Exhibit 99.1
HAPPINESS DEVELOPMENT GROUP LIMITED
CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
AS OF SEPTEMBER 30, 2022, AND MARCH 31, 2022
AND
FOR THE SIX MONTHS ENDED SEPTEMBER 30, 2022 AND 2021
HAPPINESS DEVELOPMENT GROUP LIMITED
TABLE OF CONTENTS
F-1
HAPPINESS DEVELOPMENT GROUP LIMITED
CONSOLIDATED BALANCE SHEETS
AS OF SEPTEMBER 30, 2022, AND MARCH 31, 2022
(UNAUDITED)
(IN U.S. DOLLARS)
As of September 30, | As of March 31, | |||||||
2022 | 2022 | |||||||
ASSETS | ||||||||
Current assets | ||||||||
Cash and cash equivalents | $ | 11,252,396 | $ | 19,733,631 | ||||
Accounts receivable, net of allowance for doubtful accounts of $463,514 and $463,514, respectively | 24,754,419 | 27,447,907 | ||||||
Notes receivable | - | 89,332 | ||||||
Inventories | 1,626,960 | 1,389,561 | ||||||
Prepaid expenses and other current assets | 7,868,198 | 7,909,233 | ||||||
Total current assets | 45,501,973 | 56,569,664 | ||||||
Property, plant and equipment, net | 9,345,652 | 11,246,815 | ||||||
Intangible assets, net | 8,294,643 | 10,101,405 | ||||||
Goodwill | 8,865,954 | 10,084,201 | ||||||
Deferred tax assets | 654,262 | 3,796,492 | ||||||
Prepaid assets | 3,303,216 | 5,627,099 | ||||||
TOTAL ASSETS | $ | 75,965,700 | $ | 97,425,676 | ||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
Current liabilities | ||||||||
Accounts payable | $ | 18,423,109 | $ | 12,155,733 | ||||
Other payables and accrued liabilities | 1,733,273 | 3,469,768 | ||||||
Income tax payable | 334,530 | 37,225 | ||||||
Short-term bank borrowings | 2,147,948 | 2,268,360 | ||||||
Total current liabilities | 22,638,860 | 17,931,086 | ||||||
Deferred tax liability | 1,774,698 | 2,079,986 | ||||||
TOTAL LIABILITIES | 24,413,558 | 20,011,072 | ||||||
COMMITMENTS AND CONTINGENCIES | - | |||||||
SHAREHOLDERS’ EQUITY | ||||||||
Class A Ordinary shares, $0.01 par value, 350,000,000 shares authorized, 67,004,583 and 30,481,580 shares issued and outstanding, respectively | 33,502 | 33,502 | ||||||
Class B Ordinary shares, $0.01 par value, 100,000,000 shares authorized, 12,095,100 and 0 shares issued and outstanding, respectively | 6,048 | 6,048 | ||||||
Preferred shares, $0.01 par value, 50,000,000 shares authorized, 0 shares issued and outstanding | - | - | ||||||
Additional paid-in capital | 53,871,226 | 53,871,226 | ||||||
Statutory surplus reserve | 7,622,765 | 7,622,765 | ||||||
Retained earnings | (7,084,172 | ) | 12,285,281 | |||||
Accumulated other comprehensive income (loss) | (380,257 | ) | 4,306,536 | |||||
Total Happiness Development Group Limited’s shareholders’ equity | 54,069,112 | 78,125,358 | ||||||
Non-controlling interests | (2,516,970 | ) | (710,754 | ) | ||||
Total shareholders’ equity | 51,552,142 | 77,414,604 | ||||||
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | $ | 75,965,700 | $ | 97,425,676 |
F-2
HAPPINESS DEVELOPMENT GROUP LIMITED
CONSOLIDATED STATEMENTS OF INCOME (LOSS) AND COMPREHENSIVE INCOME (LOSS)
FOR THE SIX MONTHS ENDED SEPTEMBER 30, 2022 AND 2021
(UNAUDITED)
(IN U.S. DOLLARS)
For the six months ended September 30, | ||||||||
2022 | 2021 | |||||||
Revenues | $ | 52,990,008 | $ | 46,884,584 | ||||
Cost of revenues | (50,460,142 | ) | (41,210,047 | ) | ||||
Gross profit | 2,529,866 | 5,674,537 | ||||||
Operating expenses: | ||||||||
Selling and marketing | 17,822,898 | 11,636,367 | ||||||
General and administrative | 3,829,891 | 3,780,718 | ||||||
Research and development | 402,544 | 789,482 | ||||||
Total operating expenses | 22,055,333 | 16,206,567 | ||||||
Operating loss | (19,525,467 | ) | (10,532,030 | ) | ||||
Other income (expenses): | ||||||||
Interest income | 16,832 | 62,737 | ||||||
Interest expense | (35,054 | ) | (38,511 | ) | ||||
Other (loss)/ income, net | (298,566 | ) | 114,059 | |||||
Total other (loss)/ income, net | (316,788 | ) | 138,285 | |||||
(Loss) /income before income taxes | (19,842,255 | ) | (10,393,745 | ) | ||||
Income tax provision | (2,896,428 | ) | (149,429 | ) | ||||
Net loss | $ | (22,738,683 | ) | $ | (10,543,174 | ) | ||
Net loss attributable to non-controlling interests | 3,369,230 | 488,314 | ||||||
Net loss attributable to Happiness Development Group Limited | (19,369,453 | ) | (10,054,860 | ) | ||||
Other comprehensive income (loss): | ||||||||
Foreign currency translation adjustments | (4,606,029 | ) | 1,607,416 | |||||
Comprehensive loss | $ | (27,344,712 | ) | $ | (8,935,758 | ) | ||
Less: comprehensive income /(loss) attributable to non-controlling interests: | (80,764 | ) | 2,523,603 | |||||
Comprehensive loss attributable to Happiness Development Group Limited | (27,425,476 | ) | (6,412,155 | ) | ||||
Basic and diluted earnings (loss) per ordinary share | ||||||||
Basic and diluted | $ | (0.48 | ) | $ | (0.37 | ) | ||
Weighted average number of ordinary shares outstanding | ||||||||
Basic and diluted | 40,485,912 | 26,933,050 |
F-3
HAPPINESS DEVELOPMENT GROUP LIMITED
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
FOR THE SIX MONTHS ENDED SEPTEMBER 30, 2022 AND 2021
(UNAUDITED)
(IN U.S. DOLLARS)
Class A Ordinary | Class A Ordinary |
Class B Ordinary shares |
Class B Ordinary shares amount | Additional paid-in capital | Statutory surplus reserve | Retained earnings | Accumulated other comprehensive income (loss) | Total Happiness Development Group Limited shareholders’ equity | Non-controlling interests | Total equity | ||||||||||||||||||||||||||||||||||
Balance at March 31, 2022 | 67,004,583 | $ | 33,502 | 12,095,100 | $ | 6,048 | $ | 53,871,226 | $ | 7,622,765 | $ | 12,285,281 | $ | 4,306,536 | $ | 78,125,358 | $ | (710,754 | ) | $ | 77,414,604 | |||||||||||||||||||||||
Contribution from non-controlling shareholders | - | - | - | - | - | - | - | - | - | 1,482,250 | 1,482,250 | |||||||||||||||||||||||||||||||||
Net loss | - | - | - | - | - | - | (19,369,453 | ) | - | (19,369,453 | ) | (3,369,230 | ) | (22,738,683 | ) | |||||||||||||||||||||||||||||
Foreign currency translation adjustments | - | - | - | - | - | - | - | (4,686,793 | ) | (4,686,793 | ) | 80,764 | (4,606,029 | ) | ||||||||||||||||||||||||||||||
Balance at September 30, 2022 | 67,004,583 | $ | 33,502 | 12,095,100 | $ | 6,048 | $ | 53,871,226 | $ | 7,622,765 | $ | (7,084,172 | ) | $ | (380,257 | ) | $ | 54,069,112 | $ | (2,516,970 | ) | $ | 51,552,142 |
Class A | Class A |
Class B |
Class B | Additional paid-in capital | Statutory surplus reserve | Retained earnings | Accumulated other comprehensive income (loss) | Total Happiness Development Group Limited shareholders’ equity | Non-controlling interests | Total 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 |
F-4
HAPPINESS DEVELOPMENT GROUP LIMITED
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED SEPTEMBER 30, 2022 AND 2021
(UNAUDITED)
(IN U.S. DOLLARS)
For the six months ended September 30, | ||||||||
2022 | 2021 | |||||||
Cash Flows from Operating Activities: | ||||||||
Net income | $ | (22,738,683 | ) | $ | (10,543,174 | ) | ||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
Depreciation and amortization | 1,508,899 | 517,430 | ||||||
Share-based compensation | - | 351,812 | ||||||
Loss on disposal of equipment | 90,636 | - | ||||||
Deferred taxes | 2,777,480 | - | ||||||
Changes in operating assets and liabilities: | ||||||||
Accounts receivable | (221,976 | ) | 15,909,423 | |||||
Notes receivable | 83,553 | - | ||||||
Inventories | (402,204 | ) | (239,266 | ) | ||||
Due from related parties | - | (124,808 | ) | |||||
Prepaid expenses and other current assets | 4,381,020 | 12,489,464 | ||||||
Other assets | 1,829,929 | 881,539 | ||||||
Accounts payable | 7,902,017 | 32,141 | ||||||
Other payables and accrued liabilities | (3,727,332 | ) | (12,179,570 | ) | ||||
Income taxes payable | 315,115 | (340,235 | ) | |||||
Net cash (used in) provided by operating activities | (8,201,546 | ) | 6,754,756 | |||||
Cash Flows from Investing Activities: | ||||||||
Purchases of property, plant and equipment | (84,912 | ) | (179,265 | ) | ||||
Purchase of intangible assets | - | (17,050 | ) | |||||
Purchase of BAODENG | - | (17,913 | ) | |||||
Proceeds of disposal of subsidiaries | 17,683 | - | ||||||
Net cash used in investing activities | (67,229 | ) | (214,228 | ) | ||||
Cash Flows from Financing Activities: | ||||||||
Proceeds from issuance of ordinary shares | - | 2,157,600 | ||||||
Capital contributions from noncontrolling interest shareholders | 1,473,340 | 77,096 | ||||||
Proceeds from short-term loans | 1,156,572 | 1,085,019 | ||||||
Repayments on short-term loans | (1,031,338 | ) | (1,348,524 | ) | ||||
Net cash provided by financing activities | 1,598,574 | 1,971,191 | ||||||
Effect of exchange rate changes on cash and cash equivalents | (1,811,034 | ) | 639,573 | |||||
Net (decrease) increase in cash and cash equivalents | (8,642,235 | ) | 9,151,292 | |||||
Cash and cash equivalents at the beginning of period | 19,733,631 | 36,558,752 | ||||||
Cash and cash equivalents at the end of period | $ | 11,252,396 | $ | 45,710,044 | ||||
Supplemental disclosures of cash flows information: | ||||||||
Cash paid for income taxes | $ | 528 | $ | 558,491 | ||||
Cash paid for interest expense | $ | 35,054 | $ | 38,511 |
F-5