----

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| þ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 |
|--------|-----------------------------------------------------------------------------------------|
| For the quarterly period ended | June 30, 2012 |
|--------------------------------|---------------|

| o | 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 ororganization)                                        |   | (I.R.S. Employer Identification No.) |
|                                                                                                                               |   |                                           |
|  Room 507-513, 5th Floor A Building, Meidu PlazaGongshu District, Hangzhou, Zhejiang ProvincePeople’s Republic of China |   |                                           |
|   (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) |

| Large Accelerated Filer o                                             | Accelerated Filer                   o |
|----------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------|
| Non-accelerated filer o (Do not check if a smaller reporting company) | Smaller reporting company   þ                                                                                         |

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|                                          |                                                                                                                               |   | Page   |
|-----------------------------------------------|------------------------------------------------------------------------------------------------------------------------------------|--------|--------|
| PART I                                        | FINANCIAL INFORMATION                                                                                                              |   |   |
| Item 1.                                       | Financial statements (unaudited)                                                                                                   |   | 4      |
|                                          | Condensed consolidated balance sheets as of June 30, 2012 (unaudited) and December 31, 2011                                        |   | 4      |
|                                          | Condensed consolidated statements of income and comprehensive income for the three months ended June 30, 2012 and 2011 (unaudited) |   | 5      |
|                                          | Condensed consolidated statements of cash flows for the six months ended June 30, 2012 and 2011 (unaudited)                        |   | 6      |
|                                          | Notes to condensed consolidated financial statements (unaudited)                                                                   |   | 7      |
| Item 2.                                       | Management's discussion and analysis of financial condition and results of operations                                              |   | 21     |
| Item 3.                                       | Quantitative and qualitative disclosures about market risk                                                                         |   | 26     |
| Item 4.                                       | Controls and Procedures                                                                                                            |   | 26     |
|                                          |                                                                                                                               |   |   |
| PART II                                       | OTHER INFORMATION                                                                                                                  |   | 27     |
| Item 1.                                       | Legal proceedings                                                                                                                  |   | 27     |
| Item 1A.        | Risk factors                                                                                                                       |   | 27     |
| Item 2.                                       | Unregistered sales of equity securities and use of proceeds                                                                        |   | 27     |
| Item 3.                                       | Defaults upon senior securities                                                                                                    |   | 27     |
| Item 4.                                       | Reserved                                                                                                                           |   | 27     |
| Item 5.                                       | Other information                                                                                                                  |   | 27     |
| Item 6.                                       | Exhibits                                                                                                                           |   | 28     |
| Signatures                                    |                                                                                                                               |   | 30     |

----

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| CHINA JO-JO DRUGSTORES, INC. AND SUBSIDIARIES                                      |
|------------------------------------------------------------------------------------|
| CONDENSED CONSOLIDATED BALANCE SHEETSAS OF MARCH 31, 2011 AND 2010                 |
| (UNAUDITED)                                                                        |
|                                                                               |   | JUNE 30, |   |   | MARCH 31, |   |
|                                                                               |   | 2012 |   |   | 2012 |   |
|                                                                               |   |   |   |   |   |   |
| A S S E T S                                                                        |
|                                                                               |   |   |   |   |   |   |
| CURRENT ASSETS                                                                     |   |   |   |   |   |   |
| Cash                                                                               |   | $ | 3,621,132 |   |   | $ | 3,833,216 |   |
| Restricted cash                                                                    |   |   | 1,407,870 |   |   |   | 2,818,449 |   |
| Notes receivable                                                                   |   |   | 927,947 |   |   |   | - |   |
| Trade accounts receivable, net                                                     |   |   | 23,637,397 |   |   |   | 16,516,671 |   |
| Inventories                                                                        |   |   | 7,408,490 |   |   |   | 6,875,574 |   |
| Other receivables                                                                  |   |   | 685,657 |   |   |   | 603,294 |   |
| Advances to suppliers, net                                                         |   |   | 16,882,711 |   |   |   | 14,347,557 |   |
| Other current assets                                                               |   |   | 2,838,094 |   |   |   | 2,853,301 |   |
| Total current assets                                                               |   |   | 57,409,298 |   |   |   | 47,848,062 |   |
|                                                                               |   |   |   |   |   |   |   |   |
| PROPERTY AND EQUIPMENT, net                                                        |   |   | 15,394,398 |   |   |   | 15,647,120 |   |
|                                                                               |   |   |   |   |   |   |   |   |
| OTHER ASSETS                                                                       |   |   |   |   |   |   |   |   |
| Long term deposits                                                                 |   |   | 2,518,900 |   |   |   | 2,872,219 |   |
| Other noncurrent assets                                                            |   |   | 5,641,298 |   |   |   | 5,776,667 |   |
| Intangible assets, net                                                             |   |   | 2,780,839 |   |   |   | 2,816,945 |   |
| Total other assets                                                                 |   |   | 10,941,037 |   |   |   | 11,465,831 |   |
|                                                                               |   |   |   |   |   |   |   |   |
| Total assets                                                                       |   | $ | 83,744,733 |   |   | $ | 74,961,013 |   |
|                                                                               |   |   |   |   |   |   |   |   |
| L I A B I L I T I E S  A N D  S T O C K H O L D E R S'  E Q U I T Y |
|                                                                               |   |   |   |   |   |   |   |   |
| CURRENT LIABILITIES                                                                |   |   |   |   |   |   |   |   |
| Accounts payable, trade                                                            |   | $ | 19,129,388 |   |   | $ | 13,906,383 |   |
| Notes payable                                                                      |   |   | 5,611,915 |   |   |   | 4,208,928 |   |
| Other payables                                                                     |   |   | 1,385,657 |   |   |   | 782,586 |   |
| Other payables - related parties                                                   |   |   | 1,558,519 |   |   |   | 1,458,441 |   |
| Customer deposit                                                                   |   |   | 2,029,599 |   |   |   | 1,332,141 |   |
| Taxes payable                                                                      |   |   | 537,240 |   |   |   | 469,606 |   |
| Accrued liabilities                                                                |   |   | 467,116 |   |   |   | 417,184 |   |
| Total current liabilities                                                          |   |   | 30,719,434 |   |   |   | 22,575,269 |   |
|                                                                               |   |   |   |   |   |   |   |   |
| Purchase option derivative liability                                               |   |   | 34,577 |   |   |   | 34,419 |   |
| Total liabilities                                                                  |   |   | 30,754,011 |   |   |   | 22,609,688 |   |
|                                                                               |   |   |   |   |   |   |   |   |
| COMMITMENTS AND CONTINGENCIES                                                      |   |   |   |   |   |   |   |   |
|                                                                               |   |   |   |   |   |   |   |   |
| STOCKHOLDERS' EQUITY                                                               |   |   |   |   |   |   |   |   |
| Preferred stock; $0.001 par value; 10,000,000 shares authorized;                   |   |   |   |   |   |   |   |   |
| nil issued and outstanding as of June 30 and March 31, 2012                        |   |   | - |   |   |   | - |   |
| Common stock; $0.001 par value; 250,000,000                                        |   |   |   |   |   |   |   |   |
| shares authorized; 13,628,658 and 13,589,621 shares issued                         |   |   |   |   |   |   |   |   |
| and outstanding as of June 30 and March 31, 2012                                   |   |   | 13,629 |   |   |   | 13,589 |   |
| Additional paid-in capital                                                         |   |   | 16,902,757 |   |   |   | 16,853,039 |   |
| Statutory reserves                                                                 |   |   | 1,309,109 |   |   |   | 1,309,109 |   |
| Retained earnings                                                                  |   |   | 31,963,987 |   |   |   | 31,429,100 |   |
| Accumulated other comprehensive income                                             |   |   | 2,802,569 |   |   |   | 2,747,561 |   |
| Total stockholders' equity                                                         |   |   | 52,992,051 |   |   |   | 52,352,398 |   |
|                                                                               |   |   |   |   |   |   |   |   |
| Noncontrolling interests                                                           |   |   | (1,329 | ) |   |   | (1,073 | ) |
| Total equity                                                                       |   |   | 52,990,722 |   |   |   | 52,351,325 |   |
|                                                                               |   |   |   |   |   |   |   |   |
| Total liabilities and stockholders' equity                                         |   | $ | 83,744,733 |   |   | $ | 74,961,013 |   |

----

| CHINA JO-JO DRUGSTORES, INC. AND SUBSIDIARIES                              |
|----------------------------------------------------------------------------|
| CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND OTHER COMPREHENSIVE INCOME |
| (UNAUDITED)                                                                |
|                                                                       |   |   |   |   |   |
|                                                                       |   | Three months ended June 30, |   |
|                                                                       |   | 2012 |   |   | 2011 |   |
| REVENUES, NET                                                              |   | $ | 32,847,330 |   |   | $ | 21,427,859 |   |
|                                                                       |   |   |   |   |   |   |   |   |
| COST OF GOODS SOLD                                                         |   |   | 27,702,553 |   |   |   | 14,558,536 |   |
|                                                                       |   |   |   |   |   |   |   |   |
| GROSS PROFIT                                                               |   |   | 5,144,777 |   |   |   | 6,869,323 |   |
|                                                                       |   |   |   |   |   |   |   |   |
| SELLING EXPENSES                                                           |   |   | 1,858,225 |   |   |   | 1,378,300 |   |
| GENERAL AND ADMINISTRATIVE EXPENSES                                        |   |   | 2,846,578 |   |   |   | 1,074,783 |   |
| TOTAL OPERATING EXPENSES                                                   |   |   | 4,704,803 |   |   |   | 2,453,083 |   |
|                                                                       |   |   |   |   |   |   |   |   |
| INCOME FROM OPERATIONS                                                     |   |   | 439,974 |   |   |   | 4,416,240 |   |
|                                                                       |   |   |   |   |   |   |   |   |
| OTHER INCOME (EXPENSE), NET                                                |   |   | 98,698 |   |   |   | 19,420 |   |
| CHANGE IN FAIR VALUE OF PURCHASE OPTION DERIVATIVE LIABILITY               |   |   | (158 | ) |   |   | 62,632 |   |
|                                                                       |   |   |   |   |   |   |   |   |
| INCOME BEFORE INCOME TAXES                                                 |   |   | 538,514 |   |   |   | 4,498,292 |   |
|                                                                       |   |   |   |   |   |   |   |   |
| PROVISION FOR INCOME TAXES                                                 |   |   | 3,882 |   |   |   | 1,255,563 |   |
|                                                                       |   |   |   |   |   |   |   |   |
| NET INCOME                                                                 |   |   | 534,632 |   |   |   | 3,242,729 |   |
|                                                                       |   |   |   |   |   |   |   |   |
| ADD: NET LOSS ATTRIBUTABLE TO NONCONTROLLING INTEREST                      |   |   | 255 |   |   |   | - |   |
|                                                                       |   |   |   |   |   |   |   |   |
| NET INCOME ATTRIBUTABLE TO CHINA JO-JO DRUGSTORES, INC.                    |   |   | 534,887 |   |   |   | 3,242,729 |   |
|                                                                       |   |   |   |   |   |   |   |   |
| OTHER COMPREHENSIVE INCOME                                                 |   |   |   |   |   |   |   |   |
| Foreign currency translation adjustments                                   |   |   | 55,270 |   |   |   | 574,565 |   |
|                                                                       |   |   |   |   |   |   |   |   |
| COMPREHENSIVE INCOME                                                       |   | $ | 590,157 |   |   | $ | 3,817,294 |   |
|                                                                       |   |   |   |   |   |   |   |   |
| WEIGHTED AVERAGE NUMBER OF SHARES:                                         |   |   |   |   |   |   |   |   |
| Basic                                                                      |   |   | 13,557,496 |   |   |   | 13,532,240 |   |
| Diluted                                                                    |   |   | 13,598,686 |   |   |   | 13,532,240 |   |
|                                                                       |   |   |   |   |   |   |   |   |
| EARNINGS PER SHARES:                                                       |   |   |   |   |   |   |   |   |
| Basic                                                                      |   | $ | 0.04 |   |   | $ | 0.24 |   |
| Diluted                                                                    |   | $ | 0.04 |   |   | $ | 0.24 |   |

----

| CHINA JO-JO DRUGSTORES, INC. AND SUBSIDIARIES                    |
|------------------------------------------------------------------|
| CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS                  |
| (UNAUDITED)                                                      |
|                                                             |   |   |   |   |   |   |
|                                                             |   | Three months ended June 30, |   |
|                                                             |   | 2012 |   |   | 2011 |   |
| CASH FLOWS FROM OPERATING ACTIVITIES:                            |   |   |   |   |   |   |
| Net income                                                       |   | $ | 534,632 |   |   | $ | 3,242,729 |   |
| Adjustments to reconcile net income to net cash                  |   |   |   |   |   |   |   |   |
|  provided by (used in) operating activities:                |   |   |   |   |   |   |   |   |
| Depreciation and amortization                                    |   |   | 610,866 |   |   |   | 262,181 |   |
| Stock-based compensation                                         |   |   | 49,758 |   |   |   | 28,058 |   |
| Bad debt expense                                                 |   |   | 1,114,673 |   |   |   | 54,691 |   |
| Change in fair value of purchase option derivative liability     |   |   | 158 |   |   |   | (62,632 | ) |
| Changes in operating assets:                                     |   |   |   |   |   |   |   |   |
| Accounts receivable, trade                                       |   |   | (7,712,451 | ) |   |   | (438,521 | ) |
| Notes receivable                                                 |   |   | (926,315 | ) |   |   | - |   |
| Inventories                                                      |   |   | (526,099 | ) |   |   | 1,000,520 |   |
| Other receivables                                                |   |   | (236,873 | ) |   |   | (132,648 | ) |
| Advances to suppliers                                            |   |   | (2,859,522 | ) |   |   | 1,947,720 |   |
| Other current assets                                             |   |   | 17,561 |   |   |   | 3,879,255 |   |
| Long term deposit                                                |   |   | 355,151 |   |   |   | (153,900 | ) |
| Other noncurrent assets                                          |   |   | 140,067 |   |   |   | 84,061 |   |
| Changes in operating liabilities:                                |   |   |   |   |   |   |   |   |
| Accounts payable, trade                                          |   |   | 5,201,905 |   |   |   | 2,093,048 |   |
| Other payables and accrued liabilities                           |   |   | 650,956 |   |   |   | (409,861 | ) |
| Customer deposit                                                 |   |   | 695,089 |   |   |   | (1,490,217 | ) |
| Taxes payable                                                    |   |   | 67,114 |   |   |   | 7,809 |   |
| Net cash (used in) provided by operating activities              |   |   | (2,823,330 | ) |   |   | 9,912,293 |   |
|                                                             |   |   |   |   |   |   |   |   |
| CASH FLOWS FROM INVESTING ACTIVITIES:                            |   |   |   |   |   |   |   |   |
| Purchase of property and equipment                               |   |   | (216,454 | ) |   |   | (37,760 | ) |
| Payments on leasehold improvements and construction-in-progress  |   |   | (90,313 | ) |   |   | (3,489,692 | ) |
| Deposit made to secure business acquisition                      |   |   | - |   |   |   | (4,745,968 | ) |
| Net cash used in investing activities                            |   |   | (306,767 | ) |   |   | (8,273,420 | ) |
|                                                             |   |   |   |   |   |   |   |   |
| CASH FLOWS FROM FINANCING ACTIVITIES:                            |   |   |   |   |   |   |   |   |
| Change in restricted cash                                        |   |   | 1,410,499 |   |   |   | 248,687 |   |
| Payments on notes payable                                        |   |   | - |   |   |   | (2,006,702 | ) |
| Increase in notes payable                                        |   |   | 1,396,914 |   |   |   | - |   |
| Proceeds from other payables-related parties                     |   |   | 99,996 |   |   |   | - |   |
| Net cash (used in) provided by financing activities         |   |   | 2,907,409 |   |   |   | (1,758,015 | ) |
|                                                             |   |   |   |   |   |   |   |   |
| EFFECT OF EXCHANGE RATE ON CASH                                  |   |   | 10,604 |   |   |   | 77,346 |   |
|                                                             |   |   |   |   |   |   |   |   |
| DECREASE IN CASH                                                 |   |   | (212,084 | ) |   |   | (41,796 | ) |
|                                                             |   |   |   |   |   |   |   |   |
| CASH, beginning of period                                        |   |   | 3,833,216 |   |   |   | 6,489,905 |   |
|                                                             |   |   |   |   |   |   |   |   |
| CASH, end of period                                              |   | $ | 3,621,132 |   |   | $ | 6,448,109 |   |
|                                                             |   |   |   |   |   |   |   |   |
| SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:                |   |   |   |   |   |   |   |   |
| Cash paid for income taxes                                       |   | $ | 14,713 |   |   | $ | 1,157,526 |   |
| Non-cash investing activities                                    |   |   |   |   |   |   |   |   |
| Transfer from construction in progress to property and equipment |   | $ | 1,985,391 |   |   | $ | - |   |
| Non-cash financing activities                                    |   |   |   |   |   |   |   |   |
| Notes payable transferred to vendors                             |   | $ | - |   |   | $ | 1,542,619 |   |

----

----

| Entity Name                     |   | Background                   |                                                                                                                                                                                                                                                                                         | Ownership |
|---------------------------------|--------|------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-----------|
| Renovation HK              |   | ●                      | Incorporated in Hong Kong SAR on September 2, 2008                                                                                                                                                                                                                                      |      | 100% |
| Jiuxin Management          |   | ●●●        | Established in the PRC on October 14, 2008Deemed a wholly foreign owned enterprise (“WFOE”) under PRC lawRegistered capital of $4,500,000 fully paid                                                                                                                        |      | 100% |
| Shouantang Technology           |   | ●●●● | Established in the PRC on July 16, 2010 by Renovation with registered capital of $20 millionRegistered capital requirement reduced by the SAIC to $11 million in July, 2012 and is fully paidDeemed a WFOE under PRC lawInvests and finances the working capital of Quannuo Technology  |      | 100% |
| Qianhong Agriculture       |   | ●●●        | Established in the PRC on August 10, 2010 by Jiuxin ManagementRegistered capital of RMB 10,000,000 fully paidCarries out cultivation of TCM herbal plants                                                                                                                          |      | 100%  |
|  Quannuo Technology        |   | ●●●● | Established in the PRC on July 7, 2009Registered capital of RMB 10,000,000 fully paidAcquired by Shouantang Technology in November 2010Operates the Company’s online pharmacy website and provide software and technical support                                                  |      | 100% |
| Hangzhou Quannuo                |   | ●●●        | Established in the PRC on July 8, 2010 by Quannuo TechnologyRegistered capital of RMB 800,000 fully paidOperates one “Quannuo Grand Pharmacy”                                                                                                                               |      | 100% |
| Tonglu Lydia                    |   | ●●●        | Established in PRC on June 24, 2011 by Shouantang TechnologyRegistered capital of RMB 5,000,000 fully paidTo carry out cultivation of TCM herbal plants                                                                                                                                 |      | 100% |
| Jiuzhou Pharmacy (1)  |   | ●●●        | Established in the PRC on September 9, 2003Registered capital of RMB 5 million fully paidOperates the “Hangzhou Jiuzhou Grand Pharmacy” stores in and around Hangzhou and Jiangshan                                                                                         |      | VIE by contractual arrangements (2) |
| Jiuzhou Clinic (1)         |   | ●●               | Established in the PRC as a general partnership on October 10, 2003Operates 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, 2005Registered capital of RMB 500,000 fully paidOperates a medical clinic adjacent to one of Jiuzhou Pharmacy’s stores  |   | VIE by contractual arrangements (2) |
|--------------------------|--------|-----------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------------------------------------------------|

----

| Shanghai Lydia       |   | ●●●        | Established in the PRC on January 31, 2011 by Jiuzhou PharmacyRegistered capital of RMB 1,000,000 fully paid Operates the “Lydia Grand Pharmacy” store in Shanghai     |   | VIE by contractual arrangements as a wholly-owned subsidiary of Jiuzhou Pharmacy (2)               |
|--------------------------------|--------|------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------------------------------------------------------------------------------------------|
| Jiuxin Medicine      |   | ●●●● | Established in PRC on December 31, 2003Acquired by Jiuzhou Pharmacy in August 2011Registered capital of RMB 10 million fully paidCarries out pharmaceutical distribution services                 |   | VIE by contractual arrangements as a wholly-owned subsidiary of Jiuzhou Pharmacy (2)                    |
| Shanghai Zhongxing   |   | ●●●● | Established in PRC on June 19, 2006Registered capital of RMB 1 million fully paid99% acquired by Shanghai Lydia in July 2011Operates the “Zhongxing Grand Pharmacy” store in Shanghai |   | VIE by contractual arrangements as a controlled entity of Jiuzhou Pharmacy through Shanghai Lydia (2)   |
| Jiutong Medical      |   | ●●               | Established in the PRC on December 20, 2011 by Renovation with registered capital of $5 million$2 million of registered capital paid, with the balance of $3 million due by December 20, 2012     |   | 100%                                                                                                    |
| Jiuying Pharmacy     |   | ●●               | Established in the PRC on February 27, 2012 with registered capital of RMB 5 million fully paidOperates four “Jiuying Grand Pharmacy” stores in Hangzhou                         |   | VIE by contractual arrangements (3)                                                                     |

| (1) | Jiuzhou Pharmacy, Jiuzhou Clinic and Jiuzhou Service have been under the common control of the Owners since their respective establishment dates, pursuant to agreements amongst the Owners to vote their interests in concert as memorialized in a voting agreement. Based on such voting agreement, the Company has determined that common control exists among these three companies in accordance with generally accepted accounting standards.  Operationally, the Owners have operated these three companies in conjunction with one another since each company’s respective establishment date. Shanghai Lydia, Shanghai Zhongxing and Jiuxin Medicine are also deemed under the common control of the Owners as they are each 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: consulting services agreement, operating agreement, equity pledge agreement, voting rights agreement and option agreement. As a result of these agreements, which 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 all three companies (as well as the two subsidiaries of Jiuzhou Pharmacy) as a variable interest entity (“VIE”) under the accounting standards of the Financial Accounting Standards Board (“FASB”). Accordingly, the financial statements of Jiuzhou Pharmacy, Jiuzhou Clinic and Jiuzhou Service, as well as the subsidiaries and entity under the control of Jiuzhou Pharmacy (Shanghai Lydia, Jiuxin Medicine and Shanghai Zhongxing), are consolidated into the financial statements of the Company. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
| (3)    | To comply with foreign ownership restrictions, the Company holds 49% of the equity interest (39% through Shouantang Technology and 10% through Jiuxin Management).  The remaining 51% is held by the Owners but controlled by the Company through contractual arrangements between Jiuxin Management and Jiuying Pharmacy entered into on May 15, 2012.  Such contractual arrangements are identical to those that Jiuxin Management entered into with Jiuzhou Pharmacy,   Jiuzhou Clinic and Jiuzhou Service.  As such, the Company also accounts for Jiuying Pharmacy as a VIE and consolidates its financial statements into those of the Company.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |

----

----

|                 | Estimated Useful Life |
|----------------------|---------------------------------|
| Goodwill             | Indefinite                      |
| Licenses and permits | Indefinite                      |
| Software             | 3 years                         |

----

|                             | Estimated Useful Life |
|----------------------------------|---------------------------------|
| Leasehold improvements           | 3-10 years                      |
| Motor vehicles                   | 5 years                         |
| Office equipment & furniture | 3-5 years                       |
| Buildings                        | 35 years                        |

----

----

|                                  |   | June 30,2012 |       |   | March 31,2012 |   |
|---------------------------------------|--------|--------------|------------|--------|---------------|--------|
| Accounts receivable                   |   | $            | 24,558,283 |   |          | $      | 16,817,801 |   |
| Less: allowance for doubtful accounts |   |         | (920,886   | )      |          |   | (301,130 | ) |
| Trade accounts receivable, net        |   | $            | 23,637,397 |   |          | $      | 16,516,671 |   |

|                              |   | June 30,2012 |      |   | March 31,2012 |   |
|-----------------------------------|--------|--------------|-----------|--------|---------------|--------|
| Prepaid rental expenses           |   | $            | 1,670,967 |   |          | $      | 1,994,280 |   |
| Lease rights transfer fees (1)    |   |         | 403,024   |   |          |   | 402,735 |   |
| Prepaids and other current assets |   |         | 764,103   |   |          |   | 456,286 |   |
| Total                             |   | $            | 2,838,094 |   |          | $      | 2,853,301 |   |

| (1) | Lease rights transfer fees are paid by the Company to secure store rentals in coveted areas. These additional costs of acquiring the right to lease new store locations are capitalized and amortized over the period of the initial lease term. |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                           |   | June 30,2012 |       |   | March 31,2012 |   |
|--------------------------------|--------|--------------|------------|--------|---------------|--------|
| Building                       |   | $            | 1,110,876  |   |          | $      | 1,109,926 |   |
| Leasehold improvements         |   |         | 13,512,482 |   |          |   | 11,423,330 |   |
| Office equipment and furniture |   |         | 5,029,675  |   |          |   | 4,808,721 |   |
| Motor vehicles                 |   |         | 421,346    |   |          |   | 420,985 |   |
| Total                          |   |         | 20,074,379 |   |          |   | 17,762,962 |   |
| Less: Accumulated depreciation |   |         | (5,392,040 | )      |          |   | (4,814,490 | ) |
| Construction-in-progress       |   |         | 712,059    |   |          |   | 2,698,648 |   |
| Property and equipment, net    |   | $            | 15,394,398 |   |          | $      | 15,647,120 |   |

----

|                                                          |   | June 30,2012 |      |   | March 31,2012 |   |
|---------------------------------------------------------------|--------|--------------|-----------|--------|---------------|--------|
| Prepayment for lease of land use right – noncurrent (1) |   | $            | 5,498,679 |   |          | $      | 5,533,500 |   |
| Lease rights transfer fees-noncurrent (2)                     |   |         | 142,619   |   |          |   | 243,167 |   |
| Total                                                         |   | $            | 5,641,298 |   |          | $      | 5,776,667 |   |

| (1) | This is a payment made to a local government in connection with entering into a 30-year operating land lease agreement.                                                                                                                     |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (2) | Lease rights transfer fees are paid by the Company to secure store rentals in coveted areas. These additional costs of acquiring the right to lease new store locations are capitalized and amortized over the period of the initial lease term. |

|                                          |   | June 30,2012 |      |   | March 31,2012 |   |
|-----------------------------------------------|--------|--------------|-----------|--------|---------------|--------|
| Goodwill on acquisition of Jiuxin Medicine    |   | $            | 1,402,651 |   |          | $      | 1,401,451 |   |
| Goodwill on acquisition of Shanghai Zhongxing |   |         | 69,609    |   |          |   | 69,549 |   |
| Licenses and permits                          |   |         | 1,096,729 |   |          |   | 1,095,792 |   |
| Software                                      |   |         | 462,217   |   |          |   | 461,820 |   |
| Total goodwill and other intangible assets    |   |         | 3,031,206 |   |          |   | 3,028,612 |   |
| Less: accumulated amortization                |   |         | (250,367  | )      |          |   | (211,667 | ) |
| Intangible assets, net                        |   | $            | 2,780,839 |   |          | $      | 2,816,945 |   |

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

----

|                                                       |   | For the three monthsended June 30, |
|------------------------------------------------------------|--------|------------------------------------|
|                                                       |   | 2012                               |   |   | 2011 |   |
| U.S. Statutory rates                                       |   |                               | 34.0 | % |   |   | 34.0 | % |
| Foreign income not recognized in the U.S.                  |   |                               | (34.0 | ) |   |   | (34.0 | ) |
| China income taxes                                         |   |                               | 25.0 |   |   |   | 25.0 |   |
| Exemption rendered by local tax authorities  (1) |   |                               | (25.0 | ) |   |   | - |   |
| Other (2)                                                  |   |                               | 0.7 |   |   |   | 3.0 |   |
| Effective tax rate                                         |   |                               | 0.7 | % |   |   | 28.0 | % |

| (1)   | Qianhong Agriculture enjoyed income tax waiver as an agriculture company since its start in 2010.  |
|-----------------|---------------------------------------------------------------------------------------------------------|

| (2) | The 0.7% and 3.0% for the three months ended June 30, 2012 and 2011, respectively, represent expenses incurred by the Company that were not deductible for PRC income tax. |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                |   | June 30,2012 |    |   | March 31,2012 |   |
|---------------------|--------|--------------|---------|--------|---------------|--------|
| VAT                 |   | $            | 505,657 |   |          | $      | 435,390 |   |
| Income tax          |   |         | 7,403   |   |          |   | 7,240 |   |
| Others              |   |         | 24,180  |   |          |   | 26,976 |   |
| Total taxes payable |   | $            | 537,240 |   |          | $      | 469,606 |   |

|                   |   | June 30,2012 |      |   | March 31,2012 |   |
|------------------------|--------|--------------|-----------|--------|---------------|--------|
| Due to cofounders (1): |   | $            | 880,058   |   |          | $      | 880,058 |   |
| Due to director (2):   |   |         | 678,461   |   |          |   | 578,383 |   |
| Total                  |   | $            | 1,558,519 |   |          | $      |  1,458,441 |   |

| (1) | As of June 30, 2012 and 2011, amount due to cofounders represents contributions from the Owners to Jiuxin Management to enable Jiuxin Management to meet its approved PRC registered capital requirements. |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2) | Due to foreign exchange restrictions, Mr. Lei Liu personally lent U.S. dollars to the Company to facilitate its payments of expenses in the United States. |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|                    | Underwriter Purchase Option |
|-------------------------|-----------------------------|
|                    | June 30,2012 (1)            |
|                    |                        |
| Stock price             |                        | $ | 1.37 |   |
| Exercise price          |                        | $ | 6.25 |   |
| Annual dividend yield   |                        |   | 0 | % |
| Expected term (years)   |                        |   | 2.81 |   |
| Risk-free interest rate |                        |   | 0.39 | % |
| Expected volatility     |                        |   | 92.60 | % |

| (1) | As of June 30, 2012, the option to purchase 105,000 shares of common stock had not been exercised. |
|-----|----------------------------------------------------------------------------------------------------|

----

----

|                                                  |   | Three months ended |
|-------------------------------------------------------|--------|--------------------|
|                                                  |   |  June 30,     |
|                                                  |   | 2012               |   |   | 2011 |   |
| Net income attributable to controlling interest       |   | $                  | 534,887 |   |   | $ | 3,242,729 |   |
| Weighted average shares used in basic computation     |   |               | 13,557,496 |   |   |   | 13,532,240 |   |
| Diluted effect of restricted shares                   |   |               | 41,190 |   |   |   | - |   |
| Weighted average shares used in diluted computation   |   |               | 13,598,686 |   |   |   | 13,532,240 |   |
| Earnings per share – Basic:                     |   |               |   |   |   |   |   |   |
| Net income before noncontrolling interest             |   | $                  | 0.04 |   |   | $ | 0.24 |   |
| Add: Net loss attributable to noncontrolling interest |   | $                  | 0.00 |   |   | $ | - |   |
| Net income attributable to controlling interest       |   | $                  | 0.04 |   |   | $ | 0.24 |   |
| Earnings per share – Diluted:                   |   |               |   |   |   |   |   |   |
| Net income before noncontrolling interest             |   | $                  | 0.04 |   |   | $ | 0.24 |   |
| Add: Net loss attributable to noncontrolling interest |   | $                  | 0.00 |   |   | $ | - |   |
| Net income attributable to controlling interest       |   | $                  | 0.04 |   |   | $ | 0.24 |   |

|                          |   | RetailDrugstores |       |   | DrugWholesale |   |       | Chinese herbsFarming |   |   | Total     |   |
|-------------------------------|--------|------------------|------------|--------|---------------|--------|------------|----------------------|--------|--------|-----------|--------|
| Revenue                       |   | $                | 8,954,456  |   |          | $      | 21,368,783 |                 |   | $      | 2,524,091 |   |   | $ | 32,847,330 |   |
| Cost of goods                 |   |             | 6,629,003  |   |          |   | 20,843,901 |                 |   |   | 229,649   |   |   |   | 27,702,553 |   |
| Gross profit                  |   | $                | 2,325,453  |   |          | $      | 524,882    |                 |   | $      | 2,294,442 |   |   | $ | 5,144,777 |   |
| Income from operations        |   | $                | (1,054,834 | )      |          | $      | (660,597   | )                    |   | $      | 2,155,405 |   |   | $ | 439,974 |   |
| Depreciation and amortization |   | $                | 466,939    |   |          | $      | 136,168    |                 |   | $      | 7,759     |   |   | $ | 610,866 |   |
| Total capital expenditures    |   | $                | 215,910    |   |          | $      | 544        |                 |   | $      | -         |   |   | $ | 216,454 |   |
| Total assets                  |   | $                | 45,945,587 |   |          | $      | 31,224,760 |                 |   | $      | 6,574,386 |   |   | $ | 83,744,733 |   |

----

|                               |   | Three months ended June 30, |      |
|------------------------------------|--------|---------------------------------------|-----------|
|                               |   | 2012                                  |      |   | 2011 |   |
| Prescription Drugs                 |   | $                                     | 4,036,867 |   |   | $ | 9,721,466 |   |
| Over-The-Counter (OTC) Drugs       |   |                                  | 2,626,267 |   |   |   | 6,283,486 |   |
| Nutritional Supplements            |   |                                  | 829,286   |   |   |   | 2,192,635 |   |
| Traditional Chinese Medicine (TCM) |   |                                  | 866,701   |   |   |   | 2,576,311 |   |
| Sundry Products                    |   |                                  | 222,939   |   |   |   | 306,407 |   |
| Medical Devices                    |   |                                  | 372,396   |   |   |   | 347,554 |   |
| Total                              |   | $                                     | 8,954,456 |   |   | $ | 21,427,859 |   |

|                               |   | Three months ended June 30, |       |
|------------------------------------|--------|---------------------------------------|------------|
|                               |   | 2012                                  |       |   | 2011 |   |
| Prescription Drugs                 |   | $                                     | 12,720,261 |   |   | $ | - |   |
| Over-The-Counter (OTC) Drugs       |   |                                  | 4,533,073  |   |   |   | - |   |
| Nutritional Supplements            |   |                                  | 4,108,594  |   |   |   | - |   |
| Traditional Chinese Medicine (TCM) |   |                                  | 2,866      |   |   |   | - |   |
| Sundry Products                    |   |                                  | 1,082      |   |   |   | - |   |
| Medical Devices                    |   |                                  | 2,907      |   |   |   | - |   |
| Total                              |   | $                                     | 21,368,783 |   |   | $ | - |   |

|                               |   | Three months ended June 30, |      |
|------------------------------------|--------|---------------------------------------|-----------|
|                               |   | 2012                                  |      |   | 2011 |   |
| Prescription Drugs                 |   | $                                     | -         |   |   | $ | - |   |
| Over-The-Counter (OTC) Drugs       |   |                                  | -         |   |   |   | - |   |
| Nutritional Supplements            |   |                                  | -         |   |   |   | - |   |
| Traditional Chinese Medicine (TCM) |   |                                  | 2,524,091 |   |   |   | - |   |
| Sundry Products                    |   |                                  | -         |   |   |   | - |   |
| Medical Devices                    |   |                                  | -         |   |   |   | - |   |
| Total                              |   | $                                     | 2,524,091 |   |   | $ | - |   |

| Periods ending June 30, |   | RetailDrugstores |      |   | Drug Wholesale |   |      |   Chinese herb Farming |   |   | Total Amount |   |
|------------------------------|--------|------------------|-----------|--------|----------------|--------|-----------|-----------------------------|--------|--------|--------------|--------|
| 2013                         |   | $                | 4,402,021 |   |           | $      | 194,586   |                        |   | $      | -            |   |   | $ | 4,596,607 |   |
| 2014                         |   |             | 4,163,310 |   |           |   | 204,704   |                        |   |   | -            |   |   |   | 4,368,014 |   |
| 2015                         |   |             | 3,603,182 |   |           |   | 214,045   |                        |   |   | -            |   |   |   | 3,817,227 |   |
| 2016                         |   |             | 2,898,564 |   |           |   | 225,175   |                        |   |   | -            |   |   |   | 3,123,739 |   |
| 2017                         |   |             | 1,452,371 |   |           |   | 259,936   |                        |   |   | -            |   |   |   | 1,712,307 |   |
| Thereafter                   |   |             | 4,239,314 |   |           |   | 1,231,870 |                        |   |   | -            |   |   |   | 5,471,184 |   |

----

----

| From date of invoice to customer |   | Retail Drugstores |      |   | Drug Wholesale |   |       | Chinese Herb Farming |   |   | Total Amount |   |
|----------------------------------|--------|-------------------|-----------|--------|----------------|--------|------------|----------------------|--------|--------|--------------|--------|
| 1- 3 months                      |   | $                 | 2,666,064 |   |           | $      | 11,991,552 |                 |   | $      | 2,405,129    |   |   | $ | 17,062,745 |   |
| 4- 6 months                      |   |              | 16,628    |   |           |   | 4,494,067  |                 |   |   | 605,453      |   |   |   | 5,116,148 |   |
| 7- 9 months                      |   |              | 1,479     |   |           |   | 1,867,135  |                 |   |   |         |   |   |   | 1,868,614 |   |
| 10 - 12 months                   |   |              | -         |   |           |   | 351,575    |                 |   |   |         |   |   |   | 351,575 |   |
| Between one and two years        |   |              | 3,075     |   |           |   | 155,352    |                 |   |   |         |   |   |   | 158,427 |   |
| Over two years                   |   |              | 774       |   |           |   | -          |                 |   |   |         |   |   |   | 774 |   |
| Allowance for doubtful accounts  |   |              | (3,092    | )      |           |   | (917,794   | )                    |   |   |         |   |   |   | (920,886 | ) |
| Total accounts receivable        |   | $                 | 2,684,928 |   |           | $      | 17,941,887 |                 |   | $      | 3,010,582    |   |   | $ | 23,637,397 |   |

|                                                         |   | Three months ended June 30, |       |
|--------------------------------------------------------------|--------|-----------------------------|------------|
|                                                         |   | 2012                        |       |   | 2011 |   |
|                                                         |   | Amount                      |       |   | Percentageof totalrevenue |   |   | Amount |   |   | Percentageof totalrevenue |   |
| Revenue                                                      |   | $                           | 32,847,330 |   |   |   | 100.0 | % |   | $ | 21,427,859 |   |   |   | 100.0 | % |
| Gross profit                                                 |   | $                           | 5,144,777  |   |   |   | 15.7 | % |   | $ | 6,869,323 |   |   |   | 32.1 | % |
| Selling expenses                                             |   | $                           | 1,858,225  |   |   |   | 5.7 | % |   | $ | 1,378,300 |   |   |   | 6.4 | % |
| General and administrative expenses                          |   | $                           | 2,846,578  |   |   |   | 8.7 | % |   | $ | 1,074,783 |   |   |   | 5.0 | % |
| Income from operations                                       |   | $                           | 439,974    |   |   |   | 1.3 | % |   | $ | 4,416,240 |   |   |   | 20.6 | % |
| Other income (expense), net                                  |   | $                           | 98,698     |   |   |   | 0.3 | % |   | $ | 19,420 |   |   |   | 0.1 | % |
| Change in fair value of purchase option derivative liability |   | $                           | (158       | ) |   |   | (0.0 | )% |   | $ | 62,632 |   |   |   | 0.3 | % |
| Income tax expense                                           |   | $                           | 3,882      |   |   |   | 0.0 | % |   | $ | 1,255,563 |   |   |   | 5.9 | % |
| Net income attributable to controlling interest              |   | $                           | 534,887    |   |   |   | 1.6 | % |   | $ | 3,242,729 |   |   |   | 15.1 | % |
| Net loss attributable to noncontrolling interest             |   | $                           | (255       | ) |   |   | (0.0 | )% |   | $ | - |   |   |   | 0.0 | % |

----

| (1)   | We started our wholesale business after acquiring Jiuxin Medicine in August 2011, through which we have been distributing third-party pharmaceutical and healthcare products to pharmaceutical trading companies and other group customers.  Our wholesale business increased rapidly during fiscal 2012 because we introduced very competitive pricing to customers to stimulate sales.  Sales from the wholesale business accounted for $21,368,783 or approximately 65.0% of our total revenue for the three months ended June 30, 2012. |
|-----------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2)   | In the fourth quarter of fiscal 2012, we also began distributing TCM herbs such as Peucedanum that we have been cultivating, to third-party pharmaceutical trading companies.  Although we hired several specialists to oversee our farming business, we mainly relied on the local village government to manage the cultivation process.  For example, the local government organized local farmers to sow seeds, fertilize and harvest.  In turn, we paid for the expenses incurred by the local farmers based on agreements.  Sales from the farming business accounted for $2,524,091 or approximately 7.7% of our total revenue for the three months ended June 30, 2012. |
|-----------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (3)   | Our retail sales decreased by $12,473,403 or 58.2% to $8,954,456 for the three months ended June 30, 2012 from $21,427,859 for the three months ended June 30, 2011.  Although our retail store count increased to 65 as of June 30, 2012, from 57 stores a year ago, our retail store sales decreased as a result of stricter government policies, a competitive retail market, and a shift of our group sales from our retail stores to our wholesale business. Retail sales accounted for approximately 27.3% of our total revenue for the three months ended June 30, 2012.  Same-store sales decreased by approximately $13,421,318 or 62.0%, while our new stores contributed approximately $462,365.  We expect same-store sales will continue to decline as the frequency of government-mandated price controls and the number of drugs subject to price controls continue to rise and, to a lesser extent, with the shift of our group sales to our wholesale business. |
|-----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                                                                    |   | Three months ended June 30, |       |   |               |   |   |   |   |
|-----------------------------------------------------------------------------------------|--------|-----------------------------|------------|--------|--------------------|--------|--------|--------|--------|
|                                                                                    |   | 2012                        |       |   | 2011               |   |   |   |   |   |   |   |
|                                                                                    |   | Amount                      |       |   | % of total revenue |   |   | Amount |   |   | % of total revenue |   |   | Variance by amount |   |   | % of change |   |
| Revenue from retail business                                                            |   |                        |       |   |               |   |   |   |   |   |   |   |   |   |   |   |   |   |
|      Revenue from drugstores                                   |   | $                           | 8,393,098  |   |               |   | 25.6   | %      |   | $ | 21,350,669 |   |   |   | 99.6 | % |   | $ | (12,957,571 | ) |   |   | (60.7) | % |
|      Revenue from online sales                                 |   |                        | 561,358    |   |               |   | 1.7    | %      |   |   | 77,190 |   |   |   | 0.4 | % |   |   | 484,168 |   |   |   | 627.2 | % |
|           Sub-total of retail revenue |   |                        | 8,954,456  |   |               |   | 27.3   | %      |   |   | 21,427,859 |   |   |   | 100 | % |   |   | (12,473,403 | )  |   |   | (58.2) | % |
|                                                                                    |   |                        |       |   |               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Revenue from wholesale business                                                         |   |                        | 21,368,783 |   |               |   | 65.0   | %      |   |   | - |   |   |   | 0 | % |   |   |  21,368,783 |   |   |   | 100.0 | % |
| Revenue from farming business                                                      |   |                        | 2,524,091  |   |               |   | 7.7    | %      |   |   | - |   |   |   | 0 | % |   |   | 2,524,091 |   |   |   | 100.0 | % |
| Total revenue                                                                           |   | $                           | 32,847,330 |   |               |   | 100    | %      |   | $ | 21,427,859 |   |   |   | 100 | % |   | $ | 11,419,471 |   |   |   | 53.3 | % |

| (1)   | Revenue from ”Jiuzhou Grand Pharmacy” stores decreased by approximately $13.0 million or 60.7% quarter over quarter, mainly due to two reasons.  During the three month ended June 30, 2011, we implemented a variety of promotional activities such as giving out gifts and discounts to our customers.  Since the second quarter of fiscal 2012, the Hangzhou government has been gradually restricting retail drugstores within the city from organizing large-scale marketing promotions on the streets in which further rebates or discounts are given to customers making purchases with government-sponsored medical insurance cards.  Our promotional activities were curtailed accordingly, which, in turn, impacted our retail sales revenue, especially from sales of certain prescription drugs covered by the medical insurance cards.  In addition, the government subjected more drugs to price controls in October 2011, which caused us to reduce prices for some of the affected drugs and stop carrying others at our pharmacies. |
|-----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2)   | Another factor for the decreased retail revenue is the shift of group sales from Jiuzhou Pharmacy’s retail business to Jiuxin Medicine’s wholesales business. We originally recorded group sales under Jiuzhou Pharmacy’s retail system in the prior year.  But starting in August 2011, such sales have been recorded under Jiuxin Medicine’s wholesale system because we believe group sales are essentially wholesale in nature.  Accordingly, $7.4 million in group sales that would have otherwise been recorded under Jiuzhou Pharmacy have now been recorded under Jiuxin Medicine.  Such internal re-allocation of sales revenue between our retail and wholesale businesses affected the comparison of our retail sales for the three months ended June 30, 2012 versus the three months ended June 30, 2011, but has no impact on our unaudited condensed consolidated financial statements |
|-----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| (3)   | Our online pharmacy sales increased by $484,168 or 627.2% quarter over quarter. As we started business cooperation with local business-to-consumer online vendors during the second half of 2011, our online pharmacy has become more and more widely exposed to potential customers.  As a result, we have seen a steady growth in online sales. |
|-----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                    |   | Three months endedMarch 31, |   |
|---------------------------------------------------|--------|-----------------------------|--------|
|                                    |   | 2012                        |   |   | 2011 |   |
| Average gross margin for retail business     |   |                        | 26.0   | % |   |   | 32.1 | %  |
| Average gross margin for wholesale business  |   |                        | 2.5    | % |   |   |    N/A |   |
| Average gross margin for farming business    |   |                        | 90.9   | % |   |   |  N/A |   |

----

|                                                     |   | Three months endedJune 30 |       |
|----------------------------------------------------------|--------|---------------------------|------------|
|                                                     |   | 2012                      |       |   | 2011 |   |
| Net cash (used in) provided by operating activities |   | $                         | (2,823,330 | ) |   | $ | 9,912,293 |   |
| Net cash (used in) investing activities                  |   | $                         | (306,767   | ) |   | $ | (8,273,420 | ) |
| Net cash provided by (used in) financing activities      |   | $                         | 2,907,409  |   |   | $ | (1,758,015 | ) |

| Periods ending June 30, |   | RetailDrugstores |      |   | DrugWholesale |   |      | Chinese herb Farming |   |   | TotalAmount |   |
|-----------------------------------|--------|------------------|-----------|--------|---------------|--------|-----------|----------------------|--------|--------|-------------|--------|
| 2013                              |   | $                | 4,402,021 |   |          | $      | 194,586   |                 |   | $      | -           |   |   | $ | 4,596,607 |   |
| 2014                              |   |             | 4,163,310 |   |          |   | 204,704   |                 |   |   | -           |   |   |   | 4,368,014 |   |
| 2015                              |   |             | 3,603,182 |   |          |   | 214,045   |                 |   |   | -           |   |   |   | 3,817,227 |   |
| 2016                              |   |             | 2,898,564 |   |          |   | 225,175   |                 |   |   | -           |   |   |   | 3,123,739 |   |
| 2017                              |   |             | 1,452,371 |   |          |   | 259,936   |                 |   |   | -           |   |   |   | 1,712,307 |   |
| Thereafter                        |   |             | 4,239,314 |   |          |   | 1,231,870 |                 |   |   | -           |   |   |   | 5,471,184 |   |

----

|                                                                                                  | June 30, 2012    | March 31, 2012   | June 30, 2011    |
|-------------------------------------------------------------------------------------------------------|------------------|------------------|------------------|
| Balance sheet items, except for theregistered and paid-up capital, as of end of period/year           | USD1: RMB 0.1582 | USD1: RMB 0.1581 | USD1: RMB 0.1547 |
|                                                                                                  |             |             |             |
| Amounts included in the statement ofOperations and statement of cash flows for the period/ year ended | USD1: RMB 0.1580 | USD1: RMB 0.1561 | USD1: RMB 0.1539 |

----

----

| ExhibitNumber |   | Description                                                                                                                                                                                                                                    |   |
|---------------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
| 2             |   | Share Exchange Agreement among Kerrisdale Mining Corporation (“Kerrisdale”), certain of its stockholders, Renovation Investment (Hong Kong) Co., Ltd. (“Renovation”) and its shareholders dated September 17, 2009 (3) |   |
| 3.1           |   | Articles of Incorporation of Kerrisdale (1)                                                                                                                                                                                                    |   |
| 3.2           |   | Certificate of Amendment to Articles of Incorporation of Kerrisdale filed with the Nevada Secretary of State on July 14, 2008 (2)                                                                                                              |   |
| 3.3           |   | Articles of Merger between Kerrisdale Mining and China Jo-Jo Drugstores, Inc. filed with the Nevada Secretary of State on September 22, 2009 (3)                                                                                               |   |
| 3.4           |   | Bylaws (1)                                                                                                                                                                                                                                     |   |
| 3.5           |   | Text of Amendments to the Bylaws (2)                                                                                                                                                                                                           |   |
| 3.6           |   | Certificate of Change Pursuant to NRS 78.209 with an effective date of April 9, 2010 (6)                                                                                                                                                       |   |
| 4.1           |   | Specimen of Common Stock Certificate (1)                                                                                                                                                                                                       |   |
| 4.2           |   | 2010 Equity Incentive Plan (8)                                                                                                                                                                                                                 |   |
| 10.1          |   | Consulting Services Agreement between Zhejiang Jiuxin Investment Management Co., Ltd. (“Jiuxin Management”) and Hangzhou Jiuzhou Grand Pharmacy Chain Co., Ltd. (“Jiuzhou Pharmacy”) dated August 1, 2009 (3)          |   |
| 10.2          |   | Operating Agreement among Jiuxin Management, Jiuzhou Pharmacy and its owners dated August 1, 2009 (3)                                                                                                                                          |   |
| 10.3          |   | Equity Pledge Agreement among Jiuxin Management, Jiuzhou Pharmacy and its owners dated August 1, 2009 (3)                                                                                                                                      |   |
| 10.4          |   | Option Agreement among Jiuxin Management, Jiuzhou Pharmacy and its owners dated August 1, 2009 (3)                                                                                                                                             |   |
| 10.5          |   | Voting Rights Proxy Agreement among Jiuxin Management, Jiuzhou Pharmacy and its owners dated August 1, 2009 (3)                                                                                                                                |   |
| 10.6          |   | Consulting Services Agreement between Jiuxin Management and Hangzhou Jiuzhou Clinic of Integrated Traditional and Western Medicine (General Partnership) (“Jiuzhou Clinic”) dated August 1, 2009 (3)                               |   |
| 10.7          |   | Operating Agreement among Jiuxin Management, Jiuzhou Clinic and its owners dated August 1, 2009 (3)                                                                                                                                            |   |
| 10.8          |   | Equity Pledge Agreement among Jiuxin Management, Jiuzhou Clinic and its owners dated August 1, 2009 (3)                                                                                                                                        |   |
| 10.9          |   | Option Agreement among Jiuxin Management, Jiuzhou Clinic and its owners dated August 1, 2009 (3)                                                                                                                                               |   |
| 10.10         |   | Voting Rights Proxy Agreement among Jiuxin Management, Jiuzhou Clinic and its owners dated August 1, 2009 (3)                                                                                                                                  |   |
| 10.11         |   | Consulting Services Agreement between Jiuxin Management and Hangzhou Jiuzhou Medical & Public Health Service Co., Ltd. (“Jiuzhou Service”) dated August 1, 2009 (3)                                                            |   |
| 10.12         |   | Operating Agreement among Jiuxin Management, Jiuzhou Service and its owners dated August 1, 2009 (3)                                                                                                                                           |   |
| 10.13         |   | Equity Pledge Agreement among Jiuxin Management, Jiuzhou Service and its owners dated August 1, 2009 (3)                                                                                                                                       |   |
| 10.14         |   | Option Agreement among Jiuxin Management, Jiuzhou Service and its owners dated August 1, 2009 (3)                                                                                                                                              |   |
| 10.15         |   | Voting Rights Proxy Agreement among Jiuxin Management, Jiuzhou Service and its owners dated August 1, 2009 (3)                                                                                                                                 |   |
| 10.16         |   | Amendment to Consulting Services Agreement between Jiuxin Management and Jiuzhou Pharmacy dated October 27, 2009 (4)                                                                                                                           |   |
| 10.17         |   | Amendment to Operating Agreement between Jiuxin Management and Jiuzhou Pharmacy dated October 27, 2009 (4)                                                                                                                                     |   |
| 10.18         |   | Amendment to Option Agreement between Jiuxin Management and Jiuzhou Pharmacy dated October 27, 2009 (4)                                                                                                                                        |   |
| 10.19         |   | Amendment to Voting Rights Proxy Agreement between Jiuxin Management and Jiuzhou Pharmacy dated October 27, 2009 (4)                                                                                                                           |   |
| 10.20         |   | Amendment to Consulting Services Agreement between Jiuxin Management and Jiuzhou Clinic dated October 27, 2009 (4)                                                                                                                             |   |
| 10.21         |   | Amendment to Operating Agreement between Jiuxin Management and Jiuzhou Clinic dated October 27, 2009 (4)                                                                                                                                       |   |
| 10.22         |   | Amendment to Option Agreement between Jiuxin Management and Jiuzhou Clinic dated October 27, 2009 (4)                                                                                                                                          |   |
| 10.23         |   | Amendment to Voting Rights Proxy Agreement between Jiuxin Management and Jiuzhou Clinic dated October 27, 2009 (4)                                                                                                                             |   |
| 10.24         |   | Amendment to Consulting Services Agreement between Jiuxin Management and Jiuzhou Service dated October 27, 2009 (4)                                                                                                                            |   |
| 10.25         |   | Amendment to Operating Agreement between Jiuxin Management and Jiuzhou Service dated October 27, 2009 (4)                                                                                                                                      |   |
| 10.26         |   | Amendment to Option Agreement between Jiuxin Management and Jiuzhou Service dated October 27, 2009 (4)                                                                                                                                         |   |
| 10.27         |   | Amendment to Voting Rights Proxy Agreement between Jiuxin Management and Jiuzhou Service dated October 27, 2009 (4)                                                                                                                            |   |
| 10.28         |   | Director Offer Letter with Marc Thomas Serrio dated March 15, 2010 (5)                                                                                                                                                                         |   |
| 10.29         |   | Indemnification Agreement with Marc Thomas Serrio dated March 15, 2010 (5)                                                                                                                                                                     |   |
| 10.30         |   | Loanout Agreement with Worldwide Officers, Inc. dated August 1, 2011 (12)                                                                                                                                                                      |   |
| 10.31         |   | Restricted Stock Award Agreement with Worldwide Officers, Inc. dated August 1, 2011 (12)                                                                                                                                                       |   |
| 10.32         |   | Employment Agreement with Ming Zhao dated August 1, 2011 (12)                                                                                                                                                                                  |   |

----

| 10.33   |   | Restricted Stock Award Agreement with Ming Zhao dated August 1, 2011 (12)                                                                                                                                   |   |
|---------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
| 10.34   |   | Director Offer Letter with Bennet P. Tchaikovsky dated August 1, 2011 (12)                                                                                                                                  |   |
| 10.35   |   | Restricted Stock Award Agreement with Bennet P. Tchaikovsky dated August 1, 2011 (12)                                                                                                                       |   |
| 10.36   |   | Consulting Services Agreement between Jiuxin Management and Jiuying Pharmacy dated May 15, 2012 (14)                                                                                                        |   |
| 10.37   |   | Operating Agreement between Jiuxin Management and Jiuying Pharmacy dated May 15, 2012 (14)                                                                                                                  |   |
| 10.38   |   | Voting Rights Proxy Agreement between Jiuxin Management and certain owners of Jiuying Pharmacy dated May 15, 2012 (14)                                                                                      |   |
| 10.39   |   | Equity Pledge Agreement between Jiuxin Management and certain owners of Jiuying Pharmacy dated May 15, 2012 (14)                                                                                            |   |
| 10.40   |   | Option Agreement between Jiuxin Management and certain owners of Jiuying Pharmacy dated May 15, 2012 (14)                                                                                                   |   |
| 14      |   | Code of Business Conduct and Ethics (5)                                                                                                                                                                     |   |
| 16.1    |   | Letter from Frazer Frost, LLP dated April 25, 2011 (10)                                                                                                                                                     |   |
| 16.2    |   | Letter from Frazer Frost, LLP dated May 19, 2011 (11)                                                                                                                                                       |   |
| 21      |   | List of subsidiaries *                                                                                                                                                                                      |   |
| 23      |   | Consent of Independent Publicly Registered Accounting Firm, Friedman, LLP *                                                                                                                                 |   |
| 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 *                                                                                                                              |   |
| 32.2    |   | Section 906 Certification by the Corporation’s Chief Financial Officer *                                                                                                                              |   |
| 99.1    |   | Agreement for Logistics Services entered into between Jiuzhou Pharmacy and Zhejiang Yingte Logistics Co., Ltd. (“Yingte Logistics”) dated January 1, 2011 (9)                                   |   |
| 99.2    |   | Project Agreement between The People’s Government of Qianhong Village, Lin’an, Zhejiang Province (the “Qianhong Local Government”) and Jiuzhou Pharmacy dated February 27, 2010 (7) |   |
| 99.3    |   | Security Deposit Agreement between the Qianhong Local Government and Jiuzhou Pharmacy dated February 27, 2010 (7)                                                                                           |   |
| 99.4    |   | Equity Interests Transfer Agreement dated April 15, 2011 (13)                                                                                                                                               |   |
| 99.5    |   | Supplemental Agreement to Equity Interests Transfer Agreement dated August 25, 2011 (13)                                                                                                                    |   |
| 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*  **                                                                                                                                       |

| *  | Filed herewith.                                                                                                                                                                                                                                                                                                                                                                                                        |
|----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ** | Pursuant to Rule 406T of Regulation S-T, the Interactive Data Files on Exhibit 101 hereto are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, are deemed not filed for purposes of Section 18 of the Securities and Exchange Act of 1934, as amended, and otherwise are not subject to liability under those sections. |

| (1)  | Incorporated by reference from the registrant’s Registration Statement on Form SB-2 filed on November 28, 2007 |
|------|----------------------------------------------------------------------------------------------------------------------|
| (2)  | Incorporated by reference from the registrant’s Current Report on Form 8-K filed on July 15, 2008              |
| (3)  | Incorporated by reference from the registrant’s Current Report on Form 8-K filed on September 24, 2009         |
| (4)  | Incorporated by reference from the registrant’s Current Report on Form 8-K filed on October 30, 2009           |
| (5)  | Incorporated by reference from the registrant’s Current Report on Form 8-K filed on March 16, 2010             |
| (6)  | Incorporated by reference from the registrant’s Current Report on Form 8-K filed on April 14, 2010             |
| (7)  | Incorporated by reference from the registrant’s Annual Report on Form 10-K filed on June 29, 2010              |
| (8)  | Incorporated by reference from the registrant’s Current Report on Form 8-K filed on November 3, 2010           |
| (9)  | Incorporated by reference from the registrant’s Quarterly Report on Form 10-Q filed on February 14, 2011       |
| (10) | Incorporated by reference from the registrant’s Current Report on Form 8-K filed on April 25, 2011             |
| (11) | Incorporated by reference from the registrant’s Current Report on Form 8-K filed on May 19, 2011               |
| (12) | Incorporated by reference from the registrant’s Current Report on Form 8-K filed on August 2, 2011             |
| (13) | Incorporated by reference from the registrant’s Current Report on Form 8-K filed on October 21, 2011           |
| (14) | Incorporated by reference from the registrant’s Current Report on Form 8-K filed on May 17, 2012               |

----

|                  | CHINA JO-JO DRUGSTORES, INC. |                    |
|-----------------------|------------------------------|-------------------------|
|                  | (Registrant)                 |                    |
|                  |                         |                    |   |
| Date: August 14, 2012 | By:                          | /s/ Lei Liu        |   |
|                  |                         | Lei Liu                 |   |
|                  |                         | Chief Executive Officer |   |
|                  |                         |                    |   |

| Date: August 14, 2012 | By:    | /s/ Ming Zhao      |   |
|-----------------------|--------|-------------------------|--------|
|                  |   | Ming Zhao               |   |
|                  |   | Chief Financial Officer |   |

----