NANPING, China, March 7, 2022 /PRNewswire/ -- Happiness Development Group Limited ("HAPP" or the "Company"), (NASDAQ: HAPP) an emerging and diversified 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 that it has signed an equity transfer agreement (the "Agreement") to acquire 100% of the equity interest in Fuzhou Hekangyuan Trading Co., Ltd. ("Hekangyuan") to further strengthen the distribution network of the Company.
Hekangyuan believes that it is one of largest healthcare product distributors in Fuzhou, China. Hekangyuan generated revenue of $17.6 million and $13.5 million, with net income of approximately $790,000 and $$579,000 for the fiscal year ended December 31, 2021 and 2020, respectively. Pursuant to the terms of the Agreement, the parties agreed that the valuation of Hekangyuan is $12 million and the Company will issue 10 million class A ordinary shares to the shareholders of Hekangyuan in addition to a cash payment of $8 million, in exchange for the 100% equity of Hekangyuan. The Company will have the right to require the Hekangyuan shareholders to purchase back the ordinary shares at a consideration of $12 million in cash if Hekangyuan is unable to reach certain performance target including a net income of $4.5 million during the next three fiscal years of 2022, 2023 and 2024.
"Hekangyuan has been known for its healthcare product distribution network in Fuzhou area and we have been in talk with them about the acquisition in the last several months. We believe after the acquisition of Hekangyuan, we will further strengthen our leading position in the field of healthcare products in Northern Fujian. At the same time, with the successful expansion of our online sales, we will also help Hekangyuan to fully utilize its advantages of supply chain management and distribution abilities," said Mr. Xuezhu Wang, CEO of the Company.
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-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 occurrence of any event, change or other circumstances that could give rise to the terms of the Agreement not hereafter being memorialized in a definitive agreement; the outcome of any legal proceedings that have been, or will be, instituted against the Company or other parties to the Agreement following announcement of the Agreement and transactions contemplated therein; the inability to complete the transactions contemplated by the Agreement due to unsatisfied closing conditions; risks that the proposed transaction disrupts current plans and operations as a result of the announcement of the Agreement and consummation of the transaction described therein; costs related to the proposed transactions contemplated by the Agreement; changes in applicable laws or regulations; and other risks and uncertainties described herein, as well as those risks and uncertainties 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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