EX-99.1 11 ex99-1.htm

 

Exhibit 99.1

 

Dogness Reports Financial Results for Fiscal Year Ended June 30, 2024

 

PLANO, Texas, October 16, 2024 /PRNewswire/ — Dogness (International) Corporation (“Dogness” or the “Company”) (NASDAQ: DOGZ), a developer and manufacturer of a comprehensive line of Dogness-branded, OEM and private label pet products, today announced its financial results for the fiscal year ended June 30, 2024.

 

Silong Chen, Chief Executive Officer of Dogness, commented: “We continue to face challenges due to intense competition in the domestic market and the ongoing trade dispute between China and the United States, which are impacting and will likely continue impacting our domestic and export sales in the near future. In fiscal 2024, Dogness experienced intensified competition and a complex macro environment, which posed challenges to the Company resulting in a 15.6% revenue decline. Our gross profit for fiscal 2024 decreased to approximately $3.1 million, reflecting a 14.7% decline, primarily due to lower sales volumes in intelligent pet products. However, we effectively reduced our selling expenses by approximately $1.3 million and general and administrative expenses by $2.0 million, enhancing our operational efficiency. As a result, our overall gross profit margin improved slightly to 21.0%, up from 20.8% in fiscal 2023.”

 

“Looking ahead, we are committed to leveraging our strengths in traditional pet products to capture additional market share, particularly in international markets where we see significant growth potential. We are also exploring new product lines and enhancements to our intelligent pet products, aiming to align them with consumer trends and preferences. Our commitment to sustainability will drive our research and development efforts, focusing on eco-friendly materials and advanced technologies that resonate with our customer base.”

 

“Thanks to these strategic initiatives, our net loss improved by approximately $1.4 million, or 18.8%, decreasing from $7.5 million in fiscal 2023 to $6.1 million in fiscal 2024. We appreciate the continued support of our stakeholders as we strive for sustainable growth and profitability in the coming years, which we believe will position Dogness as a leader in the pet products industry.”

 

 

 

 

Financial Results for The Fiscal Year Ended June 30, 2024

 

Revenues

 

Revenues decreased by approximately $2.7 million, or 15.6%, to approximately $14.8 million in fiscal 2024 from approximately $17.6 million in fiscal 2023. The decrease in revenue was primarily attributable to an approximately $3.0 million decrease in the sales of intelligent pet products and an approximately $0.5 million decrease in the sales of climbing hooks and others, offset by an approximately $0.7 million increase in the sales of traditional pet products.

 

The breakdown of our revenue by products and services categories is as follows:

 

  

2024

   2023   Changes 
Products and services category 

Amount

(USD Million)

  

Amount

(USD Million)

   % 
                
Products               
Traditional pet products  $9.0   $8.3    8.7%
Intelligent pet products   4.4    7.4    (40.8)%
Climbing hooks and others   1.4    1.8    (25.0)%
Total revenue from products   14.8    17.5    (15.7)%
                
Services               
Dyeing services   0.09    -    -%
Other services   -    0.07    (100.0)%
Total revenue from services   0.09    0.07    22.5%
Total  $14.8   $17.6    (15.6)%

 

Traditional Pet Products

 

Revenue from traditional pet products rose by approximately $0.7 million or 8.7%, from $8.3 million in fiscal 2023 to $9.0 million in fiscal 2024. This increase was primarily due to higher sales volume, with $1.2 million coming from overseas markets, offset by a $0.5 million decline in the Chinese domestic market.

 

Intelligent Pet Products

 

Revenue from intelligent pet products fell by approximately $3.0 million, or 40.8%, from $7.4 million in fiscal 2023 to $4.4 million in fiscal 2024. This decline was driven by a 33.1% drop in sales volume and a $2.3 decrease in average selling price per unit. The Chinese market accounted for a $0.8 million decrease, while overseas markets contributed to a $2.2 million decline, as the pet product industry is facing reduced consumer spending on non-essential intelligent pet products items.

 

 

 

 

Climbing Hooks and Others

 

Revenue from climbing hooks and other products decreased by approximately $0.5 million, or 25.0%, from $1.8 million in fiscal 2023 to $1.4 million in fiscal 2024, mainly due to lower sales volume.

 

Dyeing Services

 

The Company provides dyeing solutions using our manufacturing capabilities, applying dyes to textiles for desired quality and color. Revenue from dyeing services was $0.1 million in fiscal 2024, up from no revenue in 2023.

 

Sales to Related Parties

 

During discal 2024, Dogness Network Technology Co., Ltd. (“Dogness Network”) and Dogness Technology Co., Ltd (“Dogness Technology”) were related parties of the Company. Dogness Technology ceased being a related party after December 31, 2023. Sales to Dogness Network and Dogness Technology Co., Ltd totaled $0.1 million and $1.7 million in fiscal 2024 and 2023, respectively, representing 0.7% and 9.7% of total revenue. Costs associated with these sales were $0.1 million in 2024 and $1.2 million in 2023.

 

International vs. Domestic sales

 

Total international sales dropped by approximately $1.2 million, or 10.6% to approximately $10.1 million in fiscal 2024, primarily due to 48.7% decline in intelligent pet product sales. Traditional pet product sales, however, rose by 21.6%.

 

Domestic sales decreased by approximately $1.5 million, or 24.4% to around $4.8 million, driven by reduced customer orders caused by intense competition in the domestic market. Domestic sales of traditional and intelligent pet products declined by 19.8% and 27.7% respectively in the domestic market.

 

 

 

 

Cost of revenues

 

Cost of revenues decreased by approximately $2.2 million or 15.8%, from approximately $13.9 million in fiscal 2023 to approximately $11.7 million in fiscal 2024. The decreased cost of revenues was the result of the decrease in average unit cost due to a shift toward lower cost traditional pet products.

 

Gross profit

 

Gross profit decreased by approximately $0.5 million or 14.7%, from approximately $3.7 million in fiscal 2023 to approximately $3.1 million in fiscal 2024, primarily attributable to the decreased sales volume of our intelligent pet products. Overall gross profit margin was 21.0% in fiscal 2024, an increase of 0.2 percentage points, as compared to 20.8% in fiscal 2023.

 

The breakdown of gross profit by products and services categories is as follows:

 

   For the Year ended June 30, 
   2024   2023   Changes 
Products and services category  Amount ($Million)   Gross
profit %		   Amount ($Million)   Gross
profit %		   Gross profit Pct. Pt. 
Traditional pet products  $1.4    16.0%  $1.2    14.3%   1.7pct.
Intelligent pet products   1.2    28.3%   1.8    24.4%   3.9pct.
Climbing hooks and others   0.5    34.9%   0.6    34.2%   0.7pct.
    3.1    21.4%   3.6    20.6%   0.8pct.
Services                         
Dyeing services   (0.03)   (35.8)%   -    -%   (35.8)pct.
Other services   -    -%   0.06    86.5    (86.5)pct.
Total  $3.1    21.0%%  $3.7    20.8%   0.2pct.

 

Traditional pet products

 

Gross profit for traditional pet products rose by approximately $0.3 million in fiscal 2024, with the gross profit margin increasing by 1.7 percentage points from 14.3% to 16.0%, mainly due to a $0.15 reduction in average unit cost.

 

Intelligent pet products

 

For intelligent pet products, gross profit fell by approximately $0.6 million from $1.8 million to $1.2 million, largely due to a 33.1% drop in sales volume. However, gross profit margin improved by 3.9 percentage points from 24.4% to 28.3%, driven by a $2.42 decrease in average unit cost.

 

 

 

 

Climbing hooks and others

 

Gross profit for climbing hooks and others decreased by approximately $0.1 million from $0.6 million to $0.5 million, primarily due to a 25.2% decline in sales volume. The overall gross margin for this category increased by 0.7 percentage points from 34.2% to 34.9%, The increase was due a $0.02 reduction in average unit cost.

 

Expenses

 

Selling Expenses

 

Selling expenses decreased by approximately $1.3 million, or 54.4%, from $2.5 million in fiscal 2023 to $1.1 million in fiscal 2024, mainly due to reduced marketing research activities. As a percentage of sales, these expenses were 7.6% in fiscal 2024, down from 14.1% in 2023.

 

General and Administrative Expenses

 

General and administrative expenses decreased by approximately $2.0 million, or 20.0%, from $9.8 million in fiscal 2023 to $7.8 million in fiscal 2024, due to lower professional consulting and decoration costs. As a percentage of sales, these expenses were 52.8% in 2024, compared to 55.7% in 2023.

 

Research and Development Expenses

 

Research and development expenses decreased by approximately $0.3 million, or 34.4%, from $0.9 million in fiscal 2023 to $0.6 million in fiscal 2024. As a percentage of sales, these expenses were 4.1% in 2024, down from 5.3% in 2023. The company anticipates an increase in R&D spending to focus on environmentally-friendly materials and new high-tech products.

 

Net loss

 

As a result of the foregoing, our net loss decreased by approximately $1.4 million or 18.8%, from approximately $7.5 million in fiscal 2023 to approximately $6.1 million in fiscal 2024.

 

 

 

 

About Dogness

 

Dogness (International) Corporation was founded in 2003 from the belief that dogs and cats are important, well-loved family members. Through its smart products, hygiene products, health and wellness products, and leash products, Dogness’ technology simplifies pet lifestyles and enhances the relationship between pets and pet caregivers. The Company ensures industry-leading quality through its fully integrated vertical supply chain and world-class research and development capabilities, which has resulted in over 200 patents and patents pending. Dogness products reach families worldwide through global chain stores and distributors. For more information, please visit: ir.dogness.com.

 

Forward Looking Statements

 

No statement made in this press release should be interpreted as an offer to purchase or sell any security. Such an offer can only be made in accordance with the Securities Act of 1933, as amended, and applicable state securities laws. Certain statements in this press release concerning our future growth prospects are forward-looking statements regarding our future business expectations intended to qualify for the “safe harbor” under the Private Securities Litigation Reform Act of 1995, which involve a number of risks and uncertainties that could cause actual results to differ materially from those in such forward-looking statements. The risks and uncertainties relating to these statements include, but are not limited to, risks and uncertainties regarding our ability to raise capital on any particular terms, fulfillment of customer orders, fluctuations in earnings, fluctuations in foreign exchange rates, our ability to manage growth, our ability to realize revenue from expanded operation and acquired assets in China and the U.S., our ability to attract and retain highly skilled professionals, client concentration, industry segment concentration, reduced demand for technology in our key focus areas, our ability to successfully complete and integrate potential acquisitions, and unauthorized use of our intellectual property and general economic conditions affecting our industry. Additional risks that could affect our future operating results are more fully described in our United States Securities and Exchange Commission filings. These filings are available at www.sec.gov. Dogness may, from time to time, make additional written and oral forward-looking statements, including statements contained in the Company’s filings with the Securities and Exchange Commission and our reports to shareholders. In addition, please note that any forward-looking statements contained herein are based on assumptions that we believe to be reasonable as of the date of this press release. The Company does not undertake to update any forward-looking statements that may be made from time to time by or on behalf of the Company unless it is required by law.

 

For investor and media inquiries, please contact:

 

Wealth Financial Services LLC

Connie Kang, Partner

Email: ckang@wealthfsllc.com

Tel: +86 1381 185 7742 (CN)

 

 

 

 

DOGNESS (INTERNATIONAL) CORPORATION

CONSOLIDATED BALANCE SHEETS

(All amounts in USD)

 

   As of June 30,   As of June 30, 
   2024   2023 
ASSETS          
CURRENT ASSETS          
Cash and cash equivalents  $6,956,434   $4,483,308 
Accounts receivable from third-party customers, net   2,269,341    1,492,762 
Accounts receivable from related parties   582,182    1,272,384 
Inventories, net   3,119,827    2,679,275 
Due from related parties   97,037    87,430 
Prepayments and other current assets   3,328,189    3,748,955 
Advances to supplier- related party   50,908    239,729 
Total current assets   16,403,918    14,003,843 
           
NON-CURRENT ASSETS          
Property, plant and equipment, net   61,303,327    61,686,849 
Operating lease right-of-use lease assets   16,325,988    17,537,096 
Intangible assets, net   1,780,856    1,845,006 
Long-term investments in equity investees   1,513,600    1,516,900 
Deferred tax assets   1,873,140    1,281,634 
Total non-current assets   82,796,911    83,867,485 
TOTAL ASSETS  $99,200,829   $97,871,328 
           
LIABILITIES AND EQUITY          
CURRENT LIABILITIES          
Short-term bank loans  $894,400   $887,000 
Current portion of long-term bank loans   759,339    2,959,918 
Accounts payable   1,286,981    895,694 
Due to related parties   518,003    85,843 
Advances from customers   264,832    121,687 
Taxes payable   1,007,482    1,015,444 
Accrued expenses and other current liabilities   1,452,225    1,026,218 
Operating lease liabilities, current   2,352,482    2,326,162 
Total current liabilities   8,535,744    9,317,966 
           
NON-CURRENT LIABILITIES          
Long-term bank loans   3,315,715    1,595,549 
Operating lease liabilities, non-current   10,938,477    10,612,508 
Total non-current liabilities   14,254,192    12,208,057 
TOTAL LIABILITIES   22,789,936    21,526,023 
           
Commitments and Contingencies (Note 10)          
           
EQUITY          
Class A Common shares, no par value, unlimited shares authorized; 3,661,658 and 1,552,762 issued and outstanding as of June 30, 2024 and 2023, respectively*   92,004,296    85,716,578 
Class B Common shares, no par value, unlimited shares authorized; 9,069,000 issued and outstanding as of June 30, 2024 and 2023   18,138    18,138 
Statutory reserve   291,443    291,443 
(Accumulated deficit) retained earnings   (5,391,709)   664,004 
Accumulated other comprehensive loss   (10,511,317)   (10,345,832)
Equity attributable to owners of the Company   76,410,851    76,344,331 
           
Non-controlling interest   42    974 
Total equity   76,410,893    76,345,305 
           
TOTAL LIABILITIES AND EQUITY  $99,200,829   $97,871,328 

 

 

 

 

DOGNESS (INTERNATIONAL) CORPORATION

STATEMENTS OF (LOSS) INCOME AND COMPREHENSIVE (LOSS) INCOME

(All amounts in USD)

 

   For the Years Ended June 30, 
   2024   2023   2022 
             
Revenues – third party customers  $14,746,447   $15,884,281   $24,882,618 
Revenues – related parties   101,455    1,700,173    2,212,579 
Total Revenues   14,847,902    17,584,454    27,095,197 
                
Cost of revenues – third party customers   (11,642,233)   (12,760,852)   (15,654,952)
Cost of revenues – related parties   (82,955)   (1,162,314)   (1,301,180)
Total cost of revenues   (11,725,188)   (13,923,166)   (16,956,132)
Gross Profit   3,122,714    3,661,288    10,139,065 
                
Operating expenses:               
Selling expenses   1,129,671    2,478,163    2,077,174 
General and administrative expenses   7,838,024    9,800,714    6,742,687 
Research and development expenses   610,439    931,078    917,227 
Loss from disposal of property, plant and equipment   1,075,490    15,306    327,921 
Total operating expenses   10,653,624    13,225,261    10,065,009 
                
(Loss) income from operations   (7,530,910)   (9,563,973)   74,056 
                
Other income:               
Interest expense, net   (207,410)   (330,824)   (370,108)
Foreign exchange transaction gain   310,860    800,403    246,211 
Other income, net   541,468    112,109    115,016 
Rental income from related parties, net   337,743    295,362    173,089 
Total other income   982,661    877,050    164,208 
                
(Loss) income before income taxes   (6,548,249)   (8,686,923)   238,264 
Income taxes benefit   (491,600)   (1,227,449)   (2,777,868)
Net (loss) income   (6,056,649)   (7,459,474)   3,016,132 
Less: net loss attributable to non-controlling interest   (936)   (259,211)   (219,427)
Net (loss) income attributable to Dogness (International) Corporation   (6,055,713)   (7,200,263)   3,235,559 
                
Other comprehensive loss:               
Foreign currency translation loss   (165,481)   (6,204,254)   (3,203,448)
Comprehensive loss   (6,222,130)   (13,663,728)   (187,316)
Less: comprehensive loss attributable to non-controlling interest   (932)   (270,210)   (230,583)
Comprehensive (loss) income attributable to Dogness (International) Corporation  $(6,221,198)  $(13,393,518)  $43,267 
                
(Loss) earnings per share               
Basic  $(0.55)  $(0.68)  $0.31 
Diluted  $(0.55)  $(0.68)  $0.31 
                
Weighted Average Shares Outstanding*               
Basic   10,919,386    10,598,989    10,301,133 
Diluted   10,919,386    10,598,989    10,316,232 

 

 

 

 

DOGNESS (INTERNATIONAL) CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(All amounts in USD)

 

   For the Years Ended June 30, 
   2024   2023   2022 
             
Cash flows from operating activities:               
Net (loss) income  $(6,056,649)  $(7,459,474)  $3,016,132 
Adjustments to reconcile net (loss) income to net cash provided by (used in) operating activities:               
Amortization of operating lease right-of-use lease assets   1,179,776    1,023,500    408,566 
Depreciation and amortization   2,771,727    3,315,172    3,458,347 
Loss from disposition of property, plant and equipment   1,075,490    15,306    327,921 
Share-based compensation for services   1,114,857    1,243,385    11,831 
Change in inventory reserve   -    246,281    - 
Change in credit losses   275,923    160,254    (16,776)
Deferred tax benefit   (597,241)   (658,595)   (118,424)
Warrants modification   239,308    -    - 
Accrued interest income   -    -    (1,320)
Changes in operating assets and liabilities:               
Accounts receivables   (1,060,171)   (109,090)   683,119 
Accounts receivables-related parties   691,431    (272,301)   (620,728)
Inventories   (447,631)   268,593    740,265 
Prepayments and other current assets   97,647    (3,113,841)   1,173,662 
Advances to supplier- related party   189,395    (249,986)   - 
Accounts payables   395,559    (62,237)   224,676 
Accounts payables-related parties   -    (379,124)   58,190 
Advance from customers   144,236    (18,989)   (52,365)
Taxes payable   (5,936)   (441,390)   (2,827,106)
Accrued expenses and other liabilities   423,456    34,381    (137,457)
Operating lease liabilities   382,649    (2,444,110)   (168,075)
Net cash provided by (used in) operating activities   813,826    (8,902,265)   6,160,458 
                
Cash flows from investing activities:               
Purchase of property, plant and equipment   (3,524,713)   (1,520,556)   (15,259,272)
Proceeds from disposition of property, plant and equipment   79,850    14,872    22,213 
Proceeds upon maturity of short-term investments   -    50,330    495,680 
Net cash used in investing activities   (3,444,863)   (1,455,354)   (14,741,379)
                
Cash flows from financing activities:               
Net proceeds from private placement   4,920,800    -    19,124,920 
Adjustment relating to non-controlling interest   -    (26,245)   - 
Net proceeds from exercise of warrants   329,480    -    4,444,136 
Reverse split shares   (810)   -    - 
Net proceeds from exercise of options   -    -    180,000 
Proceeds from short-term bank loans   899,600    483,000    804,000 
Repayment of short-term bank loans   (887,000)   (160,000)   (944,446)
Proceeds from long-term bank loan   2,629,600    -    - 
Repayment of long-term bank loans   (3,102,838)   (1,337,323)   (796,416)
Proceeds from (repayment of) related party loans   425,007    (25,796)   (1,943,408)
Net cash provided by (used in) financing activities   5,213,839    (1,066,364)   20,868,786 
                
Effect of exchange rate changes on cash and cash equivalents   (109,676)   (698,581)   (617,747)
Net increase (decrease) in cash and cash equivalents   2,473,126    (12,122,564)   11,670,118 
Cash and cash equivalents, beginning of year   4,483,308    16,605,872    4,935,754 
Cash and cash equivalents, end of year  $6,956,434   $4,483,308   $16,605,872 
                
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:               
Cash (refunded) paid for income tax  $-   $(2,593)  $3,195 
Cash paid for interest  $294,628   $396,517   $471,443 
                
Non-Cash Investing Activities               
Transfer from construction-in-progress to fixed assets  $-   $-   $597,594 
Additions (reductions) to property, plant and equipment through other payable  $7,301   $(8,167)  $- 
Prepaid share-based compensation for services  $-   $315,917   $-