# EDGAR Filing Document

**Accession Number:** 0001751876
**File Stem:** 0001213900-23-002077
**Filing Date:** 2023-1
**Character Count:** 35539
**Document Hash:** d155639cae38177a171a1910abaf74d1
**Contains OCR:** False
**Source Format:** 

## Filing Content

## Filing Summary
**0001213900-23-002077.hdr.sgml**: 20230110

**ACCESSION NUMBER**: 0001213900-23-002077

**CONFORMED SUBMISSION TYPE**: 6-K

**PUBLIC DOCUMENT COUNT**: 21

**CONFORMED PERIOD OF REPORT**: 20220930

**FILED AS OF DATE**: 20230110

**DATE AS OF CHANGE**: 20230110

**FILER**: 

**COMPANY DATA:**
- **COMPANY CONFORMED NAME:** Happiness Development Group Ltd
- **CENTRAL INDEX KEY:** 0001751876
- **STANDARD INDUSTRIAL CLASSIFICATION:** MEDICINAL CHEMICALS & BOTANICAL PRODUCTS [2833]
- **IRS NUMBER:** 000000000
- **STATE OF INCORPORATION:** E9
- **FISCAL YEAR END:** 0331

**FILING VALUES:**
- **FORM TYPE:** 6-K
- **SEC ACT:** 1934 Act
- **SEC FILE NUMBER:** 001-39098
- **FILM NUMBER:** 23521834

**BUSINESS ADDRESS:**
- **STREET 1:** NO. 11, DONGJIAO EAST ROAD, SHUANGXI
- **STREET 2:** SHUNCHANG
- **CITY:** NANPING,
- **STATE:** F4
- **ZIP:** 353001
- **BUSINESS PHONE:** 86-0599-782-8808

**MAIL ADDRESS:**
- **STREET 1:** NO. 11, DONGJIAO EAST ROAD, SHUANGXI
- **STREET 2:** SHUNCHANG
- **CITY:** NANPING,
- **STATE:** F4
- **ZIP:** 353001

**FORMER COMPANY:**
- **FORMER CONFORMED NAME:** Happiness Biotech Group Ltd
- **DATE OF NAME CHANGE:** 20180831

?xml version="1.0" encoding="ASCII"?

**UNITED STATES**

**SECURITIES AND EXCHANGE COMMISSION**

**Washington, D.C. 20549**

**Form 6-K**

**REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR 15d-16**

**UNDER THE SECURITIES EXCHANGE ACT OF 1934**

For the month of September 2022

**Commission File Number 001-39098** 

**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 of China +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 ☒ Form 40-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): ☐

Note: Regulation S-T Rule 101(b)(7) only permits the submission in paper of a Form 6-K if submitted to furnish a report or other document that the registrant foreign private issuer must furnish and make public under the laws of the jurisdiction in which the registrant is incorporated, domiciled or legally organized (the registrant's "home country"), or under the rules of the home country exchange on which the registrant's securities are traded, as long as the report or other document is not a press release, is not required to be and has not been distributed to the registrant's security holders, and, if discussing a material event, has already been the subject of a Form 6-K submission or other Commission filing on EDGAR.

**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](http://www.sec.gov/Archives/edgar/data/1751876/000121390021012104/ea136207-s8_happinessbio.htm) (Registration Number 333-253602) and on [Form F-3](http://www.sec.gov/Archives/edgar/data/1751876/000121390020036482/ea129475-f3_happinessbiotech.htm) (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.

**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**

Private Placement

On December 27, 2022, the Company entered into certain securities purchase agreement (the "SPA") with certain sophisticated purchasers (the "**Purchasers**"), pursuant to which the Company agreed to sell 3,000,000 Class A ordinary shares, (the "**Shares**") par value $0.01 per share (the "**Ordinary Shares**"), at a per share purchase price of $2.00. The gross proceeds to the Company from this transaction were approximately $6.0 million. The Company plans to use 50% of the gross proceeds in a collaboration with DMG Tech Investment Ltd., and the rest for the general corporate purpose. As of the date of this report, there are 3,342,730 Class A ordinary shares and 612,255 Class B ordinary shares issued and outstanding. Upon closing of this offering, there will be 6,342,730 Class A ordinary shares and 612,255 Class B ordinary shares issued and outstanding.

Collaboration Agreement

On December 28, 2022, the Company entered into a collaboration agreement (the "**Collaboration Agreement**") with DMG Tech Investment Ltd, a limited liability company established under the laws of Delaware ("**DMG**"). DMG holds license of certain intellectual property to the development and operation of the certain animation experience in China and Korea. Pursuant to the Collaboration Agreement, DMG agreed to negotiate with the licensor to obtain the license in the U.S., and use best efforts to ensure that such rights include use of the license in development of location based entertainment centers, pop up experiences, non-fungible tokens, and merchandising. DMG also agreed to transfer the new license to a joint venture, which will be jointly owned by the Company and DMG or their respective designees. In exchange, the Company agreed to pay DMG $3 million in cash to DMG.

**Results of Operations**

The following information was derived from our Unaudited Financial Results for the six months ended September 30, 2022 and 2021, attached hereto as Exhibit 99.1.

**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<br> September 30,** | **For the six months ended<br> September 30,** |
|  | **2022** | **2021** |
| Revenues | $52990008 | $46884584 |
| Cost of revenues | (50460142) | (41210047) |
| **Gross profit** | **2529866** | **5674537** |
| Operating expenses: |  |  |
| &nbsp;&nbsp;&nbsp;Selling and marketing | 17822898 | 11636367 |
| &nbsp;&nbsp;&nbsp;General and administrative | 3829891 | 3780718 |
| &nbsp;&nbsp;&nbsp;Research and development | 402544 | 789482 |
| **Total operating expenses** | **22055333** | **16206567** |
| **Operating loss** | **(19525467)** | **(10532030)** |
| Other income (expenses): |  |  |
| &nbsp;&nbsp;&nbsp;Interest income | 16832 | 62737 |
| &nbsp;&nbsp;&nbsp;Interest expense | (35054) | (38511) |
| &nbsp;&nbsp;&nbsp;Other (loss)/ income, net | (298566) | 114059 |
| **Total other (loss)/ income, net** | (316788) | 138285 |
| **(Loss) /income before income taxes** | **(19842255)** | **(10393745)** |
| Income tax provision | (2896428) | (149429) |
| **Net loss** | $**(22738683)** | $**(10543174)** |
| Net loss attributable to non-controlling interests | 3369230 | 488314 |
| Net loss attributable to Happiness Development Group Limited | (19369453) | (10054860) |
| Other comprehensive income (loss): |  |  |
| &nbsp;&nbsp;&nbsp;Foreign currency translation adjustments | (4606029) | 1607416 |
| **Comprehensive loss** | $**(27344712)** | $**(8935758)** |
| Less: comprehensive income /(loss) attributable to non-controlling interests: | (80764) | 2523603 |
| Comprehensive loss attributable to Happiness Development Group Limited | (27425476) | (6412155) |
| 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 | 40485912 | 26933050 |

---

**Revenues**

 

We generated $52,990,008 in revenues for the six months ended September 30, 2022, representing an increase of $6,105,424 or 13.0%, as compared with $46,884,584 for the six months ended September 30, 2021. The increase was primarily due to the new goods or service provided during the six months ended September 30 2022, offsetting the decrease of revenue in the ecommerce sale and the advertising service.

Our sales from the healthcare products had increased from $11,669,522 for the six months ended September 30, 2021 to $28,103,868 for the six months ended September 30, 2022, due to the increased revenues generated from the new acquired companies. During the six months ended September 30, 2022, Fujian Shennong Jiagu Development Co., Ltd., a 70% subsidiary of the Company, and Fujian Shennong Jiagu Development Co., Ltd., a wholly owned subsidiary of the Company, together contributed 81.8% of the healthcare products revenue.

The automobile sales had increased by $10,448,555, from $5,589,207 for the six months ended September 30, 2021 to $16,037,762 for the six months ended September 30, 2022, as Taochejun began operation in June 2021, the revenue of Taochejun had only been generated for about three months as of September 30, 2021.

Our sales from the ecommerce sales had decreased from $29,625,855 for the six months ended September 30, 2021 to $8,848,378 for the six months ended September 30, 2022. The Company had disposed several low gross margin and loss-making e-commerce subsidiaries, which resulted in the decrease in sales.

***Cost of Revenue*** 

Cost of revenue increased by $9,250,095 or 22.4%, from $41,210,047 for the six months ended September 30, 2021 to $50,460,142 for the six months ended September 30, 2022. Gross margin were 4.8% and 12.1% for the six months ended September 30, 2022 and 2021, respectively.

***Selling and Marketing Expenses***

 

The selling expenses increased by $6,186,531, or 53.2%, from $11,636,367 for the six months ended September 30, 2021 to $17,822,898 for the six months ended September 30, 2022, the increase was primarily because that more cash were invested in exhibition and advertising to attract new potential customers through we-media, exhibitions, streaming advertising and etc.

***General and Administrative Expenses***

 

The general and administrative expenses increased from $3,780,718 for the six months ended September 30, 2021 to $3,829,891 for the six months ended September 30, 2022, representing a slight increase of $0.1 million, or 1.3%.

***Research and Development Expenses***

The research and development expenses increased from $789,482 for the six months ended September 30, 2021 to $402,544 for the six months ended September 30, 2022, representing a decrease of $0.39 million, or 49.0%. The decrease in the cost of research and development expense was due to the two-month closure of the Company's manufacturing facilities.

 ****

***(Loss) Income from Operations***

We incurred loss from operations of $19,842,255 for the six months ended September 30, 2022, compared to income from operations of $10,393,745 for the six months ended September 30, 2021. Most of the loss was attributed to the performance of the healthcare products segment, which was result from the impacts of COVID-19 and the lockdown and mass testing policies in different provinces in China. We had gradually optimized and integrated each segments to avoid further losses.

***Income Tax***

We incurred income tax expense of $2,896,428 for the six months ended September 30, 2022, representing an increase of $2,746,999 or 1,838.3%, compared to $149,429 for the six months ended September 30, 2021. The change was primary attributable to provision of the deductible temporary difference.

***Net Loss***

 

As a result of the foregoing, net loss amounted to $22,738,683 for the six months ended September 30, 2022, compared to net income of $10,543,174 for the six months ended September 30, 2021.

**HAPPINESS DEVELOPMENT GROUP LIMITED**

**CONSOLIDATED BALANCE SHEETS**

**AS OF SEPTEMBER 30, 2022, AND MARCH 31, 2022**

**(UNAUDITED)**

(**IN U.S. DOLLARS)**

---

| | | |
|:---|:---|:---|
|  | **As of<br> September 30,**<br>**2022** | **As of<br> March 31,**<br>**2022** |
| **ASSETS** |  |  |
| Current assets |  |  |
| &nbsp;&nbsp;&nbsp;Cash and cash equivalents | $11252396 | $19733631 |
| &nbsp;&nbsp;&nbsp;Accounts receivable, net of allowance for doubtful accounts of $463,514 and $463,514, respectively | 24754419 | 27447907 |
| &nbsp;&nbsp;&nbsp;Notes receivable |  | 89332 |
| &nbsp;&nbsp;&nbsp;Inventories | 1626960 | 1389561 |
| &nbsp;&nbsp;&nbsp;Prepaid expenses and other current assets | 7868198 | 7909233 |
| **Total current assets** | **45501973** | **56569664** |
| &nbsp;&nbsp;&nbsp;Property, plant and equipment, net | 9345652 | 11246815 |
| &nbsp;&nbsp;&nbsp;Intangible assets, net | 8294643 | 10101405 |
| &nbsp;&nbsp;&nbsp;Goodwill | 8865954 | 10084201 |
| &nbsp;&nbsp;&nbsp;Deferred tax assets | 654262 | 3796492 |
| &nbsp;&nbsp;&nbsp;Prepaid assets | 3303216 | 5627099 |
| **TOTAL ASSETS** | $**75965700** | $**97425676** |
| **LIABILITIES AND SHAREHOLDERS' EQUITY** |  |  |
| Current liabilities |  |  |
| &nbsp;&nbsp;&nbsp;Accounts payable | $18423109 | $12155733 |
| &nbsp;&nbsp;&nbsp;Other payables and accrued liabilities | 1733273 | 3469768 |
| &nbsp;&nbsp;&nbsp;Income tax payable | 334530 | 37225 |
| &nbsp;&nbsp;&nbsp;Short-term bank borrowings | 2147948 | 2268360 |
| **Total current liabilities** | **22638860** | **17931086** |
| Deferred tax liability | 1774698 | 2079986 |
| **TOTAL LIABILITIES** | **24413558** | **20011072** |
| **COMMITMENTS AND CONTINGENCIES** |  |  |
| **SHAREHOLDERS' EQUITY** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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 | 33502 | 33502 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Class B Ordinary shares, $0.01 par value, 100,000,000 shares authorized, 12,095,100 and 0 shares issued and outstanding, respectively | 6048 | 6048 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Preferred shares, $0.01 par value, 50,000,000 shares authorized, 0 shares issued and outstanding |  |  |
| &nbsp;&nbsp;&nbsp;Additional paid-in capital | 53871226 | 53871226 |
| &nbsp;&nbsp;&nbsp;Statutory surplus reserve | 7622765 | 7622765 |
| &nbsp;&nbsp;&nbsp;Retained earnings | (7084172) | 12285281 |
| &nbsp;&nbsp;&nbsp;Accumulated other comprehensive income (loss) | (380257) | 4306536 |
| **Total Happiness Development Group Limited's shareholders' equity** | **54069112** | **78125358** |
| **Non-controlling interests** | **(2516970)** | **(710754)** |
| **Total shareholders' equity** | **51552142** | **77414604** |
| **TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY** | $**75965700** | $**97425676** |

---

**Liquidity and Capital Resources**

As of September 30, 2022 and March 31, 2022, we had cash and cash equivalents of $11,252,396 and $19,733,631, respectively. We did not have any other short-term investments.

As of September 30, 2022 and March 31, 2022, our current assets were $45,501,973 and $56,569,664, respectively, and our current liabilities were $22,638,860 and $17,931,086, respectively.

**Cash Flows Summary**

---

| | | |
|:---|:---|:---|
|  | **For the Six Months Ended <br> September 30,** | **For the Six Months Ended <br> September 30,** |
|  | **2022** | **2021** |
| Net cash (used in)/ provided by operating activities | $(8201546) | $6754756 |
| Net cash used in investing activities | (67229) | (214228) |
| Net cash provided by financing activities | 1598574 | 1971191 |
| Effect of exchange rate changes on cash | (1811034) | 639573 |
| Net (decrease)/ increase in cash | $(8481235) | $9151292 |

---

*Operating activities*

Net cash used in operating activities was approximately $8.2 million for the six months ended September 30, 2022, compared to net cash provided by approximately $6.8 million for the six months ended September 30, 2021.

Net cash used in operating activities for the six months ended September 30, 2022 was mainly due to the increase of prepayments and other current assets approximately $4.4 million, accounts payable approximately $7.9 million and deferred taxes approximately $2.8 million, offset by decrease of other payables and accrued liabilities of approximately $3.7 million.

*Investing activities*

 

Net cash used in investing activities was approximately $0.1 million for the six months ended September 30, 2022, as compared to approximately $0.2 million for the six months ended September 30, 2021, due to the procurements of the equipment.

*Financing activities*

Net cash provided by financing activities was approximately $1.6 million for the six months ended September 30, 2022, as compared to approximately $2.0 million for the six months ended September 30, 2021.

Net cash provided by financing activities for the six months ended September 30, 2022 was mainly due to repayment to the short-term bank loans of approximately $1.0 million, offset by an approximately $1.5 million capital contribution from non-controlling shareholders and the proceeds from short-term bank loans amounted to $1.2 million.

**Statement Regarding 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.

**Exhibits.**

---

| | |
|:---|:---|
| **Exhibit** | **Description** |
| 99.1 | [Happiness Development Group Limited Unaudited Financial Results for the Six Months Ended September 30, 2022 and 202<u>1</u>](ea171433ex99-1_happiness.htm) |
| 101.INS | Inline XBRL Instance Document. |
| 101.SCH | Inline XBRL Taxonomy Extension Schema Document. |
| 101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document. |
| 101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document. |
| 101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document. |
| 101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document. |
| 104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101). |

---

**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** | **Happiness Development Group Limited** |
| Date: January 10, 2023 | By: | /s/ Xuezhu Wang |
|  |  | Xuezhu Wang<br> Chief Executive Officer |

---

## Exhibit 99.1

?xml version="1.0" encoding="ASCII"?

**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**

---

| | |
|:---|:---|
| **Consolidated Financial Statements** |  |
| [Consolidated Balance Sheets as of September 30, 2022 and March 31, 2022 (UNAUDITED)](#a_001) | F-2 |
| [Consolidated Statements of Income (Loss) and Comprehensive Income (Loss) for the six months ended September 30, 2022 and 2021 (UNAUDITED)](#a_002) | F-3 |
| [Consolidated Statements of Changes in Shareholders' Equity for the six months ended September 30, 2022 and 2021 (UNAUDITED)](#a_003) | F-4 |
| [Consolidated Statements of Cash Flows for the six months ended September 30, 2022 and 2021 (UNAUDITED)](#a_004) | F-5 |

---

**HAPPINESS DEVELOPMENT GROUP LIMITED**

**CONSOLIDATED BALANCE SHEETS**

**AS OF SEPTEMBER 30, 2022, AND MARCH 31, 2022**

**(UNAUDITED)**

(**IN U.S. DOLLARS)**

---

| | | |
|:---|:---|:---|
|  | **As of<br> September 30,**<br>**2022** | **As of<br> March 31,**<br>**2022** |
| **ASSETS** |  |  |
| Current assets |  |  |
| &nbsp;&nbsp;&nbsp;Cash and cash equivalents | $11252396 | $19733631 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accounts receivable, net of allowance for doubtful accounts of $463,514 and $463,514, respectively | 24754419 | 27447907 |
| &nbsp;&nbsp;&nbsp;Notes receivable | - | 89332 |
| &nbsp;&nbsp;&nbsp;Inventories | 1626960 | 1389561 |
| &nbsp;&nbsp;&nbsp;Prepaid expenses and other current assets | 7868198 | 7909233 |
| **Total current assets** | **45501973** | **56569664** |
| &nbsp;&nbsp;&nbsp;Property, plant and equipment, net | 9345652 | 11246815 |
| &nbsp;&nbsp;&nbsp;Intangible assets, net | 8294643 | 10101405 |
| &nbsp;&nbsp;&nbsp;Goodwill | 8865954 | 10084201 |
| &nbsp;&nbsp;&nbsp;Deferred tax assets | 654262 | 3796492 |
| &nbsp;&nbsp;&nbsp;Prepaid assets | 3303216 | 5627099 |
| **TOTAL ASSETS** | $**75965700** | $**97425676** |
| **LIABILITIES AND SHAREHOLDERS' EQUITY** |  |  |
| Current liabilities |  |  |
| &nbsp;&nbsp;&nbsp;Accounts payable | $18423109 | $12155733 |
| &nbsp;&nbsp;&nbsp;Other payables and accrued liabilities | 1733273 | 3469768 |
| &nbsp;&nbsp;&nbsp;Income tax payable | 334530 | 37225 |
| &nbsp;&nbsp;&nbsp;Short-term bank borrowings | 2147948 | 2268360 |
| **Total current liabilities** | **22638860** | **17931086** |
| Deferred tax liability | 1774698 | 2079986 |
| **TOTAL LIABILITIES** | **24413558** | **20011072** |
| **COMMITMENTS AND CONTINGENCIES** |  | - |
| **SHAREHOLDERS' EQUITY** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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 | 33502 | 33502 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Class B Ordinary shares, $0.01 par value, 100,000,000 shares authorized, 12,095,100 and 0 shares issued and outstanding, respectively | 6048 | 6048 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Preferred shares, $0.01 par value, 50,000,000 shares authorized, 0 shares issued and outstanding | - | - |
| &nbsp;&nbsp;&nbsp;Additional paid-in capital | 53871226 | 53871226 |
| &nbsp;&nbsp;&nbsp;Statutory surplus reserve | 7622765 | 7622765 |
| &nbsp;&nbsp;&nbsp;Retained earnings | (7084172) | 12285281 |
| &nbsp;&nbsp;&nbsp;Accumulated other comprehensive income (loss) | (380257) | 4306536 |
| **Total Happiness Development Group Limited's shareholders' equity** | **54069112** | **78125358** |
| **Non-controlling interests** | **(2516970)** | **(710754)** |
| **Total shareholders' equity** | **51552142** | **77414604** |
| **TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY** | $**75965700** | $**97425676** |

---

**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<br> September 30,** | **For the six months ended<br> September 30,** |
|  | **2022** | **2021** |
| Revenues | $52990008 | $46884584 |
| Cost of revenues | (50460142) | (41210047) |
| **Gross profit** | **2529866** | **5674537** |
| Operating expenses: |  |  |
| &nbsp;&nbsp;&nbsp;Selling and marketing | 17822898 | 11636367 |
| &nbsp;&nbsp;&nbsp;General and administrative | 3829891 | 3780718 |
| &nbsp;&nbsp;&nbsp;Research and development | 402544 | 789482 |
| **Total operating expenses** | **22055333** | **16206567** |
| **Operating loss** | **(19525467)** | **(10532030)** |
| Other income (expenses): |  |  |
| &nbsp;&nbsp;&nbsp;Interest income | 16832 | 62737 |
| &nbsp;&nbsp;&nbsp;Interest expense | (35054) | (38511) |
| &nbsp;&nbsp;&nbsp;Other (loss)/ income, net | (298566) | 114059 |
| **Total other (loss)/ income, net** | (316788) | 138285 |
| **(Loss) /income before income taxes** | **(19842255)** | **(10393745)** |
| Income tax provision | (2896428) | (149429) |
| **Net loss** | $**(22738683)** | $**(10543174)** |
| Net loss attributable to non-controlling interests | 3369230 | 488314 |
| Net loss attributable to Happiness Development Group Limited | (19369453) | (10054860) |
| Other comprehensive income (loss): |  |  |
| &nbsp;&nbsp;&nbsp;Foreign currency translation adjustments | (4606029) | 1607416 |
| **Comprehensive loss** | $**(27344712)** | $**(8935758)** |
| Less: comprehensive income /(loss) attributable to non-controlling interests: | (80764) | 2523603 |
| Comprehensive loss attributable to Happiness Development Group Limited | (27425476) | (6412155) |
| 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 | 40485912 | 26933050 |

---

**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)**

---

| | | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | <br>**Class A**<br> **Ordinary<br> shares** | **Class A**<br> **Ordinary<br> shares<br> amount** | <br>**Class B**<br> **Ordinary**<br> **shares** | <br>**Class B**<br> **Ordinary**<br> **shares**<br> **amount** | **Additional <br> paid-in<br> capital** | **Statutory <br> surplus reserve** | **Retained<br> earnings** | **Accumulated<br> other comprehensive income (loss)** | **Total<br> Happiness<br> Development Group<br> Limited<br> shareholders'<br> equity** | **Non-controlling<br> interests** | **Total<br> equity** |
| Balance at March 31, 2022 | 67004583 | $33502 | 12095100 | $6048 | $53871226 | $7622765 | $12285281 | $4306536 | $78125358 | $(710754) | $77414604 |
| Contribution from non-controlling shareholders |  |  |  |  |  |  |  |  |  | 1482250 | 1482250 |
| Net loss |  |  |  |  |  |  | (19369453) |  | (19369453) | (3369230) | (22738683) |
| Foreign currency translation adjustments | - | - | - | - | - | - | - | (4686793) | (4686793) | 80764 | (4606029) |
| **Balance at September 30, 2022** | **67004583** | $**33502** | **12095100** | $**6048** | $**53871226** | $**7622765** | $**(7084172)** | $**(380257)** | $**54069112** | $**(2516970)** | $**51552142** |

---

---

| | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | <br>**Class A<br> Ordinary<br> shares** | **Class A<br> Ordinary<br> shares<br> amount** | <br>**Class B<br> Ordinary<br> shares<br> amount** | **Additional <br> paid-in<br> capital** | **Statutory <br> surplus<br> reserve** | **Retained<br> earnings** | **Accumulated<br> other comprehensive income (loss)** | **Total<br> Happiness<br> Development Group<br> Limited<br> shareholders'<br> equity** | **Non-controlling<br> interests** | **Total<br> equity** |
| Balance at March 31, 2021 | 30481580 | $15241 | $&nbsp;&nbsp;&nbsp;&nbsp; - | $26545384 | $7622765 | $61475891 | $(913621) | $94745660 | $2891396 | $97637056 |
| Ordinary shares issued for cash | 1240000 | 620 |  | 2156980 |  |  |  | 2157600 |  | 2157600 |
| Ordinary shares issued for services | 231445 | 116 |  | 351696 |  |  |  | 351812 |  | 351812 |
| Contribution from non-controlling shareholders |  |  |  |  |  |  |  |  | 77096 | 77096 |
| Net loss |  |  |  |  |  | (10054860) |  | (10054860) | (488314) | (10543174) |
| Foreign currency translation adjustments | - | - | - | - | - | - | 4131019 | 4131019 | (2523603) | 1607416 |
| **Balance at September 30, 2021** | **31953025** | $**15977** | $**-** | $**29054060** | $**7622765** | $**51421031** | $**3217398** | $**91331231** | $**(43425)** | $**91287806** |

---

**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<br> September 30,** | **For the six months ended<br> September 30,** |
|  | **2022** | **2021** |
| Cash Flows from Operating Activities: |  |  |
| Net income | $(22738683) | $(10543174) |
| Adjustments to reconcile net income to net cash provided by operating activities: |  |  |
| &nbsp;&nbsp;&nbsp;Depreciation and amortization | 1508899 | 517430 |
| &nbsp;&nbsp;&nbsp;Share-based compensation |  | 351812 |
| &nbsp;&nbsp;&nbsp;Loss on disposal of equipment | 90636 | - |
| &nbsp;&nbsp;&nbsp;Deferred taxes | 2777480 | - |
| Changes in operating assets and liabilities: |  |  |
| &nbsp;&nbsp;&nbsp;Accounts receivable | (221976) | 15909423 |
| &nbsp;&nbsp;&nbsp;Notes receivable | 83553 | - |
| &nbsp;&nbsp;&nbsp;Inventories | (402204) | (239266) |
| &nbsp;&nbsp;&nbsp;Due from related parties | - | (124808) |
| &nbsp;&nbsp;&nbsp;Prepaid expenses and other current assets | 4381020 | 12489464 |
| &nbsp;&nbsp;&nbsp;Other assets | 1829929 | 881539 |
| &nbsp;&nbsp;&nbsp;Accounts payable | 7902017 | 32141 |
| &nbsp;&nbsp;&nbsp;Other payables and accrued liabilities | (3727332) | (12179570) |
| &nbsp;&nbsp;&nbsp;Income taxes payable | 315115 | (340235) |
| Net cash (used in) provided by operating activities | (8201546) | 6754756 |
| Cash Flows from Investing Activities: |  |  |
| &nbsp;&nbsp;&nbsp;Purchases of property, plant and equipment | (84912) | (179265) |
| &nbsp;&nbsp;&nbsp;Purchase of intangible assets |  | (17050) |
| &nbsp;&nbsp;&nbsp;Purchase of BAODENG | - | (17913) |
| &nbsp;&nbsp;&nbsp;Proceeds of disposal of subsidiaries | 17683 | - |
| Net cash used in investing activities | (67229) | (214228) |
| Cash Flows from Financing Activities: |  |  |
| &nbsp;&nbsp;&nbsp;Proceeds from issuance of ordinary shares | - | 2157600 |
| &nbsp;&nbsp;&nbsp;Capital contributions from noncontrolling interest shareholders | 1473340 | 77096 |
| &nbsp;&nbsp;&nbsp;Proceeds from short-term loans | 1156572 | 1085019 |
| &nbsp;&nbsp;&nbsp;Repayments on short-term loans | (1031338) | (1348524) |
| Net cash provided by financing activities | 1598574 | 1971191 |
| Effect of exchange rate changes on cash and cash equivalents | (1811034) | 639573 |
| Net (decrease) increase in cash and cash equivalents | (8642235) | 9151292 |
| Cash and cash equivalents at the beginning of period | 19733631 | 36558752 |
| Cash and cash equivalents at the end of period | $**11252396** | $**45710044** |
| Supplemental disclosures of cash flows information: |  |  |
| &nbsp;&nbsp;&nbsp;Cash paid for income taxes | $528 | $558491 |
| &nbsp;&nbsp;&nbsp;Cash paid for interest expense | $35054 | $38511 |

---

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