Chanson International Holding Announces Fiscal Year 2022 Financial Results

URUMQI,China,May 2,2023 -- Chanson International Holding (Nasdaq: CHSN) (the "Company" or "Chanson"),a provider of bakery,seasonal,and beverage products through its chain stores in China and the United States,today announced its financial results for the fiscal year endedDecember 31,2022.

Mr. Gang Li,Chairman of the Board of Directors and Chief Executive Officer of the Company,commented,"In fiscal year 2022,we strove to build and maintain our business resilience to offset the negative impactof the challenging macroeconomic environment and the resurgence of COVID-19 in China(the "2022 Outbreak"). Therefore,we shifted our focus to our United Statesstores and achieved a remarkable year-over-over revenue growth of 99.6% from them. As a result of our strategic expansion plans,including the opening of new stores in New York City,we generated significant revenue growth from bakery products,beverage products,and eat-in services. Our recent listing on Nasdaq in March 2023 represented a significant milestone for us and a testament toall the hard work and efforts of our dedicated team. Looking ahead,we remain committed to expanding our product selection,opening more stores across the United States,and enhancing our brand awareness to create more value for our shareholders. We are grateful for the trust our customershave placed in us and will continue to develop new products,providehigh-quality services and improvecustomer satisfaction. We believe our capabilities and experience position our company well forlong-term growth,and we are confident that our continued growth and expansion will result in greater success in the future."­

Fiscal Year 2022 Financial Results

Revenue

Total revenue decreased by 9.7% to$13.3 millionin fiscal year 2022,from $14.7 millionin fiscal year 2021. The decrease in the Company's revenue was due to lower revenue from its stores in China,which was partially offset by the increased revenue from its United Statesstores.

China Stores

Revenue from China stores decreased by 25.8% to $9.5 million in fiscal year 2022 from $12.8 million in fiscal year 2021. The decrease was primarily due to decreased revenue from bakery products as well as other products.

Revenue from bakery products decreased by 25.6% to $8.7 million in fiscal year 2022 from $11.7 million in fiscal year 2021. The decrease was due to impact by the 2022 Outbreak,which adversely affected the operations of the China stores and the production of the central factory starting from August 10,2022. Additionally,all the China stores and the central factory were closed between October 5,2022 and November 30,2022,during which the China stores only generated limited online sales and group sales.

Revenue from other products decreased by 28.6% to $0.8 million in fiscal year 2022 from $1.1 million in fiscal year 2021,among which,revenue from seasonal products decreased by 28.6% to $0.7 million in fiscal year 2022 from $1.0 million in fiscal year 2021,and revenue from beverage products decreased by 28.9% to $0.1 million in fiscal year 2022 from $0.1 million in fiscal year 2021. The impact of the 2022 Outbreak,as mentioned above,contributed to the decline in revenue from these products.

United States Stores

Revenue from United States stores increased by 99.6% to $3.8 million in fiscal year 2022 from $1.9 million in fiscal year 2021. The increase was due to increased revenue from beverage products,bakery products,and eat-in services.

Revenue from bakery products increased by 29.3% to $0.6 million in fiscal year 2022 from $0.5 million in fiscal year 2021. The increase was primarily due to the opening of Chanson 355 Greenwich LLC ("Chanson Greenwich") in December 2021,a new store that generated an additional $0.25 million in revenue. This increase was partially offset by a decrease of $0.11 million in revenue from Chanson 23rd Street LLC ("Chanson 23rd Street") due to increased competition from rival bakery brands that recently opened new stores in New York City,resulting in customers having more options and affecting sales of Chanson 23rd Street's bakery products.

Revenue from beverage products increased by 104.8%,to $2.0 million in fiscal year 2022 from $1.0 million in fiscal year 2021. The increase was mainly due to the $0.6 million increase generated by the newly opened Chanson Greenwich and the $0.4 million increase generated by Chanson 23rd Street. Chanson 23rd Street's cocktail bar launched several new types of cocktail products with a variety of flavors and styles,which became popular among customers and the cocktail bar was often fully booked by reservation during weekends. Meanwhile,Chanson 23rd Street managed to increase the prices of its cocktail products,which resulted in higher revenue.

Revenue from eat-in services increased by 166.6%,reaching $1.1 million in fiscal year 2022 from $0.4 million in fiscal year 2021. The increase was mainly due to the addition of the new store,Chanson Greenwich,which generated $0.8 million in increased revenue from eat-in services.

Gross Profit and Gross Margin

Gross profit decreased by 11.9%,to $6.1 million in fiscal year 2022 from $6.9 million in fiscal year 2021,primarily due to the overall decrease in revenue. Gross margin also decreased slightly by 1.2 percentage points to 46.0% in fiscal year 2022 from 47.2% in fiscal year 2021.

Operating Expenses

Operating costs were$7.5 millionin fiscal year 2022,compared to $7.4 millionin fiscal year 2021.

Selling expenses decreased by 10.4%,to $3.7 million in fiscal year 2022 from $4.1 million in fiscal year 2021. The decrease in selling expenses was primarily due to the decrease of $0.6 million from China stores,as the Company's business operation was adversely affected by the 2022 Outbreak,partially offset by a $0.2 million increase in selling expenses incurred by the newly opened Chanson Greenwich.

General and administrative expenses increased by 18.3%,to $3.8 million in fiscal year 2022 from $3.2 million in fiscal year 2021. The increase was primarily due to higher general and administrative expenses of $0.6 million related to stores in the United States,including full-year operating costs of the newly opened Chanson Greenwich as well as the higher rental expenses for Chanson 1293 3rd Ave LLC and Chanson 2040 Broadway LLC stores during the renovation period. The increase was partially offset by lower general and administrative expenses of $42,621 related to stores in China,where business operations were adversely affected by the 2022 Outbreak.

Net Income (Loss)

Net loss in fiscal year 2022 was$1.3 million,compared to net income of $0.5 millionin fiscal year 2021.

Basic and Diluted Earnings per Share

Basic and diluted loss per share in fiscal year 2022was$0.14,compared to basic and diluted earnings per share of$0.06in fiscal year 2021.

Balance Sheet

As ofDecember 31,the Company had cash of$2.9 million,compared to$3.9 millionas ofDecember 31,2021.

Cash Flow

Net cash provided by operating activitiesin fiscal year 2022 was$0.6 million,compared to $1.8 millionin fiscal year 2021.

Net cash used in investing activitiesin fiscal year 2022 was$0.9 million,compared to$2.0million in fiscal year 2021.

Net cash provided by financing activitiesin fiscal year 2022 was$9,929,compared tonet cash used in financing activitiesof $178,240 in fiscal year 2021.

Recent Development

On April 3,2023,the Company completed its initial public offering (the "Offering") of 3,390,000 Class A ordinary shares at a public offering price of US$4.00 per Class A ordinary share. The Class A ordinary shares began trading on the Nasdaq Capital Market on March 30,2023 under the ticker symbol "CHSN."

About Chanson International Holding

Founded in 2009,Chanson International Holding is a provider of bakery,and beverage products through its chain stores in China and the United States. Headquartered in Urumqi,Chanson directly operates stores in Xinjiang,China and New York,United States. Chanson currently manages 33 chain stores under the "George●Chanson" brand in Xinjiang and three stores in New York City while selling on digital platforms and third-party online food ordering platforms. Chanson offers not only packaged bakery products but also made-in-store pastries and eat-in services,serving freshly prepared bakery products and extensive beverage products. Chanson aims to make healthy,nutritious,and ready-to-eat food through advanced facilities based on in-depth industry research,while creating a comfortable and distinguishable store environment for customers. Chanson's dedicated and highly-experienced product development teams constantly create new products that reflect market trends to meet customer demand. For more information,please visit the Company's website:http://ir.chanson-international.net/.

Forward-Looking Statements

Certain statements in this announcement are forward-looking statements.These forward-looking statements involve known and unknown risks and uncertainties and are based on the Company's current expectations and projections about future events that the Company believes may affect its financial condition,results of operations,business strategy and financial needs.Investors can identify these forward-looking statements by words or phrases such as "approximates," "believes," "hopes," "expects," "anticipates," "estimates," "projects," "intends," "plans," "will," "would," "should," "could," "may" or other similar expressions. The Company undertakes no obligation to update or revise publicly any forward-looking statements to reflect subsequent occurring events or circumstances,or changes in its expectations,except as may be required by law. Although the Company believes that the expectations expressed in these forward-looking statements are reasonable,it cannot assure you that such expectations will turn out to be correct,and the Company cautions investors that actual results may differ materially from the anticipated results and encourages investors to review other factors that may affect its future results in the Company's registration statement and other filings with the U.S. Securities and Exchange Commission.

For investor and media inquiries,please contact:

Chanson International Holding

Investor Relations Department

Email:IR@chansoninternational.com

Ascent Investors Relations LLC

Tina Xiao

Phone: +1 917 609-0333

Email:tina.xiao@ascent-ir.com

CHANSON INTERNATIONAL HOLDING AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

December31,

December31,

2022

2021

ASSETS

CURRENT ASSETS:

Cash and cash equivalents

$

2,915,470

$

3,896,812

Accounts receivable

1,260,453

1,134,532

Inventories

693,506

526,862

Deferred offering costs

763,611

749,605

Prepaid expenses and other current assets

833,238

438,045

TOTAL CURRENT ASSETS

6,466,278

6,745,856

Operating lease right-of-use assets

13,921,825

11,644,192

Property and equipment,net

5,871,775

5,447,718

Long term security deposits

958,320

1,066,027

Long term prepaid expenses

110,988

92,301

TOTALASSETS

$

27,329,186

$

24,996,094

CURRENT LIABILITIES:

Short-term bank loans

$

434,959

$

1,559,314

Accounts payable

1,424,766

1,273,313

Due to a related party

1,798,605

721,921

Taxes payable

130,727

30,839

Deferred revenue

6,958,160

6,051,683

Operating lease liabilities,current

1,770,398

1,622,642

Other current liabilities

1,014,452

1,055,199

TOTAL CURRENT LIABILITIES

13,532,067

12,314,911

Operating lease liabilities,non-current

12,620,070

9,846,224

TOTAL LIABILITIES

26,152,137

22,161,135

COMMITMENTS AND CONTINGENCIES

SHAREHOLDERS' EQUITY

Ordinary shares,$0.001 par value,50,000,000 shares authorized; 9,000 shares

issued and outstanding as of December 31,2022 and 2021,respectively:

Class A ordinary share,44,000 shares authorized; 3,060,000

shares issued and outstanding as of December 31,respectively

3,060

3,060

Class B ordinary share,6,000 shares authorized; 5,940,respectively

5,940

5,940

Additional paid-in capital

869,400

869,400

Statutory reserve

447,231

447,231

Retained earnings (Accumulated deficit)

(183,842)

1,104,363

Accumulated other comprehensive income

35,260

404,965

TOTAL SHAREHOLDERS' EQUITY

1,177,049

2,834,959

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

$

27,094

CHANSON INTERNATIONAL HOLDING AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

For the Years Ended December 31,

2022

2021

2020

REVENUE

$

13,272,075

$

14,690,295

$

10,313,512

COST OF REVENUE

7,169,404

7,759,872

5,164,178

GROSS PROFIT

6,102,671

6,930,423

5,149,334

OPERATING EXPENSES

Selling expenses

3,697,909

4,126,126

2,947,088

General and administrative expenses

3,842,787

3,249,181

2,230,893

Total operating expenses

7,540,696

7,375,307

5,981

LOSS FROM OPERATIONS

(1,438,025)

(444,884)

(28,647)

OTHER INCOME (EXPENSE)

Interest expense,net

(35,457)

(98,033)

(108,852)

Other income (expense),net

194,824

1,065,963

(11,946)

Total other income (expense),net

159,367

967,930

(120,798)

INCOME (LOSS) BEFORE INCOME TAX PROVISION

(1,278,658)

523,046

(149,445)

PROVISION FOR INCOME TAXES

9,547

16,277

14,584

NET INCOME (LOSS)

(1,288,205)

506,769

(164,029)

Foreign currency translation gain (loss)

(369,705)

88,952

132,207

TOTAL COMPREHENSIVE INCOME (LOSS)

$

(1,657,910)

$

595,721

$

(31,822)

Earnings (loss) per ordinary share - basic and diluted

$

(0.14)

$

0.06

$

(0.02)

Weighted average shares - basic and diluted*

9,000

9,000

*

Retrospectively restated for effect of 1,000-for-1 forward split and share issuances on March 27,2021 (see Note 12)

CHANSON INTERNATIONAL HOLDING AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Years Ended December 31,

2022

2021

2020

Cash flows from operating activities:

Net Income (Loss)

$

(1,205)

$

506,769

$

(164,029)

Adjustments to reconcile net income (loss) to net cash provided by

operating activities:

Amortization of operating lease right-of-use assets

2,533,074

2,226,128

1,387,154

Depreciation

701,461

605,253

485,826

Gain on forgiveness of loan under Paycheck Protection Program

-

(502,298)

-

Loss from disposal of equipment

-

27,325

273

Changes in operating assets and liabilities:

Accounts receivable

(215,847)

(397,872)

(217,961)

Inventories

(206,264)

(46,384)

(94,227)

Prepaid expenses and other current assets

(430,717)

(175,630)

46,881

Long term security deposits

84,374

(236,020)

(222,806)

Long term prepaid expenses

(26,504)

38,476

55,347

Accounts payable

247,015

325,803

181,852

Taxes payable

103,212

(26,347)

(73,994)

Deferred revenue

1,411,004

1,252,776

964,663

Other current liabilities

(433,848)

98,362

27,689

Operating lease liabilities

(1,927,407)

(1,918,095)

(1,130,991)

Net cash provided by operating activities

551,348

1,778,246

1,245,677

Cash flows from investing activities:

Purchase of property and equipment

(860,034)

(2,038,054)

(574,333)

Proceeds from disposal of equipment

-

7,133

-

Payments made for loan to third party

-

(1,550,628)

-

Proceeds from loan to third party repayment

-

1,628

-

Net cash used in investing activities

(860,034)

(2,030,921)

(574,333)

Cash flows from financing activities:

Proceeds from short-term bank loans

445,831

1,903,563

2,175,000

Repayments of short-term bank loans

(1,474,129)

(2,683,814)

(2,168,388)

Proceeds from long-term bank loan

-

293,007

209,291

Advances received from (payments made to) a related party

1,076,717

572,712

(791,036)

Payments made for deferred offering costs

(38,490)

(263,708)

(274,246)

Net cash provided by (used in) financing activities

9,929

(178,240)

(849,379)

Effect of exchange rate fluctuation on cash and cash equivalents

(682,585)

206,659

413,812

Net increase (decrease) in cash and cash equivalents and restricted

cash

(981,342)

(224,256)

235,777

Cash,cash equivalents and restricted cash,beginning of year

3,812

4,121,068

3,885,291

Cash,end of year

$

2,470

$

3,812

$

4,068

Reconciliation of cash,

beginning of year

Cash and cash equivalents

$

3,812

$

4,098,546

$

3,874,288

Restricted cash

-

22,522

11,003

Cash,end of year

$

3,068

$

3,291

Reconciliation of cash,end of

year

Cash and cash equivalents

$

2,546

Restricted cash

-

-

22,522

Cash,068

Supplemental cash flow information

Cash paid for income taxes

$

5,282

$

9,981

$

103,160

Cash paid for interest

$

37,277

$

66,688

$

113,848

Non-cash operating and investing activities

Payable for purchase of property and equipment

$

463,556

$

682,618

$

7,283

Right of use assets obtained in exchange for operating lease liabilities

$

5,160,825

$

2,420,359

$

4,687,623

PPP loan forgiveness

$

-

$

502,298

$

-