China SXT Pharmaceuticals, Inc. Announces Financial Results for the Six Months Ended

China SXT Pharmaceuticals, Inc. Announces

Financial Results for the Six Months Ended September 30, 2018

TAIZHOU, China, Mar. 28, 2019 /PRNewswire/

-- China SXT Pharmaceuticals, Inc. (the "Company") (NASDAQ:SXTC), a specialty pharmaceutical company focusing on the

research, development, manufacture, marketing and sales of Traditional Chinese Medicine Pieces ("TCMPs"), today announced

its financial results for the six months ended September 30, 2018.

"We are pleased with the solid financial results for the six months ended September 30, 2018, highlighted with a 117.1%

increase in the sales of higher-margin advanced TCMP products, a 25.7 percentage points increase in gross margin and a 26.4%

increase in net income," said Alex Shi, Chief Financial Officer of the Company.

Feng Zhou, Chairman and Chief Executive

Officer of the Company, added, "For the six months ended September 30, 2018, sales of advanced TCMP products exceeded

50% for the first time in our history, marking a major milestone for the Company. As one of first companies to produce and

market TCMP products in the Chinese market, we believe that advanced TCMP stands for the biggest opportunity for us to separate

from the pack and to capture our fair share of the steadily growing TCMP market in the long run. We expect the advanced TCMP

segment to continue to drive our top- and bottom- line growths and margins expansion in the foreseeable future."

Months Ended September 30, 2018 Financial Results

We generated revenues primarily from manufacture

and sales of three types of traditional Chinese medicine pieces (the "TCMP") products: Advanced TCMP, Fine TCMP and

Regular TCMP. For the six months ended September 30, 2018, total revenues increased by $0.03 million, or 0.7%, to $3.92 million

from $3.89 million for the same period of the prior fiscal year. The increase in total revenues was primarily due to increase in

sales of advanced TCMP products that were mostly offset by the decrease in the sales of regular TCMP products.

Advanced TCMP is comprised of 7 Directly

Oral TCMP products (the "Directly-Oral-TCMP") and 6 After-soaking-oral TCMP products (the "After-Soaking-Oral-TCMP").

Both Directly Oral TCMP and After-soaking-oral TCMP are new types of advanced TCMP. Sales of advanced TCMP products increased

by $1.15 million, or 117.1%, to $2.12 million for the six months ended September 30, 2018 from $0.98 million for the same period

of the prior fiscal year. The increase in sales of advanced TCMP products was due to increases in both sales volume and average

We currently manufacture 426 regular

TCMP products listed on China Pharmacopoeia (version 2015) Part I for hospitals and drug store in treatment of various diseases

or serving as dietary supplements. Sales of regular TCMP products decreased by $1.07 million, or 39.9%, to $1.62 million for the

six months ended September 30, 2018 from $2.69 million for the same period of the prior fiscal year. The decrease in sales of

regular TCMP products was primarily related to one single customer.

We currently produce over 20 fine

TCMP products for drug stores and hospitals. Our fine TCMP products are manufactured manually from only high-quality authentic

ingredients derived from their region of origin. Sales of fine TCMP products decreased by $0.05 million, or 20.3%, to $0.18 million

for the six months ended September 30, 2018 from $0.22 million for the same period of the prior fiscal year. In order to promote

market acceptance of higher priced fine TCMP products, the Company lowered the selling prices for fine TCMP products, however the

sales volume did not pick up accordingly, resulting in the decreased sales of fine TCMP products.

Sales of advanced TCMP, fine TCMP ad regular

TCMP products accounted for 54.2%, 4.5%, and 41.3% of total revenues, respectively, for the six months ended September 30, 2018,

compared to 25.2%, 5.6%, and 69.2%, of total revenues, respectively, for the same period of the prior fiscal year.

Cost of revenues primarily include cost

of materials, direct labors, overhead, and other related incidental expenses that are directly attributable to the Company's

principal operations. Total cost of goods sold decreased by $0.99 million, or 44.5%, to $1.24 million for the six months ended

September 30, 2018 from $2.23 million for the same period of the prior fiscal year. The decrease in cost of revenues was primarily

due to increased sales of higher margin advanced TCMP products, decrease in purchase price of some key raw materials, as well as

savings in labor costs.

Gross profit increased by $1.02 million,

or 61.6%, to $2.68 million for the six months ended September 30, 2018 from $1.66 million for the same period of the prior fiscal

year. Gross margin was 68.4% for the six months ended September 30, 2018, compared to 42.6% for the same period of the prior fiscal

Selling expenses primarily consisted of

transportation, sales staff payroll, welfare expenses, travelling expenses, advertisement and promotion expenses, and distribution

expenses. For the six months ended September 30, 2018, selling expenses increased by $0.62 million, or 285.4%, to $0.84 million

from $0.22 million for the same period of the prior fiscal year. The increase in selling expenses was primarily due to the combined

effect of an increase of $0.23 million in distribution expenses as our new clients are more remote and an increase of $0.34 million

in advertisement and promotion expenses.

General and administrative

expenses primarily consisted of staff payroll and welfare expenses, entertainment expenses, travelling expenses, depreciation

and amortization expenses for administrative purposes, and office supply expenses. For the six months ended September 30,

2018, general and administrative expenses increased by $0.12 million, or 30.4%, to $0.51 million from $0.39 million for the

same period of the prior fiscal year. The increase in general and administrative expenses was related to an increase of $0.07

million in research and development expense and an increase of $0.04 million in intermediate service charge.

As a result, total operating expenses increased

by $0.74 million, or 121.1%, to $1.35 million for the six months ended September 30, 2018 from $0.61 million for the same period

of the prior fiscal year.

Operating income increased by $0.28 million,

or 26.8%, to $1.33 million for the six months ended September 30, 2018 from $1.05 million for the same period of the prior fiscal

year. Operating margin was 33.9% for the six months ended September 30, 2018, compared to 26.9% for the same period of the prior

fiscal year. The increase in operating margin was primarily due to increase in gross margin and partially offset by increase in

operating expenses as a percentage of revenues.

Income before income taxes

Total net other income, which includes

interest income and expenses, and other non-operating income, was $517 for the six months ended September 30, 2018, compared to

$3,099 for the same period of the prior fiscal year.

Income before income taxes increased by

$0.28 million, or 26.5%, to $1.33 million for the six months ended September 30, 2018 from $1.05 million for the same period of

the prior fiscal year. The increase was primarily due to increase in gross profit and partially offset by increase in operating

Provision for income taxes was $0.33 million

for the six months ended September 30, 2018, compared to $0.26 million for the same period of the prior fiscal year.

Net income increased by $0.21 million,

or 26.4%, to $1.00 million for the six months ended September 30, 2018 from $0.79 million for the same period of the prior fiscal

Earnings per share was $0.05 for the six

months ended September 30, 2018, compared to $0.04 for the same period of the prior fiscal year.

Liquidity and Financial

As of September 30, 2018, the Company had

cash and cash equivalents and restricted cash of $0.40 million, compared to $0.66 million at March 31, 2018. Accounts receivable

and inventories were $3.89 million and $1.07 million, respectively, as of September 30, 2018, compared to $2.60 million and $1.27

million, respectively, at March 31, 2018. Total current assets and current liabilities were $6.50 million and $3.99 million, respectively,

leading to a current ratio of 1.63 as of September 30, 2018. This compared to total current assets and current liabilities of $6.10

million and $4.37 million, respectively, and current ratio of 1.40 at March 31, 2018.

Net cash used in operating activities was

$0.24 million for the six months ended September 30, 2018, compared to $0.55 million for the same period of the prior fiscal year.

On December 31, 2018, the Company

closed its initial public offering of 2,506,300 ordinary shares at a public offering price of $4.00 per ordinary share.

On January 3, 2019, the Company sold an additional 39,975 ordinary shares at the public offering price of $4.00 per share

in a second closing. The total gross proceeds from the initial public offering was approximately $10.2 million before underwriting

commissions and offering expenses. The shares commenced trading on the NASDAQ Capital Market on January 4, 2019 under the ticker

symbol "SXTC". Boustead Securities, LLC acted as the sole underwriter for the offering. Hunter Taubman Fischer &

Li LLC acted as U.S. legal counsel to the Company, and Sichenzia Ross Ference LLP acted as legal counsel to the underwriter.

About China SXT Pharmaceuticals, Inc.