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

PR Newswire · 10/17 01:51

PLANO, Texas, Oct. 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 fiscal 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

%







1.7

pct.

Intelligent pet products





1.2







28.3

%





1.8







24.4

%







3.9

pct.

Climbing hooks and others





0.5







34.9

%





0.6







34.2

%







0.7

pct.







3.1







21.4

%





3.6







20.6

%







0.8

pct.

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

%







0.2

pct.

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





$

-



 

 

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SOURCE Dogness (International) Corporation