NANPING, China, Jan. 17, 2020 /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, 2019. The financial results has
been filed in a 6-K with the U.S. Securities and Exchange
Commission (the "SEC") on January 10,
2020.
Financial Highlights for the six months ended September 30, 2019:
- Sales for the six months ended September
30, 2019, were $31.36 million,
relatively stable compared with $31.43
million in the prior year period.
- Operating income was $9.82
million for the six months ended September 30, 2019, a slight decrease of 5.4%
from the prior year period due to increases in general and
administrative fees incurred for brand advertisement.
- The Company reported $8.42
million of net income attributable to common shareholders,
or $0.37 per basic and diluted share
in the six months ended September 30,
2019, compared to net income attributable to common
shareholders of $8.80 million, or
$0.38 per basic and diluted share, in
the comparative period.
Mr. Xuezhu Wang, Chief Executive
Officer of Happiness Biotech, commented, "We are pleased to
announce our financial results for the six months ended
September 30, 2019. We have
experienced a relatively stable half year in 2019 while we have
continued the efforts to open new Experience Stores. As previously
announced, we have opened the 31st Experience Store in
December and we will continue to open more in the last fiscal
quarter. The margin decreases slightly mainly due to our increased
marketing expenses and new store expansion. However, we are
confident that we will be rewarded with higher margin and revenue
after a sizable network of experience stores being
established."
Financial Results for the six months ended September 30, 2019 compared with the six months
ended September 30, 2018
Revenues
We generated revenues primarily from manufacture and sales of
nutraceutical and dietary supplements made of Lucidum spore powder
and others.
The following table presents an overview of our sales from our
product lines for the six months ended September 30, 2019 and 2018 respectively:
|
For the six months
ended
|
|
|
|
|
|
|
September
30,
|
|
Variance
|
|
2019
|
|
2018
|
|
Amount
|
|
Percentage
|
Lucidum spore powder
products
|
$
|
10,948,813
|
|
$
|
9,257,583
|
|
$
|
1,691,230
|
|
18.3%
|
Percentage Per
Total
|
|
34.9%
|
|
|
29.5%
|
|
|
5.4%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cordyceps mycelia
products
|
|
4,699,302
|
|
|
5,753,333
|
|
|
(1,054,031)
|
|
(18.3)%
|
Percentage Per
Total
|
|
15.0%
|
|
|
18.3%
|
|
|
(3.3)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ejiao solution
products
|
|
4,299,052
|
|
|
4,708,850
|
|
|
(409,798)
|
|
(8.7)%
|
Percentage Per
Total
|
|
13.7%
|
|
|
15.0%
|
|
|
(1.3)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Vitamins and dietary
supplements products
|
|
3,729,571
|
|
|
4,376,868
|
|
|
(647,297)
|
|
(14.8)%
|
Percentage Per
Total
|
|
11.9%
|
|
|
13.9%
|
|
|
(2.0)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
American ginseng
products
|
|
2,316,048
|
|
|
2,425,689
|
|
|
(109,641)
|
|
(4.5)%
|
Percentage Per
Total
|
|
7.4%
|
|
|
7.7%
|
|
|
(0.3)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Others
|
|
5,364,760
|
|
|
4,910,880
|
|
|
453,879
|
|
9.2%
|
Percentage Per
Total
|
|
17.1%
|
|
|
15.6%
|
|
|
1.5%
|
|
|
Total
|
$
|
31,357,546
|
|
$
|
31,433,204
|
|
$
|
(75,658)
|
|
(0.2)%
|
As of September 30, 2019, 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.
Lucidum spore powder products: Our sales from Lucidum
spore powder products have grown heavily in the six months ended
September 30, 2019, increased by
$1,691,230 or 18.3%, to $10,948,813. This rise was mainly attributed to
the more intensive marketing activities of Lucidum spore power
products and the growth of sales from experience stores.
Cordyceps mycelia products: Compared with the prior year,
it accounts for 15.0% of our total revenues of the six months ended
September 30, 2019. The revenues
generated from sales of Cordyceps mycelia products dropped
from18.3% due to heavier competition in traditional nutrition
market and lower retail prices of Cordycepts mycelia products.
Ejiao solution products months: The sales of Ejiao
solution products accounted for 13.7% and 15% of revenue recognized
during the six months ended September 30,
2019 and 2018, respectively. As compared with the six months
ended September 30, 2018, our sales
of Ejiao solution products months decreased slightly by
$409,798, or 1.3% for the six months
ended September 30, 2019. The
decrease of Ejiao products was mainly due to pricing competition in
traditional nutrition market.
Other products: The sales of other products accounted for
17.1% and 15.6% of revenue recognized during the six months ended
September 30, 2019 and 2018,
respectively. Our sales of other products increased by $453,879, or 9.2% for the six months ended,
September 30, 2019. This growth is
primarily attributable to increase of sales volume of our newly
promoted Lucidum enriched products, such as Lucidum snake oil
cream.
Cost of Revenue
Cost of revenue decreased by $54,648, or 0.4%, from $15,586,713 for the six months ended September 30, 2018 to $15,532,065 for the six months ended September 30, 2019. Gross margins are relatively
stable for six months period ended September
30, 2019 compared to that for the six months period ended
September 30, 2018; amounted to be
50.5% and 50.4% for the six months ended September 30, 2019 and 2018, respectively.
Selling and Marketing Expenses
The selling expenses increased from $3,320,375 for the six months ended September 30, 2018 to $3,593,053 for the six months ended September 30, 2019, representing an increase of
$272,678, or 8.2%. The increase was
primarily due to increases in commercial and advertising cost
strengthening our brands during the six months ended September 30, 2019.
General and Administrative Expenses
The general and administrative expenses increased from
$970,036 for the six months ended
September 30, 2018 to $1,275,679 for the six months ended September 30, 2019, representing an increase of
$305,643, or 31.5%. The increase was
primarily due to increases in professional fees incurred for brand
advertisement.
Research and Development Expenses
The research and development expenses were relatively stable
comparing these two reporting periods. These expenses were
$1,172,894 and $1,134,505 for the six months ended September 30, 2018 and for the six months ended
September 30, 2019 respectively.
Income from Operations
The income from operations decreased from $10,383,186 for the six months ended September 30, 2018 to $9,822,244 for the six months ended September 30, 2019, representing a decrease of
$560,942, or 5.4%. The decrease was
primarily due to increases in general and administrative fees
incurred for brand advertisement.
Income Tax
We incurred income tax expense of $1,484,154 for the six months ended September 30, 2019, representing a decrease of
$72,846 or 4.7%, compared to
$1,554,000 for the six months ended
September 30, 2018. Our effective
income tax rates for the six months ended September 30, 2019 and 2018 were 15.0%.
Net income
As a result of the foregoing, net income for the six months
ended September 30, 2019 was
$8,423,297 representing a decrease of
$381,523, or 4.3% from $8,804,820 for the six months ended September 30, 2018.Net margin was 26.9% for the
six months ended September 30. 2019
and 28% for the six months ended September
30, 2018.
Liquidity and Capital Resources
As of September 30, 2019 and
March 31, 2019, we had cash and cash
equivalents of $23,832,048 and
$14,800,772 respectively. We did not
have any other short-term investments.
As of September 30, 2019 and
March 31, 2019, our current assets
were approximately $59.5 million and
$54.8 million, respectively, and our
current liabilities were approximately $5.1
million and $4.7 million,
respectively.
Net cash provided by operations for the six months ended
September 30, 2019 was $8,943,354 and net cash provided by operations
for the six months ended September 30,
2018 was $5,101,977.
About Happiness 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 SFDA registered "Blue-Cap" SKUs
of nutraceutical and dietary supplements products. For more
information, please visit: www.happ.org.cn.
Forward-Looking Statements
This press release contains forward-looking statements as
defined by the Private Securities Litigation Reform Act of 1995.
Forward-looking statements include statements concerning plans,
objectives, goals, strategies, future events or performance, and
underlying assumptions and 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
actual results to differ materially from the Company's expectations
discussed in the forward-looking statements. These statements are
subject to uncertainties and risks including, but not limited to,
the following: the Company's goals and strategies; the
Company'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
business conditions in China and
assumptions underlying or related to any of the foregoing and other
risks contained in reports filed by the Company with the Securities
and Exchange Commission. For these reasons, 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 available for review
at www.sec.gov. The Company undertakes no obligation to publicly
revise these forward-looking statements to reflect events or
circumstances that arise after the date hereof.
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SOURCE Happiness Biotech Group Limited