Dogness (International) Corporation (NASDAQ: DOGZ) (“Dogness” or
the “Company”), a leading developer and manufacturer of pet
products, including leashes, accessories, and collars and harnesses
that incorporate smart technology in China, today announced its
unaudited second half and audited full fiscal year 2019 financial
results ended June 30, 2019.
Unaudited Fiscal Year 2019 Second Half Financial
Highlights (compared to prior year period)
- Revenues decreased 12.6% to approximately $13.4 million from
approximately $15.3 million. Sales of intelligent pet products
increased to $1.5 million from $0.1 million.
- Gross profit decreased 21.6% to approximately $4.8 million from
approximately $6.1 million. Gross margin decreased to 35.9% from
40.0%.
- Income from operations decreased 76.2% to approximately $0.5
million from approximately $2.2 million. Operating margin decreased
to 3.9% from 14.6%.
- Net income decreased 59.4% to approximately $0.7 million from
approximately $1.7 million. Fully diluted net income per share
decreased to $0.03 from $0.04.
Audited Fiscal Year 2019 Financial Highlights (compared
to prior year period)
- Revenues decreased 13.0% to approximately $26.2 million from
approximately $30.1 million. Sales of intelligent pet products
increased to $2.1 million from $0.06 million.
- Gross profit decreased 22.3% to approximately $9.4 million from
approximately $12.1 million. Gross margin decreased to 36.0% from
40.3%.
- Income from operations decreased 89.2% to approximately $0.6
million from approximately $6.0 million. Operating margin decreased
to 2.4% from 19.8%.
- Net income decreased 69.5% to approximately $1.4 million from
approximately $4.6 million. Fully diluted net income per share
decreased to $0.05 from $0.22.
“During fiscal 2019, we continued to pursue our growth
strategies of technological innovation, new product development,
international expansion, and strategic partnerships,” commented Mr.
Aaron (Silong) Chen, Chairman and Chief Executive Officer of
Dogness. “Our financial results were affected by the trade tensions
between China and the United States, but we were able to maintain
profitability and significantly grow sales of our smart pet
products. We continued to see success at major international trade
shows, where we introduced new smart feeders and our first smart
products designed for cats. We further expanded our sales channels
in the U.S. and South America, and entered the Australian
market.”
“As we enter fiscal 2020, we remain focused on growth. Our smart
tech products continue to ramp up sales with major retailers in the
U.S., and we will supplement this growth with increased marketing
in China, Europe, Australia, and other regions. We will also
further improve upon our existing products while investing in
technological innovation and new product development. With
increased product diversity, a growing number of online and offline
distribution channels, and broadened geographic scope, we expect
positive results for the next fiscal year, including top line
growth of approximately 15% year over year and bottom line growth
of approximately 50-80% year over year,” concluded Mr. Chen.
Unaudited Six Month Financial Results and Audited Full
Year Results for the Period Ended June 30, 2019
Revenues
Revenues in the second half of fiscal year 2019 decreased 12.6%
to approximately $13.4 million from approximately $15.3 million in
the same period of 2018. Revenues decreased 13.0% to approximately
$26.2 million for full year fiscal 2019 from approximately $30.1
million in full year fiscal 2018. The decrease was primarily
attributable to a decrease in unit sales in the U.S. as a result of
increased tariffs.
|
Revenue by geography |
|
|
For the Years Ended June 30, |
|
|
2019 |
|
|
2018 |
|
|
|
|
|
Country and Region |
|
Revenue |
|
|
% of total Revenue |
|
Revenue |
|
% of total Revenue |
|
Variance |
|
Variance% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mainland China |
|
$ |
15,082,443 |
|
|
57.5 |
% |
|
$ |
14,865,940 |
|
49.3 |
% |
|
$ |
216,503 |
|
|
1.5 |
% |
United States |
|
|
5,522,008 |
|
|
21.1 |
% |
|
$ |
10,168,945 |
|
33.7 |
% |
|
|
(4,646,937 |
) |
|
(45.7 |
%) |
Europe |
|
|
2,510,190 |
|
|
9.6 |
% |
|
|
1,994,085 |
|
6.6 |
% |
|
|
516,105 |
|
|
25.9 |
% |
Japan and other Asian
countries and regions |
|
|
1,703,102 |
|
|
6.5 |
% |
|
|
2,637,444 |
|
8.8 |
% |
|
|
(934,342 |
) |
|
(35.4 |
%) |
Canada |
|
|
950,353 |
|
|
3.6 |
% |
|
|
128,320 |
|
0.4 |
% |
|
|
811,033 |
|
|
582.1 |
% |
Central and South America |
|
|
231,426 |
|
|
0.9 |
% |
|
|
106,098 |
|
0.4 |
% |
|
|
125,328 |
|
|
118.1 |
% |
Australia |
|
|
216,993 |
|
|
0.8 |
% |
|
|
223,463 |
|
0.7 |
% |
|
|
(6,470 |
) |
|
(2.9 |
%) |
Total |
|
$ |
26,216,515 |
|
|
100 |
% |
|
$ |
30,135,295 |
|
100 |
% |
|
$ |
(3,918,780 |
) |
|
(13.0 |
%) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Company’s export sales to the United States decreased
approximately $4.6 million, or 45.7%, from approximately $10.2
million in fiscal 2018 to approximately $5.5 million in fiscal
2019. Due to the uncertainties and higher tariffs created by the
China-U.S. trade dispute, several major customers in the United
States reduced their purchase orders by approximately $3.4 million
compared to fiscal 2018.
The Company increased its marketing activities and sales efforts
in the domestic market in the wake of the growing pet consumer
market in China. As a result, domestic sales increased
approximately $0.2 million, or 1.5%, from approximately $14.9
million in fiscal 2018 to approximately $15.1 million in fiscal
2019.
The Company’s export sales to Canada and European countries,
such as Germany, Poland, Greece, Bulgaria and Ireland, increased
during fiscal 2019, partially offsetting the decreased sales in the
United States. Export sales to Canada increased by $811,033, or
582.1%, year over year. Export sales to Europe increased by
$516,105, or 25.9%, year over year.
Revenue by product category |
|
|
For the Years ended June 30, |
|
|
2019 |
|
2018 |
|
|
|
|
Product category |
|
Revenue |
|
% of total Revenue |
|
Revenue |
|
% of total Revenue |
|
Variance |
|
Variance% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Pet leashes |
|
$ |
6,266,952 |
|
23.9 |
% |
|
$ |
7,102,233 |
|
23.6 |
% |
|
$ |
(835,281 |
) |
|
(11.8 |
%) |
Pet collars |
|
|
6,188,672 |
|
23.6 |
% |
|
|
10,684,908 |
|
35.5 |
% |
|
|
(4,496,236 |
) |
|
(42.1 |
%) |
Gift suspenders |
|
|
4,058,229 |
|
15.5 |
% |
|
|
3,481,500 |
|
11.6 |
% |
|
|
576,729 |
|
|
16.6 |
% |
Pet harnesses |
|
|
3,587,128 |
|
13.7 |
% |
|
|
4,980,771 |
|
16.5 |
% |
|
|
(1,393,643 |
) |
|
(28.0 |
%) |
Intelligent pet products |
|
|
2,103,523 |
|
8.0 |
% |
|
|
59,719 |
|
0.2 |
% |
|
|
2,043,804 |
|
|
3,422.4 |
% |
Other pet accessories |
|
|
2,024,742 |
|
8.4 |
% |
|
|
1,175,232 |
|
3.9 |
% |
|
|
849,510 |
|
|
72.3 |
% |
Retractable dog leashes |
|
|
1,771,805 |
|
6.8 |
% |
|
|
2,650,932 |
|
8.8 |
% |
|
|
(879,127 |
) |
|
(33.2 |
%) |
Climbing hooks |
|
|
215,464 |
|
0.8 |
% |
|
|
- |
|
- |
|
|
|
215,464 |
|
|
- |
|
Total |
|
$ |
26,216,515 |
|
100.0 |
% |
|
$ |
30,135,295 |
|
100.0 |
% |
|
$ |
(3,918,780 |
) |
|
(13.0 |
%) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Company’s pet leashes, pet collars, gift suspenders, and pet
harnesses continued to account for the greatest percentages of
total sales. Sales of intelligent pet products increased
significantly.
Pet leashes
Revenue from pet leashes decreased 15.9% year over year to
approximately $3.2 million in the second half of fiscal 2019 from
approximately $3.8 million in the prior year period. Sales volume
decreased by 37.5% year over year.
Revenue from pet leashes decreased 11.8% year over year to
approximately $6.3 million in fiscal 2019 from approximately $7.1
million in fiscal 2018. The decrease was primarily due to a
decrease in unit sales in the U.S. as a result of increased
tariffs. The decrease was partially offset by an increase in
average selling price of approximately 45.0%, or $0.9 per unit, due
to higher prices charged to customers on higher cost leather
leashes.
Pet collars
Revenue from pet collars decreased 46.6% year over year to
approximately $2.8 million in the second half of fiscal 2019 from
approximately $5.2 million in the prior year period. Sales volume
decreased by 52.6% year over year.
Revenue from pet collars decreased 42.1% year over year to
approximately $6.2 million in fiscal 2019 from approximately $10.7
million in fiscal 2018. The decrease in revenue was due to a 46.3%
decrease in sales volume during the twelve months ended June 30,
2019, because several major customers in the United States reduced
their purchase orders due to higher tariffs. The average selling
price for pet collars increased by $0.1 per unit compared to the
same period of last year. New product design and material
improvements led the Company to charge a higher selling price.
Gift suspenders
Revenue from gift suspenders increased by 13.0%
from approximately $1.8 million for the six months ended June 30,
2018, to approximately $2.0 million for the six months ended June
30, 2019. Sales volume increased 0.6% during the six months ended
June 30, 2019.
Revenue from gift suspenders increased by 16.6%
from approximately $3.5 million in fiscal 2018 to approximately
$4.0 million in fiscal 2019. The increase in revenue was due to an
8.4% increase in sales volume during the twelve months ended June
30, 2019. The average selling price for gift suspenders remained
consistent.
Pet harnesses
Revenue from pet harnesses decreased 27.8% from approximately
$2.4 million for the six months ended June 30, 2018, to
approximately $1.8 million. Sales volume decreased by 41.3% year
over year.
Revenue from pet harnesses decreased 28.0% from
approximately $5.0 million in fiscal 2018 to approximately $3.6
million in fiscal 2019. The decrease in revenue was due to a 29.1%
decrease in sales volume during the twelve months ended June 30,
2019, because several major customers in the United States reduced
their purchase orders due to higher tariffs. The average selling
price for pet harnesses remained consistent.
Intelligent pet products
Revenue from intelligent pet products increased
by 2,470.5% to approximately $1.5 million in the second half of
fiscal 2019 compared to approximately $0.01 million in the prior
year period.
Revenue from intelligent pet products increased
by 3,422.4% to approximately $2.1 million in fiscal 2019 compared
to approximately $0.06 million in the prior year period. The
revenue increase was mainly due to a 3,628.5% increase in sales
volume during the period. The Company’s intelligent pet products
were launched in March 2018 and sales continue to increase as new
products are introduced and sales of existing products continue to
strengthen.
Retractable dog leashes
Revenue from retractable dog leashes decreased
by 41.7% to approximately $1.0 million in the second half of fiscal
2019 from approximately $1.7 million in the same period last year.
The decrease in revenue was attributable to a 41.3% year-over-year
decrease in the sales volume.
Revenue from retractable dog leashes decreased
by 33.2% to approximately $1.8 million in fiscal 2019 from
approximately $2.7 million in fiscal 2018. The decrease in revenue
was mainly due to a 32.4% decrease in the sales volume during the
twelve months ended June 30, 2019, due to reduced purchase orders
from major customers located in the United States. The average
selling price for retractable dog leashes decreased by $0.1 per
unit in order to promote sales to customers.
Climbing hooks
Revenue from climbing hooks was approximately
$0.2 million for fiscal 2019. Climbing hooks are a new product
category launched in the second half of fiscal 2019 in response to
increasing market demand for outdoor equipment from international
sports companies. There were no such sales in fiscal 2018.
Other pet accessories
Revenue from other pet accessories increased by
128.3% to approximately $1.0 million in the second half of fiscal
2019 from approximately $0.4 million in the same period last
year.
Revenue from other pet accessories increased by
72.3% to approximately $2.0 million in fiscal 2019 from
approximately $1.2 million in fiscal 2018. The increase in revenue
was attributable to a 200.0% increase in average selling price,
which was raised due to new product designs and material
improvements. Sales volume decreased by 45.5%, or 1.9 million
units, because several major customers in the United States reduced
their purchase orders.
Gross profit
Gross profit decreased 21.6% during the second half of fiscal
2019 to approximately $4.8 million from approximately $6.1 million
in the second half of fiscal 2018. Gross margin during the period
was 35.9% compared to 40.0% in the prior year period.
Gross profit decreased 22.3% during fiscal 2019 to approximately
$9.4 million from approximately $12.1 million in fiscal 2018. Gross
margin decreased to 36.0% from 40.3% in the prior year period. The
decrease in gross profit was mainly due to decreased sales volumes
of the Company’s pet leash, pet collars, pet harnesses, retractable
dog leash, and other pet accessories products, and increased
average unit cost because more higher-cost leather materials
instead of fabric materials were used during production in order to
fulfill customer purchase orders.
Gross profit by product category
|
|
For the Year ended June 30, |
|
|
2019 |
|
2018 |
|
|
|
|
Product category |
|
Gross profit |
|
Gross profit % |
|
Gross profit |
|
Gross profit % |
|
Variance in Gross
profit |
|
Variance inGross profit % |
|
|
|
|
|
|
|
|
|
|
|
|
|
Pet leashes |
|
$ |
2,148,933 |
|
34.3 |
% |
|
$ |
2,781,880 |
|
39.2 |
% |
|
$ |
(632,947 |
) |
|
(4.9 |
%) |
Pet collars |
|
|
2,227,627 |
|
36.0 |
% |
|
|
4,326,569 |
|
40.5 |
% |
|
|
(2,098,942 |
) |
|
(4.5 |
%) |
Gift suspender |
|
|
1,370,296 |
|
33.8 |
% |
|
|
1,383,940 |
|
39.8 |
% |
|
|
(13,644 |
) |
|
(6.0 |
%) |
Pet harnesses |
|
|
1,412,014 |
|
39.4 |
% |
|
|
2,132,201 |
|
42.8 |
% |
|
|
(720,187 |
) |
|
(3.4 |
%) |
Intelligent pet products |
|
|
824,572 |
|
39.2 |
% |
|
|
22,763 |
|
38.1 |
% |
|
|
801,809 |
|
|
1.1 |
% |
Other pet accessories |
|
|
690,839 |
|
34.1 |
% |
|
|
420,700 |
|
35.8 |
% |
|
|
270,139 |
|
|
(1.7 |
%) |
Retractable dog leashes |
|
|
685,519 |
|
38.7 |
% |
|
|
1,066,534 |
|
40.2 |
% |
|
|
(381,015 |
) |
|
(1.5 |
%) |
Climbing hooks |
|
|
70,205 |
|
32.6 |
% |
|
|
- |
|
- |
|
|
|
70,205 |
|
|
- |
|
Total |
|
$ |
9,430,005 |
|
36.0 |
% |
|
$ |
12,134,587 |
|
40.3 |
% |
|
$ |
(2,704,581 |
) |
|
(4.3 |
%) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit for pet leashes, pet collars, pet harnesses, and
retractable dog leashes decreased in fiscal 2019 due to decreased
sales volumes because of reduced purchase orders from major
customers located in the United States, affected by increased
tariffs. Cost of revenues associated with pet leashes, pet collars,
pet harnesses, and retractable dog leashes increased due to
increased labor costs and increased raw material costs because of
higher-cost leather materials used to fulfill customer orders.
Gross profit for gift suspenders decreased due to increased
material costs and labor costs, offset by an increase in sales
volume.
Gross profit for intelligent pet products increased due to an
increase in sales volume. In addition, average unit selling price
for intelligent pet products are higher than those of the Company’s
other products.
Gross profit for other pet accessories increased during the
period, mainly due to increased average unit selling prices and
were offset by decreased sales volumes.
Selling expenses
Selling expenses decreased to approximately $1.0 million during
the second half of fiscal 2019 from $1.1 million in the prior year
period.
Selling expenses increased to $2.1 million during fiscal 2019
from $1.7 million in fiscal 2018. The increase in selling expense
was primarily due to increased salary expenses, increased trade
show participation and related marketing expenses, an increase in
promotions, and an increase in advertising expenses.
General and administrative expenses
General and administrative expenses increased to approximately
$3.2 million during the second half of fiscal 2019 from $2.4
million in the prior year period.
General and administrative expenses increased to $6.0 million
during fiscal 2019 from $3.9 million in fiscal 2018. The higher
general and administrative expense was primarily attributable to
depreciation and amortization expenses related to the new Zhangzhou
Meijia manufacturing plant, public company maintenance fees, and
share based compensation expenses.
Research and development expenses
Research and development expenses decreased to approximately
$0.1 million in the second half of 2019 from $0.4 million in the
prior year period.
Research and development expenses increased to approximately
$0.7 million in fiscal 2019 from approximately $0.6 million year
over year due to the Company’s continued efforts to develop new
intelligent products and improve upon existing products. The
Company expects its research and development expenses to continue
to increase.
Income from operations
During the second half of 2019, income from operations decreased
76.2% to approximately $0.5 million from approximately $2.2 million
in the prior year period. Operating margin decreased to 3.9% from
14.5% in the prior year period.
Income from operations decreased 89.2% to approximately $0.6
million during fiscal 2019 from approximately $6.0 million in
fiscal 2018. Operating margin decreased to 2.4% from 19.8%.
Net income
During the second half of 2019, net income decreased 59.4% to
approximately $0.7 million from approximately $1.7 million,
partially due to foreign exchange losses. Fully diluted net income
per share decreased to $0.03 from $0.04 year over year.
Net income during fiscal 2019 was approximately $1.4 million, a
decrease of 69.5% from approximately $4.6 million in fiscal 2018.
Fully diluted net income per share decreased to $0.05 during the
period from $0.22 in the prior year period.
Cash and cash flow
As of June 30, 2019, the Company had cash and total working
capital of approximately $2.6 million and $17.9 million,
respectively.
Net cash used in operating activities was $1.3 million for
the twelve months ended June 30, 2019, compared to net cash
provided by operating activities of $3.5 million for the twelve
months ended June 30, 2018. The decrease in operating cash flow was
mainly due to an increase in prepayment and other assets of $4.4
million due to the prepayment for a lease associated with the new
warehouse.
Recent developments
On February 5, 2019, in order to expand into the Japanese market
and expedite the development of new smart pet products, the Company
invested $250,000 for 51% ownership interest to establish and
operate Dogness Japan Co. Ltd. (“Dogness Japan”), with the
remaining 49% ownership interest owned by an unrelated
individual.
Business Outlook
For fiscal year 2020, the Company expects total revenues to grow
approximately 15% and net income to grow approximately 50-80%
compared to fiscal year 2019.
This forecast reflects the Company’s current and preliminary
views, which are subject to change and is subject to risks and
uncertainties, including, but not limited to, the risks and
uncertainties identified in the Company’s public filings and
forward looking statements.
About Dogness
Dogness (International) Corporation was born in
2003 from the belief that pet dogs and cats are important,
well-loved family members. Through its smart products, hygiene
products, health and wellness products, and leash products, Dogness
is able to simplify pet lifestyles, make them more scientific, and
enhance 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 100 patents
and patents pending. Dogness products reach families worldwide
through global chain stores and distributors. For more information,
please visit: ir.dognesspet.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,
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.
Contacts:
ICR, Inc. Rose Zu Tel: +1-646-588-0383 Email:
ir@dognesspet.com
|
|
DOGNESS (INTERNATIONAL) CORPORATION |
CONSOLIDATED BALANCE SHEETS |
|
|
|
As of June 30, |
|
|
|
2019 |
|
|
2018 |
|
ASSETS |
|
|
|
|
|
|
|
|
CURRENT
ASSETS |
|
|
|
|
|
|
|
|
Cash |
|
$ |
2,550,152 |
|
|
$ |
7,085,235 |
|
Short-term investments |
|
|
11,073,200 |
|
|
|
28,233,035 |
|
Accounts receivable from third-party customers, net |
|
|
5,164,380 |
|
|
|
5,641,501 |
|
Accounts receivable – related parties |
|
|
244,764 |
|
|
|
- |
|
Inventories, net |
|
|
5,362,731 |
|
|
|
4,153,583 |
|
Prepayments and other current assets |
|
|
1,527,397 |
|
|
|
1,231,298 |
|
Total current
assets |
|
|
25,922,624 |
|
|
|
46,344,652 |
|
|
|
|
|
|
|
|
|
|
Property, plant and equipment, net |
|
|
35,516,368 |
|
|
|
20,950,685 |
|
Intangible assets, net |
|
|
2,226,798 |
|
|
|
2,390,571 |
|
Long-term prepayments for land lease |
|
|
4,107,550 |
|
|
|
- |
|
Long-term investments in equity investees |
|
|
995,131 |
|
|
|
- |
|
Deferred tax assets |
|
|
255,456 |
|
|
|
22,297 |
|
TOTAL
ASSETS |
|
$ |
69,023,927 |
|
|
$ |
69,708,205 |
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS’ EQUITY |
|
|
|
|
|
|
|
|
CURRENT
LIABILITIES |
|
|
|
|
|
|
|
|
Short-term bank loans |
|
$ |
2,914,000 |
|
|
$ |
4,835,200 |
|
Accounts payable |
|
|
543,158 |
|
|
|
351,375 |
|
Advance from customers |
|
|
179,306 |
|
|
|
240,216 |
|
Taxes payable |
|
|
2,909,097 |
|
|
|
2,421,303 |
|
Accrued liabilities and other payable |
|
|
1,526,862 |
|
|
|
1,120,579 |
|
Total current
liabilities |
|
|
8,072,423 |
|
|
|
8,968,673 |
|
|
|
|
|
|
|
|
|
|
Commitments |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EQUITY |
|
|
|
|
|
|
|
|
Common stock, $0.002 par value, 100,0000,000 shares authorized,
25,913,631 issued and outstanding |
|
|
|
|
|
|
|
|
Common stock A |
|
|
33,689 |
|
|
|
33,689 |
|
Common stock B |
|
|
18,138 |
|
|
|
18,138 |
|
Additional paid-in capital |
|
|
52,827,145 |
|
|
|
52,144,891 |
|
Statutory reserve |
|
|
191,716 |
|
|
|
164,367 |
|
Retained earnings |
|
|
11,657,630 |
|
|
|
10,263,198 |
|
Accumulated other comprehensive loss |
|
|
(3,894,300 |
) |
|
|
(1,884,751 |
) |
Total stockholders’
equity |
|
|
60,834,018 |
|
|
|
60,739,532 |
|
|
|
|
|
|
|
|
|
|
Noncontrolling interest |
|
|
117,486 |
|
|
|
- |
|
Total equity of
Dogness (International) Corporation |
|
|
60,951,504 |
|
|
|
60,739,532 |
|
|
|
|
|
|
|
|
|
|
TOTAL LIABILITIES AND
STOCKHOLDERS’ EQUITY |
|
$ |
69,023,927 |
|
|
$ |
69,708,205 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DOGNESS (INTERNATIONAL) CORPORATION |
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
(LOSS) |
|
|
|
For the Years Ended June 30, |
|
|
|
2019 |
|
|
2018 |
|
|
2017 |
|
|
|
|
|
|
|
|
|
|
|
Revenues |
|
$ |
25,887,948 |
|
|
$ |
30,135,295 |
|
|
$ |
21,172,091 |
|
Revenues – related
parties |
|
|
328,567 |
|
|
|
- |
|
|
|
- |
|
Total
Revenues |
|
|
26,216,515 |
|
|
|
30,135,295 |
|
|
|
21,172,091 |
|
Cost of
revenues |
|
|
(16,786,510 |
) |
|
|
(18,000,708 |
) |
|
|
(12,837,219 |
) |
Gross
Profit |
|
|
9,430,005 |
|
|
|
12,134,587 |
|
|
|
8,334,872 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
Selling expenses |
|
|
2,101,403 |
|
|
|
1,654,629 |
|
|
|
789,444 |
|
General and administrative expenses |
|
|
6,015,901 |
|
|
|
3,958,355 |
|
|
|
1,527,563 |
|
Research and development expenses |
|
|
673,131 |
|
|
|
580,379 |
|
|
|
208,447 |
|
Total operating expenses |
|
|
8,790,435 |
|
|
|
6,193,363 |
|
|
|
2,525,454 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from
operations |
|
|
639,570 |
|
|
|
5,941,224 |
|
|
|
5,809,418 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income
(expenses): |
|
|
|
|
|
|
|
|
|
|
|
|
Interest income (expense), net |
|
|
616, 878 |
|
|
|
(23,961 |
) |
|
|
(332,249 |
) |
Foreign exchange transaction gain (loss) |
|
|
503,528 |
|
|
|
(381,773 |
) |
|
|
320,566 |
|
Other income (expenses), net |
|
|
23,498 |
|
|
|
(6,410 |
) |
|
|
91,226 |
|
Total other income (expense) |
|
|
1,143,904 |
|
|
|
(412,144 |
) |
|
|
79,543 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before income
taxes |
|
|
1,783,474 |
|
|
|
5,529,080 |
|
|
|
5,888,961 |
|
Provision for income
taxes |
|
|
380,296 |
|
|
|
925,372 |
|
|
|
943,197 |
|
Net
income |
|
|
1,403,178 |
|
|
|
4,603,708 |
|
|
|
4,945,764 |
|
Less: net loss attributable to
noncontrolling interest |
|
|
(18,603 |
) |
|
|
- |
|
|
|
- |
|
Net income
attributable to the Company |
|
|
1,421,781 |
|
|
|
4,603,708 |
|
|
|
4,945,764 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive
income(loss): |
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency translation gain (loss) |
|
|
(2,010,170 |
) |
|
|
(1,762,729 |
) |
|
|
142,519 |
|
Comprehensive income
(loss) |
|
|
(606,992 |
) |
|
|
2,840,979 |
|
|
|
5,088,283 |
|
Less: comprehensive loss
attributable to noncontrolling interest |
|
|
(19,224 |
) |
|
|
- |
|
|
|
- |
|
Comprehensive income
(loss) attributable to the Company |
|
$ |
(587,768 |
) |
|
$ |
2,840,979 |
|
|
$ |
5,088,283 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings Per
share |
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
0.05 |
|
|
$ |
0.22 |
|
|
$ |
0.33 |
|
Diluted |
|
$ |
0.05 |
|
|
$ |
0.22 |
|
|
$ |
0.33 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted Average
Shares Outstanding |
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
25,913,631 |
|
|
|
20,800,670 |
|
|
|
15,000,000 |
|
Diluted |
|
|
25,941,606 |
|
|
|
20,809,950 |
|
|
|
15,000,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends declared per
share |
|
$ |
0.00 |
|
|
$ |
0.00 |
|
|
$ |
0.18 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DOGNESS (INTERNATIONAL) CORPORATION |
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’
EQUITY |
FOR THE YEARS ENDED JUNE 30, 2019, 2018 AND
2017 |
|
|
|
Common Stock |
|
|
Additional Paid inCapital |
|
|
StatutoryReserves |
|
|
RetainedEarnings |
|
|
Accumulated Other
ComprehensiveLoss |
|
|
Non-controllinginterest |
|
|
|
|
|
|
Shares |
|
|
Amount |
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
Balance at June 30, 2016 |
|
|
15,000,000 |
|
|
$ |
30,000 |
|
|
$ |
1,625,306 |
|
|
$ |
21,817 |
|
|
$ |
3,671,085 |
|
|
$ |
(264,541 |
) |
|
$ |
- |
|
|
$ |
5,083,667 |
|
Net income for the year |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
4,945,764 |
|
|
|
- |
|
|
|
- |
|
|
|
4,945,764 |
|
Cash dividend paid |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(2,725,883 |
) |
|
|
- |
|
|
|
- |
|
|
|
(2,725,883 |
) |
Dividend declared |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(88,926 |
) |
|
|
- |
|
|
|
- |
|
|
|
(88,926 |
) |
Statutory reserve |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
45,334 |
|
|
|
(45,334 |
) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
Foreign currency translation
gain |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
142,519 |
|
|
|
- |
|
|
|
142,519 |
|
Balance at June 30,
2017 |
|
|
15,000,000 |
|
|
$ |
30,000 |
|
|
$ |
1,625,306 |
|
|
$ |
67,151 |
|
|
$ |
5,756,706 |
|
|
$ |
(122,022 |
) |
|
$ |
- |
|
|
$ |
7,357,141 |
|
Net income for the year |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
4,603,708 |
|
|
|
- |
|
|
|
- |
|
|
|
4,603,708 |
|
Proceeds from initial public
offering |
|
|
10,913,631 |
|
|
|
21,827 |
|
|
|
50,178,458 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
50,200,285 |
|
Options granted for
services |
|
|
- |
|
|
|
- |
|
|
|
341,127 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
341,127 |
|
Statutory reserve |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
97,216 |
|
|
|
(97,216 |
) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
Foreign currency translation
loss |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(1,762,729 |
) |
|
|
- |
|
|
|
(1,762,729 |
) |
Balance at June 30,
2018 |
|
|
25,913,631 |
|
|
$ |
51,827 |
|
|
$ |
52,144,891 |
|
|
$ |
164,367 |
|
|
$ |
10,263,198 |
|
|
$ |
(1,884,751 |
) |
|
$ |
- |
|
|
$ |
60,739,532 |
|
Net income (loss) for the
year |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
1,421,781 |
|
|
|
- |
|
|
|
(18,603 |
) |
|
|
1,403,178 |
|
Options granted for
services |
|
|
- |
|
|
|
- |
|
|
|
682,254 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
682,254 |
|
Capital contribution made by
noncontrolling shareholders |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- |
|
|
|
136,710 |
|
|
|
136,710 |
|
Statutory reserve |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
27,349 |
|
|
|
(27,349 |
) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
Foreign currency translation
loss |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(2,009,549 |
) |
|
|
(621 |
) |
|
|
(2,010,170 |
) |
Balance at June 30,
2019 |
|
|
25,913,631 |
|
|
$ |
51,827 |
|
|
$ |
52,827,145 |
|
|
$ |
191,716 |
|
|
$ |
11,657,630 |
|
|
$ |
(3,894,300 |
) |
|
$ |
117,486 |
|
|
$ |
60,951,504 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DOGNESS (INTERNATIONAL) CORPORATION |
|
CONSOLIDATED STATEMENTS OF CASH FLOWS |
|
|
|
|
|
For the Years Ended June 30, |
|
|
|
2019 |
|
|
2018 |
|
|
2017 |
|
|
|
|
|
|
|
|
|
|
|
Cash flows from operating activities: |
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
$ |
1,403,178 |
|
|
$ |
4,603,708 |
|
|
$ |
4,945,764 |
|
Adjustments to reconcile net income to net cash provided by (used
in) operating activities: |
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
|
1,466,522 |
|
|
|
1,219,892 |
|
|
|
830,328 |
|
Loss on disposition of fixed assets |
|
|
- |
|
|
|
- |
|
|
|
5,053 |
|
Share-based compensation for services |
|
|
682,254 |
|
|
|
341,127 |
|
|
|
- |
|
Change in inventory reserve |
|
|
(4,863 |
) |
|
|
(14,106 |
) |
|
|
(400,957 |
) |
Change in bad debt allowance |
|
|
90,077 |
|
|
|
(5,356 |
) |
|
|
43,987 |
|
Deferred tax expenses (benefit) |
|
|
(209,015 |
) |
|
|
(12,747 |
) |
|
|
53,398 |
|
Unrealized foreign exchange loss |
|
|
(87,893 |
) |
|
|
(103,922 |
) |
|
|
(33,104 |
) |
Changes in operating assets and liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
Accounts receivable |
|
|
55,189 |
|
|
|
(1,462,024 |
) |
|
|
(743,349 |
) |
Inventories |
|
|
(1,356,110 |
) |
|
|
(1,235,858 |
) |
|
|
(434,413 |
) |
Prepayments and other current assets |
|
|
(4,475,109 |
) |
|
|
(805,370 |
) |
|
|
(93,568 |
) |
Accounts payables |
|
|
205,428 |
|
|
|
(317,716 |
) |
|
|
57,359 |
|
Advance from customers |
|
|
(52,719 |
) |
|
|
(198,827 |
) |
|
|
353,134 |
|
Taxes payable |
|
|
577,877 |
|
|
|
753,832 |
|
|
|
871,307 |
|
Accrued expenses and other liabilities |
|
|
436,233 |
|
|
|
751,752 |
|
|
|
53,052 |
|
Net cash (used in)
provided by operating activities |
|
|
(1,268,951 |
) |
|
|
3,514,385 |
|
|
|
5,507,991 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from
investing activities: |
|
|
|
|
|
|
|
|
|
|
|
|
Purchase of property, plant and equipment |
|
|
(3,157,281 |
) |
|
|
(11,030,538 |
) |
|
|
(3,620,512) |
|
Capital expenditures on construction-in-progress |
|
|
(13,572,260 |
) |
|
|
(2,413,172 |
) |
|
|
- |
|
Purchase of intangible assets- Land use rights |
|
|
- |
|
|
|
(2,079,731 |
) |
|
|
- |
|
Long-term investments in equity investees |
|
|
(1,143,707 |
) |
|
|
- |
|
|
|
- |
|
Proceeds upon maturity (purchase) of short-term investments |
|
|
16,250,610 |
|
|
|
(28,737,530 |
) |
|
|
- |
|
Net cash used in
investing activities |
|
|
(1,622,638 |
) |
|
|
(44,260,971 |
) |
|
|
(3,620,512) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from
financing activities: |
|
|
|
|
|
|
|
|
|
|
|
|
Cash dividend paid |
|
|
- |
|
|
|
- |
|
|
|
(2,725,883) |
|
Net proceeds from initial public offering |
|
|
- |
|
|
|
50,200,285 |
|
|
|
- |
|
Capital contribution made by noncontrolling shareholders |
|
|
136,710 |
|
|
|
- |
|
|
|
- |
|
Proceeds from short-term bank loans |
|
|
2,932,000 |
|
|
|
4,921,600 |
|
|
|
5,842,759 |
|
Repayment of short-term bank loans |
|
|
(4,691,200 |
) |
|
|
(6,121,240 |
) |
|
|
(5,872,120) |
|
Proceeds from (repayment of) related party loans |
|
|
(25,629 |
) |
|
|
(1,387,864 |
) |
|
|
745,579 |
|
Net cash (used in)
provided by financing activities |
|
|
(1,648,119 |
) |
|
|
47,612,781 |
|
|
|
(2,009,665) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect of exchange rate
changes on cash |
|
|
4,625 |
|
|
|
(1,285,556 |
) |
|
|
242,547 |
|
Net (decrease) increase in
cash |
|
|
(4,535,083 |
) |
|
|
5,580,639 |
|
|
|
120,361 |
|
Cash, beginning of year |
|
|
7,085,235 |
|
|
|
1,504,596 |
|
|
|
1,384,235 |
|
Cash, end of year |
|
$ |
2,550,152 |
|
|
$ |
7,085,235 |
|
|
$ |
1,504,596 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental disclosure
information: |
|
|
|
|
|
|
|
|
|
|
|
|
Cash paid for income tax |
|
$ |
74,284 |
|
|
$ |
34,393 |
|
|
$ |
- |
|
Cash paid for interest |
|
$ |
209,849 |
|
|
$ |
313,301 |
|
|
$ |
357,326 |
|
Supplemental non-cash
activity: |
|
|
|
|
|
|
|
|
|
|
|
|
Dividend declared and unpaid |
|
$ |
- |
|
|
$ |
- |
|
|
$ |
88,926 |
|
Dogness (NASDAQ:DOGZ)
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