Dogness Reports Financial Results for the Six Months Ended December 31, 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 six months ended December 31, 2024. Mr. Silong Chen, the CEO of the Company, commented: "We delivered robust financial results for the half year ended December 2024, marked by strong revenue growth, increased operational efficiency, and progress toward profitability. Our revenue reached $12.1 million for the six months ended December 2024, an 81.1% increase from the same period in 2023, driven by high demand across all product categories and regions. Meanwhile, our ongoing efforts on cost management and economies of scale have significantly improved operating results. "Looking ahead, Dogness aims to accelerate product innovation, expand its global market presence and drive cost efficiencies. The Company plans to acquire smaller pet product manufacturers in China to strengthen supply chain control and operational efficiencies, thereby increasing market share. With a focus on developing sustainable, high-tech pet products and leveraging strategic partnerships, we anticipate further revenue growth, improved profitability and increased shareholder value." Financial Results for the Half Year Ended December 31, 2024 Revenues increased by approximately $5.4 million, or 81.1%, from about $6.7 million for the year ended December 31, 2023 to approximately $12.1 million for the six months ended December 31, 2024. The increase in revenue was primarily attributable to the strong sales performance in both China's domestic market and international markets, driven by higher demand from existing customers and new customer. The following table breaks down Dogness' revenue by product and service type for the six months ended December 31, 2024 and 2023: For the six months ended December 31, 2024 2023 Products and services category Revenue Revenue Variance % Products Traditional pet products $ 4,660,824 $ 3,601,676 29.4 % Intelligent pet 4,546,642 2,234,220 103.5 % Climbing hooks and others 2,878,245 761,742 277.9 % Total revenue fromproducts 12,085,711 6,597,638 83.2 % Services Dyeing services - 77,049 (100.0) % Total revenue fromservices - 77,049 (100.0) % Total $ 12,085,711 $ 6,674,687 81.1 % ─ Traditional pet products Revenue from traditional pet products increased by approximately $1.1 million, or 29.4%, from approximately $3.6 million for the six months ended December 31, 2023 to approximately $4.7 million for the six months ended December 31, 2024. This growth was driven both higher sales volume and increased average selling prices. Of the revenue growth, $1.0 million came from international sales and $0.1 million from the domestic Chinese market, primarily due to expanded order volumes from customers. ─ Intelligent pet products Revenue from intelligent pet products grew by approximately $2.3 million, or 103.5%, from around $2.2 million for the six months ended December 31, 2023, to roughly $4.5 million for the same period in 2024, mainly due to increased sales volume. The revenue increase included $1.2 million from international customers and $1.1 million from domestic Chinese customers, primarily from new and existing orders. ─ Climbing hooks and others Revenue from climbing hooks and other products increased by about $2.1 million, or 277.9%, from roughly $0.8 million for the six months ended December 31, 2023, to about $2.9 million for the same period in 2024. This increase was influenced by higher sales volume and prices. International sales contributed $1.3 million to the revenue increase, while domestic sales accounted for $0.8 million, driven by higher orders. ─ Dyeing service For the six months ended December 31, 2024 and 2023, the Company earned approximately $Nil and $0.1 million, respectively, for dyeing services. ─ International vs. Domestic sales Total international sales rose by about $3.4 million, or 75.9%, from approximately $4.5 million for the six months ended December 31, 2023, to about $8.0 million during the same period in 2024, driven by increased orders across all product types. Domestic sales also saw a significant increase of about $2.0 million, or 92.0%, from around $2.1 million in 2023 to approximately $4.1 million in 2024. In the domestic market, sales of traditional pet products, intelligent pet products, and climbing hooks increased by 16.2%, 109.2%, and 198.5%, respectively, compared to the previous year. Cost of revenues increased by $3.3 million, or 61.6%, from approximately $5.4 million for the six months ended December 31, 2023, to approximately $8.7 million for the six months ended December 31, 2024, due to a significant increase in sales volume. As a percentage of revenues, the cost of goods sold decreased by approximately 8.7 percentage points to 71.7% for the six months ended December 31, 2024, compared to 80.4% for the six months ended December 31, 2023. Gross profit rose by approximately $2.1 million, or 160.7%, from about $1.3 million for the six months ended December 31, 2023, to around $3.4 million for the same period in 2024. This increase resulted from higher sales volume and average selling prices. The overall gross profit margin improved to 28.3%, up 8.7 percentage points from 19.6% in the previous period. Total operating expenses increased by approximately $0.7 million or 14.6%, to about $5.6 million for the six months ended December 31, 2024, compared to around $4.9 million for the same period in 2023. ─ Selling expenses Selling expenses increased by about $0.1 million, or 18.0%, from approximately $0.5 million for the six months ended December 31, 2023, to approximately $0.6 million for the six months ended December 31, 2024. This rise was driven by an increase in marketing research activities. Selling expenses accounted for 5.2% of total revenues in 2024, compared to 7.9% in 2023. ─ General and Administrative Expenses General and administrative expenses rose by approximately $0.4 million, or 11.3%, from about $3.9 million for the six months ended December 31, 2023, to roughly $4.3 million for the same period in 2024. This increase was primarily attributable to office decoration costs at our new Dongguan facility. As a percentage of sales, these expenses decreased to 35.7% in 2024 from 58.0% in 2023. ─ Research and Development Expenses Research and development expenses increased by $0.2 million, or 37.0%, from approximately $0.5 million for the six months ended December 31, 2023, to about $0.7 million for the same period in 2024. These expenses were 5.5% of total revenues in 2024, down from 7.3% in 2023. We anticipate continued growth in research and development as we expand our efforts to use environmentally friendly materials and develop new high-tech products to meet customer demand. Net loss decreased by approximately $1.4 million, or 43.2%, from about $3.2 million for the six months ended December 31, 2023, to approximately $1.8 million for the six months ended December 31, 2024, as a result of the foregoing. 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, trade policies affecting our business including tariffs on our products, 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 LLCConnie Kang, PartnerEmail: [email protected] Tel: +86 1381 185 7742 (CN) DOGNESS (INTERNATIONAL) CORPORATION CONSOLIDATED BALANCE SHEETS (All amounts in USD) (Unaudited) As of December 31, As of June 30, 2024 2024 ASSETS CURRENT ASSETS Cash and cash equivalents $ 6,057,762 $ 6,956,434 Accounts receivable from third-party customers, net 3,298,433 2,269,341 Accounts receivable from related party 311,713 582,182 Inventories, net 3,228,661 3,119,827 Due from related party 101,491 97,037 Prepayments and other current assets 3,374,352 3,328,189 Advances to supplier- related party - 50,908 Total current assets 16,372,412 16,403,918 NON-CURRENT ASSETS Property, plant and equipment, net 60,593,968 61,303,327 Operating lease right-of-use lease assets 15,679,000 16,325,988 Intangible assets, net 1,744,340 1,780,856 Long-term investments in equity investees 1,507,000 1,513,600 Deferred tax assets 1,972,480 1,873,140 Total non-current assets 81,496,788 82,796,911 TOTAL ASSETS $ 97,869,200 $ 99,200,829 LIABILITIES AND EQUITY CURRENT LIABILITIES Short-term bank loans $ 890,500 $ 894,400 Current portion of long-term bank loans 900,936 759,339 Accounts payable 2,264,565 1,286,981 Accounts payable - related party 12,913 - Due to related parties 71,994 518,003 Advances from customers 224,676 264,832 Taxes payable 1,029,282 1,007,482 Accrued expenses and other current liabilities 1,504,502 1,452,225 Operating lease liabilities, current 2,279,655 2,352,482 Total current liabilities 9,179,023 8,535,744 NON-CURRENT LIABILITIES Long-term bank loans 2,845,274 3,315,715 Operating lease liabilities, non-current 11,150,861 10,938,477 Total non-current liabilities 13,996,135 14,254,192 TOTAL LIABILITIES 23,175,158 22,789,936 Commitments and Contingencies (Note 6) EQUITY Class A Common shares, no par value, unlimited sharesauthorized; 3,661,658 issued and outstanding as of December 31, 2024 and June 30, 2024 92,403,766 92,004,296 Class B Common shares, no par value, unlimited shares authorized; 9,069,000 issued and outstanding as of December 31, 2024 and June 30, 2024 18,138 18,138 Statutory reserve 291,443 291,443 Accumulated deficit (7,207,552) (5,391,709) Accumulated other comprehensive loss (10,811,795) (10,511,317) Equity attributable to owners of the Company 74,694,000 76,410,851 Non-controlling interest 42 42 Total equity 74,694,042 76,410,893 TOTAL LIABILITIES AND EQUITY $ 97,869,200 $ 99,200,829 DOGNESS (INTERNATIONAL) CORPORATION STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (All amounts in USD) (Unaudited) For the Six Months Ended December 31, 2024 2023 Revenues–third party customers $ 12,085,711 $ 6,573,379 Revenues – related parties - 101,308 Total Revenues 12,085,711 6,674,687 Cost of revenues – third party customers (8,668,552) (5,280,923) Cost of revenues – related parties - (82,835) Total Cost of revenues (8,668,552) (5,363,758) Gross Profit 3,417,159 1,310,929 Operating expenses: Selling expenses 624,410 529,021 General and administrative expenses 4,312,486 3,873,442 Research and development expenses 665,494 485,849 Total operating expenses 5,602,390 4,888,312 Loss from operations (2,185,231) (3,577,383) Other income (expense): Interest income (expense), net 6,884 (113,690) Foreign exchange transaction gain 114,443 32,469 Other income, net 41,357 80,891 Rental income from related parties, net 107,737 148,406 Total other income, net 270,421 148,076 Loss before income taxes (1,914,810) (3,429,307) Income taxes benefit (98,967) (231,756) Net loss (1,815,843) (3,197,551) Less: net loss attributable to non-controlling interest - (934) Net loss attributable to Dogness (International) Corporation (1,815,843) (3,196,617) Other comprehensive loss Foreign currency translation adjustments (300,478) 1,666,560 Comprehensive loss (2,116,321) (1,530,991) Less: comprehensive loss attributable to non-controllinginterest - (931) Comprehensive loss attributable to Dogness(International) Corporation $ (2,116,321) $ (1,530,060) Loss Per share Basic $ (0.14) $ (0.30) Diluted $ (0.14) $ (0.30) Weighted Average Shares Outstanding Basic 12,755,658 10,622,663 Diluted 12,755,658 10,622,663 DOGNESS (INTERNATIONAL) CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS (All amounts in USD) (Unaudited) For the Six Months Ended December 31, 2024 2023 Cash flows from operating activities: Net loss $ (1,815,843) $ (3,197,551) Adjustments to reconcile loss income to net cash provided by (used in) operating activities: Depreciation and amortization 1,395,756 1,414,937 Share-based compensation for services 399,470 399,470 Loss (gain) from disposal of property, plant and equipment 176,347 (9,845) Change in credit losses (232,600) 111,105 Deferred tax benefit (108,490) (275,121) Amortization of right-of-use lease assets 585,466 591,705 Warrants modification - 239,308 Changes in operating assets and liabilities: Accounts receivable (824,001) (682,445) Accounts receivable-related party 272,429 177,374 Inventories (121,257) (359,976) Prepayments and other current assets (61,720) (1,080,158) Advances to supplier-related party 51,537 126,527 Accounts payables 999,703 425,101 Accounts payables-related party 13,130 - Accrued expenses and other current liabilities 24,691 16,516 Advance from customers (39,639) 104,887 Operating lease liabilities 200,827 188,379 Taxes payable 26,242 159,612 Net cash provided by (used in) operating activities 942,048 (1,650,175) Cash flows from investing activities: Purchase of property, plant and equipment (1,050,711) (294,828) Proceeds from disposition of property, plant and equipment 787 56,000 Net cash used in investing activities (1,049,924) (238,828) Cash flows from financing activities: Net proceeds from exercise of warrants - 15,101 Reverse split shares - (810) Proceeds from short-term bank loans 696,500 691,000 Repayment of short-term bank loans (696,500) (885,800) Proceeds from long-term bank loans - 2,625,800 Repayment of long-term bank loans (316,297) (2,793,472) (Repayment of) proceeds from related-party loans (456,160) 6,498 Net cash used in financing activities (772,457) (341,683) Effect of exchange rate changes on cash and restricted cash (18,339) 226,388 Net decrease in cash and cash equivalents (898,672) (2,004,298) Cash and cash equivalents, beginning of period 6,956,434 4,483,308 Cash and cash equivalents, end of period $ 6,057,762 $ 2,479,010 SUPPLEMENTAL DISCLOSURES OF CASH FLOWINFORMATION: Cash paid for interest $ 115,430 $ 154,884 Non-Cash Investing Activities Liabilities incurred (settled) for purchase of property andequipment $ 34,909 $ (40,251) Prepaid share-based compensation for services $ - $ (223,000) SOURCE Dogness (International) Corporation WANT YOUR COMPANY'S NEWS FEATURED ON PRNEWSWIRE.COM? 440k+ Newsrooms & Influencers 9k+ Digital Media Outlets 270k+ Journalists Opted In

Dogness Reports Financial Results for the Six Months Ended December 31, 2024

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