment and furniture		5,507,064			5,470,084
Motor vehicles		539,238			551,927
Total		23,140,382			23,183,960
Less: Accumulated depreciation		(12,227,499	)		(12,111,409	)
Impairment*		(2,292,125	)		(2,345,193	)
Property and equipment, net	$	8,620,758		$	8,727,358

* The variance of impairment from March 31, 2019 to June 30, 2019 is solely caused by exchange rate variance.

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Advances to Suppliers (Tables)

3 Months Ended

Jun. 30, 2019

Advances to Suppliers [Abstract]

Schedule of advance to suppliers

	June 30, 2019			March 31, 2019
Advance to suppliers*	$	2,180,129		$	2,477,226
Less: allowance for unrefundable advances		(635,997	)		(526,974	)
Advance to suppliers, net	$	1,544,132		$	1,950,252

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Farmland Assets (Tables)

3 Months Ended

Jun. 30, 2019

Farmland Assets [Abstract]

Schedule of farmland assets

	June 30,			March 31,
	2019			2019
Farmland assets	$	2,224,942		$	2,341,537
Less: Impairment*		(1,481,968	)		(1,516,278	)
Farmland assets, net	$	742,974		$	825,259

* The variance of impairment is caused by exchange rate variance.

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Other Noncurrent Assets (Tables)

3 Months Ended

Jun. 30, 2019

Other Assets, Noncurrent Disclosure [Abstract]

Schedule of other noncurrent assets

	June 30, 2019		March 31, 2019
Forest land use rights*	$	1,065,434	$	1,103,235
Others		112,269		92,962
Total	$	1,177,703	$	1,196,197

* The prepayment for lease of forest land use rights is a payment made to a local government in connection with entering into 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.

Schedule of amortizations of the prepayment for lease of land use right

For the year ending June 30,	Amount
2020	$	27,541
2021		27,541
2022		27,541
2023		27,541
2024		27,541
Thereafter		796,935

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Leases (Tables)

3 Months Ended

Jun. 30, 2019

Leases [Abstract]

Schedule of condensed Cash Flow Statement related to leases

Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows paid for operating leases	$	1,115,138
Right-of-use assets obtained in exchange for lease obligations:
Operating leases		-

Schedule of condensed balance sheet related to leases

Operating leases:
Operating lease right-of-use assets	$	13,564,115
Current portion of operating lease liabilities	$	4,738,632
Long-term operating lease liabilities		7,918,900
Total operating lease liabilities	$	12,657,532
Weighted average remaining lease term
Operating leases		4.5
Weighted average discount rate
Operating leases		2.10	%

Schedule of lease liabilities under operating leases

	Operating
For the year ending June 30,	Leases
2020	$	4,739,995
2021		3,691,865
2022		2,879,742
2023		1,961,837
2024		1,398,480
Thereafter		1,444,296
Total lease payments (2)		16,116,215
Less: imputed interest		(3,458,683	)
Total lease liabilities	$	12,657,532

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Intangible Assets (Tables)

3 Months Ended

Jun. 30, 2019

Goodwill and Intangible Assets Disclosure [Abstract]

Schedule of net intangible assets

	June 30, 2019			March 31, 2019
License (1)	$	1,866,487		$	1,909,700
Software(2)		1,091,268			676,336
Land use rights (3)		1,419,845			1,452,718
Total intangible assets		4,377,600			4,038,754
Less: accumulated amortization		(488,752	)		(441,431	)
Intangible assets, net	$	3,888,848		$	3,597,323

Amortization expense of intangibles amounted to $58,466 and $73,336 for the three months ended June 30, 2019 and 2018, respectively.

(1)	This represents the fair value of the licenses of insurance applicable drugstores acquired from Sanhao Pharmacy, a drugstore chain Jiuzhou Pharmacy acquired in 2014. 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 September 2017, the Company acquired several new stores for the purpose of the Municipal Social Medical Reimbursement Qualification Certificates. The owners of these acquired drugstores agreed to cease their stores' business and liquidate all of the stores' accounts before Jiuzhou Pharmacy acquired them. As a result, Jiuzhou Pharmacy has not obtained any assets or liabilities from the stores, but was able to transfer the certificates to our new stores opened at the same time.
(2)	They are 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. As of June 30, 2019, the SAP system has a total value of $345,906(RMB2,375,697). The internet Clinic Diagnosis System costs approximately $ (RMB 2,688,709). The system is used to strengthen our ability to perform online diagnosis which may increase more customer spending.  Chronic Disease costs approximately $ (RMB ) and is used to better manage and monitor our members' health.
(3)	In July 2013, the Company purchased the land use rights of a plot of farmland in Lin'an, Hangzhou, intended for the establishment of an herb processing plant in the future. However, as our farming business in Lin'an has not grown, the Company does not expect completion of the plant in the near future.

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Notes Payable (Tables)

3 Months Ended

Jun. 30, 2019

Notes Payable [Abstract]

Schedule of credit facilities with banks

		Origination	Maturity	June 30,		March 31,
Beneficiary	Endorser	date	date	2019		2019
Jiuzhou Pharmacy(1)	HUB	11/06/18	05/06/19				500,857
Jiuzhou Pharmacy(1)	HUB	12/12/18	06/12/19				2,236,559
Jiuzhou Pharmacy(1)	HUB	12/20/18	06/20/19				1,072,606
Jiuzhou Pharmacy(1)	HUB	12/29/18	06/29/19		324,592		5,504,943
Jiuzhou Pharmacy(1)	HUB	02/14/18	08/14/19		2,528,784		2,587,331
Jiuzhou Pharmacy(1)	HUB	03/06/18	09/06/19		6,451,364		6,600,727
Jiuxin Medicine(1)	HUB	10/11/18	04/11/19				4,461,531
Jiuxin Medicine(1)	HUB	11/06/18	05/06/19				2,987,119
Jiuzhou Pharmacy(1)	HUB	06/05/19	12/05/19		4,384,517
Jiuzhou Pharmacy(1)	HUB	06/28/19	12/28/19		3,844,927
Jiuxin Medicine(1)	HUB	04/10/19	10/10/19		4,112,456
Jiuxin Medicine(1)	HUB	04/15/19	10/15/19		145,602
Jiuxin Medicine(1)	HUB	05/10/19	11/10/19		2,782,713
Jiuzhou Pharmacy(1)	HUB				-		-
Total				$	24,574,955	$	25,951,673

(1) As of June 30, 2019, the Company had $24,574,955 (RMB 168,781,714) of notes payable from HUB. The Company is required to hold restricted cash in the amount of $14,626,921 (RMB 100,458,244) with HUB as collateral against these bank notes. Included in the restricted cash is a total of $10,209,998 three-year deposit (RMB 70,122,647) deposited into HUB as a collateral for current and future notes payable from HUB. As of March 31, 2019, the Company had $25,951,673 (RMB 174,203,868) of notes payable from HUB. The Company is required to hold restricted cash in the amount of $15,114,740 (RMB 101,459,590) with HUB as collateral against these bank notes. Included in the restricted cash is a total of $10,446,381 three-year deposit (RMB 70,122,647) deposited into HUB as a collateral for current and future notes payable from HUB.

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Taxes (Tables)

3 Months Ended

Jun. 30, 2019

Income Tax Disclosure [Abstract]

Schedule of income arising in or derived from tax jurisdiction which each entity domiciled

Entity	Income Tax Jurisdiction
Jo-Jo Drugstores	United States
Renovation	Hong Kong, PRC
All other entities	Mainland, PRC

Schedule of components of income tax expense

	For the three months ended
	June 30,
	2019		2018
Current:
Federal	-		-
State	-		-
Foreign		8,388		57,169
		8,388		57,169
Deferred:
Federal		-		-
State		-		-
Foreign		-		-
		-		-
Provision for income taxes		8,388		57,169

Schedule of reconciliation of the income tax provision at federal statutory rate and effective rate

	For the three months ended
	June 30,
	2019			2018
U.S. Statutory rates		21.0	%		21.0	%
Foreign income not recognized in the U.S.		(21.0	)		(21.0	)
China income taxes		25.0			25.0
Change in valuation allowance(1)		(25.0	)		(25.0	)
Non-deductible expenses-permanent difference(2)		0.4			8.9
Effective tax rate		(0.4	)%		(8.9	)%

(1) Represents a non-taxable expense reversal due to overall decrease in allowance for accounts receivable and advances to suppliers.

(2) The (0.4)% and (8.9)% rate adjustments for the three months ended June 30, 2019 and 2018 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.

Schedule of net deferred tax assets

	As of 6/30/2019			As of 3/31/2019
Allowance		1,152,638			986,665
Long-lived assets impairment		573,031			586,298
Depreciation and Amortization		-			-
Accrued expense		1,628,792			1,569,683
Net operating loss carry forward		1,438,560			1,164,735
Foreign Tax Credit Carryover		195,000			195,000
Total deferred tax assets (liabilities):		4,988,021			4,502,381
Valuation allowance		(4,988,021	)		(4,502,381	)
Net deferred tax assets (liabilities)		-			-

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Related Party Transactions and Arrangements (Tables)

3 Months Ended

Jun. 30, 2019

Related Party Transactions [Abstract]

Schedule of amounts payable to related parties

	June 30, 2019		March 31, 2019
Due to a director and CEO (1) :		326,778		795,179
Total	$	326,778	$	795,179

(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. In the three months ended June 30, 2019, the Company paid certain borrowings back to CEO.

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Warrants (Tables)

3 Months Ended

Jun. 30, 2019

Warrants [Abstract]

Schedule of estimated fair value of warrants using the binominal pricing model

	Common Stock Warrants			Common Stock Warrants
	June 30, 2019 (1)			March 31, 2019
Stock price	$	1.10		$	2.62
Exercise price	$	3.10		$	3.10
Annual dividend yield		0	%		0	%
Expected term (years)		1.56			1.80
Risk-free interest rate		1.75	%		2.27	%
Expected volatility		72.47	%		67.69	%

(1) As of June 30, 2019, the warrants had not been exercised.

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(loss) Per Share (Tables)

3 Months Ended

Jun. 30, 2019

LOSS PER SHARES:

Schedule of reconciliation of the basic and diluted (loss) earnings per share

	The three months ended June 30,
	2019			2018
Net (loss) attributable to controlling interest	$	(2,134,951	)	$	(696,615	)
Weighted average shares used in basic computation		32,453,269			28,936,778
Diluted effect of stock options and warrants		-			-
Weighted average shares used in diluted computation		32,453,269			28,936,778
Loss per share – Basic:		-			-
Net (loss) attributable to controlling interest	$	(0.07	)	$	(0.02	)
Loss per share – Diluted:
Net (loss) attributable to controlling interest	$	(0.07	)	$	(0.02	)

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Segments (Tables)

3 Months Ended

Jun. 30, 2019

Segment Reporting [Abstract]

Summary of segment of the continuing operations

	Retail drugstores			Online Pharmacy			Drug wholesale			Herb farming		Total
Revenue	$	16,734,988		$	2,443,605			6,102,191			-		25,280,784
Cost of goods		11,682,721			2,096,850			5,439,775			-		19,219,346
Gross profit	$	5,052,267		$	346,755			662,416			-		6,061,438
Selling expenses		4,835,666			473,380			659,505			-		5,968,551
General and administrative expenses		1,733,704			55,123			1,062,785			-		2,851,612	*
Loss from operations	$	(1,517,103	)	$	(181,748	)		(1,059,874	)		-		(2,758,725	)
Depreciation and amortization	$	504,463		$	-			8,486			-		512,949
Total capital expenditures	$	753,173		$	-						-		753,173

* Includes accounts receivable allowance reversal of $558,779 and additional advance to suppliers allowance of $109,023.

The following table presents summarized information by segment of the continuing operations for the three months ended June 30, 2018.

	Retail drugstores			Online Pharmacy			Drug wholesale			Herb farming		Total
Revenue	$	15,968,341		$	2,021,869			4,782,356			-		22,772,566
Cost of goods		11,163,223			1,740,904			4,251,636			-		17,155,763
Gross profit	$	4,805,118		$	280,965			530,720			-		5,616,803
Selling expenses		3,477,677			401,362			747,939			-		4,626,978
General and administrative expenses		1,301,468			187,224			65,836			-		1,554,528	*
Loss from operations	$	(25,973	)	$	(307,621	)		(283,055	)		-		(564,703	)
Depreciation and amortization	$	130,657		$	-			5,786			-		136,443
Total capital expenditures	$	157,272		$	-			1,117			-		158,389

* Includes accounts receivable allowance reversal of $112,386 and additional advance to suppliers allowance of $266,592.

Summary of net revenue from external customers through its retail drugstores by main products

	For the three months ended
	June 30,
	2019		2018
Prescription drugs	$	5,695,286		5,809,215
OTC drugs		7,240,228		6,964,828
Nutritional supplements		1,231,133		945,206
TCM		1,104,050		1,582,568
Sundry products		298,198		204,861
Medical devices		1,166,093		461,663
Total	$	16,734,988		15,968,341

	For the three months ended
	June 30,
	2019		2018
Prescription drugs	$	-		-
OTC drugs		1,024,602		775,993
Nutritional supplements		107,194		143,096
TCM		13,681		4,929
Sundry products		438,736		1,037,166
Medical devices		859,392		60,685
Total	$	2,443,605		2,021,869

	For the three months ended
	June 30,
	2019		2018
Prescription drugs	$	4,880,491		3,419,536
OTC drugs		1,074,261		1,274,919
Nutritional supplements		21,691		25,381
TCM		98,828		21,851
Sundry products		5,682		4,755
Medical devices		21,238		35,914
Total	$	6,102,191		4,782,356

XML

Description of Business and Organization (Details)	3 Months Ended
	Jun. 30, 2019
Hangzhou Jiuli Pharmacy Co., Ltd ("Jiuli Pharmacy") [Member]
Variable Interest Entity [Line Items]
Date Established	May 22, 2017
Hangzhou Jiuxiang Pharmacy Co., Ltd (“Jiuxiang Pharmacy”) [Member]
Variable Interest Entity [Line Items]
Date Established	May 26, 2017
Hangzhou Jiuyi Pharmacy Co., Ltd (“Jiuyi Pharmacy”) [Member]
Variable Interest Entity [Line Items]
Date Established	Jun. 08, 2017
Hangzhou Jiumu Pharmacy Co., Ltd (“Jiumu Pharmacy”) [Member]
Variable Interest Entity [Line Items]
Date Established	Jul. 21, 2017

XML

Description of Business and Organization (Details 1)	3 Months Ended
	Jun. 30, 2019
Variable Interest Entity [Line Items]
Entity ownership percentage	100.00%
Renovation [Member]
Variable Interest Entity [Line Items]
Ownership background, description	Incorporated in Hong Kong SAR on September 2, 2008
Entity ownership percentage	100.00%
Jiuxin Management [Member]
Variable Interest Entity [Line Items]
Ownership background, description	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
Entity ownership percentage	100.00%
Shouantang Technology [Member]
Variable Interest Entity [Line Items]
Ownership background, description	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
Entity ownership percentage	100.00%
Qianhong Agriculture [Member]
Variable Interest Entity [Line Items]
Ownership background, description	Established in the PRC on August 10, 2010 by Jiuxin Management Registered capital of RMB 10 million fully paid Carries out herb farming business
Entity ownership percentage	100.00%
Jiuzhou Pharmacy [Member]
Variable Interest Entity [Line Items]
Ownership background, description	Established in the PRC on September 9, 2003 Registered capital of RMB 5 million fully paid Operates the "Jiuzhou Grand Pharmacy" stores in Hangzhou	[1]
Entity ownership description	VIE by contractual arrangements	[2]
Jiuzhou Clinic [Member]
Variable Interest Entity [Line Items]
Ownership background, description	Established in the PRC as a general partnership on October 10, 2003 Operates a medical clinic adjacent to one of Jiuzhou Pharmacy's stores	[1]
Entity ownership description	VIE by contractual arrangements	[2]
Jiuzhou Service [Member]
Variable Interest Entity [Line Items]
Ownership background, description	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	[1]
Entity ownership description	VIE by contractual arrangements	[2]
Jiuxin Medicine [Member]
Variable Interest Entity [Line Items]
Ownership background, description	Established in PRC on December 31, 2003 Acquired by Jiuzhou Pharmacy in August 2011 10% of shares sold Registered capital of RMB 10 million fully paid Carries out pharmaceutical distribution services
Entity ownership description	VIE by contractual arrangements as a wholly-owned subsidiary of Jiuzhou Pharmacy	[2]
Jiutong Medical [Member]
Variable Interest Entity [Line Items]
Ownership background, description	Established in the PRC on December 20, 2011 by Renovation Registered capital of $2.6 million fully paid Currently has no operation
Entity ownership percentage	100.00%
Jiuli Pharmacy [Member]
Variable Interest Entity [Line Items]
Ownership background, description	Established in the PRC on May 22, 2017 by Jiuzhou Pharmacy Registered capital of $15,920 fully paid Operates a pharmacy in Hangzhou
Entity ownership description	VIE by contractual arrangements as a wholly-owned subsidiary of Jiuzhou Pharmacy	[2]
Jiuxiang Pharmacy [Member]
Variable Interest Entity [Line Items]
Ownership background, description	Established in the PRC on May 26, 2017 by Jiuzhou Pharmacy Registered capital of $15,920 fully paid Operates a pharmacy in Hangzhou
Entity ownership description	VIE by contractual arrangements as a wholly-owned subsidiary of Jiuzhou Pharmacy	[2]
iuyi Pharmacy [Member]
Variable Interest Entity [Line Items]
Ownership background, description	Established in the PRC on June 8, 2017 by Jiuzhou Pharmacy Registered capital of $15,920 fully paid Operates a pharmacy in Hangzhou
Entity ownership description	VIE by contractual arrangements as a wholly-owned subsidiary of Jiuzhou Pharmacy	[2]
Jiumu Pharmacy [Member]
Variable Interest Entity [Line Items]
Ownership background, description	Established in the PRC on July 21, 2017 by Jiuzhou Pharmacy Registered capital of $15,920 fully paid Operates a pharmacy in Hangzhou
Entity ownership description	VIE by contractual arrangements as a wholly-owned subsidiary of Jiuzhou Pharmacy	[2]
Shouantang Bio [Member]
Variable Interest Entity [Line Items]
Ownership background, description	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
Entity ownership percentage	100.00%
Jiuyi Technology [Member]
Variable Interest Entity [Line Items]
Ownership background, description	Established in the PRC on September 10, 2015 100% held by Renovation Technical support to online pharmacy
Entity ownership percentage	100.00%
Kahamadi Bio [Member]
Variable Interest Entity [Line Items]
Ownership background, description	Established in the PRC in May 2016 49% held by Shouantang Bio Registered capital of RMB 10 million Develop brand name for nutritional supplements
Entity ownership percentage	49.00%
Lin’An Jiuzhou [Member]
Variable Interest Entity [Line Items]
Ownership background, description	Established in the PRC in March 31, 2017 100% held by Jiuxin Management Registered capital of RMB 5 million Explore retail pharmacy market in Lin'An City
Entity ownership percentage	100.00%
Linjia Medical [Member]
Variable Interest Entity [Line Items]
Ownership background, description	Established in the PRC in September 27, 2017 51% held by Jiuzhou Pharmacy Registered capital of RMB 20 million Operates local clinics
Entity ownership description	VIE by contractual arrangements as a controlled subsidiary of Jiuzhou Pharmacy	[2]
Ayi Health [Member]
Variable Interest Entity [Line Items]
Ownership background, description	Established in the PRC in March 29, 2019 51% held by Jiuzhou Pharmacy Registered capital of RMB 10 million Provide technical Support for medial service
Entity ownership description	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, Mr. Chong'an Jin 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, operating agreement, equity pledge agreement, voting rights agreement and 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 subsidiary under the control of Jiuzhou Pharmacy, Jiuxin Medicine and Shouantang Bio are consolidated into the financial statements of the Company.

XML

Description of Business and Organization (Details Textual)	1 Months Ended	3 Months Ended
	Sep. 17, 2009 shares	Jun. 30, 2019 USD ($)	Jun. 30, 2019 CNY (¥)	Mar. 29, 2019	Dec. 31, 2018 USD ($)	Dec. 31, 2018 CNY (¥)	Apr. 20, 2018 USD ($)	Apr. 20, 2018 CNY (¥)	May 31, 2016	Nov. 30, 2015 USD ($)	Nov. 30, 2015 CNY (¥)
Description of Business and Organization (Textual)
Entity Incorporation, Date of Incorporation		Dec. 19, 2006
Renovation Investment [Member]
Description of Business and Organization (Textual)
Percentage of capital stock in exchange transaction	100.00%
Issuance of equity consideration, shares | shares	7,900,000
Online Pharmacy [Member] | RBM [Member]
Description of Business and Organization (Textual)
Registered capital paid | ¥			¥ 20,000,000
Shouantang Bio [Member]
Description of Business and Organization (Textual)
Percentage of capital stock in exchange transaction		100.00%	100.00%						49.00%
Shouantang Bio [Member] | RBM [Member]
Description of Business and Organization (Textual)
Registered capital paid | ¥			¥ 1,000,000
Hangzhou Jiuyi Medical Technology [Member]
Description of Business and Organization (Textual)
Percentage of capital stock in exchange transaction		100.00%	100.00%
Hangzhou Jiuzhou Medical and Public Health Service [Member]
Description of Business and Organization (Textual)
Registered capital paid		$ 500,000
Kahamadi Bio [Member]
Description of Business and Organization (Textual)
Percentage of capital stock in exchange transaction		49.00%	49.00%
Registered capital paid		$ 10,000,000
Hangzhou Jiutong Medical Technology [Member]
Description of Business and Organization (Textual)
Registered capital paid		2,600,000
Zhejiang Jiuxin Investment Management [Member]
Description of Business and Organization (Textual)
Registered capital paid		14,500,000
Zhejiang Shouantang Medical Technology [Member]
Description of Business and Organization (Textual)
Registered capital paid		20,000,000
Registered capital requirement reduced		11,000,000
Hangzhou Jiuben Pharmacy Co [Member]
Description of Business and Organization (Textual)
Registered capital paid		15,920
Jiumu Pharmacy [Member]
Description of Business and Organization (Textual)
Registered capital paid		15,920
Jiuli Pharmacy [Member]
Description of Business and Organization (Textual)
Registered capital paid		15,920
Jiuxiang Pharmacy [Member]
Description of Business and Organization (Textual)
Registered capital paid		15,920
Jiuyuan Pharmacy [Member]
Description of Business and Organization (Textual)
Registered capital paid		$ 15,920
Hangzhou Jiuzhou Grand Pharmacy Chain [Member]
Description of Business and Organization (Textual)
Percentage of capital stock in exchange transaction				51.00%
Total amount of investment					$ 741,540
Hangzhou Jiuzhou Grand Pharmacy Chain [Member] | RBM [Member]
Description of Business and Organization (Textual)
Registered capital paid | ¥			¥ 5,000,000
Total amount of investment | ¥						¥ 5,100,000
Zhejiang Jiuxin Medicine [Member]
Description of Business and Organization (Textual)
Issuance of equity consideration							$ 79,625
Percentage of capital stock in exchange transaction									51.00%
Zhejiang Jiuxin Medicine [Member] | RBM [Member]
Description of Business and Organization (Textual)
Issuance of equity consideration | ¥								¥ 507,760
Registered capital paid | ¥			10,000,000
Hangzhou Qianhong Agriculture Development [Member] | RBM [Member]
Description of Business and Organization (Textual)
Registered capital paid | ¥			10,000,000
Lin Jiuzhou [Member] | RBM [Member]
Description of Business and Organization (Textual)
Registered capital paid | ¥			¥ 5,000,000
Zhejiang Quannuo Internet Technology [Member]
Description of Business and Organization (Textual)
Issuance of equity consideration										$ 17,121
Zhejiang Quannuo Internet Technology [Member] | RBM [Member]
Description of Business and Organization (Textual)
Issuance of equity consideration | ¥											¥ 107,074
Jiuxin Medicine [Member]
Description of Business and Organization (Textual)
Percentage of capital stock in exchange transaction		10.00%	10.00%				10.00%	10.00%

XML

Liquidity (Details) - USD ($)	Apr. 15, 2019	Jun. 30, 2019
Liquidity (Textual)
Bank credit line from two local banks		$ 3,100,000
Two credit line agreements [Member]
Liquidity (Textual)
Bank credit line from two local banks		7,280,100
Two credit line agreements [Member] | CNY [Member]
Liquidity (Textual)
Bank credit line from two local banks		$ 50,000,000
Private Placement [Member]
Liquidity (Textual)
Purchase of aggregate of common stock	4,000,008
Common stock price, per share	$ 2.20
Gross proceeds from private placement	$ 10,000,020

XML

Summary of Significant Accounting Policies (Details) - USD ($)	Jun. 30, 2019	Mar. 31, 2019
Summary of fair values of derivative instruments
Cash and cash equivalents and restricted cash	$ 23,150,153
Financial assets available for sale	162,273	$ 180,928
Notes payable	24,574,955
Financial liability	80,081
Warrants liability	61,693
Total	48,029,155
Fair Value, Inputs, Level 1 [Member]
Summary of fair values of derivative instruments
Cash and cash equivalents and restricted cash	23,150,153
Notes payable
Warrants liability
Total	23,150,153
Fair Value, Inputs, Level 2 [Member]
Summary of fair values of derivative instruments
Cash and cash equivalents and restricted cash
Notes payable	24,574,955
Warrants liability	61,693
Total	24,636,648
Fair Value, Inputs, Level 3 [Member]
Summary of fair values of derivative instruments
Cash and cash equivalents and restricted cash
Financial assets available for sale	162,273
Notes payable
Financial liability	80,081
Warrants liability
Total	$ 242,354

XML

Summary of Significant Accounting Policies (Details 1) - USD ($)	3 Months Ended
	Jun. 30, 2019	Jun. 30, 2018
Disaggregation of Revenue [Line Items]
Total revenue	$ 25,280,784	$ 22,772,566
Retail Store [Member]
Disaggregation of Revenue [Line Items]
Total revenue	16,734,988	15,968,341
Retail Store [Member] | Medical Devices [Member]
Disaggregation of Revenue [Line Items]
Total revenue	1,166,093	461,663
Retail Store [Member] | Sundry Products [Member]
Disaggregation of Revenue [Line Items]
Total revenue	298,198	204,861
Retail Store [Member] | Traditional Chinese Medicine [Member]
Disaggregation of Revenue [Line Items]
Total revenue	1,104,050	1,582,568
Retail Store [Member] | Nutritional Supplements [Member]
Disaggregation of Revenue [Line Items]
Total revenue	1,231,133	945,206
Retail Store [Member] | Over Counter Drugs [Member]
Disaggregation of Revenue [Line Items]
Total revenue	7,240,228	6,964,828
Retail Store [Member] | Prescription Drugs [Member]
Disaggregation of Revenue [Line Items]
Total revenue	5,695,286	5,809,215
Drug Wholesale [Member]
Disaggregation of Revenue [Line Items]
Total revenue	6,102,191	4,782,356
Drug Wholesale [Member] | Medical Devices [Member]
Disaggregation of Revenue [Line Items]
Total revenue	21,238	35,914
Drug Wholesale [Member] | Sundry Products [Member]
Disaggregation of Revenue [Line Items]
Total revenue	5,682	4,755
Drug Wholesale [Member] | Traditional Chinese Medicine [Member]
Disaggregation of Revenue [Line Items]
Total revenue	98,828	21,851
Drug Wholesale [Member] | Nutritional Supplements [Member]
Disaggregation of Revenue [Line Items]
Total revenue	21,691	25,381
Drug Wholesale [Member] | Over Counter Drugs [Member]
Disaggregation of Revenue [Line Items]
Total revenue	1,074,261	1,274,919
Drug Wholesale [Member] | Prescription Drugs [Member]
Disaggregation of Revenue [Line Items]
Total revenue	4,880,491	3,419,536
Online Pharmacy [Member]
Disaggregation of Revenue [Line Items]
Total revenue	2,443,605	2,021,869
Online Pharmacy [Member] | Medical Devices [Member]
Disaggregation of Revenue [Line Items]
Total revenue	859,392	60,685
Online Pharmacy [Member] | Sundry Products [Member]
Disaggregation of Revenue [Line Items]
Total revenue	438,736	1,037,166
Online Pharmacy [Member] | Traditional Chinese Medicine [Member]
Disaggregation of Revenue [Line Items]
Total revenue	13,681	4,929
Online Pharmacy [Member] | Nutritional Supplements [Member]
Disaggregation of Revenue [Line Items]
Total revenue	107,194	143,096
Online Pharmacy [Member] | Over Counter Drugs [Member]
Disaggregation of Revenue [Line Items]
Total revenue	1,024,602	775,993
Online Pharmacy [Member] | Prescription Drugs [Member]
Disaggregation of Revenue [Line Items]
Total revenue

XML

Summary of Significant Accounting Policies (Details 2) - USD ($)	Jun. 30, 2019	Mar. 31, 2019
Accounting Policies [Abstract]
Trade receivable(included in accounts receivable, net)	$ 8,590,075	$ 8,692,514
Contract liabilities (included in accrued expenses)	$ 1,494,018	$ 1,689,099

XML

Summary of Significant Accounting Policies (Details 3) - USD ($)	Jun. 30, 2019	Mar. 31, 2019	Jun. 30, 2018
Accounting Policies [Abstract]
Cash and cash equivalents	$ 8,341,167	$ 9,322,463
Restricted cash	14,808,986	15,422,739
Cash, cash equivalents and restricted cash	$ 23,150,153	$ 24,745,202	$ 22,942,474

XML

Summary of Significant Accounting Policies (Details 4)	3 Months Ended
	Jun. 30, 2019
Office Equipment [Member] | Maximum [Member]
Property, Plant and Equipment [Line Items]
Estimated useful lives of property and equipment	5 years
Office Equipment [Member] | Minimum [Member]
Property, Plant and Equipment [Line Items]
Estimated useful lives of property and equipment	3 years
Leasehold Improvements [Member] | Maximum [Member]
Property, Plant and Equipment [Line Items]
Estimated useful lives of property and equipment	10 years
Leasehold Improvements [Member] | Minimum [Member]
Property, Plant and Equipment [Line Items]
Estimated useful lives of property and equipment	3 years
Vehicles [Member] | Maximum [Member]
Property, Plant and Equipment [Line Items]
Estimated useful lives of property and equipment	5 years
Vehicles [Member] | Minimum [Member]
Property, Plant and Equipment [Line Items]
Estimated useful lives of property and equipment	3 years
Building [Member]
Property, Plant and Equipment [Line Items]
Estimated useful lives of property and equipment	35 years

XML

Summary of Significant Accounting Policies (Details 5)	3 Months Ended
	Jun. 30, 2019
Land Use Rights [Member]
Finite-Lived Intangible Assets [Line Items]
Estimated useful life of intangible assets	50 years
Computer Software, Intangible Asset [Member]
Finite-Lived Intangible Assets [Line Items]
Estimated useful life of intangible assets	3 years

XML

Summary of Significant Accounting Policies (Details 6) - USD ($)	Jun. 30, 2019	Mar. 31, 2019	Jun. 30, 2018	Mar. 31, 2018
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Other current assets	$ 1,557,156	$ 2,063,375
Total current assets	50,156,769	56,202,981
Operating lease right-of-use assets	13,564,115
Total assets	80,217,704	72,730,636
Current portion of operating lease liabilities	4,738,632
Total current liabilities	48,660,016	55,212,286
Long-term operating lease liabilities	7,918,900
Total liabilities	56,720,690	55,759,469
Retained earnings	(32,722,416)	(30,587,468)
Total shareholders’ equity	24,932,657	18,165,206	$ 18,218,821	$ 18,862,405
Total  equity	23,497,014	$ 16,971,167
Restatement Adjustment [Member]
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Other current assets	(717,414)
Total current assets	(717,414)
Operating lease right-of-use assets	15,276,388
Total assets	14,558,974
Current portion of operating lease liabilities	4,718,610
Total current liabilities	4,718,610
Long-term operating lease liabilities	9,418,011
Total liabilities	14,136,621
Retained earnings	422,354
Total shareholders’ equity	422,354
Total  equity	422,354
Adjusted [Member]
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Other current assets	1,345,961
Total current assets	55,485,567
Operating lease right-of-use assets	15,276,388
Total assets	87,289,610
Current portion of operating lease liabilities	4,718,610
Total current liabilities	59,930,896
Long-term operating lease liabilities	9,418,011
Total liabilities	69,896,090
Retained earnings	(30,165,114)
Total shareholders’ equity	18,587,560
Total  equity	$ 17,393,521

XML

Summary of Significant Accounting Policies (Details Textual)	3 Months Ended
	Jun. 30, 2019 USD ($) Vendors Supplier	Jun. 30, 2018 USD ($) Vendors	Apr. 02, 2019 USD ($)	Mar. 31, 2019 USD ($)	Mar. 31, 2015 USD ($)	Mar. 31, 2015 CNY (¥)
Summary of Significant Accounting Policies (Textual)
Voting ownership interest	50.00%
Ownership percentage	100.00%
Value added tax, percentage	17.00%
Advertising and promotion costs	$ 80,049	$ 191,054
Term of agreement for operating leases				30 years
Foreign currency translation, description	The balance sheet amounts, with the exception of equity, at June 30, 2019 and at March 31, 2019 were translated at 1 RMB to 0.1456 USD and at 1 RMB to 0.1490 USD, respectively. The average translation rates applied to income and cash flow statement amounts for the three months ended June 30, 2019 and 2018 were at 1 RMB to 0.1466 USD and at 1 RMB to 0.1511 USD, respectively.
Insurance covered by own bank					$ 72,800
Bank uncovered amount					$ 72,800
Deposits	$ 23,061,379			$ 24,730,736
Farmland assets	$ 742,974			$ 825,259
Retained earnings			$ 422,354
RMB [Member]
Summary of Significant Accounting Policies (Textual)
Insurance covered by own bank | ¥						¥ 500,000
Bank uncovered amount | ¥						¥ 500,000
Wholesale Warehouse [Member]
Summary of Significant Accounting Policies (Textual)
Term of agreement for operating leases	10 years
Retail Site [Member] | Minimum [Member]
Summary of Significant Accounting Policies (Textual)
Term of agreement for operating leases	3 years
Retail Site [Member] | Maximum [Member]
Summary of Significant Accounting Policies (Textual)
Term of agreement for operating leases	10 years
Sales Revenue, Net [Member]
Summary of Significant Accounting Policies (Textual)
Concentration risk, percentage	10.00%	10.00%
Cost of Goods, Total [Member]
Summary of Significant Accounting Policies (Textual)
Concentration risk, percentage	49.20%	46.20%
Number of vendors | Vendors	2	2
Advances to Suppliers [Member]
Summary of Significant Accounting Policies (Textual)
Concentration risk, percentage	10.00%	10.00%
Number of supplier | Supplier	2
Accounts Receivable [Member]
Summary of Significant Accounting Policies (Textual)
Concentration risk, percentage	10.00%	10.00%

XML

Trade Accounts Receivable (Details) - USD ($)	Jun. 30, 2019	Mar. 31, 2019
Receivables [Abstract]
Accounts receivable	$ 12,395,705	$ 11,939,364
Less: allowance for doubtful accounts	(3,805,630)	(3,246,850)
Trade accounts receivable, net	$ 8,590,075	$ 8,692,514

XML

Trade Accounts Receivable (Details Textual) - USD ($)	3 Months Ended
	Jun. 30, 2019	Jun. 30, 2018
Trade Accounts Receivable (Textual)
Accounts receivable written off	$ 36,068	$ 30,583

XML

Other Current Assets (Details) - USD ($)		Jun. 30, 2019	Mar. 31, 2019
Other Current Assets [Abstract]
Rental deposits	[1]	$ 1,466,714	$ 1,979,852
Prepaid and other current assets		90,442	83,523
Total		$ 1,557,156	$ 2,063,375

[1] The balance as of June 30, 2019 includes short-term refundable rental security deposits only, while the balance as of March 31, 2019 includes security deposits of $1,444,026 and prepaid rental of $ 535,826.

XML

Other Current Assets (Details Textual) - USD ($)		Jun. 30, 2019	Mar. 31, 2019
Other Current Assets [Abstract]
Security deposits			$ 1,444,026
Prepaid rental	[1]	$ 1,466,714	$ 1,979,852

[1] The balance as of June 30, 2019 includes short-term refundable rental security deposits only, while the balance as of March 31, 2019 includes security deposits of $1,444,026 and prepaid rental of $ 535,826.

XML

Property and Equipment (Details) - USD ($)		Jun. 30, 2019	Mar. 31, 2019
Property, Plant and Equipment [Line Items]
Total		$ 23,140,382	$ 23,183,960
Less: Accumulated depreciation		(12,227,499)	(12,111,409)
Impairment	[1]	(2,292,125)	(2,345,193)
Property and equipment, net		8,620,758	8,727,358
Office Equipment [Member]
Property, Plant and Equipment [Line Items]
Total		5,507,064	5,470,084
Vehicles [Member]
Property, Plant and Equipment [Line Items]
Total		539,238	551,927
Leasehold Improvements [Member]
Property, Plant and Equipment [Line Items]
Total		9,280,768	8,944,025
Building [Member]
Property, Plant and Equipment [Line Items]
Total		6,072,001	6,436,297
Farmland Development Cost [Member]
Property, Plant and Equipment [Line Items]
Total		$ 1,741,311	$ 1,781,627

[1] The variance of impairment from March 31, 2019 to June 30, 2019 is solely caused by exchange rate variance.

XML

Property and Equipment (Details Textual) - USD ($)	3 Months Ended
	Jun. 30, 2019	Jun. 30, 2018
Property and Equipment (Textual)
Depreciation expenses for property and equipment	$ 441,559	$ 219,759

XML

Advances to Suppliers (Details) - USD ($)	Jun. 30, 2019	Mar. 31, 2019
Advances to Suppliers [Abstract]
Advance to suppliers	$ 2,180,129	$ 2,477,226
Less: allowance for doubtful accounts	(635,997)	(526,974)
Advance to suppliers, net	$ 1,544,132	$ 1,950,252

XML

Inventory (Details) - USD ($)	Jun. 30, 2019	Mar. 31, 2019
Inventory (Textual)
Finished goods	$ 10,806,698	$ 13,955,202

XML

Farmland Assets (Details) - USD ($)		Jun. 30, 2019	Mar. 31, 2019
Farmland Assets [Abstract]
Farmland assets		$ 2,224,942	$ 2,341,537
Less: Impairment	[1]	(1,481,968)	(1,516,278)
Farmland assets, net		$ 742,974	$ 825,259

[1] The variance of impairment is caused by exchange rate variance.

XML

Long Term Refundable Deposits, Landlords (Details) - USD ($)	Jun. 30, 2019	Mar. 31, 2019
Long Term Deposits, Landlords (Textual)
Long term deposits	$ 2,050,219	$ 2,157,275

XML

Other Noncurrent Assets (Details) - USD ($)		Jun. 30, 2019	Mar. 31, 2019
Other Assets, Noncurrent Disclosure [Abstract]
Forest land use rights	[1]	$ 1,065,434	$ 1,103,235
Others		112,269	92,962
Total		$ 1,177,703	$ 1,196,197

[1] The prepayment for lease of forest land use rights is a payment made to a local government in connection with entering into 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.

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Other Noncurrent Assets (Details 1)	Jun. 30, 2019 USD ($)
Other Assets, Noncurrent Disclosure [Abstract]
2020	$ 27,541
2021	27,541
2022	27,541
2023	27,541
2024	27,541
Thereafter	$ 796,935

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Other Noncurrent Assets (Details Textual) - USD ($)	3 Months Ended
	Jun. 30, 2019	Jun. 30, 2018
Other Noncurrent Assets (Textual)
Amortization of prepayment for lease of land use right	$ 6,885	$ 7,096
Description of lease prepayment life	Extends the life of the lease to January 31, 2060.

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Leases (Details)	Jun. 30, 2019 USD ($)
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows paid for operating leases	$ 1,115,138
Right-of-use assets obtained in exchange for lease obligations:
Operating leases

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Leases (Details 1) - USD ($)	Jun. 30, 2019	Mar. 31, 2019
Operating leases:
Operating lease right-of-use assets	$ 13,564,115
Current portion of operating lease liabilities	4,738,632
Long-term operating lease liabilities	7,918,900
Total operating lease liabilities	$ 12,657,532
Weighted average remaining lease term, Operating leases	4 years 6 months
Weighted average discount rate, Operating leases	210.00%

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Leases (Details 2)	Jun. 30, 2019 USD ($)
Leases [Abstract]
2020	$ 4,739,995
2021	3,691,865
2022	2,879,742
2023	1,961,837
2024	1,398,480
Thereafter	1,444,296
Total lease payments	16,116,215
Less: imputed interest	(3,458,683)
Total lease liabilities	$ 12,657,532

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Leases (Details Textual)	3 Months Ended
	Jun. 30, 2019 USD ($)
Leases (Textual)
Operating lease cost	$ 1,294,591
Minimum [Member]
Leases (Textual)
Operating lease initial terms	3 years
Maximum [Member]
Leases (Textual)
Operating lease initial terms	10 years

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Intangible Assets (Details) - USD ($)	Jun. 30, 2019	Mar. 31, 2019
Acquired Finite-Lived Intangible Assets [Line Items]
Total intangible assets	$ 4,377,600	$ 4,038,754
Less: accumulated amortization	(488,752)	(441,431)
Intangible assets, net	3,888,848	3,597,323
License [Member]
Acquired Finite-Lived Intangible Assets [Line Items]
Total intangible assets	1,866,487	1,909,700
Software [Member]
Acquired Finite-Lived Intangible Assets [Line Items]
Total intangible assets	1,091,268	676,336
Land use rights [Member]
Acquired Finite-Lived Intangible Assets [Line Items]
Total intangible assets	$ 1,419,845	$ 1,452,718

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Intangible Assets (Details Textual)	3 Months Ended
	Jun. 30, 2019 USD ($)	Jun. 30, 2019 CNY (¥)	Jun. 30, 2018 USD ($)	Jun. 30, 2019 CNY (¥)
Intangible Assets (Textual)
Amortization expense of intangibles | $	$ 58,466		$ 73,336
Internet Clinic Diagnosis System [Member]
Intangible Assets (Textual)
Intangible assets, net | $	$ 345,906
Internet Clinic Diagnosis System [Member] | RMB [Member]
Intangible Assets (Textual)
Amortization expense of intangibles | ¥		¥ 2,688,709
Intangible assets, net | ¥				¥ 2,375,697

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Notes Payable (Details) - USD ($)		3 Months Ended	12 Months Ended
		Jun. 30, 2019	Mar. 31, 2019
Short-term Debt [Line Items]
Notes payable		$ 24,574,955	$ 25,951,673
Hangzhou United Bank [Member] | Jiuzhou Pharmacy [Member] | 11/06/18 [Member]
Short-term Debt [Line Items]
Maturity date	[1]		May 06, 2019
Notes payable	[1]		$ 500,857
Hangzhou United Bank [Member] | Jiuzhou Pharmacy [Member] | 12/29/18 [Member]
Short-term Debt [Line Items]
Maturity date	[1]	Jun. 29, 2019	Jun. 29, 2019
Notes payable	[1]	$ 324,592	$ 5,504,943
Hangzhou United Bank [Member] | Jiuzhou Pharmacy [Member] | 02/14/18 [Member]
Short-term Debt [Line Items]
Maturity date	[1]	Aug. 14, 2019	Aug. 14, 2019
Notes payable	[1]	$ 2,528,784	$ 2,587,331
Hangzhou United Bank [Member] | Jiuzhou Pharmacy [Member] | 12/12/18 [Member]
Short-term Debt [Line Items]
Maturity date	[1]		Jun. 12, 2019
Notes payable	[1]		$ 2,236,559
Hangzhou United Bank [Member] | Jiuzhou Pharmacy [Member] | 12/20/18 [Member]
Short-term Debt [Line Items]
Maturity date	[1]		Jun. 20, 2019
Notes payable	[1]		$ 1,072,606
Hangzhou United Bank [Member] | Jiuzhou Pharmacy [Member] | 03/06/18 [Member]
Short-term Debt [Line Items]
Maturity date	[1]	Sep. 06, 2019	Sep. 06, 2019
Notes payable	[1]	$ 6,451,364	$ 6,600,727
Hangzhou United Bank [Member] | Jiuzhou Pharmacy [Member] | 6/5/2019 [Member]
Short-term Debt [Line Items]
Maturity date	[1]	Dec. 05, 2019
Notes payable	[1]	$ 4,384,517
Hangzhou United Bank [Member] | Jiuzhou Pharmacy [Member] | 6/28/2019 [Member]
Short-term Debt [Line Items]
Maturity date	[1]	Dec. 28, 2019
Notes payable	[1]	$ 3,844,927
Hangzhou United Bank [Member] | Jiuxin Medicine [Member] | 10/11/2018 [Member]
Short-term Debt [Line Items]
Maturity date	[1]		Apr. 11, 2019
Notes payable	[1]		$ 4,461,531
Hangzhou United Bank [Member] | Jiuxin Medicine [Member] | 11/6/2018 [Member]
Short-term Debt [Line Items]
Maturity date	[1]		May 06, 2019
Notes payable	[1]		$ 2,987,119
Hangzhou United Bank [Member] | Jiuxin Medicine [Member] | 4/10/2019 [Member]
Short-term Debt [Line Items]
Maturity date	[1]	Oct. 10, 2019
Notes payable	[1]	$ 4,112,456
Hangzhou United Bank [Member] | Jiuxin Medicine [Member] | 4/15/2019 [Member]
Short-term Debt [Line Items]
Maturity date	[1]	Oct. 15, 2019
Notes payable	[1]	$ 145,602
Hangzhou United Bank [Member] | Jiuxin Medicine [Member] | 5/10/2019 [Member]
Short-term Debt [Line Items]
Maturity date	[1]	Nov. 10, 2019
Notes payable	[1]	$ 2,782,713
Hangzhou United Bank [Member] | Jiuxin Medicine [Member] | Origination date [Member]
Short-term Debt [Line Items]
Notes payable	[1]

[1] As of June 30, 2019, the Company had $24,574,955 (RMB 168,781,714) of notes payable from HUB. The Company is required to hold restricted cash in the amount of $14,626,921 (RMB 100,458,244) with HUB as collateral against these bank notes. Included in the restricted cash is a total of $10,209,998 three-year deposit (RMB 70,122,647) deposited into HUB as a collateral for current and future notes payable from HUB. As of March 31, 2019, the Company had $25,951,673 (RMB 174,203,868) of notes payable from HUB. The Company is required to hold restricted cash in the amount of $15,114,740 (RMB 101,459,590) with HUB as collateral against these bank notes. Included in the restricted cash is a total of $10,446,381 three-year deposit (RMB 70,122,647) deposited into HUB as a collateral for current and future notes payable from HUB.

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Notes Payable (Details Textual)	3 Months Ended	12 Months Ended
	Jun. 30, 2019 USD ($)	Mar. 31, 2019 USD ($)	Jun. 30, 2019 CNY (¥)	Mar. 31, 2019 CNY (¥)	Jun. 30, 2018 USD ($)
Notes Payable (Textual)
Notes payable	$ 24,570,000
Line of credit total	3,100,000
Hangzhou United Bank [Member]
Notes Payable (Textual)
Notes payable	10,210,000
Restricted cash	4,420,000
Line of credit total	12,960,000
Hangzhou United Bank [Member] | Notes Payable to Banks [Member]
Notes Payable (Textual)
Notes payable	24,574,955	$ 25,951,673
Restricted cash	14,626,921	15,114,740
Hangzhou United Bank [Member] | Notes Payable to Banks [Member] | RMB [Member]
Notes Payable (Textual)
Notes payable | ¥			¥ 168,781,714	¥ 174,203,868
Restricted cash | ¥			¥ 100,458,244	101,459,590
Hangzhou United Bank One [Member] | Notes Payable to Banks [Member]
Notes Payable (Textual)
Restricted cash	$ 10,209,998	$ 10,446,381
Term of deposit	3 years	3 years
Hangzhou United Bank One [Member] | Notes Payable to Banks [Member] | RMB [Member]
Notes Payable (Textual)
Restricted cash				¥ 70,122,647	$ 70,122,647

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Taxes (Details)	3 Months Ended
	Jun. 30, 2019
Jo Jo Drugstores [Member]
Income Taxes [Line Items]
Income Tax Jurisdiction	United States
Renovation [Member]
Income Taxes [Line Items]
Income Tax Jurisdiction	Hong Kong, PRC
Other Entities [Member]
Income Taxes [Line Items]
Income Tax Jurisdiction	Mainland, PRC

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Taxes (Details 1) - USD ($)	3 Months Ended
	Jun. 30, 2019	Jun. 30, 2018
Current:
Federal
State
Foreign	8,388	57,169
Total	8,388	57,169
Deferred:
Federal
State
Foreign
Total
Provision for income taxes	$ 8,388	$ 57,169

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Taxes (Details 2)	3 Months Ended
	Jun. 30, 2019	Jun. 30, 2018
Income Tax Disclosure [Abstract]
U.S. Statutory rates	21.00%	21.00%
Foreign income not recognized in the U.S.	(21.00%)	(21.00%)
China income taxes	25.00%	25.00%
Change in valuation allowance	(25.00%)	(25.00%)
Non-deductible expenses-permanent difference	0.40%	8.90%
Effective tax rate	(0.40%)	(8.90%)

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Taxes (Details 3) - USD ($)	Jun. 30, 2019	Mar. 31, 2019
Income Tax Disclosure [Abstract]
Allowance	$ 1,152,638	$ 986,665
Long-lived assets impairment	573,031	586,298
Depreciation and Amortization
Accrued expense	1,628,792	1,569,683
Net operating loss carryforward	1,438,560	1,164,735
Foreign Tax Credit Carryover	195,000	195,000
Total deferred tax assets (liabilities):	4,988,021	4,502,381
Valuation allowance	(4,988,021)	(4,502,381)
Net deferred tax assets (liabilities)

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Taxes (Details Textual) - USD ($)	1 Months Ended	3 Months Ended
	Dec. 22, 2017	Jun. 30, 2019	Jun. 30, 2018	Mar. 31, 2019	Mar. 31, 2018
Taxes (Textual)
Estimated net operating loss carry forwards for U.S. income tax purposes		$ 1,438,560		$ 1,164,735
Effective tax rate		(0.40%)	(8.90%)
Foreign tax credit		$ 195,000
Income tax, description	The U.S. federal statutory rate from 35% to 21%, effective on January 1, 2018. ASC 740 requires companies to recognize the effect of tax law changes in the period of enactment, accordingly, the effects must be recognized on companies' calendar year-end financial statements, even though the effective date for most provisions is January 1, 2018. As a result, we re-measured our net U.S. deferred tax assets at the 21% future tax rate.	Audit periods remain open for review until the statute of limitations has passed, which in the PRC is usually 5 years as the Company's most significant tax jurisdiction.
Percentage of corporate tax rate		21.00%
Hong Kong Income Tax [Member]
Taxes (Textual)
Estimated net operating loss carry forwards for U.S. income tax purposes		$ 1,993,833			$ 1,960,933
Us Income Tax [Member]
Taxes (Textual)
Estimated net operating loss carry forwards for U.S. income tax purposes		$ 816,908		816,908
Expiration date		Mar. 31, 2032
China Income Tax [Member]
Taxes (Textual)
Estimated net operating loss carry forwards for U.S. income tax purposes		$ 3,752,108		$ 2,678,523

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Postretirement Benefits (Details) - USD ($)	3 Months Ended
	Jun. 30, 2019	Jun. 30, 2018
Postretirement Benefits (Textual)
Employment benefits and pension contribution	$ 341,024	$ 363,784

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Related Party Transactions and Arrangements (Details) - USD ($)		Jun. 30, 2019	Mar. 31, 2019
Due to a director and CEO [Member]
Related Party Transaction [Line Items]
Total	[1]	$ 326,778	$ 795,179

[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. In the three months ended June 30, 2019, the Company paid certain borrowings back to CEO.

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Related Party Transactions and Arrangements (Details Textual)	1 Months Ended		3 Months Ended
	Apr. 28, 2018 USD ($)	Apr. 28, 2018 CNY (¥)	Jun. 30, 2019 USD ($)	Jun. 30, 2018 USD ($)
Chief Executive Officer [Member]
Related Party Transactions and Arrangements (Textual)
Lease expiration date			Sep. 30, 2020
Rent expenses			$ 6,785	$ 4,532
Ownership percentage	51.00%	51.00%
Hangzhou Kangzhou Biotech [Member]
Related Party Transactions and Arrangements (Textual)
Total proceeds	$ 75,643
Sale of percentage	10.00%	10.00%
Hangzhou Kangzhou Biotech [Member] | RMB [Member]
Related Party Transactions and Arrangements (Textual)
Total proceeds | ¥		¥ 507,760

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Warrants (Details) - Warrant [Member] - $ / shares	3 Months Ended		12 Months Ended
	Jun. 30, 2019	[1]	Mar. 31, 2019
Class of Warrant or Right [Line Items]
Stock price	$ 1.10		$ 2.62
Exercise price	$ 3.10		$ 3.10
Annual dividend yield	0.00%		0.00%
Expected term (years)	1 year 6 months 21 days		1 year 9 months 18 days
Risk-free interest rate	175.00%		2.27%
Expected volatility	72.47%		67.69%

[1] As of June 30, 2019, the warrants had not been exercised.

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Warrants (Details Textual) - USD ($)	1 Months Ended	3 Months Ended		12 Months Ended
	Jul. 19, 2015	Jun. 30, 2019	Jun. 30, 2018	Mar. 31, 2017	Mar. 31, 2019
Warrants (Textual)
Fair value estimation method		Binominal pricing model
Fair value of warrant liability				$ 496,217
Recognized gain on fair value of warrant liability		$ 388,605
Recognized loss on fair value of warrant liability		$ 6,974
Maturity date		Apr. 11, 2024
Purchase of warrants investors		672,000
Change in Fair Value of Warrants Liability		$ 403,555	$ (6,974)
Purchase option and warrants liability		$ 61,693			$ 465,248
Warrant [Member]
Warrants (Textual)
Stock purchase price per share (in dollars per share)	$ 3.10
Warrants exercisable date	Jan. 19, 2016
Maturity date	Jan. 18, 2021
Purchase of warrants investors	600,000
Issuance of warrants to placement agent		72,000
Percentage of stock sold in offering		6.00%
Change in Fair Value of Warrants Liability		$ 403,555	$ (6,974)

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Financial Liability (Details) - Jun. 30, 2019	USD ($)	CNY (¥)
Financial Liability (Textual)
Reclassifies deposits financial liability | $	$ 80,081
RMB [Member]
Financial Liability (Textual)
Reclassifies deposits financial liability | ¥		¥ 550,000

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Stockholder's Equity (Details)		1 Months Ended				3 Months Ended	12 Months Ended
	Nov. 18, 2014 Segment $ / shares shares	Apr. 15, 2019 USD ($) $ / shares shares	Jun. 28, 2018 shares	Mar. 30, 2018 shares	Jan. 23, 2017 USD ($) $ / shares shares	Jun. 30, 2019 USD ($)	Mar. 31, 2019 USD ($)
Stockholder's Equity (Textual)
Maturity date						Apr. 11, 2024
Reserve fund percentage						50.00%
Statutory accounts percentage						10.00%
Compensation committee cancelled shares			225,000
Chief Executive Officer [Member]
Stockholder's Equity (Textual)
Aggregate issuances shares			675,000
Performance based compensation exemption, description			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.
Warrant [Member] | Investor [Member]
Stockholder's Equity (Textual)
Company sold common stock to investor		240,000
Exercise price of stock option | $ / shares		$ 3.125
Warrants to purchase		3,000,006
Common Stock [Member]
Stockholder's Equity (Textual)
Company sold common stock to investor		4,000,008			4,840,000
Common stock, par value | $ / shares		$ 2.50			$ 0.001
Purchase price | $ / shares					$ 2.20
Proceeds from private placement | $		$ 10,000,020			$ 10,648,000
Exercise price of stock option | $ / shares		$ 3.125
Warrants to purchase		240,000
Common Stock [Member] | Investor [Member]
Stockholder's Equity (Textual)
Exercise price of stock option | $ / shares		$ 3.00
Warrants to purchase		3,000,006
Employee Stock Option [Member]
Stockholder's Equity (Textual)
Number of granted shares	967,000
Share based compensation expense | $						$ 0
Number of directors, officers and employees in a group | Segment	46
Exercise price of stock option | $ / shares	$ 2.50
Period for options exercisable from the vesting date	5 years
Maturity date	Nov. 17, 2022
Stock Compensation Plan Three [Member]
Stockholder's Equity (Textual)
Number of granted shares				3,947,100
Share based compensation expense | $							$ 5,328,585

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(loss) Per Share (Details) - USD ($)	3 Months Ended
	Jun. 30, 2019	Jun. 30, 2018
LOSS PER SHARES:
Net income attributable to controlling interest	$ (2,378,170)	$ (696,615)
Weighted average shares used in basic computation	32,453,269	28,936,778
Diluted effect of stock options and warrants
Weighted average shares used in diluted computation	32,453,269	28,936,778
Loss per share – Basic:
Net (loss) attributable to controlling interest	$ (0.07)	$ (0.02)
Loss per share - Diluted:
Net (loss) attributable to controlling interest	$ (0.07)	$ (0.02)

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(loss) Per Share (Details Textual)	3 Months Ended
	Jun. 30, 2019 shares
Private Placement [Member]
Loss Per Share (Textual)
Antidilutive securities excluded from calculation of diluted earnings per share	3,240,006
Employee Stock Option [Member]
Loss Per Share (Textual)
Antidilutive securities excluded from calculation of diluted earnings per share	967,000
Employee Stock Option [Member] | Private Placement [Member]
Loss Per Share (Textual)
Antidilutive securities excluded from calculation of diluted earnings per share	72,000
Employee Stock Option [Member] | Investor [Member]
Loss Per Share (Textual)
Antidilutive securities excluded from calculation of diluted earnings per share	600,000

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Segments (Details) - USD ($)	3 Months Ended
	Jun. 30, 2019		Jun. 30, 2018
Segment Reporting Information [Line Items]
Revenue	$ 25,280,784		$ 22,772,566
Cost of goods	19,219,346		17,155,763
Gross profit	6,061,438		5,616,803
Selling expenses	5,968,551		4,626,978
General and administrative expenses	2,851,612	[1]	1,554,528	[2]
Loss from operations	(2,758,725)		(564,703)
Depreciation and amortization	512,949		136,443
Total capital expenditures	753,173		158,389
Retail drugstores [Member]
Segment Reporting Information [Line Items]
Revenue	16,734,988		15,968,341
Cost of goods	11,682,721		11,163,223
Gross profit	5,052,267		4,805,118
Selling expenses	4,835,666		3,477,677
General and administrative expenses	1,733,704		1,301,468
Loss from operations	(1,517,103)		(25,973)
Depreciation and amortization	504,463		130,657
Total capital expenditures	753,173		157,272
Online Pharmacy [Member]
Segment Reporting Information [Line Items]
Revenue	2,443,605		2,021,869
Cost of goods	2,096,850		1,740,904
Gross profit	346,755		280,965
Selling expenses	473,380		401,362
General and administrative expenses	55,123		187,224
Loss from operations	(181,748)		(307,621)
Depreciation and amortization
Total capital expenditures
Drug wholesale [Member]
Segment Reporting Information [Line Items]
Revenue	6,102,191		4,782,356
Cost of goods	5,439,775		4,251,636
Gross profit	662,416		530,720
Selling expenses	659,505		747,939
General and administrative expenses	1,062,785		65,836
Loss from operations	(1,059,874)		(283,055)
Depreciation and amortization	8,486		5,786
Total capital expenditures			1,117
Herb farming [Member]
Segment Reporting Information [Line Items]
Revenue
Cost of goods
Gross profit
Selling expenses
General and administrative expenses
Loss from operations
Depreciation and amortization
Total capital expenditures

[1] Includes accounts receivable allowance reversal of $558,779 and additional advance to suppliers allowance of $109,023.

[2] Includes accounts receivable allowance reversal of $112,386 and additional advance to suppliers allowance of $266,592.

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Segments (Details 1) - USD ($)	3 Months Ended
	Jun. 30, 2019	Jun. 30, 2018
Revenue from External Customer [Line Items]
Net revenue from external customers	$ 25,280,784	$ 22,772,566
Drug Wholesale [Member]
Revenue from External Customer [Line Items]
Net revenue from external customers	6,102,191	4,782,356
Drug Wholesale [Member] | Prescription Drugs [Member]
Revenue from External Customer [Line Items]
Net revenue from external customers	4,880,491	3,419,536
Drug Wholesale [Member] | Over Counter Drugs [Member]
Revenue from External Customer [Line Items]
Net revenue from external customers	1,074,261	1,274,919
Drug Wholesale [Member] | Nutritional Supplements [Member]
Revenue from External Customer [Line Items]
Net revenue from external customers	21,691	25,381
Drug Wholesale [Member] | Traditional Chinese Medicine [Member]
Revenue from External Customer [Line Items]
Net revenue from external customers	98,828	21,851
Drug Wholesale [Member] | Sundry Products [Member]
Revenue from External Customer [Line Items]
Net revenue from external customers	5,682	4,755
Drug Wholesale [Member] | Medical Devices [Member]
Revenue from External Customer [Line Items]
Net revenue from external customers	21,238	35,914
Online Pharmacy [Member]
Revenue from External Customer [Line Items]
Net revenue from external customers	2,443,605	2,021,869
Online Pharmacy [Member] | Prescription Drugs [Member]
Revenue from External Customer [Line Items]
Net revenue from external customers
Online Pharmacy [Member] | Over Counter Drugs [Member]
Revenue from External Customer [Line Items]
Net revenue from external customers	1,024,602	775,993
Online Pharmacy [Member] | Nutritional Supplements [Member]
Revenue from External Customer [Line Items]
Net revenue from external customers	107,194	143,096
Online Pharmacy [Member] | Traditional Chinese Medicine [Member]
Revenue from External Customer [Line Items]
Net revenue from external customers	13,681	4,929
Online Pharmacy [Member] | Sundry Products [Member]
Revenue from External Customer [Line Items]
Net revenue from external customers	438,736	1,037,166
Online Pharmacy [Member] | Medical Devices [Member]
Revenue from External Customer [Line Items]
Net revenue from external customers	859,392	60,685
Retail Store [Member]
Revenue from External Customer [Line Items]
Net revenue from external customers	16,734,988	15,968,341
Retail Store [Member] | Prescription Drugs [Member]
Revenue from External Customer [Line Items]
Net revenue from external customers	5,695,286	5,809,215
Retail Store [Member] | Over Counter Drugs [Member]
Revenue from External Customer [Line Items]
Net revenue from external customers	7,240,228	6,964,828
Retail Store [Member] | Nutritional Supplements [Member]
Revenue from External Customer [Line Items]
Net revenue from external customers	1,231,133	945,206
Retail Store [Member] | Traditional Chinese Medicine [Member]
Revenue from External Customer [Line Items]
Net revenue from external customers	1,104,050	1,582,568
Retail Store [Member] | Sundry Products [Member]
Revenue from External Customer [Line Items]
Net revenue from external customers	298,198	204,861
Retail Store [Member] | Medical Devices [Member]
Revenue from External Customer [Line Items]
Net revenue from external customers	1,166,093	$ 461,663
Herbs Farming [Member]
Revenue from External Customer [Line Items]
Net revenue from external customers

XML

Segments (Details Textual)	3 Months Ended
	Jun. 30, 2019 USD ($) Segment	Jun. 30, 2018 USD ($)
Segments (Textual)
Number of operating segments | Segment	4
Accounts receivable allowance reversal	$ 558,779	$ 112,386
Additional advance to suppliers allowance	$ 109,023	$ 266,592

XML

Subsequent Events (Details) - USD ($)	Aug. 02, 2019	Jul. 26, 2019	Jun. 30, 2019
Line of credit			$ 3,100,000
Subsequent Event [Member]
Line of credit	$ 728,010	$ 7,280,100
Subsequent Event [Member] | CNY [Member]
Line of credit	$ 5,000,000	$ 50,000,000