Company Overview - The company changed its name to "Paranovus Entertainment Technology Ltd." effective March 14, 2023, to better reflect its multiple business lines[188]. - The company operates primarily through its subsidiaries in China, with a focus on nutraceutical and dietary supplements made from Ganoderma spore powder[185]. - The company has established a B2B platform, Taochejun, for automobile sales, focusing on third and fourth tier cities in China[187]. - The company has signed an agreement to sell 100% equity interests of Fujian Happiness for cash consideration of RMB 78 million (approximately $11.3 million)[213]. - The company closed an acquisition of 100% membership interests of 2lab3 on March 28, 2023, to expand into the Web 3.0 industry[219]. Financial Performance - For the fiscal year ended March 31, 2023, the company generated revenue of $98,152,825, an increase of $8,664,167 or 9.68% compared to the previous fiscal year[359]. - The net loss for the fiscal year ended March 31, 2023, was $72,187,116, a decrease of $18,167,035 or 33.63% compared to the net loss of $54,020,081 for the fiscal year ended March 31, 2022[359]. - Total revenue for the year ended March 31, 2023, was $98,152,825, an increase of 9% from $89,488,658 in 2022[373]. - Healthcare products revenue was $31,770,835 in 2023, up from $30,323,831 in 2022, while online store revenue surged to $42,201,865 from $28,014,109[373]. - Internet information and advertising revenue decreased significantly to $1,197,348 in 2023 from $10,538,943 in 2022, indicating a decline of approximately 89%[373]. - The automobile segment generated $22,982,777 in revenue for 2023, compared to $20,611,775 in 2022, reflecting an increase of 11%[373]. Regulatory Compliance - The company is subject to evolving PRC laws and regulations, which could materially impact its operations and securities value[193]. - The company has obtained all necessary business licenses from the State Administration for Market Regulation for its PRC subsidiaries[199]. - The company faces risks related to compliance with the Data Security Law and the Personal Information Protection Law, which could affect its operations[193]. - The company has not received any regulatory objections to its listing on Nasdaq from PRC authorities as of the report date[202]. - The company is currently under review for renewal applications for products that require approval renewal, ensuring continued compliance with CFDA regulations[254]. Business Strategy - The company plans to divest its nutraceutical and dietary supplements business, which has been incurring losses, and transition into the entertainment and AI industries[212]. - The company is transitioning into the entertainment and AI industries, seeking prospective acquisition opportunities in these sectors[220]. - The company has established an online automobile sales platform, Taochejun, which utilizes a WeChat Mini Program to connect automobile dealers with comprehensive trade resources[223][231]. - The company has been focusing on e-commerce since 2020, providing services such as community group buying and cross-border e-commerce, and has a dedicated team for delivery optimization and live streaming[224]. Product and Market Information - As of March 31, 2023, the company had a diverse portfolio of approximately 15 nutraceutical and dietary supplement products, with sales from Lucidum spore powder products, Cordyceps mycelia products, and Ejiao solution products accounting for approximately 5.35%, 16.65%, and 18.7% of gross sales, respectively[220]. - The company has over 50 distributors and more than 10,000 sales terminals across 15 provinces in China as of March 31, 2023, with a customer conversion rate of approximately 50% for exclusive distributors[228][230]. - The company's e-commerce platform "Happy Buy" focuses on providing marketing and agency operation services to small and medium-sized businesses[217]. - The automobile sales platform "Happy Auto," later upgraded to "Taochejun," aims to connect car dealers and enhance the sales experience[218]. Intellectual Property and R&D - The company holds a total of 12 patents and has a dedicated research and development team of 13 employees, recognized as "Outstanding Research and Development Companies" by Nanping Intellectual Property Office[242][243]. - The company has obtained 38 trademarks and 18 patents, enhancing its intellectual property portfolio[313][314]. Employee and Labor Compliance - The company currently has 80 full-time employees and has employment contracts with all employees in accordance with PRC laws[249]. - The company has contributed to the basic and minimum social insurance plan, ensuring compliance with applicable PRC laws and regulations[249]. - The company has not experienced any work stoppages, indicating stable employee relations[249]. - The company is obligated to comply with labor laws, including minimum wage standards and social insurance contributions[319]. Taxation and Financial Obligations - The company is subject to a 10% withholding tax on dividends paid to foreign investors under the PRC Enterprise Income Tax Law[210]. - The company is required to set aside at least 10% of net profits each year for a statutory surplus reserve, which is not distributable as dividends[211]. - The PRC Enterprise Income Tax Law imposes a 25% tax rate on resident enterprises, with a preferential rate of 15% for High and New Technology Enterprises[320]. - The applicable VAT rate for the company is currently 13%, following a reduction from 17% and 16% in previous years[324]. Market Trends and Challenges - The sale of nutraceutical and dietary supplements is slightly seasonal, with higher sales typically occurring in winter due to traditional Chinese dietary culture[248]. - Local governments are providing subsidies for up to 30% of the investment cost for the construction of electric vehicle charging infrastructure[290]. - The State Council encourages the development of new energy vehicles as pillar industries, with municipal governments releasing plans to promote this sector[289].
Paranovus Entertainment Technology .(PAVS) - 2023 Q4 - Annual Report