annual report - year 2 (final)

Blissful Technology, LLC

ANNUAL

REPORT YEAR 2

(Group 5)


Year 2 Annual Report 2

REPORT PROFILE

The Year 2 Annual Report for Blissful Technology, LLC (Blissful) reviews the

operational and financial performances of the company for the Year 2 fiscal year

(FY2), from 1 January Year 2 to 31 December Year 2.

This report has been complied in line with the regulations of the United States Generally Accepted Accounting Principles (U.S. GAAP). Throughout this report, financial data is reported in U.S. Dollars.

Included in this report is a management letter discussing the company’s goals, strategies, past

performance (Year 1 and Year 2) and future expectations, a complete set of financial


Year 2 Annual Report

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statements prepared in accordance with U.S. GAAP, financial ratios, and an audit opinion from KPMG LLP.

CONTENTS

MANAGEMENT LETTER ..……………………………………………………………….. 4 Description of The Company ..……………………………………………….. 4

Goals ..………………..………………………………………………….…….. 4 Strategies..………………..…………………………………….……….…….. 5

Past Performance..………………..…..……………………………….…….. 5

Future Expectations ..……………………………………..………….…….. 6

FINANCIAL STATEMENTS .……………………………………………………….....….. 7 Income Statement (Quarterly and Annual) .…………………………….... 8

Cost of Goods Sold Statement (Quarterly and Annual).…………….... 13 Comparative Income Statements for Year 1 and Year 2 .…………….. 16 Statement of Cash Flows (Quarterly and Annual).………….…..….... 17

Balance Sheet (Year 2) ……...………………..…………………………... 22 Retained Earnings Statement (Year 2).……………………………….... 23

Comparative Balance Sheets for Year 1 and Year 2 .………………... 24

FINANCIAL RATIOS .…………………………...……………………………………….. 25 Current Ratio..………………………………………………………..….. 26 Quick Ratio..……………………………………………………….…….. 26

Inventory Turnover..……………………………………..………….….. 26 Profit Margin..…………………………………………………….…….. 26

Return On Assets..…………………………………………….……..….. 26 Debt To Equity..…………………………………………………..…….. 26 Book Value Per Share ..…………………………………………….….. 26

Earnings Per Share..……………………………………….……….….. 26

INDEPENDENT AUDITOR’S REPORT …………………..………………………..….. 27



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CORPORATE DIRECTORY ………………………………………………………….….29

MANAGEMENT LETTER

December 31, Year 2

The Board of Directors

Blissful Technology, LLC In planning and performing our audit of the financial statements of Blissful Technology, LLC

(Blissful) as of and for the year ended December 31, Year 2, in accordance with auditing standards generally accepted in the United States of America, we considered Blissful’s internal control over financial reporting (internal control) as a basis for designing our auditing

procedures for the purpose of expressing our opinion on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of Blissful’s internal

control.Accordingly, we do not express an opinion on the effectiveness of Blissful’s internal control.

A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned

functions, to prevent, or detect and correct misstatements on a timely basis. A material weakness is a deficiency, or combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the entity’s financial statements will

not be prevented, or detected and corrected on a timely basis. During our audit, if we become aware of areas where there are opportunities for

strengthening internal controls, we communicate our findings and suggestions in this letter. Our comments are summarized below. This letter does not affect our report dated December

31, Year 2, on the financial statements of Blissful Technology, LLC. Our consideration of internal control was for the limited purpose described in first paragraph and was not designed to identify all deficiencies in internal control that might be material weaknesses. Given these

limitations during our audit, we did not identify any deficienc ies in internal control that we consider to be material weaknesses.

Description of The Company

Blissful Technology, LLC is a manufacturer and marketer for subassemblies for microcomputers and computerized games. The company contains four distinct functional areas: marketing, production, finance, and accounting.



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Goals

Blissful Technology, LLC’s long-term goal is to emerge as the leader in the industry and to maintain this distinction throughout future years.

Blissful Technology, LLC is focused on producing high-quality subassemblies and does not plan on competing in the circuit board industry.nd

Blissful Technology, LLC had an outstanding profit margin through both Year 1 and Year 2. The company looks to continue this trend into future years. The company seeks to increase

market share, revenues, customer satisfaction, and reduce overall budget costs. Blissful also aims to increase common stock dividends each quarter and attract more

investors.Additionally, Blissful wants to keep decreasing its interest rate. Blissful Technology, LLC’s current ratio has increased in the last two quarters of Year 2.

The company hopes to continue this trend by continuing to decrease its debt.

Some internal goals for Blissful Technology, LLC are to acquire and maintain capital if expansion is needed to keep up with demand. The company also hopes to continue the high quality production of its subassemblies.

Blissful Technology, LLC has agreed to several benefit plans with its workers union. The company hopes this will keep up employee morale.

Blissful Technology, LLC also hopes to reduce variances helping it predict the market

demand for subassemblies.

Strategies Blissful Technology, LLC’s strategy is to provide customers with high quality products at

affordable prices. Blissful Technology, LLC increases net income and profit margin through several areas;

increasing sales, reducing interest expense, and spending the optimum amount for advertising and marketing of subassemblies. The company sells products at prices that are affordable by the customers. The company adjusts the price according to the industry trends, and demands

along with advertising expenditure each quarter. In this way, Blissful could maximum the operating income.

Blissful Technology, LLC does not want to keep a large outstanding debt. Blissful increases production capacity in Year 2 to create sufficient finished goods inventory and ensure

demand is met. The company invests most of the available funds to short-term investments; as a result, the company can generate extra money each quarter.

To attract more investors and maintain a good stock price, Blissful Technology, LLC rarely issues stocks. The company increases common stock dividends every quarter.

To improve employee morale, Blissful Technology, LLC increases wages and employee benefits. Blissful has several ongoing research and development projects to improve the



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product quality. The company also keeps developing new technologies to increase competitive advantage.

Blissful Technology, LLC offers good customer service on a timely basis. The company

allows returns and sells warranty for certain products.

Past Performance In Year 1, Blissful Technology, LLC maintained the dominating position within the industry. Blissful had extremely high profit margins of 12% and a total net income of $896,232 in Year

1. The company had a market share that was always above 24% throughout Year 1. The average EPS for Year 1 was $3.50. The ending retained earning at the end of Year 1 was

$839,646. The stock price boosted to $9.47 at the end of Year 1. In Year 2, Blissful Technology, LLC kept its dominating position and had outstanding

performance. The average advertising expenditure for Year 2 was $146,250, which was above the industry average for all four quarters. The advertising expense generated three to

four thousand more unit sales in quarter 3 and 4 in Year 2. Blissful’s annual sale in Year 2 equals to298,295 units. The stock price increased to $19.36 at the end of Year 2. The company declared and paid a dividend of $0.07/share. Retained earnings have increased a

good amount from Year 1 to Year 2. Blissful Technology, LLC has had a good year for sales. The company’s sales have

increased by over $3 million in Year 2. The company is on a current trend of increasing its net income from Quarter 3 to Quarter 4 in Year 2. Blissful no longer has a shortage of

inventory as was the case at the beginning of Year 2, so the company expects this trend of increasing profits to continue into the future.

Blissful Technology, LLC’s liquidity ratioshows that the company is not going to default on its debts in the immediate future. The company is in good financial health. Future Expectations

Based on the past performance, Blissful Technology, LLC would be able to be a strong competitor within the industry and maintain its leader position. The company is expected to

reduce its outstanding loans by paying the principal and interest every quarter as well as increasing its revenue. Blissful would keep or increase the stock price and dividend. The company may increase the production capacity due to the increasing demand from the

market. As the competition in the industry increases these years, Blissful Technology, LLC would

need to improve its competitive advantage. It is important for the company to maintain a good reputation and create an innovative image to its employees, customers, and investors.

* * * * *

Management’s reaction to our comments and recommendations has not been subjected to the

auditing procedures applied in the audit of the financial statements and, accordingly, we express no opinion on it.



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We would like to thank Blissful Technology, LLC management and staff for the courtesy and cooperation extended to us during the course of our engagement.

The accompanying communications and recommendations are intended solely for the

information and use of the Board of Directors, management, and others within the organization, and are not intended to be and should not be used by anyone other than these specified parties.

Michael Witts, P.C.

January 10, Year 3

FINANCIAL STATEMENTS

Income Statement (Quarterly and Annual)

Cost of Goods Sold Statement (Quarterly and Annual)



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Comparative Income Statements for Year 1 and Year 2

Statement of Cash Flows (Quarterly and Annual)

Balance Sheet (Year 2)

Retained Earnings Statement (Year 2)

Comparative Balance Sheets for Year 1 and Year 2


Income Statement

For Quarter 1, Year 2

Sales $3,560,284.00

Cost of Goods Sold 2,669,620.06

Gross Margin $890,663.94

Expenses

Selling Expense:

Sales Commissions 5% $178,014.20 Fixed Selling Expense 25,000.00

Advertising Expense 80,000.00

Total Selling Expense $283,014.20

Administration Expense: Fixed Administration $60,000.00

Depreciation-Equipment 3,000.00

Depreciation-Building 1,800.00

Total Administration Expense $64,800.00

Total Selling & Administration Expense $347,814.20

Net Income from Operation $542,849.74

Other Income and Expenses Interest Income On Short-term Investments $17,648.44

Interest Expense On Notes Payable, Short-term $-

Interest Expense On Line Of Credit 10,053.22

Interest Expense On Mortgage Payable 12,470.40

Total Interest Expense $22,523.62

Total Other Income and Expenses $(4,875.18)

Income Before Taxes $537,974.56 Income Tax $(215,189.82)

Net Income $322,784.74



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Earnings Per Share $3.59



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Blissful Technology, LLC Income Statement


Sales $3,150,594.00

Circuit Board Sales 100,000.00

Less: Cost of Circuit Board Sales 126,261.60



Expenses

Selling Expense:

Sales Commissions 5% $157,529.70

Fixed Selling Expense 25,000.00



Administration Expense:

Fixed Administration $60,000.00






Other Income and Expenses

Interest Income On Short-term Investments $-

Interest Expense On Notes Payable, Short-term $40,177.80





Income Before Taxes $241,002.53

Income Tax (96,401.01)





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Income Statement


Sales $3,641,841.00



Expenses

Selling Expense:



















Income Before Taxes $(40,489.40)

Income Tax $16,195.76

Net Income $(24,293.64)

Earnings Per Share $(0.27)



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Sales $4,297,040.00



Expenses

Selling Expense:



















Income Before Taxes $222,748.90

Income Tax (89,099.56)





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For The Year Ended December 31, Year 2

Sales $14,649,759.00


Gross Margin $2,789,950.57

Expenses

Selling Expense:

Sales Commissions 5% $732,487.95 Fixed Selling Expense 100,000.00


Total Selling Expense $1,292,487.95

Administration Expense: Fixed Administration $240,000.00


Depreciation-Building 7,200.00 Total Administration Expense $259,200.00

Total Selling & Administration Expense $1,551,687.95

Net Income from Operation $1,238,262.62


Interest Income On Short-term Investments $17,648.44

Interest Expense On Notes Payable, Short-term 139,726.60 Interest Expense On Line Of Credit 65,865.07




Income Before Taxes $987,498.19 Income Tax 394,999.28





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Cost of Goods Sold Statement


Beginning Finished Goods Inventory

433 Units @ $35.74 $15,477.20

Production Costs for 96,000 Units:

Raw Materials $1,814,400.05

Direct Labor 1,444,800.06

Variable Overhead 201,599.99

Fixed Overhead 199,756.80

Total Production Costs $3,660,556.90

Total Costs to Account for $3,676,034.10

Ending Finished Goods Inventory

27,966 Units @ $38.13 $1,066,365.95

Cost of Good Sold at Standard $2,609,668.15

Variance $59,951.90

Total Cost of Goods Sold $2,669,620.05





27,966 Units @ $38.13 $1,066,365.95







Less: Cost of Units Processed to Circuit Boards 76,261.60



59,578 Units @ $38.13 $2,271,756.80


Variance $ 60,195.04




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59,578 Units @ $ 38.13 $2,271,756.80









49,702 Units @ $ 38.13 $1,895,177.02


Variance $211,539.49






49,702 Units @ $ 38.13 $1,895,177.02









36,038 Units @ $ 38.13 $1,374,157.77

Cost of Goods Sold at Standard $3,449,464.77





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433 Units @ $35.74 $15,477.20 Production Costs for 96,000 Units: Raw Materials $6,350,400.18

Direct Labor 5,056,800.21 Variable Overhead 705,599.96


Total Production Costs $12,811,949.15 Less: Cost of Units Processed to Circuit Boards 76,261.60


Ending Finished Goods Inventory 36,038 Units @ $ 38.13 $1,374,157.77




Blissful Technology, LLC has had a good year for sales. The company’s sales have

increased by over $3 million in Year 2. Blissful Technology, LLC can attribute its increase in Cost of Goods Sold, to several

elements. First, Blissful was producing more goods because demand in the industry was increasing. Second, the company decided to increase employee morale by increasing wages and benefits, thus increase the cost for direct labor.

Blissful Technology, LLC is on a current trend of increasing its net income from Quarter 3 to

Quarter 4 in Year 2. Blissful no longer has a shortage of inventory as was the case at the beginning of Year 2, so the company expects this trend of increasing profits to continue into the future.

Blissful Technology, LLC increased expense on Short-Term Notes Payable, was a one time

necessity. The company expanded its manufacturing capacity to meet demand, and had to acquire additional debt to finance the expansion. In the future Blissful expects to be able to finance its expansion through the cash flow of profits.



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Blissful Technology, LLC Comparative Income Statement

For Years Ended December 31, Year 1 and Year 2

Amounts

Increase

Percentage

Increase

Year 2 Year 1 or Decrease or Decrease

Sales

$14,649,759.00

$11,577,019.50 $3,072,739.50 27%

Cost of Goods Sold 11,859,808.43 8,708,230.75 3,151,577.68 36%

Gross Margin $2,789,950.57 $2,868,788.75 (78,838.18) -3%

Expenses

Selling Expense:

Sales Commissions 5% $732,487.95 $578,850.98 $153,636.97 27%

Fixed Selling Expense 100,000.00 100,000.00 - 0%

Advertising Expense 460,000.00 310,000.00 150,000.00 48%

Total Selling Expense $1,292,487.95 $988,850.98 303,636.97 31%


Fixed Administration $240,000.00 $240,000.00 $- 0%

Depreciation-Equipment 12,000.00 12,000.00 - 0%

Depreciation-Building 7,200.00 7,200.00 - 0%

Total Administration Expense 259,200.00 259,200.00 - 0%

Total Selling & Administration Expense $1,551,687.95 $1,248,050.98 (69,049.82) -6%

Net Income from Operation $1,238,262.62 $1,620,737.77 (382,475.15) -24%


Interest Income On Short-term Investments $17,648.44 $12,985.68 $4,662.76 36%

Interest Expense On Notes Payable, Short-term 139,726.60 - 139,726.60

Interest Expense On Line Of Credit 65,865.07 61,670.40 4,194.67 7%

Interest Expense On Mortgage Payable 62,821.20 78,332.40 (15,511.20) -20%

Total Interest Expense $268,412.87 $140,002.80 $128,410.07 92%

Total Other Income and Expenses $(250,764.43) $(127,017.12) (123,747.31) 97% Income Before Taxes $987,498.19 $1,493,720.65 (506,222.46) -34%

Income Tax 394,999.28 597,488.26 (202,488.98) -34%

Net Income $592,498.91 $896,232.39 (303,733.48) -34%

Earnings Per Share $4.74 $9.96



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Statement of Cash Flow


Operating Activities Cash Receipts From:

Sales $3,428,072.44 Income Tax Refund - Sale of Securities 642,648.44

Line of Credit 663,000.00

Cash Disbursements From: Payments to Suppliers $1,722,461.97 Payments to Employees 1,713,757.40

Payment to Subcontractor - Interest 22,523.62

Taxes 215,189.83 Advertising 80,000.00 Misc Exp 378,602.31

Payment of Short-Term Note - Short-Term Investments -

Cash Flow From Operating Activities $601,185.75

Investing Activities Cash Disbursements From: Equipment $(300,000.00)

Cash Flow From Investing Activities $(300,000.00)

Financing Activities Cash Receipts From: Long-Term Borrowing -

Issuance of Stock -

Cash Disbursements From: Payment on Line of Credit $277,391.98 Payment for Mortgage 24,000.00

Payment of Cash Dividend -

Cash Flow From Financing Activities $(301,391.98)

Net Decrease in Cash $(206.23)



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Operating Activities Cash Receipts From:

Sales $3,659,281.21 Income Tax Refund - Sale of Securities -

Line of Credit 1,115,000.00 Cash Disbursements From:

Payments to Suppliers $1,874,102.83 Payments to Employees 1,688,430.35

Payment to Subcontractor 50,000.00 Interest 71,900.68 Taxes 96,401.01

Advertising 125,000.00 Misc Exp 396,388.80

Payment of Short-Term Note 663,000.00 Short-Term Investments -

Cash Flow From Operating Activities $(190,942.46)

Investing Activities Cash Disbursements From: Equipment $-

Cash Flow From Investing Activities $-

Financing Activities Cash Receipts From:

Long-Term Borrowing $300,000.00 Issuance of Stock -

Cash Disbursements From: Payment on Line of Credit $81,159.98

Payment for Mortgage 24,000.00 Payment of Cash Dividend 4,500.00

Cash Flow From Financing Activities $190,340.02




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Operating Activities Cash Receipts From: Sales $3,475,707.99

Income Tax Refund 16,195.76 Sale of Securities -

Line of Credit 281,000.00 Cash Disbursements From:

Payments to Suppliers $1,512,736.21 Payments to Employees 1,230,591.81

Payment to Subcontractor - Interest $134,929.24 Taxes -

Advertising 125,000.00 Misc Exp 453,998.47 Payment of Short-Term Note 1,115,000.00

Short-Term Investments -


Investing Activities Cash Disbursements From: Equipment $-



Long-Term Borrowing $300,000.00 Issuance of Stock 646,450.00




Net Decrease in Cash $64.70



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Operating Activities

Cash Receipts From: Sales $4,100,480.30

Income Tax Refund - Sale of Securities -

Line of Credit

Cash Disbursements From: Payments to Suppliers $1,343,009.53

Payments to Employees 1,439,681.44 Payment to Subcontractor - Interest 39,059.33

Taxes $89,099.56 Advertising 130,000.00

Misc Exp 434,280.00 Payment of Short-Term Note 281,000.00

Short-Term Investments 213,000.00

Cash Flow From Operating Activities $131,350.44

Investing Activities

Cash Disbursements From: Equipment $-



Long-Term Borrowing $- Issuance of Stock -



Cash Flow From Financing Activities $(130,777.76)

Net Decrease in Cash $572.68



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Operating Activities

Cash Receipts From:

Sales $14,663,541.94 Income Tax Refund 16,195.76

Sale of Securities 642,648.44 Line of Credit 2,059,000.00

Cash Disbursements From: Payments to Suppliers $6,452,310.54

Payments to Employees $6,072,461.00 Payment to Subcontractor $50,000.00 Interest $268,412.87

Taxes $400,690.40 Advertising $460,000.00

Misc Exp $1,663,269.58 Payment of Short-Term Note $2,059,000.00 Short-Term Investments $213,000.00


Investing Activities

Cash Disbursements From: Equipment $(300,000.00)

Cash Flow From Investing Activities $(300,000.00)

Financing Activities

Cash Receipts From: Long-Term Borrowing $600,000.00

Issuance of Stock $646,450.00

Cash Disbursements From: Payment on Line of Credit $574,213.04 Payment for Mortgage $96,000.00

Payment of Cash Dividend $18,650.00





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Balance Sheet


Assets

Current Assets:

Cash $ 25,825.45

Short-Term Investments $ 213,000.00

Accounts Receivable $ 1,289,112.00

Finished Goods Inventory $ 1,374,157.77

Total Current Assets $ 2,902,095.22

Plant Assets:

Equipment $ 775,000.00

Less: Accumulated Depreciation $ 253,750.00 $ 521,250.00

Building $ 1,125,000.00


Total Plant Assets $ 1,479,187.50

Administration Assets:

Equipment $ 60,000.00


Building $ 80,000.00


Land $ 125,000.00

Total Administration Assets $ 226,600.00

Total Assets $ 4,607,882.72

Liabilities Current Liabilities:

Accounts Payable $ 576,555.43

Notes Payable, Short-Term $ -

Total Current Liabilities $ 576,555.43

Long-Term Liabilities:

Notes Payable, Line of Credit $ 490,138.82 Mortgage Payable $ 768,000.00

Total Long-Term Liabilities $ 1,258,138.82

Total Liabilities $ 1,834,694.25

Stockholder's Equity Contributed Capital:

Common Stock (500,000 shares authorized, 125,000 issued at $2.00 par value $ 250,000.00

Capital in excess of Par Value $ 1,125,450.00 Total Contributed Capital $ 1,375,450.00

Retained Earnings $ 1,397,738.47

Total Stockholder's Equity $ 2,773,188.47



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Total Liabilities and Stockholder's Equity $ 4,607,882.72



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Statement of Retained Earnings

For 12 Months Ending Year 2

Retained Earnings: Beginning $ 839,646.52

Add Net Income For The Year $ 576,741.95

Deduct Common Stock Dividends $ 18,650.00

Retained Earnings: Ending $ 1,397,738.47

Blissful Technology, LLC has been hard at work reaching its goal, of increasing shareholder wealth this year. Retained earnings have increased a good amount from Year 1 to Year 2.

Blissful Technology, LLC doesn’t have as high of retained earnings as it did in year one. The

reason is due to the financing of expanding manufacturing capacity. The company has addressed the inventory shortage situation with great results. Its future net income is predicted to grow at a steady rate.

Each quarter Blissful Technology, LLC has increased its dividend amount paid to common

stockholders. This has attributed to its increasing stock price.Blissful Technology, LLC is dedicated to increasing shareholder wealth, and the company expects continued growth in its quarterly dividends, and its stock price.

Blissful Technology, LLC has had a busy year. The company has increased its plant assets,

because it needed to expand its production capacity in its manufacturing facility. The company was able to finance this expansion through liabilities and distribution of common stock.

Blissful Technology LLC, has done well this year. Total Liabilities has decreased over

$100,000 this year and retained earnings has increased by over $500,000. It paid off much of its debts that were used to expand capacity.



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Comparative Balance Sheet

As of December 31, Year 1 and Year 2

Year 2 Year 1

Assets Current Assets:

Cash $ 25,825 $ 25,997 Short-Term Investments $ 213,000 $ 625,000

Accounts Receivable $ 1,289,112 $ 1,202,895 Finished Goods Inventory $ 1,374,158 $ 15,477

Total Current Assets $ 2,902,095 $ 1,869,369

Plant Assets: Equipment net of Accumulated Depreciation $ 521,250 $ 551,250

Building net of Accumulated Depreciation $ 957,938 $ 884,188

Total Plant Assets $ 1,479,188 $ 1,435,438

Administration Assets: Equipment net of Accumulated Depreciation $ 36,000 $ 48,000 Building net of Accumulated Depreciation $ 65,600 $ 72,800

Land $ 125,000 $ 125,000

Total Administration Assets $ 226,600 $ 245,800

Total Assets $ 4,607,883 $ 3,550,606

Liabilities

Current Liabilities: Accounts Payable $ 576,555 $ 653,608 Notes Payable, Short-Term $ -

Total Current Liabilities $ 576,555 $ 653,608

Long-Term Liabilities:

Notes Payable, Line of Credit $ 490,139 $ 464,352 Mortgage Payable $ 768,000 $ 864,000

Total Long-Term Liabilities $ 1,258,139 $ 1,328,352

Total Liabilities $ 1,834,694 $ 1,981,960

Stockholder's Equity

Contributed Capital:

Common Stock ($2 par, 500,000 shares authorized) $ 250,000 $ 180,000 Capital In Excess of Par Value $ 1,125,450 $ 549,000

Total Contributed Capital $ 1,375,450 $ 729,000

Retained Earnings $ 1,397,738 $ 839,647

Total Stockholder's Equity $ 2,773,188 $ 1,568,647



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Total Liabilities and Stockholder's Equity $ 4,607,883 $ 3,550,606

Financial Ratios

Current Ratio

Quick Ratio

Inventory Turnover

Profit Margin Return On Assets



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Debt To Equity

Book Value Per Share

Earnings Per Share



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Quarter Current Ratio Quick Ratio Inventory Turnover PM ROA Debt to Equity BV Per Share

Q1 1.708 0.958 4.935 0.091 0.074 1.294 21.016

Q2 1.777 0.525 1.461 0.046 0.029 1.494 22.573

Q3 3.969 1.472 1.472 -0.007 -0.005 0.808 21.186

Q4 5.034 2.65 2.65 0.031 0.029 0.662 22.186

*The ratios are indicative of the management team’s objective of increasing inventory to

position the company as a leader in the industry.

Blissful Technology, LLC’s inventory turnover decreased in the second quarter, as a result of

management’s decrease in advertising and increase in selling price as compared to the industry average. The company has increased finished goods inventory to help sustain

operations in the future.

The increase in Blissful Technology, LLC’s inventory of finished goods did have some

negative consequences. Along with the decrease in inventory turnover, the company also experienced a decrease in the ratio of cash and cash equivalents to current liabilities and a

decrease in profitability and return on assets. These were due to the increasing competition within the industry as well as the economic recession these years.However, Blissful Technology, LLC is still in the industry leader position and keeps increasing benefits to its

employees, customers, and investors. The company has strong competitive advantage and good reputation in the industry.

The chart above illustrates the effect that the inventory build-up had on the earnings per share

of Blissful Technology, LLC throughout Year 2. Initially, the company experienced lower sales and revenue. As seen in the 4th quarter, the company’s financial position had improved and had not followed the general decline shown in the industry average. The company’s

financial position is expected to continue to improve during the next fiscal year.



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INDEPENDENT AUDITOR’S REPORT

Board of Directors, Stockholders, Owners, and/or Management of Blissful Technology, LLC 1234 Rose Street

Suite 100-150 Springfield, Missouri 65897

We have audited the accompanying financial statements of Blissful Technology, LLC, which

comprise the balance sheet as of December 31, Year 2, and the related statements of income, retained earnings, and cash flows for the year then ended, and the related notes to the

financial statements.

Management's Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with U.S. Generally Accepted Accounting Principles; this

includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of consolidated financial statements that are free from

material misstatement, whether due to fraud or error.

Auditor's Responsibility

Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We conducted our audit in accordance with U.S. Generally Accepted Auditing

Standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and

disclosures in the financial statements. The procedures selected depend on the auditors' judgment, including the assessment of the risks of material misstatement of the financial

statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the

circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. Accordingly, we express no such opinion. An audit also includes

evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.



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Opinion

In our opinion, the financial statements referred to above present fairly, in all material

respects, the financial position of Blissful Technology, LLC as of December 31, Year 2, and the results of its operations and its cash flows for the year then ended in accordance with U.S.

Generally Accepted Accounting Principles.

Bob Cratchit, P.C., CPA KPMG LLP

1 National Avenue St. Louis, Missouri 63101

February 2, Year 3



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CORPORATE DIRECTORY

REGISTED OFFICE 1234 Rose Street

Suite 100-150

Springfield, Missouri 65897

BOARD OF DIRECTORS

Jing Shi

Jonathan Carter

Matthew Wheatley

Tingting Liu

COMPANY SECRETARY Jean White

AUDITOR

KPMG LLP

1 National Avenue

St. Louis, Missouri63101

AUDIT COMMITTEE

Bob Cratchit

Michael Witts

Chris Allen

Andy Bishop

PRINCIPAL BANKER

Bank of America

20 Green Street

Springfield, Missouri 65831

www.blissfultechllc.com

annual report - year 2 (final)

Documents