Dogness Reports Financial Results for Fiscal Year Ended June 30, 2022

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    Highlights for the Fiscal Year Ended June 30, 2022

    • 11.5% Revenue Increase YoY to $27.1 Million
    • 73% Increase YoY in Sales of Intelligent Pet Products
    • 100% Increase YoY in Income Per Basic and Diluted Share
    • 241% Increase YoY in Balance of Cash and Short-Term Investments

    PLANO, Texas, Oct. 1, 2022 /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 audited financial results for the fiscal year ended June 30 2022.

    Silong Chen, Chairman and Chief Executive Officer of Dogness, commented, “We continue to benefit from our priority focus of resources on the production and promotion of sales of our higher margin intelligent pet products. With both our existing models and the newly launched models of our smart products, we delivered a 73% increase in sales of our intelligent pet products in the fiscal year ended June 30, 2022, compared to the year ago period. We also continue to upgrade our production lines for traditional pet products to improve the productivity and lower the production costs. This has allowed us to lower our average unit selling price for our traditional pet products, while still maintaining desirable profit margins. Our sales strategy for traditional pet products has helped us to successfully retain our customers and attract new customers, which we have leveraged to increase awareness for our intelligent pet products. To mitigate the impact caused by COVID-19, we expanded our sales channels to more proven online shopping platforms, such as Amazon, Chewy, JD, Tmall, Costco.com, QVC.com and the live streaming sales platforms hosted by influencers, as well as maintaining the existing online and instore channels. These ecommerce sales normally have higher profit margin than traditional sales channels.”

    “With the continued strong demand and pet culture growth in China and worldwide, more and more young consumers have become pet owners. Dogness is well positioned to benefit from this growth, which is serving as a sales catalyst for our intelligent pet products, including App-controlled smart pet food feeders, pet water fountains, pet tracking devices and smart pet toys. In addition, our sales and distribution channel has been further diversified due to the rapid change of technology and lifestyle. Younger generations are more tech savvy and more willing to purchase products from popular online shopping sites, including Amazon, Chewy, JD, Tmall and Taobao, and from live streaming sales platforms hosted by influencers. As a result, we strategically increased our marketing activities and sales efforts in the domestic market, especially on those online shopping sites and channels.”

    “As we look forward we are even more excited about our growth potential led by our continued development of innovative, differentiated pet products and services, which allow us to build strong relationships with our customers, build brand loyalty, enhance our market position, increase transaction size and further enhance operating margins. Taken together, we believe Dogness is on track to further improve our sales, profitability and return on investment for our stockholders in the near future.”

    Financial Results for the Fiscal Year Ended June 30, 2022

    Revenues increased by approximately $2.8 million, or 11.5%, to approximately $27.1 million for the year ended June 30, 2022, compared to $24.3 million in the year ended June 30, 2021. The increase in revenue was primarily attributable to the increased sales of the Company’s intelligent pet products, which have much higher average selling price than our traditional pet products.

    Revenue from the Company’s intelligent pet products increased by approximately $5.7 million or 73.0%, from approximately $7.8 million in fiscal 2021 to approximately $13.5 million in fiscal 2022, primarily reflecting a higher selling price and increased sales volume. Revenue from traditional pet products decreased by approximately $2.9 million or 20.2% from approximately $14.3 million in fiscal 2021 to approximately $11.4 million in fiscal 2022, primarily reflecting a decreased average selling price per unit.

    Total sales in international markets increased by approximately $3.9 million or 36.8% to $14.5 million in the year ended June 30, 2022 from approximately $10.6 million in the year ago period. Domestic sales decreased by approximately $1.1 million or 8.3% from approximately $13.7 million in the year ended June 30, 2021 to approximately $12.6 million in the year ended June 30, 2022. The Company has seen a sharp increase in consumer demand in the U.S., Australia, Japan and other Asian countries because of the stimulus plan and the strong recovery of the economy. Sales to the U.S. increased by approximately $2.0 million or 32.4% to approximately $8.0 million in the year ended June 30, 2022 from approximately $6.0 million for the year ended June 30, 2021. Sales to Japan and other Asian countries and regions market increased by approximately $1.7 million or 131.0% to approximately $3.0 million for the year ended June 30, 2022 from approximately $1.3 million for fiscal 2021.

    Cost of revenues increased by approximately $1.8 million, or 11.8%, from approximately $15.2 million in the year ended June 30, 2021 to approximately $17.0 million in the year ended June 30, 2022.

    Gross profit increased by approximately $1.0 million or 10.7%, to approximately $10.1 million in the year ended June 30, 2022 from approximately $9.2 million in the year ago period due to the continued upgrading of the Company’s production lines for both traditional and intelligent pet products, which led to improved productivity and lower production costs. Overall gross profit margin was 37.4% for the year ended June 30, 2022, as compared to 37.6% for the year ended June 30, 2020.

    Net income attributable to Dogness increased to $3.2 million or $0.10 per basic and diluted share for the year ended June 30, 2022 , compared to $1.5 million or $0.05 per basic and diluted share for the year ended June 30, 2021. The Company recognized a $3.2 million foreign currency translation loss for the year ended June 30, 2022, compared to a gain of $4.9 million in the year ago period.

    The Company had a balance of cash and short-term investments of approximately $16.7 million as of June 30, 2022, compared to approximately $4.9 million as of June 30, 2021.

    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 lingering effects of the Covid-19 pandemic on our customers’ businesses and end purchasers’ disposable income, 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.

    DOGNESS (INTERNATIONAL) CORPORATION

    CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

    2022

    2021

    2020

    For the Years Ended June 30,

    2022

    2021

    2020

    Revenues- third party customers

    $

    24,882,618

    $

    23,112,435

    $

    18,261,707

    Revenues – related parties

    2,212,579

    1,207,686

    909,651

    Total Revenues

    27,095,197

    24,320,121

    19,171,358

    Cost of revenues – third party customers

    (15,654,952)

    (14,501,166)

    (16,146,856)

    Cost of revenues – related parties

    (1,301,180)

    (663,742)

    (633,132)

    Total cost of revenues

    (16,956,132)

    (15,164,908)

    (16,779,988)

    Gross Profit

    10,139,065

    9,155,213

    2,391,370

    Operating expenses:

    Selling expenses

    2,077,174

    1,815,771

    2,336,229

    General and administrative expenses

    6,742,687

    4,941,036

    5,746,812

    Research and development expenses

    917,227

    540,613

    1,528,062

    Loss from disposal of property, plant and equipment

    327,921

    1,036,304

    Impairment of fixed assets

    281,680

    Impairment loss of investment in equity investees

    177,750

    Total operating expenses

    10,065,009

    7,297,420

    11,106,837

    Income (loss) from operations

    74,056

    1,857,793

    (8,715,467)

    Other income:

    Interest income (expense), net

    (370,108)

    (264,408)

    15,560

    Foreign exchange transaction gain (loss)

    246,211

    (228,260)

    214,171

    Other income, net

    115,016

    215,233

    23,937

    Rental income from related parties, net

    173,089

    354,968

    89,411

    Gain from disposition of a subsidiary

    5,162

    Total other income

    164,208

    82,695

    343,079

    Income (loss) before income taxes

    238,264

    1,940,488

    (8,372,388)

    Income taxes benefit (expense)

    (2,777,868)

    641,460

    164,537

    Net income (loss)

    3,016,132

    1,299,028

    (8,536,925)

    Less: net loss attributable to non-controlling interest

    (219,427)

    (213,336)

    (95,366)

    Net income (loss) attributable to Dogness (International) Corporation

    3,235,559

    1,512,364

    (8,441,559)

    Other comprehensive income (loss):

    Foreign currency translation income (loss)

    (3,203,448)

    4,879,315

    (1,896,934)

    Comprehensive income (loss)

    (187,316)

    6,178,343

    (10,433,859)

    Less: comprehensive loss attributable to non-controlling interest

    (230,583)

    (161,701)

    (98,635)

    Comprehensive income (loss) attributable to Dogness (International) Corporation

    $

    43,267

    $

    6,340,044

    $

    (10,335,224)

    Income (loss) earnings per share

    Basic

    $

    0.10

    $

    0.05

    $

    (0.33)

    Diluted

    $

    0.10

    $

    0.05

    $

    (0.33)

    Weighted Average Shares Outstanding

    Basic

    33,711,659

    27,499,367

    25,913,631

    Diluted

    34,013,634

    27,554,811

    25,913,631

    DOGNESS (INTERNATIONAL) CORPORATION

    CONSOLIDATED BALANCE SHEETS

    As of June 30,

    As of June 30,

    2022

    2021

    ASSETS

    CURRENT ASSETS

    Cash

    $

    16,605,872

    $

    4,912,442

    Restricted cash

    23,312

    Short-term investments

    52,255

    549,895

    Accounts receivable from third-party customers, net

    1,649,169

    2,367,326

    Accounts receivable from related parties

    1,094,855

    515,193

    Inventories, net

    3,369,885

    4,203,163

    Due from related parties

    105,403

    32,528

    Prepayments and other current assets

    477,237

    1,662,272

    Total current assets

    23,354,676

    14,266,131

    NON-CURRENT ASSETS

    Property, plant and equipment, net

    68,447,612

    69,876,039

    Right-of-use lease assets

    4,589,678

    5,170,395

    Intangible assets, net

    2,063,417

    2,223,285

    Long-term investments in equity investees

    1,642,300

    1,703,900

    Deferred tax assets

    699,039

    605,658

    Total non-current assets

    77,442,046

    79,579,277

    TOTAL ASSETS

    $

    100,796,722

    $

    93,845,408

    LIABILITIES AND EQUITY

    CURRENT LIABILITIES

    Short-term bank loans

    $

    564,000

    704,446

    Current portion of long term bank loans

    1,386,160

    796,416

    Accounts payable

    1,033,476

    847,151

    Accounts payable – related parties

    393,625

    350,199

    Due to related parties

    130,468

    2,001,940

    Advances from customers

    151,462

    209,508

    Taxes payable

    1,557,661

    4,443,192

    Accrued expenses and other current liabilities

    1,083,469

    11,737,680

    Operating lease liabilities, current

    184,700

    171,803

    Total current liabilities

    6,485,021

    21,262,335

    NON-CURRENT LIABILITIES

    Long term bank loans

    4,934,374

    6,557,608

    Operating lease liabilities, non-current

    901,351

    1,123,060

    Total non-current liabilities

    5,835,725

    7,680,668

    TOTAL LIABILITIES

    $

    12,320,746

    $

    28,943,003

    Commitments and Contingencies

    EQUITY

    Common shares, $0.002 par value, 100,000,000 shares authorized  39,274,259 and 29,624,814 issued and
    outstanding as of June 30, 2022 and 2021, respectively

    Class A Common shares

    60,410

    41,111

    Class B Common shares

    18,138

    18,138

    Additional paid-in capital

    84,096,866

    60,355,278

    Statutory reserve

    291,443

    291,443

    Retained earnings

    7,864,267

    4,628,708

    Accumulated other comprehensive loss

    (4,152,577)

    (960,285)

    Equity attributable to owners of the Company

    88,178,547

    64,374,393

    Non-controlling interest

    297,429

    528,012

    Total equity

    88,475,976

    64,902,405

    TOTAL LIABILITIES AND EQUITY

    $

    100,796,722

    $

    93,845,408

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