Dogness(US:DOGZ)2024-10-17 01:54Corporate Actions - Dogness (International) Corporation completed a share consolidation of its Class A Common Shares at a ratio of 24-for-1[283]. - A share consolidation was approved, reducing the number of Class A shares from 31,055,259 to approximately 1,552,763 to meet NASDAQ listing standards[376]. - Dogness Culture is in the process of liquidation following the board's approval on July 19, 2023[374]. Financial Performance - Total revenue for the year ended June 30, 2024, was $14,847,902, a decrease of 15.0% from $17,584,454 in 2023[370]. - 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[386]. - Total revenue decreased by approximately $9.5 million, or 35.1%, to approximately $17.6 million in fiscal 2023 from approximately $27.1 million in fiscal 2022[417]. - 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[415]. - Net loss was approximately $7.5 million in fiscal 2023, compared to net income of approximately $3.0 million in fiscal 2022, driven by decreased sales and increased operating expenses[446]. Revenue Breakdown - Traditional pet products generated $9,020,839 in revenue, accounting for 60.8% of total revenue, while intelligent pet products contributed $4,384,631, representing 29.5%[370]. - Revenue from traditional pet products increased by approximately $0.7 million, or 8.7%, from approximately $8.3 million in fiscal 2023 to approximately $9.0 million in fiscal 2024[389]. - Revenue from intelligent pet products decreased by approximately $3.0 million, or 40.8%, from approximately $7.4 million in fiscal 2023 to approximately $4.4 million in fiscal 2024[390]. - Revenue from the United States decreased by approximately $3.4 million, or 54.1%, from $6.2 million in fiscal 2023 to $2.9 million in fiscal 2024[396]. - Revenue from Japan and other Asian countries increased by approximately $1.5 million, or 57.8%, from $2.6 million in fiscal 2023 to $4.1 million in fiscal 2024[396]. Cost and Expenses - Total operating expenses decreased by approximately $2.6 million, or 19.4%, from $13.2 million in fiscal 2023 to $10.7 million in fiscal 2024[385]. - 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[403]. - 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[404]. - General and administrative expenses decreased by approximately $2.0 million or 20.0%, from approximately $9.8 million in fiscal 2023 to approximately $7.8 million in fiscal 2024[410]. - Selling expenses decreased by approximately $1.3 million or 54.4%, from approximately $2.5 million in fiscal 2023 to approximately $1.1 million in fiscal 2024[409]. Research and Development - Dogness' research and development expenses were $610,439 in fiscal 2024, representing 4.1% of total revenues, with expectations for increased R&D spending in the future[313]. - Research and development expenses were approximately $0.9 million in both fiscal 2023 and 2022, expected to increase as the company expands its R&D activities[442]. Market and Sales Strategy - Approximately 32.2% of Dogness' products were sold in China in fiscal 2024, while 19.2% were sold in the United States, indicating a shift in market focus[306]. - The company is focusing on developing new customers and markets, as well as a new generation of intelligent pet products to mitigate the impact of weak sales[379]. - The company plans to acquire smaller pet product manufacturers in China to expand and integrate its industrial chain, enhancing control over manufacturing costs[381]. Product Development - Dogness has focused on developing smart pet technology, including smart collars, feeders, and fountains, to enhance pet care[286]. - The company aims to integrate a "Smart Pet Ecosystem" that connects pets and their caregivers through technology[286]. - Upcoming product launches include indoor pet toilets and air purifiers, expanding the company's product range[303]. Legal and Compliance - The company is subject to civil liability under the Civil Code of the People's Republic of China for defective products causing property damage or physical injury[323]. - Customers can claim damages from either the manufacturer or vendor of defective products without a cap on monetary damages[324]. - Wholly foreign-owned enterprises in China can only pay dividends from accumulated profits, with a requirement to set aside at least 10% of after-tax profits to general reserves until reaching 50% of registered capital[335]. Financial Obligations - The company had total contractual obligations of approximately $25.6 million as of June 30, 2024, including operating lease commitments and bank loan repayments[456]. - The company had a loan balance of approximately $5.0 million from Dongguan Rural Commercial Bank, with a maturity date on July 16, 2028[457]. Currency and Economic Impact - The company experienced a foreign currency translation loss of $0.2 million in fiscal 2024, with export sales representing 67.8% of total revenue[461]. - Inflation post-pandemic has significantly impacted the company's financial performance, increasing costs and potentially affecting sales volume[460].