6-K
Paranovus Entertainment Technology Ltd. (PAVS)
UNITEDSTATES
SECURITIESAND EXCHANGE COMMISSION
Washington,D.C. 20549
Form6-K
REPORTOF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR 15d-16UNDER THE SECURITIES EXCHANGE ACT OF 1934
For the six-month period ended September 30, 2020
HAPPINESSBIOTECH GROUP LIMITED
(Exact name of registrant as specified in its charter)
No.11, Dongjiao East Road, Shuangxi, Shunchang, Nanping City
FujianProvince, People’s Republic of China+86-0599-782-8808
(Addressof Principal Executive Office)
Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form40-F.
Form 20-F ☒ Form40-F ☐
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): ☐
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): ☐
FORWARDLOOKING STATEMENT
This Report of Foreign Private Issuer on Form 6-K filed by Happiness Biotech Group Limited (together with our subsidiaries, unless the context indicates otherwise, “we,” “us,” “our,” or the “Company”), contains forward-looking statements within the meaning of the Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These statements relate to future events or the Company’s future financial performance. The Company has attempted to identify forward-looking statements by terminology including “anticipates,” “believes,” “expects,” “can,” “continue,” “could,” “estimates,” “intends,” “may,” “plans,” “potential,” “predict,” “should” or “will” or the negative of these terms or other comparable terminology. These statements are only predictions, uncertainties and other factors may cause the Company’s actual results, levels of activity, performance or achievements to be materially different from any future results, levels or activity, performance or achievements expressed or implied by these forward-looking statements. The information in this Report on Form 6-K is not intended to project future performance of the Company. Although the Company believes that the expectations reflected in the forward-looking statements are reasonable, the Company does not guarantee future results, levels of activity, performance or achievements. The Company expectations are as of the date this Form 6-K is filed, and the Company does not intend to update any of the forward-looking statements after the date this Report on Form 6-K is filed to confirm these statements to actual results, unless required by law.
RecentDevelopment
Registered Direct Offering
The Company entered into certain securities purchase agreement on January 4, 2021, and the Company anticipates to enter into additional securities purchase agreements (the “Purchase Agreements”) relating to the sale of up to 4,200,00 ordinary shares in a registered direct offering (the “RD Offering”). The RD Offering shall expire on July 4, 2021. Pursuant to the Purchase Agreements, the ordinary shares shall be sold at a price per share equal to the volume-weighted average trading price of the ordinary shares for the consecutive five (5) trading days immediately prior to the date when the Company sends a notice to purchase to the purchasers (each date, a “Pricing Date” ).
The first Pricing Date was January 4, 2020. The Company agreed to sell 860,214 ordinary shares at a per share purchase price of $1.86 which is the volume-weighted average trading price of the ordinary shares for the consecutive five (5) Trading Days immediately prior to the first Pricing Date. Assuming that the Company sells all of the 4,200,000 Ordinary Shares at $1.86 per share, the gross proceeds of this Offering will be $7,812,000 before deducting the offering expenses.
Each closing of the Offering will occur on the second business day following each Pricing Date.
The Company currently intends to use the net proceeds from the Offering for developing its e-commerce business carried out by its wholly-owned subsidiary in China, Happy Buy (Fujian) Internet Technology Co., Limited, and for working capital and capital expenditure purposes.
The sale and offering of the Shares pursuant to the Purchase Agreement was effected as a takedown off the Company’s shelf registration statement on Form F-3, as amended (File No. 333-250026), which became effective on November 23, 2020.
Private Placement
On September 22, 2020, the Company announced the closing of one private placement of 900,000 ordinary shares, US$0.0005 par value per share at an offering price of $2.50 per share, for a total of $2,250,000 in gross proceeds. The Company raised total net proceeds of $2,227,877after deducting offering expenses.
New Subsidiaries
Happy Buy (Fujian) Internet Technology Co., Limited (“Happy Buy”) was incorporated on July 16, 2020, which is a wholly owned subsidiary of Happiness (Nanping) Biotech Co., Limited. Happy Buy will focus on further developing our e-commerce business.
Fujian Happiness Medical Equipment Co. Ltd a 51% subsidiary of Fujian Happiness Biotech Co., Limited, which specialized in the sale of facial mask, was set up on April 15, 2020.
Hangzhou C'est La Vie Interactive Technology Co., Ltd. a 51% subsidiary of Happy Buy, which specialized in the monetization and integration of new media e-commerce and supply chain, was set up on August 26, 2020.
Resultsof Operations
The following information is derived from our Unaudited Financial Results for the Six Months Ended September 30, 2020 and 2019, attached hereto as Exhibit 99.1.
1
HAPPINESSBIOTECH GROUP LIMITED
CONSOLIDATEDSTATEMENTS OF INCOME AND COMPREHENSIVE INCOME
FORTHE SIX MONTHS ENDED SEPTEMBER 30, 2020 AND 2019
(UNAUDITED)
(INU.S. DOLLARS)
| For the six months ended September 30, | ||||||
|---|---|---|---|---|---|---|
| 2020 | 2019 | |||||
| Revenues | 21,877,234 | 31,357,546 | ||||
| Cost of revenues | (12,299,331 | ) | (15,532,065 | ) | ||
| Gross profit | 9,577,903 | 15,825,481 | ||||
| Operating expenses: | ||||||
| Selling and marketing | 3,699,676 | 3,593,053 | ||||
| General and administrative | 1,441,736 | 1,275,679 | ||||
| Research and development | 746,898 | 1,134,505 | ||||
| Total operating expenses | 5,888,310 | 6,003,237 | ||||
| Operating income | 3,689,593 | 9,822,244 | ||||
| Other income (expenses): | ||||||
| Interest income | 67,511 | 29,841 | ||||
| Interest expense | (58,154 | ) | (42,886 | ) | ||
| Other income | 210,023 | 95,252 | ||||
| Total other income | 219,380 | 82,207 | ||||
| Income before income taxes | 3,908,973 | 9,904,451 | ||||
| Income tax provision | (722,858 | ) | (1,481,154 | ) | ||
| Net income | $ | 3,186,115 | $ | 8,423,297 | ||
| Less: net income attributable to noncontrolling interests | (1,812 | ) | - | |||
| Net income attributable to Happiness Biotech Group Limited | 3,184,303 | 8,423,297 | ||||
| Other comprehensive income (loss): | ||||||
| Foreign currency translation adjustment | 3,015,157 | (3,099,751 | ) | |||
| Comprehensive income | $ | 6,201,272 | $ | 5,323,546 | ||
| Less: comprehensive income attributable to noncontrolling interest: | ||||||
| Net income | (1,812 | ) | - | |||
| Foreign currency translation adjustments | (5,166 | ) | - | |||
| Comprehensive income attributable to Happiness Biotech Group Limited | 6,194,294 | 5,323,546 | ||||
| Basic and diluted earnings per ordinary share | ||||||
| Basic and diluted | $ | 0.13 | $ | 0.37 | ||
| Weighted average number of ordinary shares outstanding | ||||||
| Basic and diluted | 25,039,560 | 23,000,000 |
2
Revenues
We generated revenues primarily from manufacture and sales of nutraceutical and dietary supplements made of Lucidum spore powder and others. As of September 30, 2020, we marketed and sold approximately 32 kinds of nutraceutical and dietary supplements products with “Blue Caps” approved by State Food and Drug Administration of PRC (“SFDA”) encompassing over 200 distributors in 27 different provinces and 30 experience stores in China. Revenues decreased by $9,480,312 or 30.2%, to $21,877,234 for the six months ended September 30, 2020 from $31,357,546 for the six months ended September 30, 2019. The decrease was primarily attributed to sales drop of Cordyceps mycelia products, Ejiao solution products, Vitamins and dietary supplements products, and American ginseng products, due to declining retail market, heavier competition and lower pricing in traditional nutrition products market.
Costof Revenue
Cost of revenue decreased by $3,232,734 or 20.8%, from $15,532,065 for the six months ended September 30, 2019 to $12,299,331 for the six months ended September 30, 2020. Gross margin is also lower by 6.7% for six months period ended September 30, 2020 compared to that for the six months period ended September 30, 2019; amounted to be 43.8% and 50.5% for the six months ended September 30, 2020 and 2019, respectively.
Sellingand Marketing Expenses
The selling expenses increased by $106,623, or 3.0%, from $3,593,053 for the six months ended September 30, 2019 to $3,699,676 for the six months ended September 30, 2020, The slight increase was primarily due to more subsidy to experience stores for the six months ended September 30, 2020.
Generaland Administrative Expenses
The general and administrative expenses increased from $1,275,679 for the six months ended September 30, 2019 to $1,441,736 for the six months ended September 30, 2020, representing a slight increase of $166,057, or 13.0%. The increase was primarily due to expenses of our Cayman entity, mainly consisting of professional service charges and repayment to related parties.
Researchand Development Expenses
The research and development expenses decreased from $1,134,505 for the six months ended September 30, 2019 to $746,898 for the six months ended September 30, 2020, representing a decrease of $387,606, or 34.2%. The decrease was primarily due to an absence of all research staff because of the travel restrictions during COVID-19 pandemic and volatile supply of research raw materials.
Incomefrom Operations
The income from operations decreased from $9,822,244 for the six months ended September 30, 2019 to $3,689,593 for the six months ended September 30, 2020, representing a decrease of $6,132,651, or 62.4%. The decrease was primarily due to decrease in revenue as a result of sluggish retail market for the six months ended September 30, 2020.
IncomeTax
We incurred income tax expense of $722,858 for the six months ended September 30, 2020, representing a decrease of $758,296 or 51.2%, compared to $1,481,154 for the six months ended September 30, 2019. Our effective income tax rate for the six months ended September 30, 2020 was 18.5%.
Netincome
As a result of the foregoing, net income for the six months ended September 30, 2020 was $3,186,115 representing a decrease of $5,237,182, or 62.2% from $8,423,297 for the six months ended September 30, 2019. Net margin was 14.6% for the six months ended September 30. 2020 and 26.9% for the six months ended September 30, 2019, respectively.
Liquidityand Capital Resources
As of September 30, 2020, and March 31, 2020, we had cash and cash equivalents of $43,803,330 and $33,654,765, respectively. We did not have any other short-term investments.
As of September 30, 2020, and March 31, 2020, our current assets were $75,415,297 and $69,984,749, respectively, and our current liabilities were $5,883,956 and $5,507,484, respectively.
Net cash provided by operations for the six months ended September 30, 2020 was $8,638,467 and net cash provided by operations for the six months ended September 30, 2019 was $8,943,354.
3
HAPPINESSBIOTECH GROUP LIMITED
CONSOLIDATEDBALANCE SHEETS
ASOF SEPTEMBER 30, 2020, AND MARCH 31, 2020
(UNAUDITED)
(INU.S. DOLLARS)
| As of<br> March 31, | |||||
|---|---|---|---|---|---|
| 2020 | |||||
| ASSETS | |||||
| Current assets | |||||
| Cash and cash equivalents | 43,803,330 | $ | 33,654,765 | ||
| Accounts receivable | 21,804,902 | 30,036,448 | |||
| Other receivables | 246,300 | - | |||
| Inventories | 2,126,986 | 2,029,406 | |||
| Prepaid expenses and other current assets | 7,433,779 | 4,264,130 | |||
| Total current assets | 75,415,297 | 69,984,749 | |||
| Property, plant and equipment, net | 9,074,646 | 7,896,501 | |||
| Land use rights, net | 740,712 | 719,722 | |||
| Other assets | 8,333,614 | 6,496,501 | |||
| TOTAL ASSETS | 93,564,269 | $ | 85,097,473 | ||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | |||||
| Current liabilities | |||||
| Accounts payable | 1,515,826 | $ | 1,549,255 | ||
| Other payables and accrued liabilities | 1,120,301 | 512,249 | |||
| Due to related parties | - | 844,716 | |||
| Income tax payable | 886,032 | 568,830 | |||
| Short-term bank borrowings | 2,361,798 | 2,032,434 | |||
| TOTAL LIABILITIES | 5,883,957 | 5,507,484 | |||
| COMMITMENTS AND CONTINGENCIES | - | - | |||
| SHAREHOLDERS’ EQUITY | |||||
| Ordinary shares, 0.0005 par value, 100,000,000 shares authorized, 25,900,000 and 25,000,000 shares issued and outstanding, respectively | 12,950 | 12,500 | |||
| Preferred shares, 0.0005 par value, 10,000,000 shares authorized, 0 shares issued and outstanding | - | - | |||
| Additional paid-in capital | 17,271,429 | 15,044,002 | |||
| Statutory surplus reserve | 2,064,096 | 2,064,096 | |||
| Retained earnings | 69,432,507 | 66,623,204 | |||
| Accumulated other comprehensive loss | (1,143,822 | ) | (4,153,813 | ) | |
| Total Happiness Biotech Group Limited Shareholders’ Equity | 87,637,160 | 79,589,989 | |||
| Non-controlling interests | 43,152 | - | |||
| TOTAL SHAREHOLDERS’ EQUITY | 87,680,312 | 79,589,989 | |||
| TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | 93,564,269 | $ | 85,097,473 |
All values are in US Dollars.
4
CashFlows Summary
| For the Six Months Ended <br> September 30, | ||||||
|---|---|---|---|---|---|---|
| 2020 | 2019 | |||||
| Net cash provided by operating activities | $ | 8,638,467 | $ | 8,943,354 | ||
| Net cash used in investing activities | (1,231,874 | ) | (61,831 | ) | ||
| Net cash provided by financing activities | 1,204,769 | 1,068,659 | ||||
| Effect of exchange rate changes on cash | 1,537,203 | (918,906 | ) | |||
| Net increase in cash | $ | 10,148,565 | $ | 9,031,276 |
Operatingactivities
Net cash provided by operating activities was approximately $8.6 million for the six months ended September 30, 2020, as compared to approximately $8.9 million for the six months ended September 30, 2019.
Net cash provided by operating activities for the six months ended September 30, 2020 was mainly due to the increase of prepaid expenses and other assets of approximately $2.9 million and $1.6 million respectively, offset by decrease of account receivable of approximately $9.2 million and increase of other payable and accrued liabilities of approximately $0.4 million.
Investingactivities
Net cash used in investing activities was approximately $1.2 million for the six months ended September 30, 2020, as compared to approximately $0.06 million for the six months ended September 30, 2019, due to purchases of equipment for the new subsidiaries.
Financingactivities
Net cash used in financing activities was approximately $1.2 million for the six months ended September 30, 2020, as compared to approximately $1.1 million for the six months ended September 30, 2019.
Net cash used in financing activities for the six months ended September 30, 2020 was mainly due to repayment to related parties of approximately $0.8 million, offset by an approximately $2.1 million capital contribution from issue of new shares.
StatementRegarding Unaudited Financial Information
The unaudited financial information set forth above is subject to adjustments that may be identified when audit work is performed on the Company’s year-end financial statements, which could result in significant differences from this unaudited financial information.
5
Exhibits.
| Exhibit | Description |
|---|---|
| 99.1 | Happiness<br> Biotech Group Limited Unaudited Financial Results for the Six Months Ended September 30, 2020 and 2019 |
| 99.2 | Press Release |
6
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| Happiness Biotech Group Limited | ||
|---|---|---|
| Date:<br> January 22, 2021 | By: | /s/<br> Xuezhu Wang |
| Xuezhu<br> Wang<br><br> <br>Chief<br> Executive Officer |
7
Exhibit99.1
HAPPINESSBIOTECH GROUP LIMITED
CONSOLIDATEDFINANCIAL STATEMENTS
(UNAUDITED)
ASOF SEPTEMBER 30, 2020, AND MARCH 31, 2020
AND
FORTHE SIX MONTHS ENDED SEPTEMBER 30, 2020 AND 2019
HAPPINESSBIOTECH GROUP LIMITED
TABLEOF CONTENTS
| Consolidated Financial Statements | |
|---|---|
| Consolidated Balance Sheets as of September 30, 2020 and March 31, 2020 (UNAUDITED) | F-2 |
| Consolidated Statements of Income and Comprehensive Income for the six months ended September 30, 2020 and 2019 (UNAUDITED) | F-3 |
| Consolidated Statements of Changes in Shareholders’ Equity for the six months ended September 30, 2020 and 2019 (UNAUDITED) | F-4 |
| Consolidated Statements of Cash Flows for the six months ended September 30, 2020 and 2019 (UNAUDITED) | F-5 |
F-1
HAPPINESSBIOTECH GROUP LIMITED
CONSOLIDATEDBALANCE SHEETS
ASOF SEPTEMBER 30, 2020, AND MARCH 31, 2020
(UNAUDITED)
(INU.S. DOLLARS)
| As of<br> March 31, | |||||
|---|---|---|---|---|---|
| 2020 | |||||
| ASSETS | |||||
| Current assets | |||||
| Cash and cash equivalents | 43,803,330 | $ | 33,654,765 | ||
| Accounts receivable | 21,804,902 | 30,036,448 | |||
| Other receivables | 246,300 | - | |||
| Inventories | 2,126,986 | 2,029,406 | |||
| Prepaid expenses and other current assets | 7,433,779 | 4,264,130 | |||
| Total current assets | 75,415,297 | 69,984,749 | |||
| Property, plant and equipment, net | 9,074,646 | 7,896,501 | |||
| Land use rights, net | 740,712 | 719,722 | |||
| Other assets | 8,333,614 | 6,496,501 | |||
| TOTAL ASSETS | 93,564,269 | $ | 85,097,473 | ||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | |||||
| Current liabilities | |||||
| Accounts payable | 1,515,826 | $ | 1,549,255 | ||
| Other payables and accrued liabilities | 1,120,301 | 512,249 | |||
| Due to related parties | - | 844,716 | |||
| Income tax payable | 886,032 | 568,830 | |||
| Short-term bank borrowings | 2,361,798 | 2,032,434 | |||
| TOTAL LIABILITIES | 5,883,957 | 5,507,484 | |||
| COMMITMENTS AND CONTINGENCIES | - | - | |||
| SHAREHOLDERS’ EQUITY | |||||
| Ordinary shares, 0.0005 par value, 100,000,000 shares authorized, 25,900,000 and 25,000,000 shares issued and outstanding, respectively | 12,950 | 12,500 | |||
| Preferred shares, 0.0005 par value, 10,000,000 shares authorized, 0 shares issued and outstanding | - | - | |||
| Additional paid-in capital | 17,271,429 | 15,044,002 | |||
| Statutory surplus reserve | 2,064,096 | 2,064,096 | |||
| Retained earnings | 69,432,507 | 66,623,204 | |||
| Accumulated other comprehensive loss | (1,143,822 | ) | (4,153,813 | ) | |
| Total Happiness Biotech Group Limited Shareholders’ Equity | 87,637,160 | 79,589,989 | |||
| Non-controlling interests | 43,152 | - | |||
| TOTAL SHAREHOLDERS’ EQUITY | 87,680,312 | 79,589,989 | |||
| TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | 93,564,269 | $ | 85,097,473 |
All values are in US Dollars.
F-2
HAPPINESSBIOTECH GROUP LIMITED
CONSOLIDATEDSTATEMENTS OF INCOME AND COMPREHENSIVE INCOME
FORTHE SIX MONTHS ENDED SEPTEMBER 30, 2020 AND 2019
(UNAUDITED)
(INU.S. DOLLARS)
| For the six months ended September 30, | ||||||
|---|---|---|---|---|---|---|
| 2020 | 2019 | |||||
| Revenues | 21,877,234 | 31,357,546 | ||||
| Cost of revenues | (12,299,331 | ) | (15,532,065 | ) | ||
| Gross profit | 9,577,903 | 15,825,481 | ||||
| Operating expenses: | ||||||
| Selling and marketing | 3,699,676 | 3,593,053 | ||||
| General and administrative | 1,441,736 | 1,275,679 | ||||
| Research and development | 746,898 | 1,134,505 | ||||
| Total operating expenses | 5,888,310 | 6,003,237 | ||||
| Operating income | 3,689,593 | 9,822,244 | ||||
| Other income (expenses): | ||||||
| Interest income | 67,511 | 29,841 | ||||
| Interest expense | (58,154 | ) | (42,886 | ) | ||
| Other income | 210,023 | 95,252 | ||||
| Total other income | 219,380 | 82,207 | ||||
| Income before income taxes | 3,908,973 | 9,904,451 | ||||
| Income tax provision | (722,858 | ) | (1,481,154 | ) | ||
| Net income | $ | 3,186,115 | $ | 8,423,297 | ||
| Less: net income attributable to noncontrolling interests | (1,812 | ) | - | |||
| Net income attributable to Happiness Biotech Group Limited | 3,184,303 | 8,423,297 | ||||
| Other comprehensive income (loss): | ||||||
| Foreign currency translation adjustment | 3,015,157 | (3,099,751 | ) | |||
| Comprehensive income | $ | 6,201,272 | $ | 5,323,546 | ||
| Less: comprehensive income attributable to noncontrolling interest: | ||||||
| Net income | (1,812 | ) | - | |||
| Foreign currency translation adjustments | (5,166 | ) | - | |||
| Comprehensive income attributable to Happiness Biotech Group Limited | 6,194,294 | 5,323,546 | ||||
| Basic and diluted earnings per ordinary share | ||||||
| Basic and diluted | $ | 0.13 | $ | 0.37 | ||
| Weighted average number of ordinary shares outstanding | ||||||
| Basic and diluted | 25,039,560 | 23,000,000 |
F-3
HAPPINESSBIOTECH GROUP LIMITED
CONSOLIDATEDSTATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITYFOR THE SIX MONTHS ENDED SEPTEMBER 30, 2020 AND 2019
(UNAUDITED)
(INU.S. DOLLARS)
| **** | Ordinary Shares | Ordinary Shares Amount | Additional paid-in capital | Statutory surplus reserve | Retained earnings | **** | Accumulated other comprehensive loss | **** | Total Happiness Biotech Group Limited Shareholders’ Equity | **** | Non-controlling interests | Total Shareholders’ Equity | **** | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Balance at March 31, 2020 | 25,000,000 | $ | 12,500 | $ | 15,044,002 | $ | 2,064,096 | $ | 66,623,204 | $ | (4,153,813 | ) | $ | 79,589,989 | - | $ | 79,589,989 | |||||
| Ordinary shares issue for cash | 900,000 | 450 | 2,227,427 | - | - | - | 2,227,877 | - | 2,227,877 | |||||||||||||
| Contribution by noncontrolling interest shareholders | - | - | - | - | - | - | - | 36,174 | 36,174 | |||||||||||||
| Net income | - | - | - | - | 3,184,303 | - | 3,184,303 | 1,812 | 3,186,115 | |||||||||||||
| Dividend | - | - | - | - | (375,000 | ) | - | (375,000 | ) | - | (375,000 | ) | ||||||||||
| Foreign currency translation adjustment | - | - | - | - | - | 3,009,991 | 3,009,991 | 5,166 | 3,015,157 | |||||||||||||
| Balance at September 30, 2020 | **** | 25,900,000 | $ | 12,950 | $ | 17,271,429 | $ | 2,064,096 | $ | 69,432,507 | **** | $ | (1,143,822 | ) | $ | 87,637,160 | **** | $ | 43,152 | $ | 87,680,312 | **** |
| **** | Ordinary Shares | Ordinary Shares Amount | Additional paid-in capital | Statutory surplus reserve | Retained earnings | Accumulated other comprehensive loss | **** | Total Happiness Biotech Group Limited Shareholders’ Equity | **** | Non-controlling interests | Total Shareholders’ Equity | **** | ||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | |
| Balance at March 31, 2019 | 23,000,000 | $ | 11,500 | $ | 5,702,663 | $ | 2,064,096 | $ | 53,935,169 | $ | (797,781 | ) | $ | 60,915,647 | - | $ | 60,915,647 | |||||
| Net income | - | - | - | - | 8,423,297 | - | 8,423,297 | - | 8,423,297 | |||||||||||||
| Foreign currency translation adjustment | - | - | - | - | - | (3,099,751 | ) | (3,099,751 | ) | - | (3,099,751 | ) | ||||||||||
| Balance at September 30, 2019 | **** | 23,000,000 | $ | 11,500 | $ | 5,702,663 | $ | 2,064,096 | $ | 62,358,466 | $ | (3,897,532 | ) | $ | 66,239,193 | **** | **** | - | $ | 66,239,193 | **** |
F-4
HAPPINESSBIOTECH GROUP LIMITED
CONSOLIDATEDSTATEMENTS OF CASH FLOWS
FORTHE SIX MONTHS ENDED SEPTEMBER 30, 2020 AND 2019
(UNAUDITED)
(INU.S. DOLLARS)
| For the six months ended<br> September 30, | ||||||
|---|---|---|---|---|---|---|
| 2020 | 2019 | |||||
| Cash Flows from Operating Activities: | ||||||
| Net income | $ | 3,186,115 | $ | 8,423,297 | ||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||
| Depreciation and amortization | 393,709 | 345,240 | ||||
| Changes in operating assets and liabilities: | ||||||
| Accounts receivable | 9,173,869 | 1,701,044 | ||||
| Other receivables | (140,757 | ) | - | |||
| Inventories | (17,267 | ) | (28,902 | ) | ||
| Prepaid expenses | (2,937,641 | ) | 828,236 | |||
| Other assets | (1,587,241 | ) | (1,809,981 | ) | ||
| Accounts payable | (91,993 | ) | 95,171 | |||
| Other payables and accrued liabilities | 372,363 | (316,229 | ) | |||
| Income taxes payable | 287,310 | (294,522 | ) | |||
| Net cash provided by operating activities | 8,638,467 | 8,943,354 | ||||
| Cash Flows from Investing Activities: | ||||||
| Purchases of property, plant and equipment | (1,230,804 | ) | (61,831 | ) | ||
| Purchase of intangible assets | (1,070 | ) | - | |||
| Net cash used in investing activities | (1,231,874 | ) | (61,831 | ) | ||
| Cash Flows from Financing Activities: | ||||||
| Proceeds from issuance of ordinary shares | 2,134,531 | - | ||||
| Capital contributions from noncontrolling interest shareholders | 36,174 | - | ||||
| Repayments to related party payables | (833,968 | ) | - | |||
| Proceeds from short-term loans | 1,243,755 | 2,079,553 | ||||
| Repayments on short-term loans | (1,000,723 | ) | (1,010,894 | ) | ||
| Dividends paid | (375,000 | ) | - | |||
| Net cash provided by financing activities | 1,204,769 | 1,068,659 | ||||
| Effect of exchange rate changes on cash and cash equivalents | 1,537,203 | (918,906 | ) | |||
| Net increase in cash and cash equivalents | 10,148,565 | 9,031,276 | ||||
| Cash and cash equivalents at the beginning of period | 33,654,765 | 14,800,772 | ||||
| Cash and cash equivalents at the end of period | $ | 43,803,330 | $ | 23,832,048 | ||
| Supplemental disclosures of cash flows information: | ||||||
| Cash paid for income taxes | $ | 435,548 | $ | 1,775,676 | ||
| Cash paid for interest expense | $ | 58,154 | $ | 42,886 |
F-5
Exhibit 99.2
HappinessBiotech Announces Financial Results for the Six Months Ended September 30, 2020 and Provides Guidance For the Whole Fiscal Year Ending March 31, 2021
NANPING, China, January 22, 2021 /PRNewswire/ -- Happiness Biotech Group Limited (the “Company” or Nasdaq: HAPP), an innovative China-based nutraceutical and dietary supplements producer, today announced its unaudited financial results for the six months ended September 30, 2020 and provided the guidance for the whole fiscal year ending March 31, 2021.
FinancialHighlights for the six months ended September 30, 2020:
| ● | Revenues decreased by $9.48 million or 30.2%, to $21.88 million for the six months ended September 30, 2020 from $31.36 million for the six months ended September 30, 2019, mainly due to the declining retail market affected by the COVID-19. |
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| ● | Operating income was $3.69 million for the six months ended September 30, 2020, a decrease of $6.13million, or 62.4% from the prior year period, primarily due to decrease in revenue as a result of sluggish retail market. |
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| ● | The Company reported $3.18 million of net income attributable to the shareholders, in the six months ended September 30, 2020, compared to net income attributable to the shareholders of $8.42 million in the comparative period. |
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“The first six months in fiscal year 2020 have been very tough for us as the COVID-19 has hit the whole retail market hardly. The number of tourists dropped dramatically and materially affected our experience stores. In response to the epidemic, we have taken a series of measures, including reducing cost and expenses, increasing subsidies and support for the stores and other sales channels, etc. With the efforts of our team, we successfully maintained a profit for the first half year.” Mr. Xuezhu Wang, CEO of the Company, continued, “We officially launched our e-commerce business in September 2020, and achieved very good results. We expect that we will still achieve growth for the whole fiscal year 2020 ending March 31, 2021, with our sales expected to hit a record high of $70 million, realizing about 10% of annual growth .”
Further information on the Company’s financial results for the six months ended September 30, 2020, including the management’s discussion and analysis of financial condition and results of operations, can be found by visiting EDGAR on the SEC website at www.sec.gov, as well as the Investor Relations page of the Company’s website at www.happ.org.cn..
AboutHappiness Biotech Group Limited
Headquartered in Nanping, China, Happiness Biotech Group Limited is an innovative China-based nutraceutical and dietary supplements producer focused on the research, development, manufacturing and marketing of a variety of products made from Chinese herbal extracts and other ingredients. The Company’s goal is to provide high-quality products to our consumers. Over the past 14 years, the Company has established a product portfolio consisting of 32 PRC National Medical Products Administration registered “Blue-Cap” SKUs of nutraceutical and dietary supplements products. For more information, please visit: www.happ.org.cn.
Forward-LookingStatements
Thispress release contains forward-looking statements as defined by the Private Securities Litigation Reform Act of 1995. Forward-lookingstatements include statements concerning plans, objectives, goals, strategies, future events or performance, and underlying assumptionsand other statements that are other than statements of historical facts. When the Company uses words such as “may, “will,“intend,” “should,” “believe,” “expect,” “anticipate,” “project,”“estimate” or similar expressions that do not relate solely to historical matters, it is making forward-looking statements.Forward-looking statements are not guarantees of future performance and involve risks and uncertainties that may cause the actualresults to differ materially from the Company’s expectations discussed in the forward-looking statements. These statements aresubject to uncertainties and risks including, but not limited to, the following: the Company’s goals and strategies; theCompany’s future business development; product and service demand and acceptance; changes in technology; economic conditions;reputation and brand; the impact of competition and pricing; government regulations; fluctuations in general economic and businessconditions in China, the COVID-19 outbreak and its impact on our operations and assumptions underlying or related to any of theforegoing and other risks contained in reports filed by the Company with the Securities and Exchange Commission. For thesereasons, among others, investors are cautioned not to place undue reliance upon any forward-looking statements in this press release.Additional factors are discussed in the Company’s filings with the U.S. Securities and Exchange Commission, which are availablefor review at www.sec.gov. The Company undertakes no obligation to publicly revise these forward-looking statements to reflectevents or circumstances that arise after the date hereof.
CONTACT: Ping Chen, +86-599-7828808, ir@fjxfl.com