6-K
Paranovus Entertainment Technology Ltd. (PAVS)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 6-K
REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TORULE 13a-16 OR 15d-16UNDER THE SECURITIES EXCHANGE ACT OF 1934
For the six-month period ended September 30, 2021
HAPPINESS DEVELOPMENT GROUP LIMITED
(Exact name of registrant as specified in its charter)
No. 11, Dongjiao East Road, Shuangxi, Shunchang,Nanping City
Fujian Province, People’s Republic ofChina+86-0599-782-8808
(Address of 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): ☐
EXPLANATORY NOTE
Happiness Development Group Limited (the “Company”) is furnishing this Form 6-K to provide six-month interim financial statements and incorporate such financial statements into the Company’s registration statements referenced below.
This Form 6-K is hereby incorporated by reference into the registration statements of the Company on Form S-8 (Registration Number 333-253602) and on Form F-3 (Registration Number 333-250026), to the extent not superseded by documents or reports subsequently filed or furnished by the Company under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended.
1
FORWARD LOOKING STATEMENT
This Report of Foreign Private Issuer on Form 6-K filed by Happiness Development 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.
Recent Development
Registered Direct Offering
The Company entered into certain securities purchase agreement (the “Purchase Agreement”) on June 25, 2021 relating to the offer and sale of 1,240,000 ordinary shares (the “Shares”), par value $0.0005 per share (the “Ordinary Shares”) in a registered direct offering (the “Offering”). Pursuant to the Purchase Agreement, the Shares were sold at a per share purchase price of $1.74, for gross proceeds of $2,157,600, before deducting the estimated offering expenses. The Offering closed on July 1, 2021.
The Company intends to use the net proceeds from the Offering for the development of the Company’s auto business under the brand of “Taochejun,” working capital and other general corporate purposes.
This offering was made pursuant to an effective shelf registration statement on Form F-3 (File No. 333-250026) previously filed with the U.S. Securities and Exchange Commission (the “SEC”) and declared effective on November 23, 2020.
2
New Subsidiaries
| Name of Entity | Date of<br><br> Incorporation | Place of<br><br> Incorporation | % of <br> Ownership | ||
|---|---|---|---|---|---|
| Happiness Youdao (Hangzhou) Electronic Commerce Co., Ltd. | April 1, 2021 | PRC | 70 | % | |
| Happiness (HK) Technology Limited | April 8, 2021 | HK | 100 | % | |
| Shunchang Shangyoupin E-commerce Co., Ltd. | April 15, 2021 | PRC | 100 | % | |
| Shunchang Youqiangdiao E-commerce Co., Ltd. | April 16, 2021 | PRC | 100 | % | |
| Shunchang Fanquguan E-commerce Co., Ltd. | April 23, 2021 | PRC | 100 | % | |
| Taochejun (Fujian) Automobile Sales Co., Ltd. | April 27, 2021 | PRC | 51 | % | |
| Shunchang Fan Full E-commerce Co., Ltd. | May 8, 2021 | PRC | 100 | % | |
| Ganzhou Youjia New Energy Automobile Sales Co., Ltd. | May 10, 2021 | PRC | 100 | % | |
| Wuhan Xingfu Youxuan Automobile Sales Co., Ltd. | May 12, 2021 | PRC | 100 | % | |
| Happy car source (Ningbo) Automobile Service Co., Ltd. | May 14, 2021 | PRC | 100 | % | |
| Shunchang Youxi e-commerce Co., Ltd. | May 18, 2021 | PRC | 100 | % | |
| Hunan Xingfu Vehicle Source Technology Co., Ltd. | May 28, 2021 | PRC | 100 | % | |
| Happy Unicorn (Hangzhou) Network Technology Co. , Ltd. | June 1, 2021 | PRC | 51 | % | |
| Shunchang County Partners Supply Chain Management Co., Ltd. | June 11, 2021 | PRC | 51 | % | |
| Taochejun (Hainan) New Energy Technology Co., Ltd. | June 15, 2021 | PRC | 100 | % | |
| Happy Doddo (Fujian) Network Technology Co., Ltd. | June 28, 2021 | PRC | 51 | % | |
| Shunchang Subobo E-commerce Co., Ltd. | July 9, 2021 | PRC | 100 | % | |
| Shunchang Keyan Ketian E-commerce Co., Ltd. | July 9, 2021 | PRC | 100 | % | |
| Taochejun (Hangzhou) New Energy Technology Co., Ltd. | July 13, 2021 | PRC | 100 | % | |
| Sichuan Taochejun Automobile Sales Co., Ltd. | July 13, 2021 | PRC | 100 | % | |
| Shunchang Nongba E-commerce Co., Ltd. | August 18, 2021 | PRC | 100 | % | |
| Taochejun Car Rental Co., Ltd. | August 20, 2021 | PRC | 100 | % | |
| Fuzhou Taochejun Culture Media Co., Ltd. | August 31, 2021 | PRC | 100 | % | |
| Shunchang Haiwushuo Brand Management Co. , Ltd. | September 2, 2021 | PRC | 51 | % |
Results of Operations
The following information is derived from our Unaudited Financial Results for the Six Months Ended September 30, 2021 and 2020, attached hereto as Exhibit 99.1.
3
HAPPINESS DEVELOPMENT GROUP LIMITED
CONSOLIDATED STATEMENTS OF INCOME (LOSS) AND COMPREHENSIVE INCOME (LOSS)
FOR THE SIX MONTHS ENDED SEPTEMBER 30, 2021AND 2020
(UNAUDITED)
(IN U.S. DOLLARS)
| For the six months ended<br> September 30, | ||||||
|---|---|---|---|---|---|---|
| 2021 | 2020 | |||||
| Revenues | $ | 46,884,584 | $ | 21,877,234 | ||
| Cost of revenues | (41,210,047 | ) | (12,299,331 | ) | ||
| Gross profit | 5,674,537 | 9,577,903 | ||||
| Operating expenses: | ||||||
| Selling and marketing | 11,636,367 | 3,699,676 | ||||
| General and administrative | 3,780,718 | 1,441,736 | ||||
| Research and development | 789,482 | 746,898 | ||||
| Total operating expenses | 16,206,567 | 5,888,310 | ||||
| Operating (loss) income | (10,532,030 | ) | 3,689,593 | |||
| Other income (expenses): | ||||||
| Interest income | 62,737 | 67,511 | ||||
| Interest expense | (38,511 | ) | (58,154 | ) | ||
| Other income, net | 114,059 | 210,023 | ||||
| Total other income, net | 138,285 | 219,380 | ||||
| (Loss) /income before income taxes | (10,393,745 | ) | 3,908,973 | |||
| Income tax provision | (149,429 | ) | (722,858 | ) | ||
| Net (loss) /income | $ | (10,543,174 | ) | $ | 3,186,115 | |
| Net income /(loss) attributable to non-controlling interests | 488,314 | (1,812 | ) | |||
| Net (loss) /income attributable to Happiness Development Group Limited | (10,054,860 | ) | 3,184,303 | |||
| Other comprehensive income (loss): | ||||||
| Foreign currency translation adjustments | 1,607,416 | 3,015,157 | ||||
| Comprehensive (loss) /income | $ | (8,935,758 | ) | $ | 6,201,272 | |
| Less: comprehensive income /(loss) attributable to non-controlling interests: | 2,523,603 | (6,978 | ) | |||
| Comprehensive (loss) /income attributable to Happiness Development Group Limited | (6,412,155 | ) | 6,194,294 | |||
| Basic and diluted earnings (loss) per ordinary share | ||||||
| Basic and diluted | $ | (0.37 | ) | $ | 0.13 | |
| Weighted average number of ordinary shares outstanding | ||||||
| Basic and diluted | 26,933,050 | 25,039,560 |
4
Revenues
We generated $46,884,584 in revenues for the six months ended September 30, 2021, representing an increase of $25,007,350 or 114.3%, as compared with $21,877,234 for the six months ended September 30, 2020. The increase was primarily due to the new goods or service provided including ecommerce sale, automobile sale and advertising service in 2021, offset the decrease of revenue in healthcare products.
Our sales from the healthcare products had dropped down significantly from $21,805,489for the six months ended September 30, 2020 to $11,669,522 for the six months ended September 30, 2021 due to the adverse impact of COVID-19 starting from January 2020. As continuous spreading of COVID-19 in different provinces in China, the performance of our experience stores was greatly impaired. During the six months ended September 30, 2021, we closed 70% experience stores to avoid further losses.
In September 2020, we started our ecommerce sales, the revenue of which for the six months ended September 30, 2021 was $21,485,231. In October 2020, we began providing the internet information and advertising service to individuals or small companies whose businesses need exposure online. For the six months ended September 30, 2021, the information service revenue reached $8,252,060.
In November 2020, we started engaging in selling automobiles to companies or individual customers and built our own brand “Taochejun” in May 2021. Through Taochejun, we aim to build a network among car dealers in China, especially in the third- and fourth-tier cities. During the six months ended September 30, 2021, the revenue from selling automobiles was $5,477,770.
Cost of Revenue
Cost of revenue increased by $28,910,716 or 235.1%, from $12,299,331 for the six months ended September 30, 2020 to $41,210,047 for the six months ended September 30, 2021. Gross margin were 12.1% and 43.8% for the six months ended September 30, 2021 and 2020, respectively.
Selling and Marketing Expenses
The selling expenses increased by $7,936,691, or 214.5%, from $3,699,676 for the six months ended September 30, 2020 to $11,636,367 for the six months ended September 30, 2021, the increase was primarily due to higher allowance costs, advertising costs, and subsidies to our experience store operators to support their continuity of insufficient business for the prolonged COVID-19 period.
General and Administrative Expenses
The general and administrative expenses increased from $1,441,736 for the six months ended September 30, 2020 to $3,780,718 for the six months ended September 30, 2021, representing an increase of $2,338,982, or 162.2%. The increase was primarily due to the increased costs, including the service charges by internet search engine of key words, brand promotion costs for online store sales and, the share-based compensation cost.
Research and Development Expenses
The research and development expenses increased from $746,898 for the six months ended September 30, 2020 to $789,482 for the six months ended September 30, 2021, representing a slight increase of $42,584, or 5.7%.
(Loss) Income from Operations
We incurred loss from operations of $10,532,030 for the six months ended September 30, 2021, compared to income from operations of $3,689,593 for the six months ended September 30, 2020. Most of the loss was attributed to the performance of the healthcare products segment due to the continuous negative impacts on COVID-19 in different provinces in China. We closed 70% experience stores continuously to avoid further losses.
Income Tax
We incurred income tax expense of $149,429 for the six months ended September 30, 2021, representing a decrease of $573,429 or 79.3%, compared to $722,858 for the six months ended September 30, 2020. The decrease was primarily due to the increasing operating expenses deriving from the new business segments including online stores, the internet information and advertising service and automobiles.
Net Loss
As a result of the foregoing, net loss amounted to $10,543,174 for the six months ended September 30, 2021, compared to net income of $3,186,115 for the six months ended September 30, 2020.
5
HAPPINESS DEVELOPMENT GROUP LIMITED
CONSOLIDATED BALANCE SHEETS
AS OF SEPTEMBER 30, 2021, AND MARCH 31, 2021
(UNAUDITED)
(IN U.S. DOLLARS)
| As of<br> March 31, | |||||
|---|---|---|---|---|---|
| 2021 | |||||
| ASSETS | |||||
| Current assets | |||||
| Cash and cash equivalents | 45,710,044 | $ | 36,558,752 | ||
| Accounts receivable | 19,195,282 | 34,563,743 | |||
| Inventories | 2,428,641 | 1,785,379 | |||
| Due from related parties | 124,156 | - | |||
| Prepaid expenses and other current assets | 19,368,295 | 22,189,744 | |||
| Total current assets | 86,826,418 | 95,097,618 | |||
| Property, plant and equipment, net | 10,381,490 | 10,514,031 | |||
| Intangible assets, net | 2,069,316 | 1,832,099 | |||
| Goodwill | 552,567 | 162,832 | |||
| Other assets | 4,315,953 | 5,138,105 | |||
| TOTAL ASSETS | 104,145,744 | $ | 112,744,685 | ||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | |||||
| Current liabilities | |||||
| Accounts payable | 8,769,624 | $ | 8,841,163 | ||
| Other payables and accrued liabilities | 2,083,303 | 3,694,943 | |||
| Income tax payable | 509 | 334,523 | |||
| Short-term bank borrowings | 2,004,502 | 2,237,000 | |||
| TOTAL LIABILITIES | 12,857,938 | 15,107,629 | |||
| COMMITMENTS AND CONTINGENCIES | - | ||||
| SHAREHOLDERS’ EQUITY | |||||
| Ordinary shares, 0.0005 par value, 90,000,000 shares<br> authorized, 31,953,025 and 30,481,580 shares issued and outstanding, respectively | 15,977 | 15,241 | |||
| Preferred shares, 0.0005 par value, 10,000,000 shares authorized, 0 shares issued and outstanding | - | - | |||
| Additional paid-in capital | 29,054,060 | 26,545,384 | |||
| Statutory surplus reserve | 7,622,765 | 7,622,765 | |||
| Retained earnings | 51,421,031 | 61,475,891 | |||
| Accumulated other comprehensive income (loss) | 3,217,398 | (913,621 | ) | ||
| Total Happiness Development Group Limited Shareholders’ Equity | 91,331,231 | 94,745,660 | |||
| Non-controlling interests | (43,425 | ) | 2,891,396 | ||
| TOTAL SHAREHOLDERS’ EQUITY | 91,287,806 | 97,637,056 | |||
| TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | 104,145,744 | $ | 112,744,685 |
All values are in US Dollars.
6
Liquidity and Capital Resources
As of September 30, 2021 and March 31, 2021, we had cash and cash equivalents of $45,710,044 and $36,558,752, respectively. We did not have any other short-term investments.
As of September 30, 2021 and March 31, 2021, our current assets were $86,826,418 and $95,097,618, respectively, and our current liabilities were $12,857,938 and $15,107,629, respectively.
Cash Flows Summary
| For the Six Months Ended <br> September 30, | ||||||
|---|---|---|---|---|---|---|
| 2021 | 2020 | |||||
| Net cash provided by operating activities | $ | 6,754,756 | $ | 8,638,467 | ||
| Net cash used in investing activities | (214,228 | ) | (1,231,874 | ) | ||
| Net cash provided by financing activities | 1,971,191 | 1,204,769 | ||||
| Effect of exchange rate changes on cash | 639,573 | 1,537,203 | ||||
| Net increase in cash | $ | 9,151,292 | $ | 10,148,565 |
Operating activities
Net cash provided by operating activities was approximately $6.8 million for the six months ended September 30, 2021, compared to net cash of approximately $8.6 million for the six months ended September 30, 2020.
Net cash provided by operating activities for the six months ended September 30, 2021 was mainly due to the decrease of other payables and accrued liabilities approximately $12.6 million, offset by increase of accounts receivable and prepaid expenses of approximately $6.7 million and $15.6 million, respectively.
Investing activities
Net cash used in investing activities was approximately $0.3 million for the six months ended September 30, 2021, as compared to approximately $1.23 million for the six months ended September 30, 2020, due to the new acquisitions and procurements of the equipment and intangible assets.
Financing activities
Net cash provided by financing activities was approximately $2.0 million for the six months ended September 30, 2021, as compared to approximately $1.2 million for the six months ended September 30, 2020.
Net cash provided by financing activities for the six months ended September 30, 2021 was mainly due to repayment to the short-term bank loans of approximately $1.3 million, offset by an approximately $2.2 million capital contribution from issue of new shares and the proceeds from short-term bank loans amounted to $1.1 million.
Statement Regarding Unaudited FinancialInformation
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.
7
Exhibits.
| Exhibit | Description |
|---|---|
| 99.1 | Happiness Development Group Limited Unaudited Financial Results for the Six Months Ended September 30, 2021 and 2020 |
| 99.2 | Press Release |
8
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 Development Group Limited | ||
|---|---|---|
| Date: January 6, 2022 | By: | /s/<br> Xuezhu Wang |
| Xuezhu Wang<br><br> <br>Chief Executive Officer |
9
Exhibit 99.1
HAPPINESS DEVELOPMENT GROUP LIMITED
CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
AS OF SEPTEMBER 30, 2021, AND MARCH 31, 2021
AND
FOR THE SIX MONTHS ENDED SEPTEMBER 30, 2021AND 2020
HAPPINESS DEVELOPMENT GROUP LIMITED
TABLE OF CONTENTS
| Consolidated Financial Statements | |
|---|---|
| Consolidated Balance Sheets as of September 30, 2021 and March 31, 2021 (UNAUDITED) | F-2 |
| Consolidated<br> Statements of Income (Loss) and Comprehensive Income (Loss) for the six months ended September 30, 2021 and 2020<br> (UNAUDITED) | F-3 |
| Consolidated Statements of Changes in Shareholders’ Equity for the six months ended September 30, 2021 and 2020 (UNAUDITED) | F-4 |
| Consolidated Statements of Cash Flows for the six months ended September 30, 2021 and 2020 (UNAUDITED) | F-5 |
F-1
HAPPINESS DEVELOPMENT GROUP LIMITED
CONSOLIDATEDBALANCE SHEETS
AS OF SEPTEMBER 30, 2021, AND MARCH 31, 2021
(UNAUDITED)
(IN U.S. DOLLARS)
| As of<br> March 31, | |||||
|---|---|---|---|---|---|
| 2021 | |||||
| ASSETS | |||||
| Current assets | |||||
| Cash and cash equivalents | 45,710,044 | $ | 36,558,752 | ||
| Accounts receivable | 19,195,282 | 34,563,743 | |||
| Inventories | 2,428,641 | 1,785,379 | |||
| Due from related parties | 124,156 | - | |||
| Prepaid expenses and other current assets | 19,368,295 | 22,189,744 | |||
| Total current assets | 86,826,418 | 95,097,618 | |||
| Property, plant and equipment, net | 10,381,490 | 10,514,031 | |||
| Intangible assets, net | 2,069,316 | 1,832,099 | |||
| Goodwill | 552,567 | 162,832 | |||
| Other assets | 4,315,953 | 5,138,105 | |||
| TOTAL ASSETS | 104,145,744 | $ | 112,744,685 | ||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | |||||
| Current liabilities | |||||
| Accounts payable | 8,769,624 | $ | 8,841,163 | ||
| Other payables and accrued liabilities | 2,083,303 | 3,694,943 | |||
| Income tax payable | 509 | 334,523 | |||
| Short-term bank borrowings | 2,004,502 | 2,237,000 | |||
| TOTAL LIABILITIES | 12,857,938 | 15,107,629 | |||
| COMMITMENTS AND CONTINGENCIES | - | ||||
| SHAREHOLDERS’ EQUITY | |||||
| Ordinary shares, 0.0005 par value, 90,000,000 shares<br> authorized, 31,953,025 and 30,481,580 shares issued and outstanding, respectively | 15,977 | 15,241 | |||
| Preferred shares, 0.0005 par value, 10,000,000 shares authorized, 0 shares issued and outstanding | - | - | |||
| Additional paid-in capital | 29,054,060 | 26,545,384 | |||
| Statutory surplus reserve | 7,622,765 | 7,622,765 | |||
| Retained earnings | 51,421,031 | 61,475,891 | |||
| Accumulated other comprehensive income (loss) | 3,217,398 | (913,621 | ) | ||
| Total Happiness Development Group Limited Shareholders’ Equity | 91,331,231 | 94,745,660 | |||
| Non-controlling interests | (43,425 | ) | 2,891,396 | ||
| TOTAL SHAREHOLDERS’ EQUITY | 91,287,806 | 97,637,056 | |||
| TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | 104,145,744 | $ | 112,744,685 |
All values are in US Dollars.
F-2
HAPPINESS DEVELOPMENT GROUP LIMITED
CONSOLIDATEDSTATEMENTS OF INCOME (LOSS) AND COMPREHENSIVE INCOME (LOSS)
FOR THE SIX MONTHS ENDED SEPTEMBER 30, 2021AND 2020
(UNAUDITED)
(IN U.S. DOLLARS)
| For the six months ended<br><br> September 30, | ||||||
|---|---|---|---|---|---|---|
| 2021 | 2020 | |||||
| Revenues | $ | 46,884,584 | $ | 21,877,234 | ||
| Cost of revenues | (41,210,047 | ) | (12,299,331 | ) | ||
| Gross profit | 5,674,537 | 9,577,903 | ||||
| Operating expenses: | ||||||
| Selling and marketing | 11,636,367 | 3,699,676 | ||||
| General and administrative | 3,780,718 | 1,441,736 | ||||
| Research and development | 789,482 | 746,898 | ||||
| Total operating expenses | 16,206,567 | 5,888,310 | ||||
| Operating (loss) income | (10,532,030 | ) | 3,689,593 | |||
| Other income (expenses): | ||||||
| Interest income | 62,737 | 67,511 | ||||
| Interest expense | (38,511 | ) | (58,154 | ) | ||
| Other income, net | 114,059 | 210,023 | ||||
| Total other income, net | 138,285 | 219,380 | ||||
| (Loss) /income before income taxes | (10,393,745 | ) | 3,908,973 | |||
| Income tax provision | (149,429 | ) | (722,858 | ) | ||
| Net (loss) /income | $ | (10,543,174 | ) | $ | 3,186,115 | |
| Net income /(loss) attributable to non-controlling interests | 488,314 | (1,812 | ) | |||
| Net (loss) /income attributable to Happiness Development Group Limited | (10,054,860 | ) | 3,184,303 | |||
| Other comprehensive income (loss): | ||||||
| Foreign currency translation adjustments | 1,607,416 | 3,015,157 | ||||
| Comprehensive (loss) /income | $ | (8,935,758 | ) | $ | 6,201,272 | |
| Less: comprehensive income /(loss) attributable to non-controlling interests: | 2,523,603 | (6,978 | ) | |||
| Comprehensive (loss) /income attributable to Happiness Development Group Limited | (6,412,155 | ) | 6,194,294 | |||
| Basic and diluted earnings (loss) per ordinary share | ||||||
| Basic and diluted | $ | (0.37 | ) | $ | 0.13 | |
| Weighted average number of ordinary shares outstanding | ||||||
| Basic and diluted | 26,933,050 | 25,039,560 |
F-3
HAPPINESS DEVELOPMENT GROUP LIMITED
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’EQUITYFOR THE SIX MONTHS ENDED SEPTEMBER 30, 2021 AND 2020
(UNAUDITED)
(IN U.S. DOLLARS)
| Ordinary<br> Shares | Ordinary<br> shares <br> amount | Additional<br> paid-in <br> capital | Statutory<br> surplus <br> reserve | Retained<br> earnings | Accumulated<br> other<br> comprehensive<br> income (loss) | Total Happiness<br> <br>Development Group Limited Shareholders’ Equity | Non-controlling interests | Total <br> equity | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Balance at March 31, 2021 | 30,481,580 | $ | 15,241 | $ | 26,545,384 | $ | 7,622,765 | $ | 61,475,891 | $ | (913,621 | ) | $ | 94,745,660 | $ | 2,891,396 | $ | 97,637,056 | |||||
| Ordinary shares issued for cash | 1,240,000 | 620 | 2,156,980 | - | - | - | 2,157,600 | - | 2,157,600 | ||||||||||||||
| Ordinary shares issued for services | 231,445 | 116 | 351,696 | - | - | - | 351,812 | - | 351,812 | ||||||||||||||
| Contribution from non-controlling shareholders | - | - | - | - | - | - | - | 77,096 | 77,096 | ||||||||||||||
| Net loss | - | - | - | - | (10,054,860 | ) | - | (10,054,860 | ) | (488,314 | ) | (10,543,174 | ) | ||||||||||
| Foreign currency translation adjustments | - | - | - | - | - | 4,131,019 | 4,131,019 | (2,523,603 | ) | 1,607,416 | |||||||||||||
| Balance at September 30, 2021 | 31,953,025 | $ | 15,977 | $ | 29,054,060 | $ | 7,622,765 | $ | 51,421,031 | $ | 3,217,398 | $ | 91,331,231 | $ | (43,425 | ) | $ | 91,287,806 | |||||
| Ordinary<br> Shares | Ordinary<br> Shares <br> Amount | Additional <br> paid-in <br> capital | Statutory<br> surplus <br> reserve | Retained<br> earnings | Accumulated <br> other<br> comprehensive<br> loss | Total <br> Happiness <br> Development <br> Group <br> Limited Shareholders’ Equity | Non-controlling <br> interests | Total <br> 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 issued 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 adjustments | - | - | - | - | - | 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 |
F-4
HAPPINESS DEVELOPMENT GROUP LIMITED
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED SEPTEMBER 30, 2021AND 2020
(UNAUDITED)
(IN U.S. DOLLARS)
| For the six months ended<br> September 30, | ||||||
|---|---|---|---|---|---|---|
| 2021 | 2020 | |||||
| Cash Flows from Operating Activities: | ||||||
| Net income | $ | (10,543,174 | ) | $ | 3,186,115 | |
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||
| Depreciation and amortization | 517,430 | 393,709 | ||||
| Share-based compensation | 351,812 | - | ||||
| Changes in operating assets and liabilities: | ||||||
| Accounts receivable | 15,909,423 | 9,173,869 | ||||
| Inventories | (239,266 | ) | (17,267 | ) | ||
| Due from related parties | (124,808 | ) | - | |||
| Prepaid expenses | 12,489,464 | (3,078,398 | ) | |||
| Other assets | 881,539 | (1,587,241 | ) | |||
| Accounts payable | 32,141 | (91,993 | ) | |||
| Other payables and accrued liabilities | (12,179,570 | ) | 372,363 | |||
| Income taxes payable | (340,235 | ) | 287,310 | |||
| Net cash provided by operating activities | 6,754,756 | 8,638,467 | ||||
| Cash Flows from Investing Activities: | ||||||
| Purchases of property, plant and equipment | (179,265 | ) | (1,230,804 | ) | ||
| Purchase of intangible assets | (17,050 | ) | (1,070 | ) | ||
| Purchase of BAODENG | (17,913 | ) | - | |||
| Net cash used in investing activities | (214,228 | ) | (1,231,874 | ) | ||
| Cash Flows from Financing Activities: | ||||||
| Proceeds from issuance of ordinary shares | 2,157,600 | 2,134,531 | ||||
| Capital contributions from noncontrolling interest shareholders | 77,096 | 36,174 | ||||
| Repayments to related party payables | - | (833,968 | ) | |||
| Proceeds from short-term loans | 1,085,019 | 1,243,755 | ||||
| Repayments on short-term loans | (1,348,524 | ) | (1,000,723 | ) | ||
| Dividends paid | - | (375,000 | ) | |||
| Net cash provided by financing activities | 1,971,191 | 1,204,769 | ||||
| Effect of exchange rate changes on cash and cash equivalents | 639,573 | 1,537,203 | ||||
| Net increase in cash and cash equivalents | 9,151,292 | 10,148,565 | ||||
| Cash and cash equivalents at the beginning of period | 36,558,752 | 33,654,765 | ||||
| Cash and cash equivalents at the end of period | $ | 45,710,044 | $ | 43,803,330 | ||
| Supplemental disclosures of cash flows information: | ||||||
| Cash paid for income taxes | $ | 558,491 | $ | 435,548 | ||
| Cash paid for interest expense | $ | 38,511 | $ | 58,154 |
F-5
Exhibit 99.2
HappinessDevelopment Announces Financial Results for the Six Months Ended September 30, 2021
NANPING, China, January 6, 2022 /PR Newswire/ -- Happiness Development Group Limited (“HAPP” or the “Company”), (NASDAQ: HAPP) a China-based company engaging in the business of production of nutraceutical and dietary supplements, providing e-commerce sales and e-commerce marketing solutions, and the sales of automobile today announced its unaudited financial results for the six months ended September 30, 2021.
Financial Highlights for the six months endedSeptember 30, 2021:
| ● | Revenues increased by $25.01<br> million or 114.3%, to $46.88 million for the six months ended September 30, 2021 from $21.88 million for the six months ended September<br> 30, 2020, mainly due to the start-up of new goods or service provided including online sale, automobile sale and advertising service. |
|---|---|
| ● | The loss from operating<br> was $10.53 million for the six months ended September 30, 2021, a decrease of $14.22 million from the prior year period. The decrease<br> was primarily attributed to the performance of the healthcare products segment due to the continuous negative impacts on COVID-19<br> in different provinces in China. |
| --- | --- |
| ● | The Company reported $10.05<br> million of net loss attributable to the shareholders, in the six months ended September 30, 2021, compared to net income attributable<br> to the shareholders of $3.19 million in the comparative period. |
| --- | --- |
“The first half of fiscal year 2021 was really tough for us. As COVID-19 continues to spread in different provinces in China, the performance of our experience stores was greatly impaired. During the six months ended September 30 2021, we closed 70% experience stores to avoid further losses.” Mr. Xuezhu Wang, CEO of the Company, continued, “However, we still see a lot of hopes and highlights in the first six months, and we did accomplish some good results. In the first six months, our ecommerce sales started from September 2020 have reached over $21.48 million, 84% more than the sales of health products. Our internet information and advertising service started from October 2020 generated sales of approximately $8.25 million, and our automobile sales started from November 2020 have reached approximately $5.48 million. These newly developed businesses have now become the main drive of our business. With the continuous closing of our experience stores and the development of these newly launched businesses, we believe we will gradually get out of the haze and return to the right track of profitability.”
Further information on the Company’s financial results for the six months ended September 30, 2021, 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.
About Happiness Development Group Limited
Headquartered in Nanping, China, Happiness Development Group Limited currently has three business lines: nutraceutical and dietary supplements, e-commerce and automobile sales. The nutrition and dietary supplements business is focusing on the research, development, manufacture and marketing of various products made from Chinese herbal extracts and other ingredients. Over the past 17 years, we have established a product portfolio consisting of 23 PRC National Medical Products Administration registered “Blue-Cap” SKUs of nutraceutical and dietary supplements products. Our e-commerce business focuses on offering e-commerce solutions, including advertising and information technology services to small and medium-sized enterprises in China. We also run our online stores which carries our products of dietary supplements and other selected products sourced from the small and medium-sized enterprises in China. Our mission for the e-commerce business is to enable small and medium-sized enterprises to fully leverage the power of e-commerce to grow rapidly. Our automobile sales adopts the B2B business model and is committed to optimizing the auto supply chain by connecting car dealers on our online automobile sales platform and offering the overall services for purchasing automobiles. For more information, please visit: www.happ.org.cn
Forward-Looking Statements
This press release contains forward-lookingstatements as defined by the Private Securities Litigation Reform Act of 1995. Forward-looking statements include statements concerningplans, objectives, goals, strategies, future events or performance, and underlying assumptions and other statements that are other thanstatements of historical facts. When the Company uses words such as “may, “will, “intend,” “should,”“believe,” “expect,” “anticipate,” “project,” “estimate” or similar expressionsthat do not relate solely to historical matters, it is making forward-looking statements. Forward-looking statements are not guaranteesof future performance and involve risks and uncertainties that may cause the actual results to differ materially from the Company’sexpectations discussed in the forward-looking statements. These statements are subject to uncertainties and risks including, but notlimited to, the following: the Company’s goals and strategies; the Company’s future business development; product andservice demand and acceptance; changes in technology; economic conditions; reputation and brand; the impact of competition and pricing;government regulations; fluctuations in general economic and business conditions in China, the COVID-19 outbreak and its impact on ouroperations and assumptions underlying or related to any of the foregoing and other risks contained in reports filed by the Company withthe Securities and Exchange Commission. For these reasons, among others, investors are cautioned not to place undue reliance uponany forward-looking statements in this press release. Additional factors are discussed in the Company’s filings with the U.S. Securitiesand Exchange Commission, which are available for review at www.sec.gov. The Company undertakes no obligation to publicly revise theseforward-looking statements to reflect events or circumstances that arise after the date hereof.
CONTACT: Ping Chen, +86-599-7828808, ir@fjxfl.com