China Jo-Jo Drugstores Chairman's Open Letter to Shareholders

HANGZHOU, China, March 10, 2016

Dear Fellow Shareholders:

As we move fully into the 2016 calendar year, I thought it would be appropriate to bring our shareholders at large up to speed on the Company's operational highlights, progress and future goals. Since our launch China Jo-Jo has grown to become one of China's strongest regional chain pharmacy brands.  We are an early adopter and pioneer of the Western large chain pharmacy model in China, which combines convenience store shopping and access to pharmacy dispensary services within the same space. 

Today, our large chain drugstore model has expanded to include premium value added services such as access to doctors who are trained in traditional Chinese medicine and Western medicine, and holistic spa treatments. In parallel to developing our physical retail pharmacy presence, the last several years has been dedicated to the rapid development of our online sales presence.  As an early mover, and pioneer in adopting online pharmacy sales in China, we remain wholly committed to the development of this new sales channel in China.  Following China's legalization of online pharmaceutical sales, growth in this industry has been exponential and embraced by consumers looking for convenient access to pharmacy dispensary services and online shopping for health and wellness products.  Admittedly China Jo-Jo has sacrificed potential gains and regional expansion of its physical store fronts in our effort to increase allocation of resources and investments into the development of the Company's mobile and e-commerce platform.  As of recent, we have been fortunate enough to bolster our IT development through the strategic hiring of senior level technologists from Alibaba as our own online pharmaceutical sales continue to grow annually at a rate of over 100% since launch. 

Our simple goal is to become one of the leading online and physical retail chain pharmacy stores in China. Looking at our most recent performance, the Company's third quarter fiscal 2016 online sales from our own website reached $ 8.8 million, or roughly 55 million yuan, up more than 400% year over year.  We were pleased to report that for the first time store sales growth from China Jo-Jo's own branded storefront exceeded sales from our third party platform sites.  We believe this step change in sales growth was prompted by management's differentiated sales model, in addition to gaining customers through commercial health insurance participation where customers in this category have higher rates of repeat business in addition to higher levels of spend in comparison to other categories of online customers. In many cases due to commercial health insurance participation, we have successfully retained satisfied customers who benefit from utilizing their commercial health insurance dollars to shop in our online pharmacy.

Moving beyond these initial efforts to foster growth in infrastructure and the development of the online pharmaceutical space, we look to further enhance the ability to sell products online. As of current, we have introduced additional IT development staff and in the past two years have invested nearly $ 1.6 million or roughly 10 million yuan for the recruitment of key technical personnel, optimizing our system for mobile shopping and sales, pc app development. We also continue to build relationships with commercial health insurance providers and pharmacy benefits management providers that will build up our e-commerce sites customer base which now consists of over 3 million customers, 70% of which are mobile users.

Despite macro-economic pressures affecting the capital markets, our vision for the Company's future remains upbeat.  We continue to seek avenues that best serve our existing customers while gaining users on our platform from an operational perspective.  As a publicly listed Company we believe that these efforts in building the businesses critical mass is paramount to creating shareholder value. Based on market conditions and if the opportunity arises we will seek other ways to create shareholder value and would be open to purchase our own stock on the open market as a demonstration of our belief in our mission.