Overview Happiness Express was started in 1989 by two brothers, Joseph and Isaac Sutton. They started the company with an initial investment of $10,000. By the end of the fiscal year ending March 31, 1994, the company had total revenues that were greater than $40 million. The company was growing at a tremendously fast rate and it was a wonder how they would continue this growth. They then bought the rights to Nickelodeon, Disney, Universal Studios, Warner Brothers and major publishing companies. The company used the slogan “In Kids We Trust” to show their commitment to the results of the research they performed to see what they kids liked and were willing to buy. When the company wanted to continue to grow, they needed to raise capital. They did this by an IPO in July of 1994. The price nearly doubled in just a few months. The company was given an award from Business Week for the “#1 Hot Growth Company” in 1995 after the year they had in 1994. Although everything seemed to be going great for the company, Wall Street was projecting a big loss for the fiscal year of 1995. But the company proved them wrong, as they increased net income from last year by nearly double. The company also increased their revenues by almost fifty percent. Happiness Express reported fourth quarter sales in 1995 as $12.8 million which was a very large increase from the $2.3 million they reported in the previous year. In September 1995, CEO Joseph Sutton admits that the forecast for 1996 may have been too optimistic which causes the stock price to plummet in the following days. This also introduced a lawsuit as investors started to question the reported financials in previous years. By the end of September, the company had filed for bankruptcy and the CEO resigned following the announcement. As the SEC started their investigation, they uncovered that the company had a net