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.
“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
Unaudited Six Month Financial Results and Audited Full Year Results for the Period Ended
Revenues
Revenues in the second half of fiscal year 2019 decreased 12.6% to approximately
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 Company increased its marketing activities and sales efforts in the domestic market in the wake of the growing pet consumer market in
The Company’s export sales to
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
Revenue from pet leashes decreased 11.8% year over year to approximately
Pet collars
Revenue from pet collars decreased 46.6% year over year to approximately
Revenue from pet collars decreased 42.1% year over year to approximately
Gift suspenders
Revenue from gift suspenders increased by 13.0% from approximately
Revenue from gift suspenders increased by 16.6% from approximately
Pet harnesses
Revenue from pet harnesses decreased 27.8% from approximately
Revenue from pet harnesses decreased 28.0% from approximately
Intelligent pet products
Revenue from intelligent pet products increased by 2,470.5% to approximately
Revenue from intelligent pet products increased by 3,422.4% to approximately
Retractable dog leashes
Revenue from retractable dog leashes decreased by 41.7% to approximately
Revenue from retractable dog leashes decreased by 33.2% to approximately
Climbing hooks
Revenue from climbing hooks was approximately
Other pet accessories
Revenue from other pet accessories increased by 128.3% to approximately
Revenue from other pet accessories increased by 72.3% to approximately
Gross profit
Gross profit decreased 21.6% during the second half of fiscal 2019 to approximately
Gross profit decreased 22.3% during fiscal 2019 to approximately
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 in Gross 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
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
Selling expenses increased to
General and administrative expenses
General and administrative expenses increased to approximately
General and administrative expenses increased to
Research and development expenses
Research and development expenses decreased to approximately
Research and development expenses increased to approximately
Income from operations
During the second half of 2019, income from operations decreased 76.2% to approximately
Income from operations decreased 89.2% to approximately
Net income
During the second half of 2019, net income decreased 59.4% to approximately
Net income during fiscal 2019 was approximately
Cash and cash flow
As of
Net cash used in operating activities was
Recent developments
On
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
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
Contacts:
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 in Capital |
Statutory Reserves |
Retained Earnings |
Accumulated Other Comprehensive Loss |
Non- controlling interest |
|||||||||||||||||||||||||||
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 |
Source: Dogness (International) Corporation