Universe Pharmaceuticals (UPC) 6-K Management’s Discussion and Analysis of Financial Condition and Results of Operation

Exhibit 99.2

UNAUDITED CONDENSED CONSOLIDATED FINANCIAL DATA

UNIVERSE PHARMACEUTICALS INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

	As of
	March 31, 2021			September 30, 2020
ASSETS
CURRENT ASSETS
Cash	$	35,999,129		$	10,058,202
Accounts receivable, net		17,799,597			10,871,778
Inventories, net		4,917,271			1,906,232
Deferred initial public offering costs		-			443,709
Prepaid expenses and other current assets		3,089,459			-
TOTAL CURRENT ASSETS		61,805,456			23,279,921
Property, plant and equipment, net		4,404,018			4,428,064
Intangible assets, net		178,573			174,776
Investment in equity securities		762,500			735,000
Deferred tax assets		122,342			186,537
TOTAL NONCURRENT ASSETS		5,467,433			5,524,377
TOTAL ASSETS	$	67,272,889		$	28,804,298
LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES
Short-term bank loans	$	2,745,000		$	2,646,000
Accounts payable		8,589,492			2,691,193
Taxes payable		1,436,645			1,331,749
Due to related party		3,117,081			956,492
Accrued expenses and other current liabilities		694,410			375,960
TOTAL CURRENT LIABILITIES		16,582,628			8,001,394
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS’ EQUITY
Ordinary shares, $0.003125 par value, 100,000,000 shares authorized, 21,750,000 shares and 16,000,000 shares issued and outstanding as of March 31, 2021 and September 30, 2020, respectively		67,969			50,000
Additional paid in capital		29,174,188			3,679,000
Share subscription receivable		(3,571,241	)		-
Statutory reserve		2,439,535			2,439,535
Retained earnings		20,886,777			13,738,979
Accumulated other comprehensive income		1,693,033			895,390
TOTAL SHAREHOLDERS’ EQUITY		50,690,261			20,802,904
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	67,272,889		$	28,804,298

UNIVERSE PHARMACEUTICALS INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

(UNAUDITED)

	For the six months ended March 31,
	2021			2020
REVENUE	$	24,292,948		$	16,388,865
COST OF REVENUE		12,304,678			7,868,761
GROSS PROFIT		11,988,270			8,520,104
OPERATING EXPENSES
Selling expenses		1,109,287			646,241
General and administrative expenses		985,498			743,813
Research and development expenses		310,668			547,627
Total operating expenses		2,405,453			1,937,681
INCOME FROM OPERATIONS		9,582,817			6,582,423
OTHER INCOME(EXPENSES)
Interest expense, net		(46,671	)		(63,709	)
Other expense, net		(8,227	)		(674	)
Equity investment income		30,626			21,805
Total other expense, net		(24,272	)		(42,578	)
INCOME BEFORE INCOME TAX PROVISION		9,558,545			6,539,845
INCOME TAX PROVISION		2,410,747			1,465,769
NET INCOME		7,147,798			5,074,076
OTHER COMPREHENSIVE INCOME
Foreign currency translation adjustment		797,643			18,877
COMPREHENSIVE INCOME	$	7,945,441		$	5,092,953
EARNINGS PER SHARE
Basic and diluted	$	0.44		$	0.32
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING
Basic and diluted		16,168,956			16,000,000

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UNIVERSE PHARMACEUTICALS INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

FOR THE SIX MONTHS ENDED MARCH 31, 2021 AND 2020

(UNAUDITED)

	Ordinary shares				Additional paid-in		Subscription			Statutory		Retained		Accumulated other comprehensive		Total shareholders’
	Shares*		Amount		capital		Receivable			reserve		earnings		income		equity
Balance at September 30, 2019		16,000,000	$	50,000	$	3,679,000	$	-		$	2,439,535	$	6,180,757	$	34,767	$	12,384,059
Net income		-		-		-		-			-		5,074,076		-		5,074,076
Foreign currency translation adjustment		-		-		-		-			-		-		18,877		18,877
Balance at March 31, 2020		16,000,000	$	50,000	$	3,679,000	$	-		$	2,439,535	$	11,254,833	$	53,644	$	17,477,012
Balance at September 30, 2020		16,000,000	$	50,000	$	3,679,000	$	-		$	2,439,535	$	13,738,979	$	895,390	$	20,802,904
Issuance of ordinary shares in initial public offerings, net		5,000,000		15,625		21,747,532		-			-		-		-		21,763,157
Issuance of additional shares under overallotment option in initial public offerings, net		750,000		2,344		3,747,656		(3,571,241	)		-		-		-		178,759
Net income		-		-		-		-			-		7,147,798		-		7,147,798
Foreign currency translation adjustment		-		-		-		-			-		-		797,643		797,643
Balance at March 31, 2021		21,750,000	$	67,969	$	29,174,188	$	(3,571,241	)	$	2,439,535	$	20,886,777	$	1,693,033	$	50,690,261

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UNIVERSE PHARMACEUTICALS INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

	For the six months ended March 31,
	2021			2020
Cash flows from operating activities
Net income	$	7,147,798		$	5,074,076
Adjustments to reconcile net income to cash provided by operating activities
Depreciation and amortization		243,466			205,654
Changes in allowance for doubtful accounts		(203,253	)		9,038
Inventory reserve		(76,734	)		(25,483	)
Deferred income tax provision		71,221			6,442
Changes in operating assets and liabilities:
Accounts receivable		(6,322,074	)		2,089,969
Inventories		(2,864,911	)		(2,354,137	)
Prepaid expenses and other current assets		(3,098,993	)		(10,267	)
Accounts payable		5,801,410			3,189,657
Taxes payable		55,105			140,942
Accrued expenses and other current liabilities		305,094			54,012
Net cash provided by operating activities		1,058,129			8,379,903
Cash flows from investing activities
Purchase of property and equipment		(50,875	)		(47,512	)
Net cash used in investing activities		(50,875	)		(47,512	)
Cash flows from financing activities
Proceeds from short-term bank loans		1,220,800			-
Repayment of bank loans		(1,220,800	)		-
Net proceeds from initial public offerings		21,941,916			-
Deferred initial public offering costs		-			(90,698	)
Proceeds from related party borrowings		2,194,640			446,731
Net cash provided by financing activities		24,136,556			356,033
Effect of changes of foreign exchange rates on cash		797,117			(69,293	)
Net increase in cash		25,940,927			8,619,131
Cash, beginning of period		10,058,202			3,177,321
Cash, end of period	$	35,999,129		$	11,796,452
Supplemental disclosure of cash flow information
Cash paid for income tax	$	3,364,769		$	1,289,194
Cash paid for interest expense	$	65,775		$	71,447
Supplemental non-cash financing activities:
Subscription receivable from issuance of ordinary shares under initial public offerings	$	3,571,241		$	-

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